Non-Performing Asset Recovery Trust v Kapeeka Coffee Works Ltd. and Anor [2002] UGSC 21

Supreme Court · 2002 Appeal Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Second appeal from the Court of Appeal, which had reversed the Tribunal's dismissal of a preliminary objection that the amended plaint disclosed no cause of action.

Decision

Appeal allowed; Court of Appeal orders set aside and the suit remitted to the Tribunal for hearing.

The full judgment

Read the complete, verbatim text of this judgment.

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 Supreme Court allowed the appeal. It held that under section 11 of the Non-Performing Assets Recovery Trust Statute, all rights and liabilities attaching to a non-performing asset vest in the Trust by operation of law upon transfer, independent of regulation 4. Regulation 4(b) imposes a duty on the bank (assignor), not the Trust (assignee), to forward notice of assignment, and prescribes neither a time limit nor a sanction for omission, so the omission was not fatal. The plaint pleaded the fact of assignment and annexed the deed, thereby disclosing a cause of action. Section 136 of the English Law of Property Act 1925 does not apply in Uganda, so its pleading requirements did not govern the suit.

Facts

The first respondent, Kapeeka Coffee Works Ltd, obtained a US$550,159.21 loan from Uganda Commercial Bank (UCB) in December 1990 to rehabilitate its coffee factory, secured in part by registered land. The second respondent signed the loan agreement on the company's behalf. After the Non-Performing Assets Recovery Trust Statute 1994 was enacted, UCB by deed of assignment dated 7 December 1995 assigned the loan, designated a non-performing asset, to the appellant Trust. The appellant sued the respondents in the Tribunal to recover Shs.839,030,582 plus interest. The respondents raised a preliminary objection that the money had been advanced to Kapeeka Coffee Hullery, a different entity, and that the plaint disclosed no cause of action. The Tribunal overruled the objection; on appeal the Court of Appeal held that failure to comply with regulation 4(b) (notice of assignment) rendered the plaint defective. The appellant appealed to the Supreme Court.

Issues

Whether the appellant's omission to plead notice of assignment under regulation 4(b) of the NPART Regulations 1995 rendered the amended plaint fatally defective for disclosing no cause of action.
Whether the vesting of the right to sue on a non-performing asset depended on service of the deed or notice of assignment on the debtor.
Whether the pleading requirements for assignment of a chose in action under section 136 of the English Law of Property Act 1925 apply in Uganda.

Orders

Appeal allowed.
Orders of the Court of Appeal set aside.
Suit remitted to the Tribunal for hearing to proceed expeditiously.
Notice for affirming the decision of the Court of Appeal dismissed with costs to the appellant.
Costs of the appeal and in the Court of Appeal awarded to the appellant.

Key headnotes

Banking & Finance — Assignment of Debt — Statutory Vesting by Operation of Law

Under section 11 of the Non-Performing Assets Recovery Trust Statute, all assets, rights and liabilities attaching to a non-performing asset transferred by a bank vest in the Trust by operation of law immediately upon transfer, and that vesting does not depend on the procedural requirements of regulation 4.

Statutory Interpretation — Mandatory vs Directory Provisions — Absence of Sanction or Time Limit

Where neither the statute nor the regulations prescribe a sanction or a time limit for failure to forward notice of assignment to the owner, such omission is not fatal to the assignee's suit and does not deprive the assignee of title to sue.

Civil Procedure — Pleadings — Notice of Assignment — Duty of Bank Not Assignee

Regulation 4(b) of the NPART Regulations imposes a duty on the bank, as assignor, to forward notice of assignment to the owner, not on the Trust as assignee; the assignee is therefore not required to plead that such notice was served.

Civil Procedure — Pleadings — Disclosure of Cause of Action — Incorporation of Annexed Documents

A plaint that pleads the fact of assignment and annexes the deed of assignment discloses a cause of action, since annexing a document to a pleading incorporates its contents into the pleading.

Statutory Interpretation — Reception of English Law — Non-Application of Foreign Statute

Section 136 of the English Law of Property Act 1925 does not have effect in Uganda under section 50 of the Judicature Statute 1996, and the English pleading requirements for assignment of a chose in action do not govern proceedings in Ugandan courts.

Legislation cited (11)

Non-Performing Assets Recovery Trust Statute 1994 s.11
Non-Performing Assets Recovery Trust Statute 1994 s.16(3)
Non-Performing Assets Recovery Trust Regulations 1995 (SI 76 of 1995) reg.4
Non-Performing Assets Recovery Trust Regulations 1995 (SI 76 of 1995) reg.4(a)
Non-Performing Assets Recovery Trust Regulations 1995 (SI 76 of 1995) reg.4(b)
Non-Performing Assets Recovery Trust Regulations 1995 (SI 76 of 1995) reg.5
Judicature Statute 1996 s.50
Civil Procedure Rules Order 6
Civil Procedure Rules Order 7
Constitution of Uganda Article 126(2)(e)
Law of Property Act 1925 (England) s.136

Cases cited (3)

Auto Garage & Others (supra)
African Overseas Trading v Tansukh S Acharya (1963) EA 468
Castelino v Rodrigues (1972) EA 223

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.