Wakilii

Kabiito(Manager of Spencon Services Limited in Receivership (Miscellaneous Application 1202 of 2021; Miscellaneous Cause 32 of 2023)

High Court · [2023] UGCOMMC 33 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated objector proceedings and application for directions arising from execution of judgment; applicants seeking discharge of property from attachment and removal of caveat; first respondent resisting discharge and seeking to continue execution
Decision
Application dismissed; execution proceedings to continue with fresh warrant of attachment and sale subject to the mortgage; registration of second respondent as proprietor of Plot 3 to be cancelled and original owner restored

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that although mortgaged property is subject to attachment and sale in execution, the purported sale by DFCU Bank was void on multiple grounds: DFCU lacked legal capacity to sell Plot 3 as the mortgage had never been transferred to it from Crane Bank; the sale of Plot 5 was void as it was conducted without court sanction while the property was under a valid warrant of attachment and in custodia legis. The first respondent's caveat was properly maintained as it protected a valid contractor's lien ratified by subsequent judgment and execution decree. Application dismissed with costs to the first respondent.

Outcome

Application dismissed; execution proceedings to continue with fresh warrant of attachment and sale subject to the mortgage; registration of second respondent as proprietor of Plot 3 to be cancelled and original owner restored

Facts

Yanjian Uganda Company Limited (first respondent) was contracted by Spencon Development Company Ltd in November 2010 to construct apartment blocks on two plots in Mbuya. To finance construction, Spencon mortgaged both plots to Crane Bank Limited as security for loans. The first respondent remained on site as unpaid contractor and lodged a caveat on Plot 5 after Crane Bank's mortgage was registered. In February 2015, judgment was entered in favour of the first respondent for US$1,220,246 and damages. A warrant of attachment was issued in June 2015 against Plot 5. Crane Bank objected to the execution and obtained an interim stay of sale in July 2015. In September 2016, Crane Bank appointed a receiver over Spencon. In January 2017, DFCU Bank acquired Crane Bank's assets including the Spencon loan under statutory management. In September 2021, DFCU purported to sell both plots to Native Power Company Limited (second respondent) for 6 billion shillings under its powers as mortgagee, despite the ongoing attachment and interim orders.

Issues

  1. Whether the property comprised in LRV 3757 Folio 12 Plot 5 Nadiope Lane, Mbuya, Kampala is subject to attachment and sale in execution of a decree against M/s Spencon Development Company Ltd.
  2. Whether the sale of land comprised in LRV 3727 Folio 25 Plot 3 Nadiope Lane and LRV 3757 Folio 12 Plot 5 Nadiope Lane, Mbuya, Kampala is valid.
  3. Whether the first respondent's caveat lodged on land comprised LRV 3757 Folio 12 Plot 5 Nadiope Lane, Mbuya, Kampala subsists and should be maintained.
  4. Whether the land comprised in LRV 3757 Folio 12 Plot 5 Nadiope Lane, Mbuya, Kampala should be discharged from attachment.

Orders

  • Application dismissed.
  • Costs awarded to the first respondent.
  • Deputy Registrar to revive execution process by issuing fresh warrant of attachment and sale in respect of LRV 3757 Folio 12 Plot 5 Nadiope Lane, Mbuya, Kampala following end of Court Vacation.
  • Persons in possession of LRV 3757 Folio 12 Plot 5 Nadiope Lane to forthwith grant vacant possession to the bailiff for purposes of execution.
  • Sale shall be subject to the mortgage in accordance with Order 22 rule 59 of the Civil Procedure Rules.
  • Commissioner Land Registration to cancel registration of second respondent as proprietor of LRV 3727 Folio 25 Plot 3 Nadiope Lane and restore M/s Spencon Development Company Limited as registered proprietor.
  • Second respondent to deliver up duplicate certificate of title to Commissioner Land Registration for rectification.
  • Commissioner Land Registration to restore mortgage of M/s Crane Bank Limited onto title deed to LRV 3727 Folio 25 Plot 3 Nadiope Lane.
  • First respondent to bring decision to attention of Commissioner Land Registration.

Rules and key headnotes

Execution — Attachment and Sale — Mortgaged Property
Property that is mortgaged to a creditor is not exempt from attachment in execution of a money decree against the judgment debtor who is the registered proprietor, and the court may order the property sold subject to the mortgage with the consent of the mortgagee.
Registration of Titles — Transfer of Mortgage — Capacity to Sell
Only the proprietor of a mortgage whose name appears in the Register Book has legal capacity to transfer or sell mortgaged property; a person who has acquired a mortgage by contract but has not caused registration of the transfer in their name cannot exercise powers of mortgagee to sell the mortgaged land.
Execution — Property in Custodia Legis — Requirement of Court Sanction
Land that is subject to a valid warrant of attachment and sale in execution is deemed to be in custodia legis and cannot be sold, transferred, or otherwise dealt with by a private person without prior permission of the court that issued the warrant; a sale conducted without such leave is void.
Caveats — Contractor's Lien — Caveatable Interest
An unpaid contractor whose payment is due has the right to register a caveat based on a construction lien where there exists an actual indebtedness by the owner arising from the construction work, the property is specifically identified and appropriated to the performance of the contract, and the owner would be acting unconscientiously if disposing of the property without discharging the liability.
Execution — Priority — Warrant of Attachment and Unregistered Sale
A warrant of attachment in execution has preference over a later unregistered sale agreement, and even if the later sale is subsequently registered after the warrant is issued, the validity of the execution sale is upheld because the warrant retroacts to the date of its issuance.
Objector Proceedings — Possession Test — Constructive Knowledge
In objector proceedings, where a purchaser had express knowledge through a registered caveat and court orders that property was subject to a warrant of attachment at the time of purchase, such knowledge is equivalent to registration and the purchaser cannot claim to be a bona fide purchaser without notice; actual physical possession by the judgment creditor at time of attachment coupled with power of sale trumps constructive possession without registered capacity to sell.
Slip Rule — Correction of Accidental Omissions
Under section 99 of the Civil Procedure Act, the court may at any time correct clerical mistakes or errors arising from accidental slip or omission in orders to reflect the court's manifest intention at the time judgment was given, but the slip rule cannot be used to correct substantive errors of law or fact or to add provisions not in the court's contemplation at the hearing.

