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Friends Estate Limited v Akulamusa (Civil Appeal 21 of 2020)

Supreme Court · [2024] UGSC 17 · 2024 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal from a judgment of the Court of Appeal (Civil Appeal No. 104 of 2018) which had reversed the High Court (Land Division) decision in HCCS No. 612 of 2014.
Decision
Appeal allowed; appellant company reinstated as registered proprietor of the suit property, all defiant entries and the DFCU mortgage cancelled, and mesne profits and general damages awarded.

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Holding

The appeal concerned whether the respondent was a bona fide purchaser for value without notice over land that was subject to subsisting court orders. The lead judgment held that the Court of Appeal judgment, signed by only two of three justices, was incompetent, but proceeded to correct illegalities apparent on the record: transactions effected in defiance of valid court orders are void; a transfer by a non-registered proprietor and before any sale agreement is a nullity; under-declaration of consideration constitutes fraud; and the respondent had constructive notice of the suit land's fraudulent history. The Court allowed the appeal, declared the appellant the rightful owner, cancelled all subsequent entries and the DFCU mortgage, and awarded mesne profits and general damages.

Facts

Friends Estate Limited, owned by Ugandan Asians who fled in 1972, was registered proprietor of land at Plot 1 Rubaga (Lubaga) Road and repossessed it in 1992 under the Expropriated Properties Act. From 2003 fraudsters used a sham foreclosure suit (HC OS No. 27 of 2003) to strip the company of title; the land then passed through a chain of registrations (J.B Kalungi, G.K Kalule, Hajji Mumya, Mash Investments Limited and finally the respondent), with mortgages to Nile Bank and DFCU Bank. Court orders of Kiryabwire J (M.A 552 of 2004) and Okumu Wengi J (M.A 1005 of 2004) set aside the fraudulent transfers, reinstated the company and barred any sale, lease or mortgage of the land pending final determination of ownership. Despite these subsisting orders, the Commissioner Land Registration de-registered the company and reinstated G.K Kalule; subsequent transfers followed. On 27 October 2010, five transactions, including the respondent's registration and a DFCU mortgage, were registered within minutes. The respondent's transfer form was signed before the sale agreement, his consideration was under-declared, and he had knowledge of the disputed history.

Issues

  1. Whether the Court of Appeal judgment, signed by only two of the three justices who heard the appeal, was a competent and valid judgment.
  2. Whether, on finding the Court of Appeal judgment incompetent, the Supreme Court should merely remit the appeal or could proceed to correct illegalities apparent on the record.
  3. Whether transactions and registrations effected over the suit land in defiance of subsisting court orders were valid.
  4. Whether the Commissioner for Land Registration could exercise powers under section 91 of the Land Act to alter the register in the face of a valid court order.
  5. Whether a transfer form executed by a person who was not the registered proprietor, and before any sale agreement, could pass title.
  6. Whether under-declaration of the consideration and false declaration that the land was undeveloped amounted to fraud.
  7. Whether the respondent was a bona fide purchaser for value without notice of fraud.
  8. Whether a mortgage created by a party who was not the registered proprietor was valid.
  9. What remedies, including mesne profits and general damages, the appellant was entitled to.

Orders

  • Appeal allowed.
  • A declaration that the appellant company is the rightful owner of the suit property.
  • A declaration that the court orders of Kiryabwire J in M.A No. 552 of 2004 and Okumu Wengi J in M.A No. 1005 of 2004 are valid and still subsisting.
  • A declaration that all entries on LRV 149 Folio 8 Plot 1 Lubaga Road entered in defiance of the said court orders are null and void.
  • A declaration that the consent order entered on 20th June 2008 by G.K Kalule and J.B Kalungi in HCCS No. 771 of 2004 is null and void.
  • A declaration that the respondent is not a bona fide purchaser for value without notice.
  • The Commissioner Land Registration shall cancel the transfer of LRV 149 Folio 8 Plot 1 Lubaga Road to the respondent and the mortgage to DFCU Bank, and reinstate the appellant company as registered proprietor entitled to immediate vacant possession.
  • DFCU Bank shall deposit the Certificate of Title with the Registrar of the Court within 30 days for delivery to the appellant company.
  • The appellant company is awarded mesne profits of UGX 861,120,000 with interest at 8% per annum from the date of judgment until payment in full.
  • General damages of UGX 100,000,000 are awarded with interest at 8% per annum from the date of judgment until payment in full.
  • The appellant company is awarded costs of the appeal in this Court and the courts below.

