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Diamond Trust Bank Limited v Muchope (Civil Appeal No. 82 of 2006)

Court of Appeal · [2021] UGCA 90 · 2021 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from High Court (Commercial Division) order reviewing and setting aside an earlier order that had authorised the sale of mortgaged matrimonial property
Decision
Appeal dismissed; trial court's review order setting aside the sale of the matrimonial property upheld

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AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

By majority, the Court of Appeal dismissed the bank's appeal. The court held that the trial judge had correctly reviewed his own order authorising sale of matrimonial property, given that an earlier subsisting interim order from another court of equal jurisdiction prohibited the sale, and that the bank and borrower had proceeded with an illegality of which they had notice. The trial judge's order for refund of the purchaser's money sufficiently protected the third party so no separate hearing was required. Kibeedi JA dissented, finding the third party purchaser was condemned unheard contrary to the Constitution, rendering the review decision a nullity, and would have ordered a re-trial.

Facts

Diamond Trust Bank advanced an overdraft of UGX 200,000,000 to Joseph Muchope, secured by guarantees and a mortgage over property the respondent later claimed was matrimonial property mortgaged without her consent. Following default, the bank instituted a summary suit and obtained default judgment against the borrower and a guarantor. While an application to set aside that judgment was pending, the advocates negotiated an out-of-court settlement under which the High Court (Commercial Division) made an order authorising sale of the matrimonial property. The property was advertised by court bailiffs and allegedly sold to Siraji Mpagi. The respondent, who had earlier sued the bank and her husband at Nakawa and obtained an interim order restraining the sale, applied for review. The trial judge found the impugned order had been made while an earlier subsisting interim order from a court of equal jurisdiction prohibited the sale, reviewed and set aside the order and the sale, and ordered restoration of the property pending the Nakawa suit, with refund of the purchaser's money.

Issues

  1. Whether the trial judge erred in holding that an interim order restraining the sale of the suit property was in existence when the impugned sale order was made.
  2. Whether the trial judge correctly construed the interim order as restraining attachment and sale of the suit property.
  3. Whether a certificate of title of a registered proprietor can only be impeached on grounds of fraud.
  4. Whether the trial judge erred in setting aside the sale of the suit property without affording the third party purchaser a hearing.

Orders

  • Preliminary objection overruled.
  • Appeal dismissed.
  • Appellant to bear the costs in the Court of Appeal and in the court below.

Key headnotes

Civil Procedure — Review of Judgments — Error Apparent on the Face of the Record
A court may review its own order under section 82 of the Civil Procedure Act and Order 46 of the Civil Procedure Rules where there is an error apparent on the face of the record, being an evident error requiring no extraneous matter to demonstrate its incorrectness; making an order authorising sale of property in ignorance of a subsisting interim order prohibiting that sale is such an error.
Civil Procedure — Concurrent Orders — Priority of Orders Issued by Courts of Equal Jurisdiction
Where two courts of equal jurisdiction issue conflicting orders concerning the same property, the order issued earlier in time takes precedence, regardless of whether it was issued by a registrar or a judge.
Land & Property — Sale of Matrimonial Property — Illegality and Notice of Adverse Claim
A mortgagee and borrower who proceed to sell property despite notice of an adverse claim by a spouse who did not consent to the mortgage are proceeding with an illegality and do not come before the court with clean hands; an illegality once brought to the court's attention cannot be ignored.
Land & Property — Judicial Sale — Setting Aside Before Sale Becomes Absolute
A judicial sale, unlike a private sale, is not complete immediately it takes place and is liable to be set aside in appropriate proceedings; only where no such proceedings are taken, or are unsuccessful, does the sale become absolute.
Constitutional Law — Right to be Heard — Third Party Purchaser of Judicial Sale (Dissent)
Per the dissent: existing laws such as section 82 of the Civil Procedure Act and Order 46 of the Civil Procedure Rules must, under Article 274, be construed consistently with the non-derogable right to be heard under Articles 28(1) and 44(c); setting aside a judicial sale without affording the registered third party purchaser a hearing condemns him unheard and renders the decision a nullity.

Legislation cited (6)

  • Civil Procedure Act s.82
  • Civil Procedure Rules Order 46
  • Civil Procedure Rules Order 43 Rule 2(1)
  • Constitution of Uganda 1995 Article 274
  • Constitution of Uganda 1995 Article 28(1)
  • Constitution of Uganda 1995 Article 44(c)

Cases cited (3)

  • Sanyo Lwanga Musoke v Sam Galiwanga (Civil Appeal No. 48 of 1995)
  • Edison Kanyabwera v Pastori Tumwebaze (Civil Appeal No. 6 of 2004)
  • Muwanga Lawrence v Kyeyune Stephen (Civil Appeal No. 12 of 2001)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.