Legislation cited (40)

Cases cited (40)

  • Bank of India Uganda Ltd v. NCB Uganda Ltd and URA (High Court Civil Suit No. 009 of 2021)
  • Rigo z messenger case, (1836) 1 All ER 79
  • Edwin Otile Ojungu v. Acanilwete cop Socierty Ltd and another, 1994 KLR 735
  • Owembabazi Enid v. Guarantee Trust Bank Ltd (High Court Civil Suit No. 63 of 2019)
  • Adrabo Stanley v. Madira Jimmy
  • KCB v. Afraha [2001] 1 EA 86
  • J.M Hauliers Ltd v. Access Microfinance bank Tz Ltd, 2022 TZ CA No. 522 of 22nd August, 2022
  • African Textile Ltd v. Coop Bank Ltd (High Court Civil Suit No. 20 of 2005)
  • Pou Cohi Kam v. Wealth Credit Ltd 2018 Hong Cong CA 250
  • Khakale E. t/a New Elgon Textiles v. Banyamini W (in the matter of Mugunjo) [1976] HCB 31
  • Kasozi Ddamba v. M/s Male Construction Service Co., [1981] HCB 26
  • Trans Africa Assurance Co. v National Social Security Fund [1999] 1 E.A. 352
  • Econocom 183 CC t/a Econocom v. Swanepoel and Another (59961/2014) [2014] ZAGPPHC 853 (18 September 2014)
  • Ploughall (Edms) Bpk v. Rae 1971 (1) SA 887 (W)
  • Conress (Pty) Ltd and another v. Gallic Construction (Pty) Ltd 1981 (3) SA 73 (W) 76
  • Nino Bonino v. De Lange 1906 TS 120 122
  • Scholtz v. Faifer, 1910 T.P.D. 243
  • Savory v. Baldochi 1907 TS 523 525
  • Morris v. Taljaard 1952 (1) SA 49 (C)
  • Assurity (Pvt.) Ltd v. Truck Sales (Pvt.) Ltd 1960 (2) SA 686 (SR) at 689H - 690A
  • Wightman t/a JW Construction v. Headfour (Pty) Ltd and Another (A28/2006) [2006] ZAWCHC 78; 2007 (2) SA 128 (C) (7 September 2006)
  • Bishopsgate Motor Finance Corpn. Ltd. v. Transport Brakes Ltd [1902] AC 325 at 326
  • Greenwoods v. Bennett (1973) 1 QB 195
  • Sentongo Produce & Coffee Farmers Ltd v. Rose Nakafuma Thijusa (High Court Miscellaneous Cause No. 690 of 1999)
  • Ainomugisha Doreen v. Saava Michael David Kyazze (High Court Civil Suit No. 839 of 2017)
  • Black v. Garnock [2007] HCA 31; 230 CLR 438; 237 ALR 1
  • Walter v. Registrar of Titles [2003] VSCA 122 at [18]
  • Depas Pty Ltd v. Dimitriou [2006] VSC 281
  • Hewett v. Court (1983) 149 CLR 639 at 668
  • Leros Pty Ltd v. Terara Pty Ltd [1992] 66 ALJR 399
  • Piroshenko v. Grojsman [2010] VSC 240; 27 VR 489
  • Miller v. Duggan (1892) 21 SCR 33
  • Barry v. Heider. [1914] HCA 79; 19 CLR 197
  • Lakhamshi Brothers Ltd v. R. Raja and sons [1966] EA 313 at 314
  • Ahmed Kawoya Kanga v. Banga Aggrey Fred [2007] KALR 164
  • Fangmin v. Dr. Kaijuka Mutabazi Emmanuel (High Court Civil Application No. 15 of 1977)
  • Mutual Shipping v. Bayshore Shipping [1985] 1 All ER 520
  • King v. Thomas McKenna Ltd [1991] 1 All ER 653
  • UDB v. Oil Seeds (U) Ltd (Supreme Court Civil Appeal No. 06 of 2009)
  • NKT Cables A/S v. SP Power Systems Ltd [2001] All ER (D) 74

Full judgment

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Kabiito(Manager of Spencon Services Limited in Receivership (Miscellaneous Application 1202 of 2021; Miscellaneous Cause 32 of 2023) [2023] UGCommC 33 (11 August 2023)
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.