Wakilii

Formular Feeds Limited and Anor v KCB Bank Uganda Limited and 2 Ors (Civil Miscellaneous Application No. 208 of 2020)

High Court · [2020] UGHCEBD 9 · 2020 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside execution by way of attachment and sale arising from HCCS No. 289 of 2014 and EMA No. 390 of 2016
Decision
Execution set aside; sale declared null and void; certificates of title to be returned to applicants for rectification; 2nd respondent referred to police

Observed later treatment

No later-treatment classification is recorded for this judgment.

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.

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

The court held that the execution by way of attachment and sale of mailo land registered in the names of non-citizens was illegal and void ab initio. Non-citizens cannot hold mailo land under section 40(4) of the Land Act. The mortgages over the properties had been declared null in the underlying judgment, yet the bank proceeded with execution. The entire execution process was set aside as unlawful, including the purported sale to the third respondent and the bailiff's taxation of costs.

Outcome

Execution set aside; sale declared null and void; certificates of title to be returned to applicants for rectification; 2nd respondent referred to police

Facts

The applicants, Formula Feeds Limited (a company controlled by non-Ugandans) and Gichohi Ngari (a Kenyan national), had obtained mailo land titles in their names and mortgaged these properties to KCB Bank. In HCCS No. 289 of 2014, the High Court Commercial Division found the mortgage deeds null and void because non-citizens cannot hold mailo land under section 40(4) of the Land Act, but upheld personal guarantees and found the applicants liable for approximately UGX 2.159 billion. The bank obtained a partial consent judgment for UGX 2.159 billion in April 2015. Despite the finding that the mortgages were void, the bank applied for execution by attachment and sale of the mailo properties. A court order allowed disposal of some properties to realize UGX 2.159 billion. On 6 March 2017, the court bailiff purportedly sold the properties by public auction to the 3rd respondent for UGX 3.598 billion. The applicants challenged this execution, alleging the sale was illegal, conducted without proper advertisement, grossly undervalued, and in breach of the decree which had declared the mortgages null. The bailiff kept proceeds for nearly three years without depositing them in court and had his costs taxed ex parte at UGX 234.725 million.

Issues

  1. Whether there is sufficient cause to merit the grant of this Application
  2. Whether the Applicants are entitled to the reliefs sought

Orders

  • The purported sale of the lands comprised in Kyadondo Block 101 Plots 190, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270 and 275 at Watuba and in Kyadondo Block 90 Plots 397, 459 and 460 at Katalemwa to the 3rd Respondent is declared illegal and set aside.
  • The execution of the decree dated 10th February 2016 vide HCCS No. 289 of 2014 by the 2nd Respondent is declared illegal and set aside.
  • The Bill of costs taxed and allowed at UGX 234,725,000 is declared illegal and set aside.
  • The 2nd Respondent is directed to refund all the money received from the 3rd Respondent as execution costs.
  • A permanent injunction order doth issue restraining the Respondents from dealing in any way with the suit lands and from evicting the Applicants therefrom.
  • The 1st Respondent is directed to refund the 3rd Respondent's money paid in the illegal transaction.
  • The 3rd Respondent is directed to deliver up all certificates of title to the Court for safe custody and submission to the Registrar of Titles to cancel the illegal registration and return the same to the Applicants for rectification.
  • The 2nd Respondent is referred to Police under Rule 20 of the Judicature (Bailiffs) Rules for acting in breach of the rules.
  • Costs of the application awarded to the Applicants against all three Respondents.

Rules and key headnotes

Land Law — Mailo Land — Prohibition on Non-Citizen Ownership
Section 40(4) of the Land Act prohibits non-citizens from acquiring or holding mailo or freehold land. Where a non-citizen is registered as owner of mailo land, such registration is illegal and the mortgages created over such illegally-held land are void ab initio and unenforceable.
Execution — Attachment and Sale of Illegally Held Property
A court cannot authorize execution by way of attachment and sale of properties that were illegally acquired and held by the judgment debtor. Where the underlying mortgages have been declared null and void because the properties were illegally registered in the names of non-citizens, the properties are not legally attachable in execution proceedings.
Execution — Deposit of Certificate of Title — Section 48(1) Civil Procedure Act
Section 48(1) of the Civil Procedure Act mandates that a court shall not proceed with the sale of immovable property under a decree of execution until the duplicate certificate of title or special certificate of title has been lodged with the court. Non-compliance with this mandatory provision renders the execution process illegal.
Execution — Public Auction — Essential Elements and Procedure
A public auction of property requires competitive bidding by multiple bidders, proper advertisement for the statutory period, proper valuation, and the auctioneer must act in good faith to obtain the best financial return. A sale to a single bidder on the same day a warrant is issued, without evidence of competitive bidding or proper advertisement, does not constitute a lawful public auction.
Court Bailiffs — Deposit of Proceeds — Rule 15(1) Judicature (Court Bailiffs) Rules
Rule 15(1) of the Judicature (Court Bailiffs) Rules mandates that a court bailiff shall deposit in court all proceeds of execution within seven days of the execution and thereafter submit his bill of costs for taxation. A bailiff who retains execution proceeds for nearly three years without depositing them in court acts in breach of the rules, and any taxation of costs conducted without proper deposit of proceeds is unlawful.
Illegality — Court Cannot Sanction What Is Illegal
Following Makula International Ltd v Cardinal Nsubuga, a court cannot sanction what is illegal and an illegality once brought to the attention of court overrides all questions of pleadings including admissions made thereon. An execution process founded on an illegality is void ab initio and must be set aside.
Execution — Jurisdiction of Execution Court — Section 34(1) Civil Procedure Act
Section 34(1) of the Civil Procedure Act clothes the Execution and Bailiffs Division with jurisdiction to determine all questions relating to the execution, discharge or satisfaction of a decree, including whether the property is available for attachment, whether proper procedure has been followed, and control and direction of court bailiffs. The court is not functus officio where the challenge relates to illegality in the execution process itself rather than the underlying decree.

Legislation cited (14)

Cases cited (9)

  • Makula International Ltd v Cardinal Nsubuga and Anor (1982) HCB II
  • National Social Security Fund and Anor v Alcon International Ltd (Supreme Court Civil Suit No. 15 of 2009)
  • Mac Foy v United Africa Co Ltd [1961] 3 All ER 1169
  • Dima Dominic Poro v Inyani Godfrey (Civil Appeal No. 16 of 2016)
  • Law Development Centre v Daniel Serufusa Wasswa and Anor (HCMA No. 162 of 2017)
  • Sinba (K) Ltd and Others v UBC (SCCA No. 3 of 2014)
  • Pitchfork Ranch Co Versus Bar TL 615 P.2d 541
  • Broadways Construction Company v Musa Kasule and Others (Civil Appeal No. 39 of 1971)
  • Lawrence Muwanga v Stephen Kyeyune (SCCA No. 12 of 2001)

Full judgment

↓ Download PDF

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

Formular Feeds Limited and Anor v KCB Bank Uganda Limited and 2 Ors (Civil Miscellaneous Application No. 208 of 2020) [2020] UGHCEBD 9 (26 August 2020)
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.