The capacity of a lawyer to act as an agent in property transactions has been subject to several misleading opinions. Many have argued that the Rules of Professional Conduct and judicial decisions do not lend support to a lawyer being a commissioned agent or ‘selling land’. In this piece, Oliver Omoredia argues that it is a misconception that a lawyer cannot ‘sell land’ or be a commissioned agent, and makes a case to the contrary which finds impetus in available judicial authority.
In Nigeria today, real estate is a viable area of legal practice. With the average property transactions running into millions of naira, lawyers are frequently involved in their capacity as legal practitioners, or as agents referring prospective buyers to intending property sellers.
Who is an Agent?
According to Bowstead, agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly consents that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly consents so to act or so acts. The one who is to act is called the agent. In real estate transactions, any person can be an agent of the Land owner or prospective Purchaser. A lawyer can therefore be an agent in a land purchase transaction as there is no special formality, provided he fulfils the fiduciary obligations of his position as agent.
Does the RPC restrict a lawyer from acting as Agent?
Usually, proponents of the argument that a lawyer cannot act as agent in a land transaction rely on Rule 7(2)(b) of the Rules of Professional Conduct for Legal Practitioners2007 (‘RPC’) and the popular case of NBA v. Ibebunjo. An analysis of the provision of the Rules and the decision however reveals the fundamental flaw in the arguments.
Provision of the RPC
Rule 7 (2)(b) of the RPC provides:
(2) A lawyer shall not practice as a legal practitioner while personally engaged in-
(b) the business of a commission agent;
The above provision of the rule may seem clear and unambiguous until one begins to question what certain terms are in the provision. For instance, what does the provision imply by “personally engaged in” or “in the business of”? If a law firm sells a land, and one counsel prepares documentation while another acts as the agent, will it be a violation of the rule? Furthermore, where a legal practitioner acts as agent for commission in a single or a few transactions, can he be said to be engaged ‘in the business’ of a commission agent?
Indeed, what seems clear from the provision of Rule 7(2)(b) is that it is a rule against double portion, in the sense that it expressly prohibits a lawyer from acting personally as legal practitioner and commission agent in the same transaction. This view of the provisions seems to appeal to logic because a legal practitioner in a property transaction has key responsibilities to conduct due diligence, which will be adversely hampered if he is a party interested in receiving commission from the finalization of the transaction. Therefore, to avoid this conflict of interest, the rule makes it mandatory that where a legal practitioner personally acts in a land transaction, he should not be the commissioned agent. This is however just one possible interpretation which was not the interpretation considered in NBA v. Ibebunjo.
Why the position in NBA V. Ibebunjo is not authority for interpretation of Rule 7(2) of RPC
As a preliminary point, it is noteworthy that the 2013 case of NBA v. Ibebunjo (2013) 18 NWLR Pt. 1386, was a decision of the Legal Practitioners Disciplinary Committee and not the decision of a competent court. Therefore, caution must be had in reliance on the opinion of the learned Seniors that decided the matter as it does not lay a sweeping authority on the interpretation of Rule 7 (2)(b) of the RPC. Furthermore, the issues which came up for consideration before the committee was not the question whether Rule 7(2)(b) was violated, rather it was the preponderance of violations of the Rules of Professional Conduct which led to the decision of the committee.
Facts of NBA v. Ibebunjo
The Respondent, Anozie Ibebunjo, a legal practitioner, fraudulently or by trick obtained from the Petitioner the sum of N1.6million under the pretence that he sold him 8 plots of land in 2002. The Petitioner was unable to take possession of the land and demanded a refund of his money which the Respondent did not make. The Respondent did not show his root of title to the land, but as vendor of the property had drafted a power of attorney wherein, he promised to indemnify the Petitioner in case of any defect in his title. This promise was not kept, and the Respondent refunded only the sum of N300,000 to the Petitioner.
