Court Validates Power of Local Governments to Collect Parking Permit Fees

Court Validates Power of Local Governments to Collect Parking Permit Fees From Owners Of Private, Non-Commercial Parks

Introduction

In July 2017, the Court of Appeal sitting in Lagos held in Airtel Networks Limited v Attorney General of Lagos Sate & Ors. APPEAL NO.CA/L/311/2013 that Local Governments have the power to charge and collect parking permit fees from owners of private, non-commercial parking lots. The dispute arose as a result of the decision of Eti-Osa Local Government to issue a demand notice in respect of alleged parking permit fees on Airtel Networks Limited pursuant to the Parking and Control of Traffic Bye-Law (No. 7) of 2002. Airtel Networks Limited has offices at Banana Island, Ikoyi, Lagos. Airtel Networks Limited operates a car park for its staff, and customers at its

said offices. Dissatisfied with the demand notice, Airtel Networks Limited commenced this action at the Lagos State High Court by an originating summons, seeking to set aside the demand notice on the following grounds:

  1. The Fourth Schedule to the Constitution of the Federal Republic of Nigeria, 1999 (the Constitution) does not allow the Local Government to levy charges on private places. The park in question was a private, non-commercial park used by Airtel employees and its customers. The Fourth Schedule to the Constitution of the Federal Republic of Nigeria, 1999 limits the functions of the local government to public places such as slaughter slabs, markets, motor parks and conveniences and does not include private places such as the park operated by Airtel Networks Limited.
  2. The Parking and Control of Traffic Bye-Law (No. 7) of 2002 is unconstitutional because the Fourth Schedule to the Constitution does not list the regulation of motor parks as a function of Local Governments.

The High Court ruled in favour of Eti-Osa Local Government thus prompting this appeal at the Court of Appeal.

Issues for Determination

The following issues were submitted for determination in this appeal:

  1. Whether the powers and functions of the Local Government Council to establish, maintain, and regulate motor parks extends to private car parks/car lots.
  2. Whether Eti-Osa Local Government has the power to enact the Parking and Control of Traffic Bye-Law (No. 7) of 2002.

Decision

The Court ruled in favour of Eti-Osa Local Government and held inter alia as follows:

  1. Power of Local Government to make bye laws charging fees on private parking lot

The Court held that the functions of Local Government Councils set out in the Fourth Schedule to the Constitution are not exhaustive. Section 7(5) of the 1999 Constitution states as follows:

“The functions to be conferred by Law upon local government councils shall include those set out in the Fourth Schedule to this Constitution.” (emphasis supplied)

Based on the above, the Court held that the Fourth Schedule to the Constitution only makes provision for the “main functions” of the Local Government. By using the word “include”, Section 7(5) of the Constitution can be interpreted to accommodate other functions (including power to impose fees on private car parks/parking lot) on the part of Local Governments.

  1. Validity of the Parking and Control of Traffic Bye-Law (No. 7) of 2002

Based on the above, the Court held that Eti-Osa Local Government has the power to enact the Parking and Control of Traffic Bye-Law (No. 7) of 2002 on public and private, non-commercial parking lots.

Implications of the Decision

  1. The decision of Court may be construed by Local Government Authorities as a license to impose fees on any company or individual that has a car park. This may be extended to parks in residential premises since the decision of the Court in this case was not affected by the fact that the parking lot in issue is not for commercial purpose.
  2. By holding that the functions of the Local Government set out in the Fourth Schedule to the Constitution are not exhaustive, the Court may have unwittingly opened the floodgates for similar levies and fees. Taxpayers may now be assailed with spurious and numerous tax laws enacted by local governments as a means to raise revenue. It is worth noting that the provisions of the Taxes and Levies (Approved List for Collection) Act was not considered in this case.

Airtel Networks Limited (and other stakeholders) should take steps to appeal the decision at the Supreme Court. Based on the principle of noscitur a sociis (the meaning of a word used in a statute is to be found from its associates), the following subject matters – slaughter slabs, markets, motor parks and conveniences- set out in Fourth Schedule to the Constitution are public in nature and should not be extended to include a private, non-commercial parking lot. In Pengelly v. Bell Punch Co. Ltd (1964) 1WLR 1055, the court had to decide whether a floor used for storage came under purview of the Factories Act 1961, which provided that ‘floors, steps, stairs, passageways and gangways’ had to be kept free from obstruction. The court held that as all the other words were used to indicate passage, a floor used exclusively for storage did not fall within the Factories Act 1961.

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