Wakilii

Bbaale Samuel Wakulira V Cairo International Bank Limited & 2 Others (Civil Suit No. 149 of 2013)

High Court · [2019] UGHCLD 42 · 2019 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaration that transfer of mortgaged land was void and tainted by fraud
Decision
Transfer cancelled and land ownership restored to plaintiff; 1st Defendant to pay damages and reimburse 3rd Defendant

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the transfer of mortgaged land was void ab initio and tainted by fraud. The transfer instrument was unlawfully executed as vendor signatures were scribbled rather than in Latin character, breaching Registration of Titles Act s.148. The transfer was registered before stamp duty was paid, contravening Stamps Act s.42. The Chief Magistrates Court lacked jurisdiction over the prior consent judgment as the loan amount and land value exceeded its pecuniary limit. The mortgagee bank failed to obtain pre-sale valuation, acted in bad faith by blocking the borrower's account without notice while the borrower was attempting to redeem the mortgage, and the purchaser failed to conduct proper due diligence. Transfer cancelled and land ownership restored to plaintiff.

Outcome

Transfer cancelled and land ownership restored to plaintiff; 1st Defendant to pay damages and reimburse 3rd Defendant

Facts

Plaintiff obtained a loan of UGX 90,000,000 from the 1st Defendant bank secured by mortgage over land at Kyadondo Block 221 Plot 1172 at Nalyako. After dispute over loan balance, parties entered consent judgment in Chief Magistrates Court Mengo requiring plaintiff to pay outstanding balance of UGX 77,437,963 in instalments. Plaintiff sold alternative land at Kawala in December 2012 for UGX 54,000,000 to settle the debt after discussions with bank and its lawyer. Before plaintiff could pay, bank instructed auctioneers to advertise and sell the mortgaged land. The 3rd Defendant purchased the land for UGX 220,000,000 in instalments (deposit UGX 30,000,000 on 13 December 2012, balance UGX 190,000,000 on 2 January 2013). Bank blocked plaintiff's account preventing him from depositing proceeds from Kawala land sale. Transfer and mortgage release instruments were lodged at land registry on 7 January 2013, registered on 11 January 2013, but stamp duty only paid on 14 January 2013. Vendor signatures on transfer instrument were scribbled rather than in Latin characters. Plaintiff sought declaration that transfer was void and tainted by fraud.

Issues

  1. Whether the suit is barred by res-judicata?
  2. Whether the transfer of the suit land is void ab initio?
  3. Whether the transfer of the suit land is tainted by fraud, or whether the 1st Defendant lawfully sold the suit property to the 3rd Defendant, or whether the 3rd Defendant lawfully purchased the mortgaged property?
  4. Whether the 1st Defendant breached banker-customer contractual relationship?
  5. Whether the Defendant defaulted in the repayment of the loan and whether he has any action against the Defendants?
  6. What remedies are available to the parties?

Orders

  • The sale and transfer of the Plaintiff's land was illegal, null and void.
  • The Registrar of Titles to cancel the transfer and ownership of the suit land in the names of Kyaligonza Daphine.
  • The Registrar of Titles to restore the ownership of the suit land to the Plaintiff.
  • Permanent injunction granted.
  • General damages of UGX 50,000,000 awarded to the Plaintiff to be paid by the 1st Defendant.
  • Exemplary damages of UGX 20,000,000 awarded to the Plaintiff to be paid by the 1st Defendant.
  • The 1st Defendant to reimburse the 3rd Defendant the amount received from the illegal sale of the Plaintiff's property.
  • Costs of the suit awarded to the Plaintiff.
  • Interest allowed at Court rate from the date of judgment until payment in full by the 1st Defendant.

