d
Follow us

CAN A RESIDENTS’ ASSOCIATION OF AN ESTATE IMPOSE AUTOMATIC MEMBERSHIP ON THE RESIDENTS? A REVIEW OF THE DECISION IN MEGAWATTS NIG. LTD v. REGISTERED TRUSTEES OF GBAGADA PHASE 2 RESIDENTS’ ASSOCIATION & 3 ORS.

CAN A RESIDENTS’ ASSOCIATION OF AN ESTATE IMPOSE AUTOMATIC MEMBERSHIP ON THE RESIDENTS? A REVIEW OF THE DECISION IN MEGAWATTS NIG. LTD v. REGISTERED TRUSTEES OF GBAGADA PHASE 2 RESIDENTS’ ASSOCIATION & 3 ORS.

INTRODUCTION

Given the high rate at which estates are springing up in the metropolitan cities in Nigeria, it is no longer unusual for the developers of the estates or the residents to set up residents’ associations to pool together monetary contributions for the execution of community developments and environmental maintenance projects such as waste management, installation and maintenance of drainages, streetlighting and community security.

In the course of the coordination and execution of these activities, estate homeowners and residents’ associations (later referred to as “HORAs”) or community development associations (later referred to as “CDAs”) often impose automatic or mandatory membership on residents of the estates or community which the associations cover. Aside from imposing membership affiliation on residents, it is the custom of HORAs or CDAs to mandate or demand that residents pay membership dues, development fees and other compulsory monetary association levies. Often, a resident’s failure to pay the said dues may result in the withdrawal of access to the estate or the withdrawal of services that ought to accrue from the said dues. Other HORAs or CDAs go as far as imposing sanctions or using coercive measures to pressure defaulting residents into paying the imposed dues.

Due to the somewhat unconventional and unorthodox means that HORAs and CDAs use in enforcing compliance amongst members and residents, disputes between residents and their HORAs or CDAs have regularly been the subject of public interest debates about the wide-ranging powers of residents’ associations and community development associations which regularly arrogate so much power to themselves with respect to sanctions and imposition of fines on erring residents.

It is against the backdrop of the foregoing that this article briefly reviews the Federal High Court decision in Megawatts Nig. Ltd v. Registered Trustees of Gbagada Phase 2 Residents’ Association & 3 Ors (Suit number: FHC/L/CS/982/2020), which was delivered by Hon. Justice I.N. Oweibo on 25 September 2020 and its implications on the practice of imposing membership and attendant obligations on residents by HORAs or CDAs.

THE FACTS OF THE CASE

In 2016, Megawatts Nigeria Limited (“Megawatts/Megawatts Ltd”), an infrastructure solution provider company, moved its head office into the Gbagada Phase 2 Estate. Upon its relocation into the Estate, the Estate CDA began to demand that Megawatts Ltd pay its membership dues. It also collected tolls from vehicles belonging to the company before granting them access to the Estate. The company refused to make the payments, alleging that the dues were exorbitant. The company alleged that it had never enjoyed membership benefits from the Estate CDA, as the company provided its own power, security, and waste management system. The company held a settlement meeting with the Estate CDA concerning the dispute and when it was unable to resolve the dispute, it instituted a fundamental rights enforcement lawsuit at the Lagos Division of the Federal High Court against the Estate CDA of the Gbagada Phase 2 Estate for declaratory orders that the Estate CDA infringed its right to freedom of association and its employees right to freedom of movement, as well as the sum of N50,000,000.00 (Fifty million naira) as damages.

THE APPLICANT’S ARGUMENT

The Applicant, Megawatts, argued that being an artificial person, it could sue for the enforcement of its fundamental rights. The Applicant argued that by coercing it to join the Estate CDA, the Estate CDA of the Gbagada Phase 2 Estate was infringing on its constitutionally guaranteed right of freedom of association. It further argued that it could voluntarily choose not to be a member of the Estate CDA, and coercing it to do so would be an infringement of its constitutional right to freedom of association. The Applicant also argued that restricting its employee’s entry into the Estate amounted to restricting the company’s freedom of movement by proxy. The Applicant argued that since it was an artificial person, it could only act through natural persons (humans). Therefore, restricting its employees’ movement also amounted to restricting the company’s freedom of movement by proxy.

