Wakilii

Fulgence Mungereza & Anor v Ponsiano Lwakataka & Anor (HCT-00-CC-MA 217 of 2010)

High Court · [2012] UGCOMMC 37 · 2012 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to release property from attachment under Order 22 r 55, 56, 57 and Order 52 r 1, 3 of the Civil Procedure Rules, arising from prior judgment in Civil Suit No. 819 of 2007
Decision
Trucks released from attachment and returned to the receivers/managers of Uganda Marine Products Ltd (in receivership)

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that receivers appointed before the warrant of attachment was issued had constructive possession of the judgment debtor's assets, and therefore no attachment could be lawfully effected on trucks registered under the debtor company. The title of the receiver prevails over that of execution creditors. The trucks were ordered released from attachment.

Outcome

Trucks released from attachment and returned to the receivers/managers of Uganda Marine Products Ltd (in receivership)

Facts

On 18 October 2008, Mungereza and Kariisa were appointed joint receivers/managers of Uganda Marine Products Ltd by the East African Development Bank. The respondent, Ponsiano Lwakataka, obtained judgment against the company in Civil Suit No. 819 of 2007. On 24 March 2010, the respondent obtained a warrant of attachment and attached machinery and motor vehicles including six trucks registered UAH 728D, UAB 547Z, UAB 548Z, UAB 540Z, UAE 433N. The applicants/receivers claimed that when they took over the company, the trucks had been borrowed by customers including the judgment creditor. The trucks were subsequently traced to various locations including Kenya, Congo, Sudan, Kampala, and Kisenyi landing site with changed chassis and registration plates. The respondent asserted he was holding the trucks subject to a lien.

Issues

  1. Whether at the time of attachment, the property was in the possession of the applicants/receivers or the judgment debtor.
  2. Whether the appointment of receivers vests possessory rights in the receivers that prevail over the execution rights of a judgment creditor.
  3. Whether trucks held subject to a lien by the respondent were held on his own account or on account of the judgment debtor.
  4. Whether property under receivership can be lawfully attached by a judgment creditor whose warrant of attachment was issued after the appointment of receivers.

Orders

  • Trucks registered under numbers UAH 728D, UAB 547Z, UAB 548Z, UAB 540Z and UAE 433N be released from attachment.
  • Costs awarded to the applicants.

Rules and key headnotes

Civil Procedure — Execution — Objection to Attachment — Test for Release of Property
In an application for release of property from attachment, the sole question to be investigated by the court is that of possession: whether at the time of attachment the property was in the possession of the objector on his or her own account, or on account of the judgment debtor or some other person. Questions of legal right and title are not relevant except insofar as they may affect the decision as to whether the possession is on account of or in trust for the judgment debtor or some other person.
Banking & Finance — Receivership — Lien — Whether Lien Confers Possessory Rights
A lien does not confer possessory rights over the property secured by the lien, but merely gives the person exercising the lien an interest in the property until the debt is satisfied. Property held subject to a lien is not held on one's own account but rather on account of or in trust for the debtor. There can therefore be no constructive possession of the property in such a situation.
Banking & Finance — Receivership — Effect of Appointment — Priority over Execution Creditors
The appointment of a receiver causes a floating charge to crystallise and the receiver becomes entitled to possession of the company's assets. The title of the receiver prevails over that of execution creditors who have not completed their execution, even where the debentures were issued after the date of execution, if there was a valid contract for their issue.
Banking & Finance — Receivership — Attachment of Assets — Priority of Receivers over Judgment Creditors
Once a receiver has taken possession of property before attachment, that property cannot be attached by subsequent decree holders against the judgment debtor. Where receivers are appointed before a warrant of attachment is issued, the receivers have constructive possession of the debtor's assets even if they may not have been in actual possession, and no attachment can be lawfully effected on such property.
Banking & Finance — Receivership — Possession — Nature of Possession
Receivers hold property to pay the debts of the company and are in possession not on behalf of the judgment debtor but for the mortgagee. Although receivers are in law the agents of the debtor company, their possession is held for the benefit of the secured creditor, not the debtor company.

Legislation cited (6)

Cases cited (4)

  • Harilal & Co v Buganda Industries Ltd [1960] 1 EA 318
  • John Verjee & Anor v Simon Kalenzi & Ors (CACA No. 71 of 2000)
  • Sokempex Interstate Co Ltd v Eurapro General Import & Export Co Ltd [1981] HCB 73
  • Kasozi Damba v M/S Male Construction Service Co [1981] HCB 26

Full judgment

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

Fulgence Mungereza & Anor v Ponsiano Lwakataka & Anor (HCT-00-CC-MA 217 of 2010) [2012] UGCommC 37 (2 May 2012)
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.