Wakilii

Bukenya Henry v Remode Enterprises Ltd (Civil Appeal No. 040 of 2014)

Court of Appeal · [2023] UGCA 369 · 2023 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
First appeal from a High Court (Land Division) judgment in a civil suit concerning a disputed land transaction and loan/mortgage.
Decision
Appeal allowed; trial court orders against the appellant set aside and the respondent's suit against the appellant dismissed.

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Cited — treatment unverified cited in 1 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Court of Appeal allowed the appeal. The majority (Bamugemereire and Musota JJA) held that the underlying transaction was a moneylending agreement governed by the Moneylenders Act, not the Mortgage Act, and was tainted by illegality, an excessive interest rate (48% per annum) and limitation under section 19. The court held that the parole evidence rule in section 91 of the Evidence Act does not bind third parties, and that section 92(a) permits proof of fraud. On the evidence the probabilities were equal, so the respondent, bearing the burden of proof, failed. The consent judgment, entered amid illegality, was set aside. The respondent's suit against the appellant was dismissed, with no order as to costs.

Facts

The respondent, Remode Enterprises Ltd, a licensed moneylender, advanced UGX 70,000,000 to Richard Matovu on 28 July 2011, with Matovu pledging his house at Ochieng Zone, Nansana, Wakiso District as security. When Matovu defaulted, Remode sued him and others for recovery. The appellant, Henry Bukenya, claimed he had purchased the suit land from Matovu by a sale agreement dated 20 July 2011, six days before the pledge, and had taken possession. Remode amended its plaint to add Bukenya as fifth defendant, alleging he fraudulently obtained registration by relying on a backdated sale agreement. During the trial a consent judgment was entered between the respondent and other defendants, and a default judgment was entered against Matovu, leading to orders to sell the house and cancel Bukenya's title. The trial Judge believed the respondent's case, finding fraud against Bukenya. Bukenya appealed.

Issues

  1. Whether the plaint disclosed a cause of action against the appellant.
  2. Whether the trial Judge wrongly shifted the legal burden of proof from the plaintiff to the appellant.
  3. Whether the parole evidence rule under section 91 of the Evidence Act precluded evidence contradicting the land sale agreement.
  4. Whether a consent judgment entered between the respondent and third parties could affect the appellant's case.
  5. Whether the appellant fraudulently obtained registration of the suit land by backdating the sale agreement.
  6. Whether the moneylending transaction could operate as a mortgage under the Mortgage Act.

Orders

  • Appeal allowed.
  • Decision and orders of the trial court against the appellant set aside.
  • By majority (Musoke and Musota, JJA), the respondent's suit against the appellant dismissed.
  • Consent judgment set aside.
  • No order as to costs, both of the appeal and in the court below.

Key headnotes

Evidence — Parole Evidence Rule — Section 91 Evidence Act — Inapplicability to Third Parties
The parole evidence rule in section 91 of the Evidence Act applies only as between parties to a written contract and does not govern evidence tendered by or against a third party to that contract.
Evidence — Exclusion of Oral Agreement — Section 92(a) Evidence Act — Proof of Fraud
Notwithstanding the parole evidence rule, section 92(a) of the Evidence Act permits proof of any fact, such as fraud, that would invalidate a document or seriously cast doubt on its validity.
Civil Procedure — Burden of Proof — Equal Probabilities — Plaintiff's Failure
Where the probabilities left by conflicting evidence are equal and the trial court gives no compelling reason for preferring one version, the party bearing the burden of proof on a balance of probabilities must fail.
Banking & Finance — Moneylending — Distinction from Mortgage — Moneylenders Act s.21(1)(c)
A moneylending transaction does not become a mortgage merely by wording it as such or purporting to create it under the Mortgage Act; a moneylender who is not a financial institution cannot seek foreclosure remedies as a mortgagor.
Banking & Finance — Moneylending — Excessive Interest — Unconscionability
Interest charged by a moneylender in excess of the statutory rate of 9 percent per year is presumed excessive, and the transaction harsh and unconscionable, under the Moneylenders Act.
Banking & Finance — Moneylending — Limitation — Moneylenders Act s.19
Under section 19 of the Moneylenders Act, proceedings for recovery of money lent must be commenced within twelve months of the accrual of the cause of action, failing which the suit is time-barred.
Civil Procedure — Equitable Maxims — Clean Hands — Refusal of Relief for Illegality
A party guilty of illegal or unconscionable conduct, who does not come to equity with clean hands, will be refused relief in equity, and where both parties are tainted by illegality the estate is left to lie where it falls.

Legislation cited (11)

  • Evidence Act Cap. 5 s.91
  • Evidence Act Cap. 5 s.92
  • Moneylenders Act Cap. 273 s.1(h)
  • Moneylenders Act Cap. 273 s.11
  • Moneylenders Act Cap. 273 s.12
  • Moneylenders Act Cap. 273 s.19
  • Moneylenders Act Cap. 273 s.21(1)(c)
  • Mortgage Act 2009 s.2
  • Tier 4 Microfinance Institutions and Moneylenders Act 2016 s.98
  • Judicature Act s.33
  • Judicature (Court of Appeal Rules) Directions SI 13-10 rule 30(1)(a)

Cases cited (9)

  • Maung Kyin vs. Ma Shwe La (1918) 20 BOMLR 278
  • Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
  • S.N.Shah v C.M.Patel (1961) E.A 397
  • Francis Kiyaga v Josephine Segujja and Another (Civil Appeal No. 37 of 2010)
  • Fredrick J.K. Zaabwe v Orient Bank and Others (Civil Appeal No. 4 of 2006)
  • Macfurv v United Africa Co. Ltd [1962] 3 ALL ER 1169
  • Geoffrey Gatete and Another v William Kyobe (Civil Appeal No. 7 of 2005)
  • Cross v Cross (1983) 4 FLR 235
  • Dering v Earl of Winchelsea (1787) 1 Cox 318
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.