Wakilii

Kalisa and Others v Nyangire and Others (Civil Appeal No. 146 of 2013)

Court of Appeal · [2021] UGCA 62 · 2021 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated civil appeals from a High Court (Commercial Division) judgment in consolidated suits concerning mortgage realisation and sale of mortgaged property
Decision
Consolidated appeals allowed; sale of mortgaged property to 1st appellant declared valid; general damages and mesne profits awards vacated; 1st appellant declared lawful registered proprietor

Observed later treatment

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Holding

The Court of Appeal, by majority (Musota JA and Kasule Ag. JA, Musoke JA dissenting), allowed the consolidated appeals. It held that where a mortgage deed expressly authorises sale by private treaty with the mortgagor's irrevocable consent and without notice, the 60-day notice under section 7(1) of the Mortgage Act does not apply. The mortgagee lawfully exercised its power of sale under section 10. The 1st appellant was a bona fide purchaser; the caveat had lapsed and the pendency of a suit was no bar to sale (no lis pendens rule). General damages, mesne profits (unpleaded) and 21% interest were wrongly awarded and set aside. The 2nd appellant was entitled to interest and costs on its counter-claim.

Outcome

Consolidated appeals allowed; sale of mortgaged property to 1st appellant declared valid; general damages and mesne profits awards vacated; 1st appellant declared lawful registered proprietor

Facts

The 1st respondent owned developed land at LRV 2839 Folio 17 Plot 108 Katalima Road, Naguru/Nakawa. The 3rd respondent company, of which the 1st and 2nd respondents were directors, obtained a lease facility from DFCU Leasing (2nd appellant) in 2003 to finance a printing machine, secured by a mortgage over the land (via the 1st respondent's power of attorney) and personal guarantees by the 1st and 2nd respondents. The mortgage deed expressly authorised sale by private treaty without recourse to court or notice on default. The 3rd respondent defaulted from the first instalment. After repeated demands, DFCU terminated the facility in October 2006, appointed receivers/managers, advertised and sold the printing machine for UGX 120,000,000 and the mortgaged property to the 1st appellant for UGX 220,000,000 on 10 May 2007. The 1st respondent had lodged a caveat based on a court interim order and interlocutory judgment, both of which had lapsed or been set aside before the sale. The respondents sued challenging the sale.

Issues

  1. Whether the sale of the mortgaged property to the 1st appellant was conducted in secret, without due process, and in bad faith.
  2. Whether the 1st appellant was a bona fide purchaser for value without notice.
  3. Whether the 60-day notice under section 7(1) of the Mortgage Act applied where the mortgage deed expressly authorised sale by private treaty without notice.
  4. Whether the award of general damages to the respondents was justified.
  5. Whether the trial judge erred in awarding mesne profits that were not pleaded.
  6. Whether interest at 21% per annum on general damages and mesne profits was properly awarded.
  7. Whether the trial judge erred in denying the 2nd appellant interest and costs on the counter-claim despite finding the respondents indebted.

Orders

  • Appeal allowed; judgment and orders of the trial judge set aside.
  • The sale and transfer of the property comprised in LRV 2839 Folio 17 Plot 108 Katalima Road, Naguru/Nakawa to the 1st appellant was valid and effective.
  • The 1st appellant is declared the lawful registered proprietor of the said land and the Registrar of Titles is to effect this in the Register book.
  • The 1st respondent's prayer for a permanent injunction restraining the 2nd appellant from selling, transferring or encumbering the title stands dismissed.
  • The 3rd respondent is indebted to the 2nd appellant in the sum of UGX 361,631,144 principal as from 10.05.2007.
  • The principal sum shall carry interest from 10.05.2007 at the rate calculated in the manner agreed in the Master Lease Agreement and Mortgage Deed until paid in full.
  • The trial court orders awarding general damages and mesne profits are vacated.
  • Each party to bear its own costs of the appeal.
  • The appellants are awarded the costs of the High Court consolidated suits, including the counter-claim.

