Wakilii

Kyewalyanga Properties Limited v Kigongo (Land Civil Suit 1 of 2017)

High Court · [2023] UGHC 64 · 2023 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaration of nullity of land sale and recovery of title documents
Decision
Suit dismissed. Defendant declared bona fide purchaser for value. Land titles to be transferred to defendant. Plaintiff company and its directors evicted from the suit land.

Observed later treatment

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Holding

The High Court dismissed the plaintiff company's suit seeking to nullify land sale agreements and recover title documents. The court held that the company's then-directors had lawful authority under the Companies Act to bind the company in the sale transactions. The plaintiff failed to prove a valid cause of action as no written authorization from shareholders or directors to institute the suit was attached to the plaint. The sale agreements were valid contracts supported by full consideration of UGX 178,000,000. The defendant was declared a bona fide purchaser for value and entitled to transfer the titles into his name.

Outcome

Suit dismissed. Defendant declared bona fide purchaser for value. Land titles to be transferred to defendant. Plaintiff company and its directors evicted from the suit land.

Facts

Kyewalyanga Properties Limited, a private company, owned land comprised in Buddu Block 147 Plots 15, 24 and 51 measuring approximately 230 acres. Dr. Joseph Kikambi Kyewalyanga was the company's Managing Director and held the duplicate certificates of title. Between February 2013 and August 2015, Dr. Kikambi, together with Margaret Nalufusa Kyewalyanga (Director) and Phillow Nakulila Kasule (Company Secretary/Director), executed three sale agreements selling the land to Kigongo William for UGX 178,000,000. The defendant paid the full purchase price in cash installments. The directors handed over the titles, executed transfer forms, and provided their photographs and identity cards. In June 2014, a purported extraordinary general meeting removed Dr. Kikambi and appointed new directors. The new board filed this suit in January 2017 seeking to nullify the sale on grounds that there was no company resolution authorizing the sale and that the defendant knew the sellers lacked authority. The defendant had attempted to transfer the titles into his name but was restrained by interim court order.

Issues

  1. Whether the Plaintiff has a cause of action against the Defendant?
  2. Whether the alleged sale of the suit land by the Plaintiff to the Defendant is valid and legal?
  3. Whether the suit land should be transferred in the names of the Defendant?
  4. What are the remedies available to the Parties?

Orders

  • The Plaintiff Company is found to have no cause of action against the Defendant and the suit is hereby dismissed.
  • A declaration is hereby made that the Defendant acquired the suit lands comprised in Buddu Block 147 Plots 15, 24 & 51 situate at Lutente, Lukaya in Kalungu District measuring approximately 230 acres lawfully through binding contracts of sale; and is declared a bona fide purchaser for value.
  • The Defendant has proved that the Certificates of Title he was given by the then Directors of the Plaintiff Company in respect of Buddu Block 147 Plots 15, 24 & 51 situate at Lutente, Lukaya in Kalungu District are lawfully his; and it is hereby declared that he is free to transfer the same into his names.
  • The Interim Order by this Honourable Court forbidding him to do so is hereby vacated.
  • It is Ordered that Vacant Possession, Eviction and Permanent Injunction be issued against the Plaintiff Company, its current Managing Director and all Directors, Shareholders, their agents, servants and anybody claiming under any of them in this case in respect of the suit lands comprised in Buddu Block 147 Plots 15, 24 & 51 situate at Lutente, Lukaya in Kalungu District.
  • The Defendant being the successful party in this case is awarded General Damages of Ug. Shs. 200,000,000/= (Two Hundred Million Only).
  • The Defendant is also awarded Shs. 20,000,000/= (Twenty Million only) as damages in respect of Contempt of Court Orders.
  • The Defendant is awarded interest at a commercial rate of 23% per annum applicable to the General Damages until payment in full.
  • The Defendant is also awarded full costs of the suit from the time of filing till Judgment.
  • A consequential order doth issue to the Commissioner Land Registration Masaka Zonal Area for the rectification of the title and transferring of the Certificate of Titles for land comprised in Buddu Block 147 Plots 15, 24 & 51 situate at Lutente, Lukaya in Kalungu District with immediate effect into the names of the Defendant.