Key headnotes

Court of Appeal — Validity of Judgment — Civil appeal judgment signed by fewer than the full panel
In a civil appeal where separate judgments are required, a judgment of the Court of Appeal signed by only two of the three justices who heard the appeal, the third having been elevated before signing, is incompetent and invalid for failing to comply with rule 33(5) and (10) of the Judicature (Court of Appeal Rules) Directions.
Appellate Jurisdiction — Power to correct illegality on an incompetent appeal
Where a superior court determines that an appeal is incompetent or that the matter must be remitted, it nonetheless has authority and a duty, on identifying an illegality apparent from the record, to address and correct that illegality before disposing of the case.
Torrens System — Disobedience of Court Orders — Validity of transactions made in defiance of a subsisting order
A subsisting court order may only be varied or set aside by the issuing court or on appeal; transactions and registrations effected in defiance of such an order are illegal and void, and the passage of time does not cure the illegality.
Indefeasibility of Title — Fraud and Illegality as exceptions
The indefeasibility conferred by section 59 of the Registration of Titles Act is subject to the statutory exceptions, including fraud; illegality vitiates a transfer so that no interest passes, and a court cannot, on the basis of indefeasibility, sanction irregularities or illegalities.
Commissioner Land Registration — Section 91 Land Act — Limits in the face of a court order or fraud
The Commissioner Land Registration's special powers under section 91 of the Land Act cannot be exercised where the matter is before or has been determined by court, or where the dispute is founded on fraud; the Commissioner is bound to comply with subsisting court orders.
Transfer of Land — Section 92 RTA — Transfer by non-proprietor and before sale agreement
Under section 92 of the Registration of Titles Act a transfer form may be executed only by a registered proprietor and presupposes a concluded sale agreement; a transfer form signed by a non-proprietor, or before any agreement and payment of consideration, is a nullity and passes no interest, and a transfer form does not convey equitable rights.
Bona Fide Purchaser for Value Without Notice — Constructive notice and under-declaration of consideration
A purchaser who under-declares consideration and falsely declares land undeveloped commits fraud, and one who has constructive notice of adverse claims yet abstains from inquiry to avoid the truth cannot claim to be a bona fide purchaser for value without notice; the defence also fails where the purchaser bought from a vendor with no title.

Legislation cited (35)

  • Registration of Titles Act (Cap 230) s.1(1)
  • Registration of Titles Act (Cap 230) s.59
  • Registration of Titles Act (Cap 230) s.64(1)
  • Registration of Titles Act (Cap 230) s.77
  • Registration of Titles Act (Cap 230) s.92
  • Registration of Titles Act (Cap 230) s.115
  • Registration of Titles Act (Cap 230) s.136
  • Registration of Titles Act (Cap 230) s.140
  • Registration of Titles Act (Cap 230) s.176
  • Registration of Titles Act (Cap 230) s.177
  • Registration of Titles Act (Cap 230) s.181
  • Registration of Titles Act (Cap 230) s.184
  • Registration of Titles Act (Cap 230) s.190
  • Registration of Titles Act (Cap 230) s.202
  • Land Act s.91
  • Mortgage Act 8 of 2009 s.3
  • Stamps Act (Cap 342) s.31
  • Stamp Duty Act 2014 s.24
  • Contracts Act 2010 s.10(5)
  • Civil Procedure Act s.2(m)
  • Civil Procedure Act s.27(2)
  • Civil Procedure Act s.101
  • Judicature Act s.6(2)
  • Judicature Act s.40(2)
  • Judicature (Court of Appeal Rules) Directions rule 33(5)
  • Judicature (Court of Appeal Rules) Directions rule 33(10)
  • Constitution of Uganda 1995 Article 28
  • Constitution of Uganda 1995 Article 40
  • Constitution of Uganda 1995 Article 62(2)
  • Constitution of Uganda 1995 Article 126(2)(e)
  • Constitution of Uganda 1995 Article 132(4)
  • Constitution of Uganda 1995 Article 135(1)
  • Constitution of Uganda 1995 Article 17(1)(g)
  • Civil Procedure Rules Order 22 (objector proceedings)
  • Expropriated Properties Act (Cap 87)

Cases cited (45)

