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Lweza Clays Limited & Another v Tropical Bank Limited & Another (Civil Appeal 15 of 2018)

Supreme Court · [2021] UGSC 76 · 2021 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second civil appeal to the Supreme Court from a Court of Appeal decision ordering a de novo retrial
Decision
Appeal dismissed; Court of Appeal order that HCCS No. 300 of 2008 and Miscellaneous Application No. 99 of 2009 be tried de novo upheld

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Holding

The Supreme Court dismissed a second appeal challenging a Court of Appeal order for a de novo retrial. It held that the trial Judge's ruling, which finally disposed of the controversy, was appealable as of right under section 66 of the Civil Procedure Act. The trial Judge had breached the respondents' non-derogable right to a fair hearing by ruling before they cross-examined the URA witness or made oral submissions, rendering the ruling null and void. Non-payment of stamp duty does not invalidate a document; it only bars its use as evidence until duty is paid. Serious fraud allegations required strict proof at a full trial. Additional evidence created after judgment could not be admitted. Each party bears its own costs.

Facts

In 2007 the first respondent, a commercial bank, extended financial facilities secured by mortgage and debenture to the first appellant, a clay building products manufacturer whose chairman/managing director is the second appellant. In October 2008, asserting breach of repayment obligations, the bank placed the first appellant into receivership and appointed the second respondent as receiver/manager. The appellants sued, contending the receivership was unlawful because the underlying securities were null and void. After URA evidence suggested stamp duty had been paid on other documents rather than the securities, the appellants brought an application to dismiss the bank's defence and counterclaim. Before that application was heard to completion—and before counsel cross-examined the URA officer or made oral submissions—the trial Judge delivered a ruling holding the mortgage, debenture and counterclaim null and void for non-payment of stamp duty, and awarded substantial damages and costs to the appellants. The Court of Appeal set that ruling aside and ordered a retrial de novo, prompting this appeal.

Issues

  1. Whether the respondents had an automatic right of appeal to the Court of Appeal against the trial Judge's ruling that arose from an application under Order 6 rules 28 and 29 of the Civil Procedure Rules.
  2. Whether the trial Judge denied the respondents the right to a fair hearing by delivering a ruling before they could cross-examine the URA witness or make full oral submissions.
  3. Whether failure to pay stamp duty rendered the mortgage and debenture documents invalid.
  4. Whether the Court of Appeal erred in declining to determine the allegations of fraud and illegality in non-payment of stamp duty and court filing fees, and in ordering a retrial.
  5. Whether the appellants should be permitted to adduce additional evidence of stamp duty and court fee receipts created after judgment in the lower courts.

Orders

  • Appeal dismissed.
  • The judgment of the Court of Appeal is upheld.
  • Each party to bear its own costs in this appeal and in the courts below.

Key headnotes

Civil Procedure — Appeals — Right of Appeal from Interlocutory Ruling that Finally Disposes of the Controversy
Where the resolution of an interlocutory matter wholly disposes of the controversy in issue between the parties, the resulting decision is a decree and the aggrieved party has a right of appeal as of right under section 66 of the Civil Procedure Act, without requiring leave.
Constitutional Law — Right to a Fair Hearing — Effect of Breach on Validity of Judgment
The right to a fair hearing under Article 28(1) of the Constitution is non-derogable under Article 44(c); a judgment or ruling arrived at in breach of that right is null and void and cannot be enforced.
Constitutional Law — Fair Hearing — Speedy Trial Not to Override Right to Be Heard
Although a party is entitled to a speedy trial, the trial must not be rushed; parties must be given a hearing, including the opportunity to cross-examine witnesses and make submissions, before the court takes its decision.
Evidence — Stamp Duty — Effect of Non-Payment on Admissibility, Not Validity, of Documents
Failure to pay stamp duty does not render the document chargeable with that duty invalid; it only bars a litigant from using the document as evidence until the duty, with any penalty, is paid, after which the document may be admitted in evidence.
Evidence — Fraud — Standard and Mode of Proof
Fraud is a serious allegation that must be strictly proved to a standard heavier than the ordinary balance of probabilities, and cannot be established by affidavit evidence; it requires a full trial at which the parties affected can adduce and test evidence.
Civil Procedure — Additional Evidence on Appeal — Newly Created Evidence Not in Existence at Trial
An appellate court may admit additional evidence only in exceptional circumstances; evidence newly created after the hearings in the lower courts, relating to events that had not occurred at the time of those hearings, cannot satisfy the requirement that the evidence existed but could not, with due diligence, have been discovered earlier.
Civil Procedure — Memorandum of Appeal — Requirement of Concise and Distinct Grounds
A ground of appeal alleging that the lower court failed to properly evaluate the evidence, stated in broad terms, offends Rule 82(1) of the Supreme Court Rules requiring grounds to be set out concisely and under distinct heads, and is liable to be rejected.

