Wakilii

Barclays Bank of Uganda Limited v Golf View Inn Limited (Civil Appeal No. 56 of 2015)

Court of Appeal · [2023] UGCA 373 · 2023 Appeal Dismissed; Cross-Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal and cross-appeal from a High Court judgment (HCCS No. 358 of 2009) in favour of the respondent
Decision
Appeal dismissed; cross-appeal allowed — the bank could not lawfully debit the respondent's account with the legal/recovery and conveyancing costs

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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

The Court of Appeal dismissed the bank's appeal. The Service Level Agreement entitling MMAKS Advocates to 6% of recovered sums was illegal and unenforceable for failing the mandatory requirements of section 51 of the Advocates Act, regardless of which party imposed the terms; no court can enforce an illegality. The bank had not commenced recovery proceedings, the conditions for doing so never arose, and the third ground impermissibly raised a new, unpleaded issue. The cross-appeal succeeded: as each party agreed to bear its own costs under the sale agreement and the conveyancing benefited the purchaser, neither the bank nor its advocates could recover conveyancing costs from the respondent.

Facts

Golf View Inn obtained a loan facility from Barclays Bank secured by mortgages over various Entebbe properties, a debenture and personal guarantees. The company defaulted, and after demands the parties (with the bank's lawyers MMAKS Advocates) negotiated a Security Realization Agreement giving the company four months to dispose of the mortgaged property. The company sold the property to Imperial Botanical Beach Hotel for UGX 5,350,000,000 and paid the bank UGX 2,778,163,314 to clear the debt. The bank then debited UGX 196,693,961 from the company's account as a 6% recovery fee paid to MMAKS Advocates under a Service Level Agreement between the bank and the firm — to which the company was not a party. The company sued for breach of contract; the High Court found the Service Level Agreement illegal and held the bank had not commenced recovery, but ordered the bank's lawyers' conveyancing costs be taxed and offset. Both parties appealed.

Issues

  1. Whether sections 48, 50 and 51 of the Advocates Act apply to a remuneration agreement whose terms are imposed by the client on the advocate, such that the Service Level Agreement was illegal and unenforceable.
  2. Whether the appellant commenced recovery action or proceedings for enforcement of the security following the respondent's default, so as to entitle it to debit the respondent's account with its recovery expenses.
  3. Whether, even if recovery proceedings had not commenced, steps had nonetheless been taken to obtain payment of the monies secured, providing an independent basis to debit the respondent's account.
  4. Whether the appellant was entitled to recover conveyancing costs from the respondent under the Mortgage Deed.

Orders

  • The appeal is dismissed with costs to the respondent here and in the court below.
  • The cross-appeal succeeds with costs to the cross-appellant.

Key headnotes

Advocates' Remuneration Agreements — Section 51 Advocates Act — Mandatory Statutory Requirements
A remuneration agreement under sections 48 or 50 of the Advocates Act must be in writing, signed by the person to be bound, and certified by a notary public; non-compliance with these mandatory requirements renders the agreement illegal and unenforceable, irrespective of which party proposed or imposed the remunerative terms.
Illegality — Court Cannot Sanction or Enforce an Illegal Agreement
A court of law cannot condone or enforce an illegality, and once an illegality is brought to the attention of the court it overrides all questions of pleadings, including any admissions made; consequently every payment made under an illegal agreement is void.
Mortgage — Recovery Costs — Entitlement Conditional on Commencement of Recovery Proceedings
A mortgagee may only debit a defaulting debtor's account with recovery costs under the mortgage deed where recovery action or proceedings for enforcement of the security have actually commenced; where the contractual conditions triggering recovery never arise and no recovery is in fact undertaken, no such costs are recoverable.
Pleadings — New Issue Raised on Appeal — Party Bound by Pleaded Case
A party is bound to prove the case as pleaded and covered by the issues framed at trial and cannot, on appeal, raise a new issue or set up a case inconsistent with its pleadings; an appellant who did not plead or frame a particular issue is estopped from raising it on appeal.
Conveyancing Costs — Sale Agreement Allocating Costs — Each Party Bears Own Costs
Where a sale agreement provides that each party shall bear its own costs incidental to the agreement and that the purchaser bears the costs of registering the transfer, the vendor's mortgagee cannot recover conveyancing costs from the vendor, as conveyancing of the title to the purchaser is the purchaser's expense.
First Appellate Court — Duty to Re-appraise Evidence
A first appellate court is under a duty to subject the evidence adduced at trial to a fresh and exhaustive re-appraisal and scrutiny, draw its own inferences of fact, and decide whether the trial judge reached correct conclusions, reaching its own conclusions where it finds otherwise.

Legislation cited (10)

  • Advocates Act Cap 267 s.48
  • Advocates Act Cap 267 s.50
  • Advocates Act Cap 267 s.51
  • Advocates Act Cap 267 s.69
  • Advocates (Remuneration and Taxation of Costs) Regulations S.I 267-4 reg.4
  • Mortgage Act 2009 s.31(1)(c)
  • Stamp Duty Act 2014 s.1
  • Constitution of Uganda Article 26
  • Judicature (Court of Appeal Rules) Directions r.30
  • Judicature (Court of Appeal Rules) Directions r.86(1)

Cases cited (10)

  • Kituuma Magala & Co. Advocates v Celtel (U) Ltd (Supreme Court Civil Appeal No. 9 of 2010)
  • S.V. Pandit V Willy Mukrrsa Ssekatauto & Others (1964) EA 490
  • Shell Uganda Ltd & 9 Others v Muwema & Mugerwa Advocates & Solicitors & Anor (Supreme Court Civil Appeal No. 2 of 2013)
  • Fang Min v Belex Tours and Travel Limited (Supreme Court Civil Appeal No. 6 of 2013, consolidated with Civil Appeal No. 7 of 2014)
  • Interfreight Forwarders (U) Limited v East African Development Bank (Supreme Court Civil Appeal No. 33 of 1992)
  • Father Nasensio Begumisa & 3 Others v Eric Tibebaga (Supreme Court Civil Appeal No. 17 of 2002)
  • Essaji v. Solanki (1968) EA 218 at 222
  • Makula International Ltd V His Eminence Cardinal Nsubuga and Another (1982) HCB 13
  • White V City of London Brewery Co. (1889) 42 CH D 237 at 242
  • Julius Rwabinumi v Hope Bahimbisomwe (Supreme Court Civil Appeal No. 10 of 2009)
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