Rules and key headnotes

Mortgages — Power of Sale by Private Treaty — Exclusion of Statutory Notice under Mortgage Act s.7(1)
Where a mortgage deed expressly empowers the mortgagee to sell the mortgaged property by private treaty without recourse to court and the mortgagor irrevocably consents to such sale without notice, the requirement under section 7(1) of the Mortgage Act to give sixty days' notice before taking possession does not apply.
Freedom of Contract — Enforcement of Bargains — Non-Interference by Courts
Parties have freedom to fix the terms of their own bargain and, in the absence of fraud, duress, undue influence, mistake or misrepresentation, courts will enforce a contract freely and voluntarily agreed upon and expressed in writing.
Bona Fide Purchaser for Value — Effect of Notice and Caveat — Lis Pendens
A purchaser who acquires mortgaged property with notice of a caveat or pending litigation is not thereby barred from obtaining good title where the caveat lacked a valid basis and the pendency of a suit, absent an injunction, does not prevent dealings in land, there being no lis pendens rule in Uganda.
Caveats — Lapse of Basis — Court Interim Order and Interlocutory Judgment
A caveat lodged on the basis of a court interim order and interlocutory judgment loses its foundation and lapses where the interim order expires unextended and the interlocutory judgment is set aside.
Pleadings — Award of Unpleaded Relief — Mesne Profits
A court cannot award a remedy such as mesne profits that was neither pleaded, raised as an issue, testified to, nor submitted upon, as parties are bound by their pleadings and a party cannot be condemned on a case not put against it.
General Damages — No Recovery Where Claimant is Author of Own Loss
General damages, being compensatory, cannot be awarded to a party who, in breach of contractual obligations, is the author of its own loss and has suffered no compensable injury from the other party's lawful exercise of its rights.
Interest and Costs on Counter-claim — Successful Party — Discretion of Court
A successful party on a counter-claim is entitled to interest at the commercial rate on sums adjudged due where it has been kept out of its money, and to costs, unless the court gives sound reasons for ordering otherwise.

Legislation cited (17)

Cases cited (26)

  • Kifamunte v Uganda (Criminal Appeal No. 10 of 1997)
  • Takiya Kaswahiri v Kajungu Dennis (Civil Appeal No. 85 of 2011)
  • Senkungu and 4 Others v Mukasa (Civil Appeal No. 17 of 2014)
  • J.W.R. Kazzora v M.L.S. Rukuba (Civil Appeal No. 13 of 1992)
  • Afrikano Bakaihahwenki v Samuel Patrick Nganda (HCCS No. 86 of 2011)
  • Goustar Enterprises Ltd v John Kokas Oumo (Civil Appeal No. 8 of 2003)
  • Charles Harry Twagira v Uganda (Criminal Appeal No. 27 of 2002)
  • Crane Bank Ltd v Nipun Narrotam Bhatia (Civil Appeal No. 2 of 2014)
  • Attorney General v Virchand Mithalal and Sons (Civil Appeal No. 20 of 2007)
  • Kiska Ltd v Dengelis [1969] EA 6
  • David Ssejjaka Nalika v Rebecca Musoke (Civil Appeal No. 12 of 1985)
  • George Kasedde Mukasa v Emmanuel Wambedde & 4 Others (HCCS No. 45 of 1998)
  • Waiglobe (U) Ltd v Sai Beverage Ltd (HCCS No. 16 of 2017)
  • Wambugu v Public Service Commission [1972] 1 EA 296
  • Laxmiba v Radhabai [1971] 42 BOM 327
  • Behangane v School Outfitters (U) Ltd, [2002] 1 EA 20
  • Barclays Bank (Uganda) Ltd v Livingstone Katende Luutu (Civil Appeal No. 22 of 1993)
  • Jane Francis Nakamya v DFCU Bank Ltd and Another (HCCS No. 813 of 2007)
  • Lourbard North Central PLC vs Butterworth (1987) 1 ALLER 267
  • National Bank v Behan [1913] 11 R. 512
  • Francis Sembuya v All Port Services (Uganda) Limited (Civil Appeal No. 6 of 1999)
  • Robert Coussens v Attorney General (Civil Appeal No. 8 of 1999)
  • Bakaluba Mukasa v Nambooze (Electoral Petition Appeal No. 4 of 2009)
  • Oriental Insurance Brokers Ltd v Transocean (Uganda) Limited (Civil Appeal No. 55 of 1995)
  • Ecta (U) Ltd v Geraldine Namurimu (Civil Appeal No. 29 of 1994)
  • Sam Kuteesa and 2 Others v Attorney General (Constitutional Petition No. 46 of 2011)

Full judgment

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Kalisa and Others v Nyangire and Others (Civil Appeal No. 146 of 2013) [2021] UGCA 62 (26 August 2021)
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.