Legislation cited (21)

  • Civil Procedure Act s.66
  • Civil Procedure Act s.97
  • Judicature Act s.10
  • Constitution of Uganda Article 28(1)
  • Constitution of Uganda Article 44(c)
  • Constitution of Uganda Article 134(2)
  • Companies Act s.96
  • Stamps Act Cap.342 s.40(1)
  • Stamps Act Cap.342 s.42
  • Stamps Act Cap.342 s.45
  • Stamps (Amendment) Act 2002
  • Mortgage Act 2010 s.2
  • Mortgage Act 2010 s.26
  • Mortgage Regulations 2012
  • Civil Procedure Rules Order 6 rule 28
  • Civil Procedure Rules Order 6 rule 29
  • Court of Appeal Rules rule 2(2)
  • Court of Appeal Rules rule 40
  • Judicature (Supreme Court) Rules Directions S.I 13-11 rule 2(2)
  • Judicature (Supreme Court) Rules Directions S.I 13-11 rule 30(1)
  • Judicature (Supreme Court) Rules Directions S.I 13-11 rule 82(1)

Cases cited (31)

  • Makhangu vs. Kibwana, (1995-1998)1 EA 175
  • Ali Muss Properties Uganda Ltd & 2 others v CTM (U) Ltd & 2 others (Court of Appeal Civil Application No. 379 of 2017)
  • Andrew Maviri v Jomayi Property Consultants (Court of Appeal Civil Appeal No. 274 of 2014)
  • Dr Sheikh Mohammed Kasule v Greenland Bank in Liquidation (Supreme Court Civil Appeal No. 11 of 2010)
  • Re; Summer Fruit (U) Ltd, Christine Serunkuma, Christine Okot, (Company cause No.5 of 1995)
  • Ibis Aviation vs. Equatorial Commercial Bank Ltd & James Tullideph Bionise, CA No. NAI 257 of 1999
  • Kasozi Ddamba vs. Male Construction Services Ltd, (1981) HCB 26
  • Betty Kizito v David Kizito Kanonya & 7 others (Supreme Court Civil Appeal No. 8 of 2018)
  • Samuel Kizito Mubiru vs. Byensiba & another (1985) HCB 106
  • Namatomu Kaaya & another, Civil Suit No. 432 of 2008
  • Ndaula Ronald v Hajji Nadduli Abdul (Civil Appeal No. 20 of 2006)
  • Fibrosa Spolka Akcyjna vs. Fairbairn Lawson Combe Barbour, Ltd (1943) AC 32
  • Co-operative Bank (in liquidation) vs. Shell Kasese Service Ltd, H.C.C.S No. 140 of 2005
  • Musonga Moses Musah v Muwonge Peter (Supreme Court Civil Appeal No. 11 of 2004)
  • Mukisa Biscuit Manufacturing Co. Ltd vs. West End Distributors Ltd, [1969] EA 696
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Supreme Court Civil Appeal No. 22 of 1992)
  • Busonya Jamada & 2 others v Daudi Giruli (Supreme Court Civil Appeal No. 11 of 2017)
  • Lawrence Muwanga v Stephen Kyeyune (Supreme Court Civil Appeal No. 12 of 2001)
  • Housing Finance Bank Ltd & another v Edward Musisi (Supreme Court Civil Appeal No. 22 of 2010)
  • Sunderji Nanji Ltd. vs. Mohamedali Kassam Bhaloo (1958) EA 763
  • Shamsherali Zaver vs. F.L Kadhibhoi and others, Civil Appeal No. 81 of 2004
  • Rene Dol vs. Official Receiver of Uganda, (1954) 21 EACA 116
  • Gurdial Singh Dhillon vs. Sham Kaur & others, [1960] EA 795
  • Livingstone Kayaga Kizito v Charles Waligo (Miscellaneous Application No. 80 of 2012)
  • Active Automobile Spares Ltd v Crane Bank Ltd & another (Civil Appeal No. 27 of 2001)
  • Kifamunte Henry v Uganda (Supreme Court Criminal Appeal No. 10 of 1997)
  • R vs Hassan bin Said, [1942] 9 EACA 62
  • Iwan Sang Ltd v M and D Timber Merchants and Transporters Ltd (Civil Appeal No. 2 of 2018)
  • Micheal Mabikke v Law Development Centre (Miscellaneous Application No. 16 of 2015)
  • Attorney General v Paul Kawanga Ssemogerere (Supreme Court Constitutional Application No. 2 of 2004)
  • Ladd v Marshall [1954] 3 All ER 745
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