Wakilii

Bukenya v DFCU Bank Ltd & Anor (Civil Suit No. 267 of 2015)

High Court · [2016] UGCOMMC 50 · 2016 Preliminary Objection Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Ruling on preliminary objection on limitation period in civil suit for recovery of land and breach of contract
Decision
Causes of action for breach of contract and compensation dismissed as time-barred; cause of action for cancellation of title on grounds of fraud proceeds to trial against both Defendants.

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that the Plaintiff's causes of action for breach of the mortgage agreement and for compensation for alleged deprivation of property were barred by limitation under section 3(1) of the Limitation Act and section 178 of the Registration of Titles Act, having been brought more than six years after the cause of action arose. However, the cause of action for cancellation of the second Defendant's title on grounds of fraud was not time-barred under the 12-year limitation period for recovery of land under section 5 of the Limitation Act. Further held that the first Defendant bank was a necessary party to the fraud allegations and must be afforded an opportunity to defend itself before its reputation is besmirched. Section 115 of the Registration of Titles Act is permissive, not mandatory; failure to execute a mortgage in the prescribed form does not per se render it null and void. Preliminary objection sustained in part.

Outcome

Causes of action for breach of contract and compensation dismissed as time-barred; cause of action for cancellation of title on grounds of fraud proceeds to trial against both Defendants.

Facts

The Plaintiff obtained credit facilities totalling UGX 200,000,000 from the first Defendant bank in 2004/2005. As security, the Plaintiff mortgaged property comprised in Kyadondo Block 265, Plot 2353 at Bunamwaya. The Plaintiff defaulted on loan repayment. In 2006, the first Defendant sold the property to the second Defendant for UGX 85,000,000, despite a valuation of UGX 190,000,000. The Plaintiff alleged that the mortgage deed was not properly attested as required by section 147 of the Registration of Titles Act, rendering it null and void. The Plaintiff further alleged that both Defendants acted fraudulently in the sale. The suit was filed in 2015, more than six years after the 2006 sale. The first Defendant raised a preliminary objection that the action was barred by the six-year limitation period under section 3(1) of the Limitation Act.

Issues

  1. Whether the Plaintiff's action is barred by the statute of limitation.
  2. Whether the Plaintiff's action is an action for recovery of land within the meaning of section 5 of the Limitation Act.
  3. Whether the mortgage deed executed contrary to statutory provisions renders it null and void.
  4. Whether section 115 of the Registration of Titles Act is mandatory or directory.
  5. Whether the First Defendant bank is a necessary party to an action for recovery of land where fraud is alleged.

Orders

  • The preliminary objection succeeds in part only in relation to allegations relating to breach of contract.
  • The cause of action for cancellation of title shall be tried as pleaded against both Defendants without prejudice to any defence of the first Defendant on points of law and will not be disposed of preliminarily.
  • The preliminary objection on the causes of action for breach of contract and for the alleged illegality of execution of mortgage is sustained with costs.

Rules and key headnotes

Limitation of Actions — Distinction Between Actions Founded on Contract and Actions for Recovery of Land
Actions founded on contract or tort shall not be brought after the expiration of six years from the date on which the cause of action arose, whereas actions for recovery of land may be brought within 12 years. Where a plaintiff seeks cancellation of a registered title on grounds of fraud, the action is an action for recovery of land subject to the 12-year limitation period, not the six-year period applicable to contractual claims.
Mortgages — Formal Requirements — Mandatory vs Directory Provisions
Section 115 of the Registration of Titles Act, which permits a proprietor to mortgage land by signing a mortgage in the prescribed form, is permissive and directory, not mandatory. Failure to execute a mortgage in the form prescribed in the Eleventh Schedule does not per se render the mortgage null and void. A mortgage may still be valid as an equitable mortgage by deposit of title deeds under section 129 of the Registration of Titles Act.
Limitation of Actions — Breach of Mortgage Agreement
A claim for breach of the terms of a mortgage agreement is a claim founded on contract and must be brought within six years from the date the cause of action arose under section 3(1) of the Limitation Act. A claim brought more than six years after the mortgagee's sale of mortgaged property is time-barred.
Joinder of Parties — Fraud Allegations — Necessary Parties
Where fraud is alleged against a mortgagee bank and a transferee in title in an action for recovery of land, the mortgagee is a necessary party and must be afforded an opportunity to defend itself before its reputation is besmirched. The cause of action for cancellation of title on grounds of fraud cannot be determined preliminarily solely against the transferee without affording the mortgagee its right to be heard.
Mandatory vs Directory Provisions — Purpose and Effect
In determining whether a statutory provision is mandatory or directory, the court must consider the scope and object of the enactment as a whole. Where a requirement is merely procedural and imposed for the benefit of one party alone, that party may waive the requirement. Provisions intended to protect third parties by giving notice of interests in land are directory.
Illegality — Ex Turpi Causa Non Oritur Actio
A plaintiff cannot maintain a cause of action if, in order to establish it, the plaintiff must show that he or she has been guilty of illegality. A mortgagor who alleges that a mortgage was executed contrary to statutory provisions cannot rely on her own alleged illegality to found a cause of action where the formal requirement was the mortgagor's duty to perform.
Claims for Compensation for Deprivation of Land — Limitation Period
Actions for compensation for deprivation of land as a consequence of fraud or any other cause must be brought within six years under section 3(1) of the Limitation Act and section 178 of the Registration of Titles Act. A claim for the current market value of property sold by a mortgagee is a claim for compensation and is time-barred if brought more than six years after the sale.

Legislation cited (18)

Cases cited (12)

  • Western Highland Creameries and Lee Ngugi v Stanbic Bank Uganda Ltd and Others (High Court Civil Suit No. 462 of 2011)
  • Frederick Zaabwe v Orient Bank Ltd and Five Others (Supreme Court Civil Appeal No. 04 of 2006)
  • General Parts (U) Ltd v NPART (Supreme Court Civil Appeal No. 5 of 1999)
  • David Sejjaka Nalima v Rebecca Musoke (Supreme Court Civil Appeal No. 12 of 1985)
  • Prof Daniel David Ntanda Nsereko v Barclays Bank of Uganda and Others (High Court Civil Suit No. 18 of 2009)
  • MacFoy v United Africa Company Ltd [1961] 3 All ER 1169
  • Dawson and Co v Bingley Urban District Council [1911] 2 KB 149
  • Cullimore v Lyme Regis Corporation [1961] 3 All ER 1008
  • St John Shipping Corporation v Joseph Rank Ltd [1956] 3 All ER 683
  • Active Automobile Spares Ltd v Crane Bank Ltd and Rajesh Pakekh (Civil Appeal No. 21 of 2001)
  • Scott v Brown (1892) 2 QBD 724
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Civil Appeal No. 22 of 1992) [1993] UGSC 1

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Bukenya v DFCU Bank Ltd & Anor (Civil Suit No. 267 of 2015) [2016] UGCommC 50 (10 June 2016)
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.