Rules and key headnotes

Company Law — Authority of Directors — Power to Bind Company — Companies Act s.50, s.52, s.55
Under the Companies Act 2012, the power of the Board of Directors to bind the company or authorize others to do so in favour of a person dealing with the company in good faith shall not be limited by the company's memorandum. Documents executed by two directors and expressed to be executed by the company have the same effect as if executed under the common seal of the company.
Civil Procedure — Cause of Action — Requirements — Plaint and Annexures
In determining whether a plaint discloses a cause of action, the court must look only at the plaint and its annexures and nowhere else. A cause of action requires that the plaintiff enjoyed a right, that the right has been violated, and that the defendant is liable. Where a company sues without attaching any written authorization, consent, powers of attorney or other documentation from either the shareholders or company directors to use its name to bring the suit, the plaint fails to disclose a cause of action.
Contract Law — Formation — Capacity to Contract — Companies
A company duly registered in Uganda has capacity to contract with third parties by virtue of section 50 of the Companies Act 2012. Where directors with authority under the company's articles of association execute sale agreements on behalf of the company, receive full consideration, and hand over title documents with executed transfer forms, a valid and binding contract is formed between the company and the purchaser.
Company Law — Indoor Management Rule — Third Party Protection — Royal British Bank v Turquand
Under the indoor management rule, a party to a transaction with a company is not bound to inquire whether it is authorized by the company's memorandum or as to any limitation on the powers of the board of directors to bind the company. A third party dealing with a company has a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done, and the company is liable whether or not a resolution had been passed.
Contract Law — Estoppel — Approbation and Reprobation — Receipt of Consideration
It is a well-known principle of equity that one cannot approbate and reprobate at the same time. Where a company enters into a contract to sell land, receives the full purchase price, and hands over title documents with executed transfer forms, the company is estopped from later denying the validity of the transaction and seeking to retain both the land and the purchase price.
Company Law — Ratification — Retrospective Effect — Subsequent Resolution
Where directors of a company ratify a transaction by passing a resolution after the transaction has been entered into, the ratification has retrospective effect and renders the transaction binding on the company as from the time it was entered into by the directors.
Civil Procedure — Contempt of Court — Requirements — Willful Disobedience of Court Orders
For contempt of court to be found, the following conditions must exist: a lawful order, the potential contemnor's knowledge of the order, the potential contemnor's ability to comply, and the potential contemnor's failure to comply. Where a company director, with knowledge of an interim order to maintain the status quo of land, continues to hire out the land to third parties and admits doing so, the company and its director are in contempt of a lawful court order.

Legislation cited (21)

Cases cited (62)

