General Parts (U) Ltd v Non-Performing Assets Recovery Trust (Civil Appeal 5 of 1999)

Supreme Court · [2000] UGSC 10 · 2000 Appeal Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Second civil appeal from the Court of Appeal, originating in a High Court suit for a declaratory judgment that a receiver/manager had been properly appointed.

Decision

Appeal allowed; the declaratory orders of the Court of Appeal and High Court set aside and replaced with an order rejecting the declaration sought by UCB.

The full judgment

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Treatment recorded in citing cases followed in 3 · distinguished in 1 Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Supreme Court held that the mortgage given as additional security was not validly executed: under the Registration of Titles Act a company must mortgage land either by affixing its common seal or through an attorney signing in compliance with s.156, neither of which occurred, and the presumption of validity arising from registration was rebutted by the document itself. It further held that the receiver/manager was not properly appointed under clause 7 of the debenture because no lawful demand for the whole balance owing had been made — the letters relied upon were a mere reminder and a request for instalment arrears. The appeal was allowed and the declaratory orders of the courts below were set aside.

Facts

Around 1990 the appellant obtained an overdraft from Uganda Commercial Bank (UCB), secured by a debenture creating a floating charge over its property. As the appellant struggled to service the facility, the parties agreed to restructure the debt into short- and long-term components, the appellant accepting UCB's terms in writing. One term required additional security by way of a mortgage of several plots of land, some belonging to the appellant and some to its Managing Director, signed in 1991. The appellant continued to default. On 21 July 1992 UCB appointed Key Agencies & Auctioneers as Receiver/Manager under the debenture and instructed the firm to take possession of and sell the charged assets, and if necessary the mortgaged land. The appellant resisted and sued the firm for trespass, whereupon UCB sought a declaratory judgment that its appointment was lawful. The debt was later assigned to the Non-Performing Assets Recovery Trust, which was joined as co-plaintiff. The High Court granted the declaration and the Court of Appeal dismissed the appellant's appeal.

Issues

Whether the validity of the mortgage was an issue at the trial and whether the mortgage was validly executed.
Whether a company may validly execute a mortgage of land under the Registration of Titles Act without affixing its common seal or acting through a duly appointed attorney.
Whether registration of the mortgage raised a conclusive (irrebuttable) presumption of its due execution and validity.
Whether the notice under section 115 of the Registration of Titles Act was mandatory and relevant to the appointment of a receiver/manager.
Whether Uganda Commercial Bank made a lawful demand for payment before appointing the receiver/manager under clause 7 of the debenture deed.
Whether Uganda Commercial Bank had agreed to provide further funding and breached its agreement with the appellant.

Orders

Appeal allowed.
Orders of the Court of Appeal and the High Court set aside.
Substituted for the High Court order, an order rejecting the declaration that UCB properly appointed M/s Key Agencies & Auctioneers as receiver/manager and that it executes the powers conferred through that appointment.
Three quarters of the costs in the Supreme Court, and costs in the courts below, awarded to the appellant.

Key headnotes

Mortgage — Execution by a company under the Registration of Titles Act

To validly execute a mortgage of land under the Registration of Titles Act, a company must either affix its common seal to the instrument or act through an attorney appointed for that purpose signing in the manner prescribed by section 156; signatures by company officials who are neither shown to be the registered proprietor nor appointed attorneys do not constitute valid execution.

Registration of Titles — Presumption of due execution arising from registration

Registration of a mortgage under the Registration of Titles Act raises a rebuttable presumption that the instrument was duly executed and is valid, but that presumption is rebutted by clear evidence from the document itself that it was not executed by the registered proprietor as required by law.

Pleadings — Pleading lack of due execution of a document

Where the nature of the pleadings does not require a party to plead lack of due execution of a document, such pleading is not a condition precedent to rebutting the presumption of validity arising from registration, and the point may be raised through cross-examination and submissions.

Debenture — Appointment of receiver conditional on lawful demand

Where a debenture provides that secured moneys become payable upon a lawful demand, a receiver/manager may only be appointed after a lawful demand for the whole balance owing; a demand confined to instalments in arrears does not render the entire balance payable and cannot ground the appointment.

Demand for payment — Nature of a valid demand and construction in context

Although a demand for payment need only be a peremptory and unconditional intimation that payment is required, and need not use the word 'demand', whether a communication constitutes the demand envisaged by a contractual provision must be construed in the context of that provision and not in isolation.

Statutory interpretation — Registration of Titles Act prevails over Companies Act

By virtue of section 3 of the Registration of Titles Act, its provisions governing the execution of documents affecting land under its operation prevail over any inconsistent provision of the Companies Act.

Legislation cited (8)

Companies Act (Cap.85) s.34
Registration of Titles Act (Cap.205) s.3
Registration of Titles Act (Cap.205) s.114
Registration of Titles Act (Cap.205) s.115
Registration of Titles Act (Cap.205) s.141
Registration of Titles Act (Cap.205) s.154
Registration of Titles Act (Cap.205) s.156
Non-Performing Assets Recovery Statute

Cases cited (8)

Govindji Popatlal v Nathoo Visandji (1960) EA 361 (CA); (1962) EA 377 (PC)
Lwajagali Coffee Growers Ltd v Leslie and Anderson (EA) Ltd and Others (1967) 1 ALR Comm 323
General Industries (U) Ltd v NPART (Civil Appeal No. 5 of 1998)
Uganda Credit and Savings Bank v Erivazali Senkuba (1966) EA 500
Moore v Ullcoats Mining Co Ltd [1908] 1 Ch 575
Evans v Davis (1878) 10 Ch D 747
Re Edwards; Williams v French (1891) 65 LT 453
Re Colonial Finance, Mortgage, Investment and Guarantee Corporation Ltd (1905) 6 SR (NSW) 6

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.