Wakilii

Musisi v Grindlays Bank (U) Limited & Another (Civil Appeal 5 of 1986)

Court of Appeal · [1988] UGCA 2 · 1988 Appeal Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a judgment of the High Court dismissing a suit challenging a mortgagee's sale of land
Decision
Appeal allowed in part; registration of the 2nd respondent cancelled, appellant restored as proprietor, caveat restored, and matter remitted to the High Court for proceedings under section 149 of the Registration of Titles Act

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal held the mortgagee's auction sale lawful, finding the bank had power to sell under the mortgage deed and that subsequent encouragement to redeem did not invalidate the sale or raise estoppel. Fraud had not been proved. However, the Chief Justice erred in ordering removal of the caveat and registration of the second respondent without hearing the caveators, contravening sections 149 and 150 of the Registration of Titles Act and natural justice. The appeal was allowed only insofar as it related to registration: the second respondent's registration was cancelled, the appellant restored as proprietor, the caveat restored, and the matter remitted to the High Court for proceedings under section 149. The damages award of Shs. 800,000 was upheld.

Outcome

Appeal allowed in part; registration of the 2nd respondent cancelled, appellant restored as proprietor, caveat restored, and matter remitted to the High Court for proceedings under section 149 of the Registration of Titles Act

Facts

The appellant was the registered proprietor of leasehold property which he mortgaged to Grindlays Bank (U) Ltd, the first respondent, to secure a loan. The loan was not repaid as stipulated, and the bank instructed lawyers and a court broker to sell the property under the mortgage powers. The property was sold by public auction to Baseka House Ltd, the second respondent. Subsequently the appellant, with funds from Cardinal Nsubuga and Father Mulebwa, repaid the loan; the lenders lodged a caveat. The bank initially declined to execute a transfer, but the second respondent obtained a court order in Civil Suit No. 705/80 compelling transfer. At the Land Registry, the second respondent was registered as proprietor and the caveat removed. The appellant sued alleging the sale was null and void for fraud. The High Court found the sale proper and fraud unproved, but awarded the appellant Shs. 800,000 damages against the bank for negligence. The appellant appealed.

Issues

  1. Whether the mortgagee's sale of the property by public auction was lawful and proper.
  2. Whether fraud on the part of the respondents in the sale of the property had been proved.
  3. Whether the second respondent was a bona fide purchaser for value.
  4. Whether the Chief Justice erred in ordering removal of the caveat and registration of the second respondent without hearing the caveators.
  5. Whether the award of Shs. 800,000 in damages was inadequate.

Orders

  • Appeal allowed in part.
  • Judgment and decree of the High Court set aside only insofar as they relate to registration of the 2nd respondent as proprietor.
  • Cancellation of the 2nd respondent as registered proprietor directed and restoration of the appellant as registered proprietor.
  • Restoration of the caveat lodged by the Cardinal and Father Mulebwa directed.
  • Case remitted to the High Court for proceedings under section 149 of the Registration of Titles Act to enable the caveators to be heard.
  • Appellant awarded half his costs in the Court of Appeal; High Court costs order unaltered.

Rules and key headnotes

Mortgages — Mortgagee's Power of Sale — Validity of Auction Sale After Default
Where a mortgagee has power to sell upon default and exercises it in accordance with the terms of the mortgage deed, the sale is lawful; the mortgagee's subsequent encouragement of the mortgagor to redeem after the sale does not invalidate a completed sale nor found an estoppel against asserting the sale.
Bona Fide Purchaser — Knowledge Acquired After Concluded Sale
A purchaser who buys property at auction is a bona fide purchaser where they honestly intend to purchase and do not intend wrongful acquisition; knowledge acquired after the contract of sale has been concluded does not per se establish fraud, since execution of the transfer follows the sale.
Standard of Proof — Allegations of Fraud in Civil Proceedings
Allegations of fraud must be strictly proved; while the standard need not reach proof beyond reasonable doubt, something more than a mere balance of probabilities is required, and there should be indication the trial judge applied this standard.
Caveats — Removal Without Hearing Caveators — Sections 149 and 150 Registration of Titles Act
So long as a caveat remains in force, the Registrar of Titles may not enter any change in proprietorship except in accordance with the caveat or with written consent; a court may not order removal of a caveat and register a new proprietor without affording the caveators a hearing, as doing so condemns them unheard contrary to natural justice.
Assessment of Damages — Date of Breach Rule
Damages are assessed as at the time of the breach, not at the time of hearing; inflation in property value occurring after the breach does not entitle a plaintiff to a higher award.

Legislation cited (9)

Cases cited (10)

  • Robert Kitariko v Twino Kataana (Civil Appeal No. 2 of 1982)
  • Kiboro V. Posts & Telecommunications Corporation (1974) E.A. 155
  • Barclays Bank of Uganda Ltd V. Eddy Podridges, Civil Appeal No. 5 of 198? (UCA) unreported
  • Hugo V. Wanjira (1970) E.A.
  • Shanti V. Zlindocha & Others (1973) E.A. 207
  • David Sebodda Colima v Rebecca Tusoke (Civil Appeal No. 12 of 1965)
  • Adonia vs. Mutekanga 197? EA 429
  • Maddingford v. Mutual Society (1879)
  • Ratilal Gordhanbhai Patel vs. Lalji Makanji (1957)
  • Ryde vs. Bushell and Another 1967 817

Full judgment

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

Musisi v Grindlays Bank (U) Limited & Another (Civil Appeal 5 of 1986) [1988] UGCA 2 (3 December 1988)
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.