Wakilii

General Parts (U) Ltd and Ors v Non-Performing Assets Recovery Trust (Civil Appeal 9 of 2005)

Supreme Court · [2006] UGSC 3 · 2006 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision affirming the Non-Performing Assets Recovery Tribunal's grant of foreclosure orders over equitable mortgages
Decision
Appeal dismissed; Tribunal's foreclosure orders in favour of the respondent affirmed

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Cited — treatment unverified cited in 2 (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 Supreme Court dismissed a second appeal against foreclosure orders made in favour of NPART over equitable mortgages. Although instituting the suit by Notice of Motion rather than Originating Summons under O.34 r.3A was erroneous, it occasioned no miscarriage of justice as the appellants suffered no prejudice and the debt was undisputed. The NPART Act did not authorise the Tribunal to modify the mode of instituting a suit. The foreclosure action, governed by the twelve-year limitation period, was not time-barred, nor res judicata. A valid equitable mortgage arose under s.129 of the Registration of Titles Act from the registered proprietor's deposit of title certificates, and no release or waiver of rights was proved.

Facts

General Parts (U) Ltd held an overdraft with Uganda Commercial Bank (UCB) secured by a floating debenture. In 1991 part of the balance was converted into a rescheduled short-term loan on condition that the company provide a legal mortgage over plots of land, most of which belonged to its Managing Director, Haruna Semakula. The title certificates were surrendered to UCB and a mortgage instrument was registered, though it was later found not to have been validly executed as a legal mortgage. After the company defaulted, two earlier recovery attempts failed: an appointment of a Receiver/Manager was held improper (Civil Appeal No.5 of 1999), and an attempted sale was restrained by the High Court. NPART, as assignee of the debt, then applied to the Non-Performing Assets Recovery Tribunal for foreclosure as an equitable mortgagee. The Tribunal granted the orders and the Court of Appeal dismissed the appellants' appeal, leading to this second appeal.

Issues

  1. Whether the inclusion in the record of appeal of documents not before the trial court contravened r.82 of the Rules of the Supreme Court.
  2. Whether instituting the foreclosure suit by Notice of Motion, instead of Originating Summons under O.34 r.3A of the Civil Procedure Rules, occasioned a miscarriage of justice.
  3. Whether s.14(3)/s.16(3) of the NPART Act empowered the Tribunal to modify O.34 r.3A and permit institution of the suit by Notice of Motion.
  4. Whether the foreclosure suit was time-barred under the Limitation Act.
  5. Whether the foreclosure suit was res judicata or barred as concurrent litigation under sections 6 and 7 of the Civil Procedure Act.
  6. Whether a valid equitable mortgage was created over the 2nd appellant's land notwithstanding alleged shortfalls in the powers of attorney.
  7. Whether the respondent released or waived its equitable rights over the mortgaged property.

Orders

  • Appeal dismissed.
  • Costs of the appeal, and of the proceedings in the Court of Appeal and the Tribunal, awarded to the respondent.

Key headnotes

Civil Procedure — Record of Appeal — Inclusion of Material Not Before the Trial Court
An appellate court acts only on material that was properly before the trial court, unless it grants leave to adduce additional evidence; documents neither adduced at trial nor admitted as additional evidence on appeal are improperly included in the record of appeal and offend r.82 of the Rules of the Supreme Court.
Civil Procedure — Mode of Instituting Suit — Foreclosure — Originating Summons
Foreclosure proceedings by a legal or equitable mortgagee must be instituted by originating summons under O.34 r.3A of the Civil Procedure Rules; a Notice of Motion is not a competent mode of instituting any suit, the only modes being plaint, originating summons and petition.
Statutory Interpretation — Application of Civil Procedure Rules to a Tribunal 'with Necessary Modifications'
A statutory provision applying the Civil Procedure Rules to a tribunal 'with necessary modifications' permits only modifications necessitated by the peculiarities of the tribunal's procedure; it is not a general licence to alter the rules at discretion or to substitute one prescribed mode of instituting a suit for another.
Civil Procedure — Irregular Procedure — Miscarriage of Justice — Article 126(2)(e)
An irregular mode of instituting a suit does not occasion a miscarriage of justice where the party suffered no prejudice and could have moved for a full trial but declined to do so; substantive justice should not be unduly impeded by technicalities under Article 126(2)(e) of the Constitution.
Limitation of Actions — Foreclosure — Applicable Period
A foreclosure action is governed by the twelve-year limitation period under sections 5 and 18(4) of the Limitation Act, not the six-year period applicable to a claim in contract.
Civil Procedure — Res Judicata and Pending Litigation — Sections 6 and 7 of the Civil Procedure Act
Sections 6 and 7 of the Civil Procedure Act bar a suit only where the matter directly and substantially in issue is the same and the suit is between the same parties; where the substantial issues differ and the parties are not identical, the suit is neither res judicata nor barred as concurrent litigation.
Land & Property — Equitable Mortgage by Deposit of Title — Section 129 Registration of Titles Act
An equitable mortgage of land is created under s.129 of the Registration of Titles Act by the registered proprietor's deposit of his certificate of title with intent to create security; the proprietor cannot disclaim the mortgage on the basis that he was not the borrower or acted through a company, and powers of attorney are not a component of its creation or validation.

Legislation cited (15)

  • Civil Procedure Rules O.34 r.3A
  • Civil Procedure Rules O.48 r.1
  • Non-Performing Assets Recovery Trust Act s.14(3)
  • Non-Performing Assets Recovery Trust Act s.16(3)
  • Non-Performing Assets Recovery Trust Act s.18(1)
  • Limitation Act s.5
  • Limitation Act s.18(4)
  • Civil Procedure Act s.6
  • Civil Procedure Act s.7
  • Registration of Titles Act s.129
  • Constitution of Uganda Article 126(2)(e)
  • Rules of the Supreme Court r.82
  • Rules of the Supreme Court r.93
  • Rules of the Supreme Court r.102
  • Mortgage Act

Cases cited (7)

  • General Industries (U) Ltd v NPART (Civil Appeal No. 25 of 1998)
  • General Parts (U) Ltd v NPART (Civil Appeal No. 5 of 1999)
  • Miscellaneous Application No. 8 of 2000
  • UCB v General Parts (U) Ltd (High Court Civil Suit No. 386 of 1993)
  • High Court Civil Suit No.1470 of 2000
  • Civil Appeal No. 29 of 2003
  • Civil Appeal No.49 of 2004
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