Wakilii

The New Park Local Up Owners Association Limited v M s Tibeingana & Co. Advocates & 2 Others (Civil Suit 129 of 2020)

High Court · [2023] UGCOMMC 172 · 2023 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract, fraud, and unjust enrichment; 1st and 2nd defendants did not appear; suit proceeded ex parte against them
Decision
Judgment entered for the plaintiff; 1st and 2nd defendants found liable for breach of contract, fraud and unjust enrichment; 3rd defendant to return titles held as collateral

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that the 1st and 2nd defendants breached their contractual duty under a Deed of Understanding by failing to deliver 17 condominium titles to the plaintiff and fraudulently pledging 11 of them to the 3rd defendant as loan security without the plaintiff's authorisation. The court declared that no valid mortgage existed over the plaintiff's titles and ordered their return. The 1st and 2nd defendants were found to have unjustly enriched themselves and were ordered to pay general damages of UGX 70,000,000 plus interest and costs.

Outcome

Judgment entered for the plaintiff; 1st and 2nd defendants found liable for breach of contract, fraud and unjust enrichment; 3rd defendant to return titles held as collateral

Facts

The plaintiff, a condominium owners association, engaged the 1st and 2nd defendants to create 1,021 condominium titles from its mother title as required by DFCU Bank as a condition for loan approval. The plaintiff paid all costs and fully performed its obligations under a Deed of Understanding dated 3 February 2016. The 1st and 2nd defendants created the titles but failed to deliver 17 of them despite multiple demands. The plaintiff later discovered that the 2nd defendant had pledged 11 of the titles to the 3rd defendant as security for a loan of UGX 1,000,000,000 without the plaintiff's knowledge or consent. The 2nd defendant pledged two condominium titles initially, then exchanged them for 11 titles registered in the plaintiff's name. The 1st and 2nd defendants did not appear in court and the suit proceeded ex parte against them.

Issues

  1. Whether the 1st and 2nd defendants breached the deed of undertaking entered into between them and the plaintiff.
  2. Whether or not there is a valid mortgage created on the plaintiff's titles in issue between the 2nd and 3rd defendants.
  3. Whether or not the 3rd defendant legally holds the condominium certificates of title in issue.
  4. Whether or not the defendants acted fraudulently towards the plaintiff.
  5. Whether or not the conduct of the defendants amounts to unjust enrichment.
  6. What remedies are available to the parties.

Orders

  • The 3rd defendant is directed to hand over to the plaintiff the condominium certificates of title belonging to the plaintiff which are held in its custody.
  • The 1st and 2nd defendants are directed to hand over to the plaintiff the remaining 6 condominium certificates of titles belonging to the plaintiff which are still held in their custody.
  • The 1st and 2nd defendants shall pay to the plaintiff the sum of UGX 70,000,000 as general damages for breach of contract, fraud and unjust enrichment.
  • Interest shall be paid on general damages at the rate of 10% per annum from the date of judgment until payment in full.
  • Costs of the suit shall be paid by the 1st and 2nd defendants.

Rules and key headnotes

Breach of Contract — Failure to Deliver Property — Deed of Understanding
A breach of contract occurs when a party fails to perform an obligation imposed by the contract. Where a party undertakes to create and deliver condominium titles and receives full payment but fails to deliver all the titles within the contractually agreed timeline, such failure constitutes a breach of the deed of undertaking.
Mortgage — Validity — Power to Mortgage
Under section 3 of the Mortgage Act 2009, only a person holding land under any form of land tenure may mortgage his or her interest in the land. A person who does not hold title to land and has no power of attorney from the registered proprietor cannot create a valid mortgage over that land. Where condominium certificates of title are registered in the plaintiff's name, no other person can legally mortgage them without proper authorisation.
Fraud — Concealment — Pledging Property Without Authority
Fraud includes intentional perversion of truth for the purpose of inducing another to part with something valuable or to surrender a legal right. Where a party falsely conceals from the plaintiff that it has pledged the plaintiff's property as security and this deception is calculated to allow the defendant to benefit financially to the plaintiff's detriment, such conduct constitutes fraud.
Unjust Enrichment — Receipt of Benefit at Plaintiff's Expense
For unjust enrichment to be established, three elements must be satisfied: first, that the defendant has been enriched by the receipt of a benefit; secondly, that this enrichment is at the expense of the plaintiff; and thirdly, that the retention of the enrichment is unjust. Where a defendant pledges the plaintiff's property as security for a loan without authorisation and enjoys the loan proceeds while the plaintiff's members cannot use the titles for legitimate purposes, the defendant's conduct amounts to unjust enrichment.
Security for Loans — Substitute Collateral — Third Party Titles
A lender who accepts certificates of title registered in a third party's name as substitute collateral without verifying that the borrower has proper authority or power of attorney to pledge those titles acts unlawfully, though such conduct may not amount to fraud if the lender was itself deceived by the borrower.

Legislation cited (1)

Cases cited (6)

  • Mogas Uganda Limited v Benzina Uganda Limited (High Court Civil Suit No. 88 of 2013)
  • Lucy Nelima and Others v Bank of Baroda (Civil Suit No. 55 of 2015)
  • Dan Kyobe v Daniel G.B Kibuuka-Musoke and Another (Civil Suit No. 108 of 2021)
  • Fredrick J.K. Zaobwe v Orient Bank Ltd and Others (Civil Appeal No. 04 of 2006)
  • Peninah Kensheka v Uganda Development Bank (Civil Suit No. 459 of 2011)
  • Cloth Link (U) Ltd v Africa Traders Investments Fund Ltd and Another (Civil Suit No. 234 of 2010)

Full judgment

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

The New Park Local Up Owners Association Limited v M s Tibeingana & Co. Advocates & 2 Others (Civil Suit 129 of 2020) [2023] UGCommC 172 (10 October 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.