THE RESPONDENTS’ ARGUMENT

The Respondents, the Estate CDA of the Gbagada Phase 2 Estate and its executive members filed a preliminary objection arguing that an artificial person could not sue for the enforcement of fundamental rights under the law. The Respondents argued that only natural persons could sue to enforce fundamental rights. In their defence to the main lawsuit, the Respondents argued that by providing the Court with evidence of the payment of membership dues and attendant fees, the Applicant had, by its conduct, admitted membership of the Estate CDA, and it could not turn around and claim that it was not a member. The Respondents further argued that the Applicant had not provided the Court with concrete evidence of the alleged acts of coercion and urged the Court to dismiss the Applicant’s lawsuit.

THE JUDGMENT OF THE COURT

The Court dismissed the Respondents’ preliminary objection and it agreed with the Applicant’s position that an artificial person could file a lawsuit for the protection of its fundamental rights where its employees or officers who are natural persons suffer infringement of their fundamental rights, which in turn affects the company because infringement amounts to an infringement of the company’s fundamental rights by proxy.

On the issue of freedom of association, the Court held that a person, whether natural or artificial, could not be compelled to join an association and where the membership of such an association was imposed on him as part of the custom of the association (that is, non-voluntary membership), such an association cannot impose obligations on the non-voluntary member as doing so would amount to an infringement of the person’s right to freedom of association.

The Court further held that the Respondents had indeed infringed on the Applicant’s right to freedom of association. The Court also held that the Applicant had not proven coercion or the infringement of its right of movement due to a lack of credible evidence. Therefore, the Court declined to grant the damages of N50,000,000.00 (Fifty million naira) sought by the Applicant

The Court granted the following orders:

  1. A declaration that the Respondents’ acts of harassment, intimidation and extortion, all calculated at coercing the Applicant to become a member of their association, is unconstitutional.
  2. A perpetual injunction restraining the Respondents from harassing, extorting and intimidating the Applicant to become a member of their association.

KEY TAKEAWAYS

Rethinking of compulsory or automatic CDA membership

A major area where the ripple effect of the judgment affects directly is the issue of CDA membership. Although CDAs and HORAs are generally set up for the benefit of residents, it is imperative that CDAs change their member recruitment strategies to ensure that members are allowed to voluntarily consent to membership of the CDA.

For estate residents, the judgment marks a watershed restatement of the constitutionally guaranteed right to freedom of association. Therefore, estate residents can rightly avoid being coerced into being members of Estate CDAs merely because of their residence in the said estate or community

Part of the right of freedom of association includes the right to withdraw from the membership of an association. Therefore, where consent for membership was freely given, such membership can also be freely withdrawn. Furthermore, Estate CDAs should also ensure that their respective constitutions or guidelines are not drafted in such a way as to victimise persons who voluntarily withdraw their membership of the Estate CDA since such may expose the Estate CDA to a potential lawsuit for the infringement of the rights of the residents who voluntarily choose to withdraw their membership of an Estate CDA or HORA as the case may be.

CONCLUSION

In conclusion, Megawatts Nig. Ltd v. Registered Trustees of Gbagada Phase 2 Residents’ Association & 3 Ors (Suit number: FHC/L/CS/982/2020) serves as a judicial balancing act between HORAs, Estate CDAs and their residents. Therefore, HORAs and Estate CDAs must carefully ensure that their regulations are not too exacting on residents to avoid potential litigation, which may put a financial strain on the resources of the HORA or Estate CDA.

Please note that this article is for general information only. We do not offer it as advice on any particular matter, whether legal, procedural or otherwise. If you have any questions about this article, please contact the authors at fmsarumoh@abdu-salaamabbasandco.com and george@abdu-salaamabbasandco.com.