Wakilii

Lubwama & Anor v Bank of Africa (U) Ltd & Ors (Civil Suit No 177 of 2013)

High Court · [2016] UGHCLD 26 · 2016 Judgment for Plaintiffs AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaration of ownership and cancellation of fraudulent mortgage and registration
Decision
Mortgage declared null and void; fraudulent registrations cancelled; suit land restored to rightful owners; defendants permanently enjoined from trespassing

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a mortgage executed by a person not the registered proprietor and without a valid Power of Attorney is null and void under sections 115 and 146 of the Registration of Titles Act. Where the mortgage deed fails to comply with the attestation requirements of section 148 RTA (signatures not in Latin character and capacity of witnesses not disclosed), the mortgage is invalid. A bank that advances a loan without verifying the mortgagor's authority acts fraudulently and cannot pass good title to third parties. Defendants who purchase mortgaged property with knowledge or constructive notice of the mortgagor's lack of authority are not bona fide purchasers. Mortgage and subsequent registrations cancelled; plaintiffs declared lawful owners.

Outcome

Mortgage declared null and void; fraudulent registrations cancelled; suit land restored to rightful owners; defendants permanently enjoined from trespassing

Facts

The late Agati Tiisa was the registered proprietor of Mawokota Block 39 Plots 56 and 59. The late Kiggundu Joseph Salongo, father of the 2nd plaintiff, purchased a legal interest in Plot 59 from Agati Tiisa in 1981. In 2010 the plaintiffs' family was evicted by the 2nd to 5th defendants, who are close relatives. The plaintiffs discovered that the suit land had been mortgaged to Sembule Investment Bank (U) Ltd (predecessor to the 1st defendant) by one Lubwama Jackson, not the registered proprietor, purportedly under a Power of Attorney. The bank subsequently sold the suit land to the 2nd to 5th defendants following alleged default. The defendants became registered proprietors after having a caveat lodged by the plaintiffs removed by fraudulent means, including impersonating the deceased registered proprietor. The defendants had been raised by the 2nd plaintiff's father on the suit land and were aware of the family's interest in the property.

Issues

  1. Whether the suit land was lawfully mortgaged to the 1st defendant's predecessors.
  2. Whether the 1st defendant passed good title to the 2nd, 3rd, 4th, and 5th defendants.
  3. Whether the 2nd, 3rd, 4th and 5th defendants are bona fide purchasers for value without notice of fraud.
  4. What remedies are available to the parties?

Orders

  • The mortgage lodged by the 1st defendant's predecessor is declared null and void.
  • The late Agati Tiisa is declared the lawful owner of land comprised in Mawokota Block 39 Plot 56.
  • The late Kiggundu Joseph Salongo is declared the lawful owner of land comprised in Mawokota Block 39 Plot 59 land at Jumba.
  • The 2nd, 3rd, 4th and 5th defendants fraudulently acquired registration on title to the suit land in their names.
  • The names of the 2nd, 3rd, 4th and 5th defendants on the title of the suit land are cancelled.
  • The 2nd, 3rd, 4th and 5th defendants shall deliver up to the Registrar of Titles the duplicate certificate of title of the suit land for appropriate action.
  • A permanent injunction is granted restraining the 2nd, 3rd, 4th and 5th defendants from trespassing on the suit land.
  • The plaintiffs are awarded UGX 50,000,000 as general damages at an interest rate of 8% per annum from the date of judgment till payment in full.
  • Costs of the suit awarded to the plaintiffs.

Rules and key headnotes

Mortgages — Execution Requirements — Authority of Mortgagor
Under section 115 of the Registration of Titles Act, only the registered proprietor of land may mortgage it. Where a mortgage is executed by a person other than the registered proprietor, the mortgagee must prove that the mortgagor acted under a valid Power of Attorney donated by the registered proprietor pursuant to section 146(1) RTA. Failure to adduce the Power of Attorney in evidence means the bank has failed to prove that the mortgage was lawfully executed.
Mortgages — Formal Requirements — Attestation in Latin Character
Section 148 of the Registration of Titles Act mandates that every mortgage deed must be attested with signatures in Latin character, or a transliteration must be provided. The capacity of attesting witnesses must be disclosed. Non-compliance with these requirements renders the mortgage deed invalid and unenforceable.
Mortgage Lending — Due Diligence — Verification of Authority
A bank that advances a loan on the strength of a purported Power of Attorney without verifying its authenticity with the registered proprietor, and without ensuring the mortgage deed complies with statutory formalities, acts negligently and fraudulently. Such conduct prevents the bank from passing good title to subsequent purchasers.
Bona Fide Purchaser — Knowledge and Notice — Constructive Notice
A purchaser who has actual or constructive knowledge that the vendor lacks lawful title to the property cannot claim to be a bona fide purchaser for value without notice. Where a purchaser knows or ought reasonably to have known that the mortgagee did not have a valid mortgage, they take the property subject to the defects in title.
Fraud — Impeaching Registered Title — Fraudulent Acquisition
To impeach the title of a registered proprietor on grounds of fraud, the fraud must be attributable to the registered proprietor either directly or by necessary implication. Fraud includes any deliberate act to deprive another of their interest in property, including attempting to remove caveats by impersonating a deceased registered proprietor and proceeding with a purchase despite knowledge of adverse claims.
Mortgages — Foreclosure and Sale — Statutory Procedure
Section 8 of the Mortgage Act requires that foreclosure be by court order and that any subsequent sale be by public auction pursuant to section 9. A sale by private treaty without following the statutory procedure is invalid and does not pass good title.
Trespass to Land — General Damages — Assessment
General damages for trespass are awarded to compensate for loss of use, physical inconvenience, mental distress, and suffering caused by unlawful eviction and deprivation of property. The measure of damages is the sum that will put the injured party in the position they would have been in had the wrong not occurred.

Legislation cited (13)

Cases cited (13)

  • Fredrick Zzabwe v Orient Bank Ltd & 5 Others (Supreme Court Civil Appeal No. 4 of 2006)
  • Bishopgates Motor Finance vs. Transport Brakes Ltd [1949] 1 KB 332
  • Halling Manzoor v Serwan Singh Baram (Supreme Court Civil Appeal No. 9 of 2001)
  • Mbuthia vs. Jimba credit finance Corporation and another EALR (1986-1989) EA.340
  • General Parts (U) Limited v Non Performing Assets Recovery Trust (Civil Appeal No. 5 of 1999)
  • Hannigton Njuki v William Nyanzi (High Court Civil Appeal No. 434 of 1996)
  • Simon Kato Bugoba vs. Samuel Kigozi & Mayanja Mbabali [2007]1 HCB 122
  • Kampala Bottlers Ltd v Damanico (U) Ltd (Supreme Court Civil Appeal No. 22 of 1992)
  • Makula International vs. Cardinal Emmanuel Nsubuga & Anor [1982] HCB 11 (CA)
  • James Fredrick Nsubuga v Attorney General (High Court Civil Suit No. 13 of 1993)
  • Storms vs. Hutchison (1905) AC 515
  • Kampala District Land Board & George Mitala v Venansio Babweyana (Civil Appeal No. 2 of 2007)
  • Livingstone vs. Ronoyard's Coal Co. (1880) 5 APP. Case 259

Full judgment

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

Lubwama & Anor v Bank of Africa (U) Ltd & Ors (Civil Suit No 177 of 2013) [2016] UGHCLD 26 (7 November 2016)
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.