  • Kasaala Growers Co-operatives Society v Kakooza Johathan & Kalemera Edson (Civil Application No. 19 of 2010)
  • Ngoma-Ngime v Electoral Commission and Hon. Winnie Byanyima (Election Petition Appeal No. 11 of 2002)
  • Navichandra Kakubhai Radia v Kakubhai Kalidas and Co. Ltd (Civil Appeal No. 10 of 1994)
  • John Shaw and Sons (Salford) Limited v Peter Shaw and John Shaw [1935] 2 KB 113
  • M/S. Tatu Naiga & Co. Emporium v Verjee Brothers Limited (Civil Appeal No. 8 of 2000)
  • Bugerere Coffee Growers Ltd v Zulubabari Kikuyo [1970] 1 EA 147
  • Stanbic Bank Uganda Limited v Ssenyonjo Moses and Nakibuka Nusula (Civil Appeal No. 147 of 2012)
  • Marendrah K. Radia v Kakabhai Kalidas & Co. Ltd (SCCA No. 10 of 1994)
  • United Assurance Co. Ltd v Attorney General (Civil Appeal No. 1/1986)
  • Madhavani Jayant Meena v Madhvan Muljibhai Pratabhi (Civil Suit No. 774 of 88)
  • Megha Industries (u) Limited v Comform Uganda Limited (Miscellaneous Application No. 21 of 2014)
  • Stanbic Bank (u) limited & Jacobsen Power Plant ltd v Uganda Revenue Authority (MA 42 of 2010)
  • Hon Sitenda Sebalu v Secretary General of East Africa Community (Ref No. 8 of 2012)
  • Wasswa Sekyonda v Tumusiime Festus (Misc. Application No. 1344 of 2020)
  • Bashaija v Electoral Commission & Anor (Mbra HCT EP No. 4/2011)
  • Barbra Nambi v Raymond Lwanga (Misc. Application No. 213 of 2017)
  • Ekau David v Dr. Jane Ruth Aceng & 2 others (Misc Application No. 746 of 2018)
  • Steven Semakula v Samuel Serunjogi (HCCS No. 187 of 2012)
  • Tororo Cement Co. Ltd v Frokina International Ltd (Civil Appeal No. 21 of 2001)
  • Uganda Telecom Limited v ZTE Corporation (SCCA No. 3 of 2017)
  • Baku Raphael Obudra and Obiga Kania v The Attorney General (Constitutional Appeal No. 1 of 2003)
  • Walakira Jimmy v Ssengendo Lubwama Isaac & 2 others (High Court Family Division Civil Suit No. 152 of 2018)
  • Kapeka Coffee Works Ltd v NPART (CACA No. 3/2000)
  • Candiru Asina Binnia v Centenary Rural Development Bank Limited (High Court Civil Suit No. 0022 of 2016)
  • Stephen Seruwagi Kavuma v Barclays Bank (u) Limited (Commercial Court Division Miscellaneous Application No. 0634 of 2010)
  • Auto Garage and another v Motokov [1971] EA 514
  • Dima Dominic Poro v Inyani and Another (Civil Appeal No. 007 of 2016)
  • Kebirungi v Road Trainers Ltd & 2 Others [2008] HCB 72
  • Elly B Mugabi v Nyanza Textile Industries Ltd [1992-1993] HCB 227
  • Hajji Nasser Katende v Vithalidas Halidas & Co. Ltd. (CACA No. 84 of 2003)
  • Sir John Bageire v Ausi Matovu (CACA No. 07 of 1996)
  • Nabanoba Desiranta & Another v Kayiwa Joseph & Another (HCCS No. 496 of 2005)
  • UP & TC v Abraham Katumba [1997] IV KALR 103
  • Shaw & Sons Ltd v Shaw [1935] 2 KB 113
  • Lennard's Carrying Co. v Asiatic Petroleum Co. Ltd [1915] AC 705
  • Royal British Bank v Turquand (1856) 6 E & B 327
  • Pan African Insurance Company (u) Ltd v International Air Transport Association (High court Commercial Division civil suit no. 0667 of 2003)
  • Development Finance Co of Kenya v Wino Industries Ltd (1995-98) 2 EA 65
  • Clison v Hawley (1966) EA 41
  • Cairncross v Lorimer (1860) 3 LT 130
  • Okot Nelson Ojuk v Nyeko Esanueri (Civil Appeal No. 058 of 2018)
  • CTM Uganda Limited v Italtile Limited (High Court Commercial Division, Miscellaneous Application no. 806 of 2015)
  • Muddu Oils Refinery Ltd & Anor v Centenary Rural Development Bank (CERUDEB) & 5 Others (HCCS 159 of 2009)
  • Stockloser v Johnson [1954] 1 All ER 630
  • L Schules A.G v Wickman Machine Tools Sales Ltd [1974] AC 234
  • Margaret Namatovu v Tom Kaaya & Anor (Civil Suit 432 of 2005)
  • Lazarus Estates Ltd v Beasley [1956] 1 QB 702
  • Fam International Limited & another v Muhammed Hamid (Civil Appeal No. 16 Of 1993)
  • Rama Corporation Ltd v Proved Tin & General Investments Limited [1952] 1 All ER 554
  • Foss v Harbottle [1843] 67 ER 189
  • Charles Harry Twagira and Sanctum Investments Limited v DFCU Bank Limited (High Court Commercial Division, Civil Suit No. 188 of 2018)
  • Sietco v Noble Builders (U) Ltd (SCCA no. 31 of 1995)
  • James Fredrick Nsubuga v Attorney General (H.C.C.S No. 13 of 1993)
  • Erukan Kuwe v Isaac Patrick Matovu & A'nor (H.C.C.S. No. 177 of 2003)
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Charles Acire v Myaana Engola (H.C.C.S No. 143 of 1993)
  • Kibimba Rice Ltd v Umar Salim (S.C.C.A. No. 17 of 1992)
  • Robert Cuossens v Attorney General (S.C.C.A No. 8 of 1999)
  • Ongom v Attorney General [1979] HCB 267
  • Francis Butagira v Deborah Mukasa (Civil Appeal No. 6 of 1989)
  • Uganda Development Bank v Muganga Construction Company (1981) HCB 35
  • Sutherland v Canada (Attorney General) 2008 BCCA 27

Full judgment

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Kyewalyanga Properties Limited v Kigongo (Land Civil Suit 1 of 2017) [2023] UGHC 64 (23 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.