Wakilii

MS Fang Min v Belex Tours & Travel Ltd (Civil Appeal 6 of 2013)

Supreme Court · [2015] UGSC 12 · 2015 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Consolidated second civil appeals to the Supreme Court from a decision of the Court of Appeal
Decision
Appeals allowed; Court of Appeal decision set aside and the High Court's dismissal of the suit restored.

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Holding

By majority, the Supreme Court allowed the consolidated appeals. The Court of Appeal had erred in deciding the case on issues of fraud, illegality and cancellation of title that were neither pleaded, framed nor argued, and in granting reliefs not sought in the plaint. A court cannot found its decision on unpleaded matters, and where illegality or fraud is raised on appeal the parties must be heard before the court decides; cancelling Ms Fang Min's title without a hearing breached the non-derogable right to a fair hearing under Article 28. The US$745,000 price included the movable assets, so no conversion was established, and no balance of US$5,800 was due. The High Court's dismissal of the suit was restored.

Facts

Belex Tours and Travel Ltd obtained credit facilities from Crane Bank between 1997 and 1999, secured by a mortgage over leasehold property on Ssezibwa Road (where it ran Holiday Hotel) and by two debentures over its movable assets. Belex defaulted; by May 1999 it owed about US$704,829. The Bank and Belex executed an Agreement of Sale of Landed Property and Hotel Business, and the Bank sold the property and business to Ms Fang Min for US$745,000, applying the proceeds to the debt, legal charges and auctioneer's fees. The Bank did not pay Belex a claimed US$5,800 balance, and Ms Fang Min took possession of the hotel's movable property. Belex (with Holiday Hotel Ltd) sued the Bank and Ms Fang Min for the value of the movables (Shs.194,313,000) and the US$5,800, alleging conversion. The sole trial issue was whether the US$745,000 included the movables. The High Court held it did and dismissed both the suit and the counterclaim. The Court of Appeal reversed, found fraud and illegality, cancelled Ms Fang Min's title and made several damages awards, prompting the appellants' appeals to the Supreme Court.

Issues

  1. Whether the Court of Appeal erred in deciding the appeal on issues of fraud, illegality and cancellation of title that were not pleaded, framed or argued at the trial or in the Court of Appeal.
  2. Whether the Court of Appeal erred in cancelling Ms Fang Min's certificate of title and granting reliefs not sought in the plaint without affording the appellants an opportunity to be heard.
  3. Whether the Court of Appeal erred in holding that the US$745,000 purchase price did not include the value of the respondent's movable assets.
  4. Whether the respondent was entitled to recover US$5,800 as the alleged balance on the purchase price.

Orders

  • Both appeals allowed.
  • Decision and orders of the Court of Appeal set aside.
  • Decision and orders of the High Court dismissing the respondent's suit restored.
  • Costs in the Supreme Court and in the courts below awarded to each of the appellants.

Key headnotes

Civil Procedure — Pleadings — Decision and relief confined to pleaded issues
A court must base its decision and orders on the pleadings and the issues framed and contested before it; founding a decision on an unpleaded matter, or granting relief not claimed in the plaint, is an error of law.
Constitutional Law — Fair hearing — Illegality or fraud raised for the first time on appeal
Although an issue of illegality or fraud not raised in the lower court may be raised on appeal, the parties must be given an opportunity to address the court on it before the court decides, the right to a fair hearing under Article 28 of the Constitution being non-derogable.
Land & Property — Registration of Titles — Cancellation of a registered title for fraud
Under section 176 of the Registration of Titles Act a registered proprietor's title may be impeached only on the ground of fraud proved against the transferee; fraud means actual fraud or dishonesty, not constructive fraud, and must be proved by the party alleging it to a standard higher than in an ordinary civil suit.
Civil Procedure — Court of Appeal Rules — Rule 102(c) is mandatory
Rule 102(c) of the Rules of the Court of Appeal, which bars the court from allowing an appeal on a ground not set forth or implicit in the memorandum of appeal without affording the affected party an opportunity to be heard, is mandatory.
Banking & Finance — Mortgagee's power of sale — Omnibus sale of land and charged movables
Where a mortgage and debentures empower the mortgagee to sell both the mortgaged land and the charged movable assets, an omnibus sale of the land, business and movables as a package for a single consideration is lawful, and the agreed price may be treated as covering both the land and the movables.

Legislation cited (11)

  • Registration of Titles Act s.176
  • Registration of Titles Act s.148
  • Financial Institutions Act s.37(a)
  • Mortgage Act s.10
  • Mortgage Decree 1975
  • Evidence Act s.55
  • Evidence Act s.56
  • Limitation Act
  • Rules of the Court of Appeal r.102(c)
  • Constitution of Uganda art.28
  • Constitution of Uganda art.44

Cases cited (18)

  • Interfreight Forwarders (U) Ltd v East African Development Bank (Civil Appeal No. 33 of 1992)
  • Oriental Insurance Brokers v Transocean (Civil Appeal No. 55 of 1995)
  • Makula International Ltd v Cardinal Emmanuel Nsubuga & Others (Civil Appeal No. 4 of 1981)
  • Mohammed Mohammed Hamid v Roko Construction Ltd (Civil Appeal No. 1 of 2003)
  • Frederick Zaabwe v Orient Bank (Civil Appeal No. 4 of 2006)
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Civil Appeal No. 22 of 1992)
  • George Kanarusasi vs. Uganda (1988- 1996) HCB9
  • Oketh Okale Vs. Uganda (1965) EA 555
  • National Social Security Fund Vs. Alcon International
  • Attorney General v Paul Ssemogerere & Zachary Olum (Constitutional Appeal No. 3 of 2004)
  • Julius Rwabinumi v Hope Bahimbisimwe (Civil Appeal No. 10 of 2009)
  • Hotel International Ltd v Administrator of the Estate of Robert Kavuma (Civil Appeal No. 37 of 1995)
  • Standard Chartered Bank (U) Ltd Vs. Grand Imperial Hotel Ltd
  • Kato Margaret v Nulu Nalwoga (Civil Appeal No. 8 of 1998)
  • Masembe v Sugar Corporation (Civil Appeal No. 22 of 1999)
  • H Singh Vs. SS Dhiman (1951) 18EACA 75
  • Cuckmere Brick Co. v. Mutual Finance [1971] 2 All ER 642
  • McHugh v. Union Bank of Canada [1913] AC 299,311
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.