Rules and key headnotes

Civil Procedure — Res Judicata — Lack of Jurisdiction — Effect on Binding Nature of Prior Decision
For the plea of res judicata to be sustained, it must be established that the former court had jurisdiction to try both the former suit and the latter suit. Where a Chief Magistrates Court hears a matter involving a loan of UGX 90,000,000 and land securing that loan, both exceeding the court's pecuniary jurisdiction of UGX 50,000,000, any decision of that court including a consent judgment is not binding in subsequent proceedings and does not create res judicata.
Land & Property — Registration of Title — Execution of Transfer Instruments — Latin Character Requirement
A transfer instrument is unlawfully executed and void where the signatures of parties are merely scribbled without names being written in Latin character. Registration of Titles Act s.148 mandatorily requires signatures on instruments affecting land to be in Latin character to enable the Registrar and others to ascertain the identity of signatories and verify their capacity to execute the instrument.
Land & Property — Registration of Title — Stamping of Instruments — Registration Before Payment of Stamp Duty
It is illegal for the Registrar of Titles to register transfer and mortgage release instruments before stamp duty has been paid. Stamps Act s.42 provides that no instrument chargeable with duty shall be admitted in evidence, acted upon, registered or authenticated by any public officer unless the instrument is duly stamped. Registration effected before stamp duty payment is void.
Banking & Finance — Mortgages — Mortgagee's Duty of Care — Pre-Sale Valuation
A mortgagee has a duty to take reasonable care to obtain the true market value of mortgaged property at the time of sale. Failure to revalue property before sale and selling based on a valuation obtained at the time of loan advance constitutes acting in bad faith, particularly where land continues to appreciate in value. The mortgagee must act as a reasonable person would in realizing their own property so that the mortgagor receives credit for fair value.
Banking & Finance — Banker-Customer Relationship — Blocking of Account — Notice Requirement
A bank breaches its duty to a customer when it blocks the customer's account without prior notice, even where the customer is in default on a loan. Bank of Uganda Financial Consumer Protection Guidelines require a financial service provider to give 14 days' notice before closing a customer's account. Blocking a borrower's account while the borrower is attempting to deposit funds to redeem a mortgage constitutes breach of banker-customer relationship and acts of bad faith.
Land & Property — Purchase of Mortgaged Property — Due Diligence — Purchaser from Mortgagee
A purchaser of mortgaged property from a mortgagee is required to conduct due diligence including making inquiries from persons in possession of the property. Failure to meet or make inquiries from a person visibly in occupation constitutes constructive fraud. Registration of Titles Act s.201 requires due diligence; purchasing property known to be in occupation of someone other than the vendor without inquiry constitutes fraud, and negligence to conduct proper search shows lack of good faith.
Land & Property — Fraud and Illegality — Effect on Transfer — Cancellation of Title
Where a transfer of land is tainted by fraud and illegality, the transfer is void and cannot vest good title in the purchaser. An illegality vitiates the transfer with the result that the property remains the property of its original owner. The Registrar must cancel the fraudulent transfer and restore ownership to the rightful owner.

Legislation cited (10)

Cases cited (20)

  • Ssengendo v Attorney General (1974) EA 140
  • Karia & Anor v Attorney General & Anor (2005) EA 83
  • Lt David Kabareebe v Maj Prossy Nalweyiso (Court of Appeal Civil Appeal No. 4 of 2003)
  • Doreen Otto Oya & 4 Others v Owera William (High Court Civil Appeal No. 36 of 2013)
  • Opedo Patrick & 16 Others v Kiconco Medard (Civil Revision No. 33 of 2018)
  • Fredrick Zaabwe v Orient Bank Ltd & 5 Others (Supreme Court Civil Appeal No. 4 of 2006)
  • Yakoyada Kaggwa v Mary Kiwanuka & Anor (1979) HCB 23
  • Napier v National Business Agency Ltd [1951] 2 All ER 264
  • Sam Mubiru & Another v Byensiba & Another (1985) HCB 106
  • Sinba (K) Ltd & Ors v Uganda Broadcasting Corporation (Supreme Court Civil Appeal No. 3 of 2014)
  • Kanoonya David v Kivumbi & 2 Others (High Court Civil Suit No. 616 of 2003)
  • Mathiya v Housing Finance Company of Kenya & Another [2003] 1 EA 133
  • Greenland Bank Ltd (in Liquidation) v Wasswa Birigwa (High Court Civil Suit No. 26 of 2004)
  • Epaineti Mubiru v Uganda Credit and Savings Bank (High Court Civil Suit No. 567 of 1965)
  • Jeane Frances Nakamya v DFCU Bank Ltd & Anor (Civil Suit No. 813 of 2007)
  • Nabanoba Desiranta & Another v Kayiwa Joseph & Another (High Court Civil Suit No. 496 of 2005)
  • UP&TC v Abraham Katumba [1997] IV KALR 103
  • Lusweswe Robert v GW Kasule & Anor (1987) HCB 65
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Uganda Revenue Authority v Wanume David Kitamirike (Court of Appeal Civil Appeal No. 43 of 2010)

Full judgment

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Bbaale_Samuel_Wakulira_V_Cairo_International_Bank_Limited_&_2_Others_(Civil_Suit_No._149_of_2013)_[2019]_UGHCLD_42_(10_July_2019)
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.