Wakilii

Lebel (E.A.) Limited v Eclipse Limited (Civil Suit 1520 of 1986)

High Court · [1991] UGHC 91 · 1991 Counter-Claim Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Counter-claim by 2nd defendant following plaintiff's withdrawal of main suit; heard ex-parte due to plaintiff's non-appearance
Decision
Counter-claim allowed; property ordered to be registered in counter-claimant's name; fraudulent re-transfer cancelled

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that Alphonse Odido was the beneficial owner of the suit property under the doctrine of resulting trust, as he personally funded the entire purchase through a loan he secured and repaid, despite legal title being registered in Eclipse Mercantile Ltd's name. Eclipse Mercantile Ltd held the property as trustee for Odido. The subsequent re-transfer of the property from Eclipse Mercantile Ltd to Lebel EA Ltd was fraudulent and a breach of the trustee's duty to the beneficiary. The court ordered the fraudulent transfer cancelled and directed registration of the property in Odido's name.

Outcome

Counter-claim allowed; property ordered to be registered in counter-claimant's name; fraudulent re-transfer cancelled

Facts

Alphonse Odido leased property at Plot 65 Mobutu Road, Makindye from Lebel EA Ltd on a yearly basis. In 1985, Lebel EA Ltd decided to sell the property by public auction. Odido applied to purchase the property but used Eclipse Mercantile Ltd's name on the bid because he had no account with Uganda Commercial Bank (UCB), from which he had negotiated a loan. Gilbert Ochwada, Managing Director of Eclipse Mercantile Ltd and Odido's friend, consented to this arrangement. Odido secured a loan of Shs. 50,000,000/= from UCB channelled through Eclipse Mercantile Ltd's account, and added Shs. 10,000,000/= from his own funds. The total purchase price of Shs. 60,000,000/= was paid to Lebel EA Ltd through Eclipse Mercantile Ltd and directly by Odido. Lebel EA Ltd obtained consent from the landlord, Mr. F. Lutwama, to sell the property. Legal title was transferred to Eclipse Mercantile Ltd with a mortgage to UCB. Odido personally repaid the loan. Subsequently, Eclipse Mercantile Ltd and Lebel EA Ltd colluded to re-transfer the property back to Lebel EA Ltd. Lebel EA Ltd then withdrew its own suit against Eclipse Ltd, prompting Odido's counter-claim for recognition as beneficial owner.

Issues

  1. Whether Alphonse Odido was the beneficial owner of the suit property despite legal title being registered in the name of Eclipse Mercantile Ltd.
  2. Whether the principle of resulting trust applied to establish Odido's beneficial ownership.
  3. Whether Eclipse Mercantile Ltd and Lebel EA Ltd acted fraudulently in re-transferring the suit property from the trustee to the plaintiff.

Orders

  • Counter-claim allowed.
  • The re-transfer of the suit property from Eclipse Mercantile Ltd to Lebel EA Ltd declared illegal, null and void, and ordered to be cancelled as having been obtained fraudulently and illegally.
  • Declared that the suit property belongs to Alphonse Odido who is the rightful owner.
  • Ordered that neither the plaintiff nor the 1st defendant shall interfere with Odido's quiet possession of the house.
  • After cancellation of Lebel EA Ltd from the register in respect of Block 21 Plot 63 Mobutu Road Makindye, the Chief Registrar of Titles is directed to register Block 21 Plot 63 Mobutu Road, Makindye in the names of Alphonse Odido.
  • No order as to costs.

Rules and key headnotes

Trusts — Resulting Trust — Purchase in Another's Name with Purchaser's Funds
If a person purchases property in the name of another and provides all the funds for the purchase, the person in whose name the property is registered will hold that property on resulting trust for the person who provided the funds, unless fraud, illegality, or a presumption of advancement can be established.
Trusts — Trustee's Duties — Duty of Loyalty and Duty to Preserve Trust Property
A trustee owes the beneficiary duties including the duty to preserve the trust property, the duty of loyalty requiring the trustee to act exclusively for the benefit of the beneficiary, and the duty to keep and render full and candid accounts demonstrating how the trust property has been preserved.
Trusts — Breach of Trust — Transfer of Trust Property Without Authority
A trustee who transfers trust property to a third party without the beneficiary's authority commits a breach of trust and acts fraudulently toward the beneficiary, particularly where the third party has knowledge of the trust.
Contract Law — Illegality — Agreements to Defraud
An agreement between parties designed to defraud a third party is illegal and void, and any transfer of property pursuant to such an agreement will be set aside as illegal and of no effect.
Land & Property — Registration — Cancellation of Fraudulent Registration
Where property has been registered in a party's name through fraud or breach of trust, the court will order cancellation of that registration and direct the Registrar of Titles to register the property in the name of the rightful beneficial owner.

Cases cited (5)

  • Re Howes (1905) 21 TLR
  • Hussey v Palmer [1972] 1 WLR 1286
  • Crouhard v Cartwright [1954] 3 All ER 649
  • Re Asteris Will Trusts [1956] Ch 395
  • Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621

Full judgment

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

Lebel (E.A.) Limited v Eclipse Limited (Civil Suit 1520 of 1986) [1991] UGHC 91 (7 August 1991)
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.