  • Henry Kifamunte v Uganda (Criminal Appeal No. 10 of 1997)
  • Namyalo Kevina & Anor v John Baptist Kawanga (Civil Appeal No. 16 of 2020)
  • Orient Bank v Fredrick Zaabwe & Anor (SC Civil Application No. 17 of 2007)
  • Surendra Singh & Others vs The State of Uttah Pradesh (1954) AIR 194
  • Mohamed Akil vs. Asadunissa Bibee (9WR lFB)
  • David Chandi Jamwa v Uganda (Civil Appeal No. 02 of 2017)
  • Komaketch Geoffrey & Anor v Rose Akol Okullo & 2 Ors (Civil Appeal No. 21 of 2010)
  • Hassan Basajjabalaba v Attorney General (Constitutional Appeal No. 01 of 2018)
  • Sinba (K) Ltd & 4 Ors v Uganda Broadcasting Corporation (Civil Appeal No. 03 of 2014)
  • David Sejjaaka Nalima v Rebecca Musoke (Civil Appeal No. 12 of 1985)
  • General Industries v Z.J Hasham Fish Industries Ltd (Civil Appeal No. 05 of 2019)
  • Betty Kizito v David Kanonya & Ors
  • David Kizito Kanonya & Ors v Betty Kizito (Court of Appeal Civil Appeal No. 187 of 2012)
  • Makula International Ltd v His Eminence Cardinal Nsubuga & Anor [1982] HCB 11
  • Beatrice Kobusingye v Fiona Nyakaana & Anor (Civil Appeal No. 05 of 2004)
  • Frazer v Walker [1967] AC 569
  • Hilda Wilson Namusoke & 3 Ors v Owalla's Home Investment Trust (E.A) Ltd (Civil Appeal No. 15 of 2017)
  • China Road and Bridge Corporation v Welt Machinen Engineering Ltd & Attorney General (Civil Appeal No. 13 & 14 of 2019)
  • Henry Kyarimpa v Attorney General (EACJ Appeal No. 6 of 2014)
  • Dina Management Ltd v County Government of Mombasa (Petition 8 (E010) of 2021)
  • Konde Mathias Zimula v Byarugaba Moses & Anor (HCCS No. 66 of 2007)
  • Saul Kisiribombo Rumanda v Emmy Tumwine & 6 Ors (Civil Appeal No. 19 of 2018)
  • Yakobo M.N Senkungu & 4 Ors v Cresensio Mukasa (Civil Appeal No. 17 of 2014)
  • Sir John Bageire v Ausi Matovu (Court of Appeal Civil Appeal No. 7 of 1996)
  • Midland Bank Ltd v Reckitt [1933] AC 1
  • Bryant, Powis and Bryant Ltd v La Banque du Peuple [1893] AC 170
  • Fredrick J.K Zaabwe v Orient Bank & Ors (Civil Appeal No. 4 of 2006)
  • Kampala Bottlers Ltd v Damanico (U) Ltd
  • Frost v Beekman, 1 Johns. Ch. 288 (N.Y. 1814)
  • Hunt v Luck [1902] 1 Ch 45
  • Macmillan v Bishopsgate Investment Trust (No. 3) [1995] 1 WLR 978
  • Baden v Societe Generale [1993] 1 WLR 509
  • Edward Musisi v Grindlays Bank (U) Ltd & 2 Ors [1983] HCB 39
  • Lawrence Muwanga v Stephen Kyeyune (Civil Appeal No. 12 of 2001)
  • Uganda Broadcasting Corporation vs. Sinba (K) Ltd and 4 others
  • Kibimba Rice Ltd v Umar Salim (Civil Appeal No. 17 of 1992)
  • Storms v Hutchinson [1905] AC 515
  • Hadley v Baxendale (1843-60) All ER Rep 461
  • Kanoonga David v Khurumbi & 2 Ors (HCCS No. 676 of 2003)
  • Banco Arabe Espanol v Bank of Uganda (Civil Appeal No. 8 of 1998)
  • Uganda Development Bank v National Insurance Corporation & Anor (Civil Appeal No. 28 of 1995)
  • NSSF v Ncon International Ltd (Civil Appeal No. 18 of 2009)
  • Belvoir Finance Co Ltd v Harold G Cole Ltd [1969] 2 All ER 904
  • Sarah Kulata Basangwa v Uganda (Civil Appeal No. 3 of 2018)
  • Bulasiyo Kkonde v Buladina Nankya & Anor (Civil Appeal No. 07 of 1980)
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.