Dissatisfied with the situation, the Petitioner petitioned to the NBA Umuahia branch and the matter was taken before the Legal Practitioners Disciplinary Committee (‘LPDC’) which, in striking off the name of the Respondent from the roll of legal practitioners, decided that the actions of the Respondent were a violation of Rules 1, 7(2)(3), 23 and 55 of the Rules of Professional Conduct. In relation to Rules 7(2)(3) the Committee decided as follows:
“As it relates to count 2, it is clear beyond peradventure that the business of selling land is a trade or business incompatible with the practice of law. Rule 7(3) clearly provides the category of business that are incompatible with the practice of law. From what we have reproduced above the respondent was clearly playing with fire when he was using the platform of his legal practice to sell land. The justice of this case demands that we allow him go full time into his main business of selling land and to leave the business of practicing law to those who are bona fide legal practitioners.”
This case exemplifies the wisdom of the founding fathers in prohibiting legal practitioners from carrying on trade or business incompatible with the practice of law. This was to forestall a situation where the profession of law will be robbed of its luster and brought into odium, opprobrium and disrepute by allowing the ethics of other professions to fuse or intermingle with the noble ethics of the profession. Legal practitioners must make up their minds whether or not they desire to practice law.”
Analysis of NBA v. Ibebunjo
While, the decision of the Committee is one which resonates the sound tenets of the legal profession and its nobility, respectfully, the committee went far from the object of Rule 7 of the RPC, so far so that the rule was misinterpreted in the instant case for the following reasons:
1. The Committee wrongly fused the provisions of Rule 7(2), and read Rule 7(2)(b) to apply to the circumstance of the case without taking time to analyze and interpret the purport of the said Rule. This is clear as the committee held that “it is clear beyond peradventure that the business of selling land is a trade or business incompatible with the practice of law” without laboring to analyze what made it so clear. Indeed, Rule 7(2)(b) speaks of legal practitioner engaging in the business of agent for commission, but it is Rule 7(2)(c) which speaks of trade or business which the Bar Council may from time to time declare as incompatible with the practice as a lawyer, and sale of land has not been so declared.
2. Rule 7(2) was inapplicable to the circumstances because the respondent sold the land as vendor and did not profess to be acting as an agent for commission. While, the acts of the respondent were grossly atrocious, they did not come within the contemplation of Rule 7(2)(b). In any case however, the decisions of the LPDC, do not form interpretative basis for the provisions of the Rules of Professional Conduct, neither are they binding judicial authority for any purpose.
A better and binding approach
In Ukah & Ors v. Onyia & Ors (2016) LPELR-40025(CA), the Court of Appeal considered Rule 7(2) of the RPC and gave a more robust and binding view to the provision. According to the appellate Court:
” …Rule 7(2)(b) of the Rules of Professional Conduct for Legal Practitioners, 2007, therefore forbids a lawyer from practicing as a legal practitioner while personally engaged in the business of a commission agent. A proper dissection of this Rule shows that what is forbidden is practicing as a lawyer, while engaged in the business of a commission agent. In other words, the active part of the provision/prohibition is practice as a legal practitioner. The provision does not forbid a legal practitioner from engaging in the business of a commission agent. Rather, it forbids a legal practitioner engaged in the business of commissioned agent from practicing as a legal practitioner while so engaged. In construing this provision, it is pertinent to note that the qualification of a person as a legal practitioner is distinct from practice as a legal practitioner while the former borders on the mere appellation of one as a lawyer upon being called to the Nigerian Bar, the latter is a question of fact and evidence.” Per OGUNWUMIJU, J.C.A.
Therefore, on the succinct authority of the Court of Appeal decision in Ukah & Ors v. Onyia, a legal practitioner is not forbidden from selling land as a commissioned agent but cannot act also as a legal practitioner while so engaged. The effect of Rule 7(2)(b) is that you cannot be a legal practitioner and commission agent in the same land transaction. This position is logical and equitable, since equity leans against double portion.
Conclusion & Recommendation
Therefore, it is not the law that a legal practitioner cannot be a land agent for commission or ‘sell land’, but to do so without infraction of Rule 7(2)(b) requires:
· A Legal Practitioner may act as legal practitioner and agent, but cannot collect the commission entitled an agent when he does so.
· A Legal Practitioner may act as legal practitioner, but involve another legal practitioner to act as agent for commission.
· A Legal Practitioner may act as agent, but involve another Legal Practitioner to perfect the transaction and receive fees as Legal Practitioner.
· A legal practitioner must not in any transaction act as the Legal Practitioner while engaging also as the Agent receiving commission.
