Wakilii

General Industries (U) Ltd v Non. Performing Assets Recovery Trust (Civil Appeal 5 of 1998)

Supreme Court · [1999] UGSC 8 · 1999 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Second appeal from the Court of Appeal, which had dismissed a first appeal from the Non-Performing Assets Recovery Tribunal
Decision
Appeal dismissed; the Tribunal's and Court of Appeal's refusal to declare the mortgage void for lack of consideration upheld

Observed later treatment

Cited — treatment unverified cited in 15 (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 15 times with no adverse treatment recorded; not yet tested on the merits. Citations rising — 23 citing cases on record, 13 in the most recent three data years. 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

The Supreme Court dismissed the appeal. Although the mortgage document recited a non-existent loan of shs.700m as consideration, both parties agreed no such loan was made; the debt was inherited from a sister company. The Court held that where the stated consideration is meaningless in relation to the actual transaction, ss.90 and 91 of the Evidence Act do not bar extrinsic evidence used to ascertain the true consideration, which was the bank's forbearance from recovering the debt at the appellant's request. A term properly implied takes effect from execution and needs no separate registration under s.51 RTA. Sufficient evidence proved forbearance; the later suit against the principal debtor did not invalidate it.

Outcome

Appeal dismissed; the Tribunal's and Court of Appeal's refusal to declare the mortgage void for lack of consideration upheld

Facts

General Parts (U) Ltd was heavily indebted to Uganda Commercial Bank (UCB) under an overdraft that had grown to about shs.1.75b by July 1991. Following negotiations, the debt was restructured and rescheduled: it was split, with shs.700m assumed by the appellant, General Industries (U) Ltd, a sister company. As a term of the arrangement, the appellant entered into a mortgage dated 12.8.91 over six properties to secure repayment of the shs.700m. The mortgage was on a standard UCB form and recited, inaccurately, that UCB had lent the appellant shs.700m. Both parties accepted no such loan was made; the appellant had merely inherited the debt. The debt went unpaid; UCB assigned it to the respondent under Statute No.11 of 1994, which advertised the mortgaged property for sale. The appellant sued, claiming the mortgage was void for lack of consideration and seeking a declaration of non-indebtedness and cancellation of the mortgage.

Issues

  1. Whether the Court of Appeal erred in relying on extrinsic evidence to hold that the Uganda Commercial Bank had provided consideration for the mortgage in the form of forbearance, contrary to ss.90 and 91 of the Evidence Act and s.51 of the Registration of Titles Act.
  2. Whether there was sufficient evidence before the Tribunal to prove forbearance by the Uganda Commercial Bank as the consideration given for the mortgage.

Orders

  • Appeal dismissed with costs.
  • Certificate for two counsel granted.

Rules and key headnotes

Evidence — Parol Evidence Rule — Exceptions — Ascertaining True Consideration
Where the consideration recited in a contractual document is unreal or meaningless in relation to the actual transaction, the exclusionary rule in ss.90 and 91 of the Evidence Act does not bar extrinsic evidence adduced to ascertain the true consideration, since such evidence neither contradicts nor varies the document but gives effect to the parties' real intention.
Contract Law — Consideration — Forbearance to Sue as Good Consideration
A creditor's forbearance from enforcing recovery of a debt, accepted at the request of a third party who promises to repay that debt, is good consideration, and such forbearance may be inferred from proved facts even in the absence of an express promise to forbear.
Contract Law — Implied Terms — Time of Legal Effect
Where a court properly implies a term into a written contract, it does not add a new term but declares one that was in the parties' contemplation at execution; the implied term takes legal effect from the date the document took effect, not from the date of interpretation.
Land & Property — Registration of Titles — Implied Terms in a Mortgage and s.51 RTA
A term properly implied into a registered mortgage is not deprived of legal effect by s.51 of the Registration of Titles Act for not being expressed in the registered instrument, because it is deemed to have taken effect with the other terms from the date the instrument took effect.
Civil Procedure — Second Appeal — New Issues and Additional Evidence
An appellate court has no jurisdiction to receive additional evidence except as provided by its rules, and cannot use a general inherent-powers provision to do what another rule specifically forbids; a defence not pleaded or canvassed at trial cannot be raised for the first time on a second appeal.

Legislation cited (9)

Cases cited (9)

  • Hassanali K. Kanji v Gailey & Roberts (1959) EA 521
  • Choitram v Lazar (1959) EA 157
  • Jinabhai & Co. Ltd v Eustace Sisal Estates Ltd (1967) EA 153
  • Damodar Jamnadas v Noor Valji (1961) EA 615
  • Frith v Frith (1906) AC 254
  • Turner v Forwood (1951) All ER 746
  • Pragji v Lubega (1964) EA 659
  • Mills Vs United Countries Bank Ltd
  • Crears v Hunter (1887) 19 QBD 341

Cases citing this judgment (15)

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.

General Industries (U) Ltd v Non. Performing Assets Recovery Trust (Civil Appeal 5 of 1998) [1999] UGSC 8 (12 January 1999)
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.