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Western Highland Creameries Limited and Another v Stanbic Bank Uganda Limited and Another (Civil Appeal 81 of 2014)

Court of Appeal · [2023] UGCA 267 · 2023 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court (Commercial Division) ruling upholding a preliminary objection that the suit was time-barred
Decision
Appeal dismissed with costs; the trial court's dismissal of the suit as time-barred upheld

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Holding

The Court of Appeal considered whether the appellants' suit — challenging the enforcement of a debenture and mortgage and the receiver's sale of the mortgaged property — was an action for recovery of land attracting a 12-year limitation period, or a contract claim subject to a 6-year period. The Court held that because the property had been sold and the registered proprietor was not joined, the action was not in substance one for recovery of land under sections 5 or 18 of the Limitation Act, nor one for redemption. It was grounded in alleged breaches of the security agreements and governed by the 6-year contract limitation in section 3. The 2011 suit, on 2001 facts, was time-barred. Appeal dismissed.

Facts

Western Highland Creameries Ltd mortgaged property comprised in LRV 2849 Folio 23, Plot 4-8 Ntengye Road, Mbarara, to Stanbic Bank Uganda Ltd. Following default, the bank appointed Michael Mawanda as receiver. On 27 August 2001 the receiver sold and transferred the property to Alpha Diary Products (U) Ltd. That company later transferred the property to Shumuk Properties Ltd, which was the registered proprietor on 7 October 2010 and at the time of suit. In December 2011 the appellants sued the bank, the receiver and Alpha Diary Products, seeking declarations that the crystallisation of the debenture and mortgage, the appointment of the receiver and the sale were fraudulent and illegal; recovery of the property, plant and business; reinstatement as registered proprietor; and cancellation of title. Alternatively they sought restitution at current market value plus compensatory, aggravated, punitive and exemplary damages, interest at 20% per annum and costs. Shumuk Properties Ltd, the registered owner, was not joined. The respondents raised preliminary objections that the suit disclosed no cause of action and was barred by limitation.

Issues

  1. Whether the appellants' action was in substance an action for recovery of land, attracting a 12-year limitation period under sections 5 and 18 of the Limitation Act, or an action founded on contract subject to the 6-year period under section 3.
  2. Whether an action for the value of, or damages for, land sold can be treated as equivalent to an action for recovery of land.
  3. Whether the suit could be maintained as one for recovery of land when the registered proprietor of the suit property was not joined as a party.
  4. Whether Order 2 rule 9 of the Civil Procedure Rules permitted a declaratory judgment where the underlying suit was barred by limitation.
  5. Whether Order 1 rule 9 of the Civil Procedure Rules could cure the non-joinder of the registered proprietor.

Orders

  • Appeal dismissed with costs.
  • Miscellaneous Application No. 332 of 2019 for further security for costs dismissed with no order as to costs.

Key headnotes

Limitation — Characterisation of Action — Recovery of Land versus Contract
Where the substance of a claim arising from a mortgage and debenture is grounded in alleged breaches of the security agreements between lender and borrower, the action is founded on contract and governed by the 6-year limitation period in section 3 of the Limitation Act, not the 12-year period for recovery of land under section 5.
Recovery of Land — Necessary Parties — Registered Proprietor
An action for recovery of land, cancellation of title and re-registration cannot in substance be maintained where the current registered proprietor, who is presumed to be in possession, is not joined as a party; the absence of the registered proprietor shows the suit is not one for recovery of land.
Limitation Act — 'Recovery of Land' — Ordinary Meaning
Section 5 of the Limitation Act refers to actions for recovery of land and not to recovery of the value of land or damages; the phrase must be given its ordinary meaning without addition or subtraction, so a claim for the value of land sold or for damages is not an action for recovery of land.
Mortgage — Equity of Redemption — Extinction on Sale and Transfer
Once mortgaged property has been sold and transferred to a third party, there is nothing left to redeem; the equity of redemption is extinguished and the action cannot be characterised as one for redemption or foreclosure under section 18 of the Limitation Act.
Declaratory Judgment — Order 2 rule 9 CPR — Jurisdiction Barred by Limitation
Order 2 rule 9 of the Civil Procedure Rules does not enable a court to grant a declaratory judgment where the underlying suit is barred by the Limitation Act, because the court must first be seized of jurisdiction to entertain the matter before it can make binding declarations.
Non-joinder of Parties — Order 1 rule 9 CPR — Suit Barred by Statute
Order 1 rule 9 of the Civil Procedure Rules, which prevents a suit from being defeated by misjoinder or non-joinder, does not cure a suit that is barred by the Limitation Act; a suit barred by statute is not merely defeated by the absence of a party.

Legislation cited (12)

  • Limitation Act s.3
  • Limitation Act s.5
  • Limitation Act s.18
  • Limitation Act s.18(4)
  • Limitation Act s.19
  • Mortgage Act s.12
  • Registration of Titles Act s.176
  • Registration of Titles Act s.176(a)
  • Registration of Titles Act s.178
  • Registration of Titles Act s.187
  • Civil Procedure Rules Order 2 rule 9
  • Civil Procedure Rules Order 1 rule 9

Cases cited (16)

  • Fredrick J.K. Zaabwe v Orient Bank & 5 Ors [2007] UGSC 21
  • Kyasulanyi Coffee Ltd v Francis Senabulya [2010] UGCA 36
  • Edward Musisi v Housing Finance Co (U) Ltd & Speedway Auctioneers [2010] UGCA 35
  • John W. Katende v The Uganda Land Commission (High Court Civil Suit No. 573 of 2015)
  • Christopher Sebuliba v Attorney General [1992] UGSC 6
  • Hwan Sung Ltd v M and D Timber Merchants and Transporters Ltd (Civil Appeal No. 02 of 2018)
  • General Parts (U) Ltd & Anor v NPART [2002] UGSC 10
  • Maurice Sebowa v DFCU Ltd [2014] UGCommC 15
  • Gladys Nyangire Karumu & Ors v DFCU Leasing Company Ltd [2003] UGCommC 89
  • Uganda Broadcasting Corporation v Sinba (K) Ltd & Ors [2014] UGCA 12
  • Asuman Mugenyi v Buwule [2019] UGSC 220
  • Agnes Bainomugisha v DFCU [2011] UGCommC 206
  • Attorney General v The East African Law Society [2015] EACJ 65
  • Ranchhobhai Shiv Abhai Patel Ltd & Anor v Henry Wambuga & Anor (Supreme Court Civil Appeal No. 6 of 2017)
  • Saul Kisiribombo Rumanda v Emmy Tuuwiae & 6 Others [2020] UGSC 43
  • Kifamunte Henry v Uganda [1998] UGSC 20
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.