THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
[COMMERCIAL DIVISION]
MISC APPLICATION NO 424 OF 2010
(Arising out of Misc Application No. 527 of 2010 and Civil Suit No. 309 of 2009)
ESIMU MOSES::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANT
VERSUS
1. CAIRO INTERNATIONAL BANK LTD
2. CELLULAR GALORE LTD::::::::::::::::::::::::: RESPONDENT
BEFORE: LADY JUSTICE HELLEN OBURA.
RULING
This ruling arises from a preliminary objection that counsel for the 1st Respondent raised when this application came up for hearing on 13th December 2010.
The Applicant filed this application to reinstate Misc. Application No. 527 of 2010 that was dismissed under Order 9 Rule 22 of Civil Procedure Rules (CPR) for want of prosecution.
The brief background of this application is that the Applicant gave power of attorney over the suit property to the 2nd Respondent who mortgaged it to the 1st Respondent, obtained a loan facility and failed to repay it.
The 1st Respondent sought to exercise its power of sale of the mortgaged land and the Applicant filed HCCS 309 of 2009 to stop it on the ground that the powers of attorney the 2nd Respondent used to borrow money from the 1st Respondent had expired by the time the borrowing was done. He sought for non-interference and quiet possession among other prayers.
The Applicant sought a Temporary Injunction under Misc. Application No. 493 of 2009 which was granted on 5th October 2009 to stop the sale of the suit property until the disposal of HCCS No. 309 of 2009. HCCS No. 309 of 2009 was scheduled on 29th October 2009 and fixed for hearing on 19th May 2010.
On 19th May 2010, counsel for the Plaintiff/Applicant did not appear and the case was adjourned to 14thSeptember 2010. Again, neither the Plaintiff/Applicant nor his Counsel appeared and the suit was dismissed with costs under Order 9 Rule 10 of the CPR as against the 1st Respondent and Order 9 Rule 17 of the CPR, as against the 2nd Defendant.
The Applicant filed Misc Application No. 527 of 2010 to reinstate HCCS No. 309 of 2010 which was also dismissed for want of prosecution on 18th November 2010 when it came up for hearing and neither the applicant nor his counsel appeared. He then filed this application to reinstate the same.
This application is supported by an affidavit sworn by Mr. Esimu Moses the Applicant giving reasons for their failure to attend court on the day Misc. Application No. 527 of 2010 was dismissed for want of prosecution.
An affidavit in reply to oppose the application was sworn by Mrs. Hedwige Gariyo on the 13th December 2010. She denied all the contents of the affidavit in support save for paragraph 1.
When Misc No.424 of 2010 came up for hearing on 13th December 2010, the Applicant was represented by Mr. Musa Nsimbe while the 1st Respondent was represented by Mr. Enos Tumusiime. Neither the 2nd Respondent nor its counsel were present.
Counsel for the 1st Respondent raised a Preliminary Objection to the effect that the subject matter of the suit had already been sold to a third party and the 1st Respondent had parted with its possession which was now in the hands of the buyer.
Counsel submitted that when HCCS No. 309 of 2010 was dismissed with costs on the 15th of September 2010, on the 22nd of September 2010, the Auctioneers (Malujje Auctioneers) advertised the said property for sale in the New Vision Newspaper. He contended that on 4th October 2010, the 1st Respondent’s valuers, Professional Consultants and Valuers, carried out a valuation and submitted a Valuation Report to the 1st Respondent.
That on 25th October, 2010, the Auctioneers sold the suit property to one Mr. Edmund Habaasa for Shs. 110,000,000/= who paid cash to the 1st Respondent and the 1st Respondent handed over the Title Deed and possession of the said property to him. That on 25th October 2010, the auctioneers also wrote to the Registrar, Commercial Division informing Court of the sale.
Counsel stated that the issue for determination is whether the 1st Respondent as mortgagee had powers to sell the suit property. He then submitted that section 20 of the Mortgage Act, Cap 8 as amended in 2009 empowers the 1st Respondent as a mortgagee to sell the mortgaged land when the mortgagor is in default. Further that, section 176(a) of the Registration of Titles Act, Cap 230 puts the interest of a mortgagee over and above the mortgagor in default.
He submitted that Section 176(a) of the Registration of Titles Act has received judicial recognition in KEHAR SINGH &ANOR VS B.D.BHATT [1962] EA 759 PER Sir Alastair Forbes,V-P (as be then was) and OLINDA DE SOUZA FIGUEIRENDO V. KASSAMALI NANJI [1962] ED 756 per Sheridha J to the effect that; once a mortgage has been registered it could not in the absence of fraud be impeached, referring to the then S. 184, RTA, now S. 176 RTA.
Counsel for the 1st Respondent prayed that the preliminary objection be upheld and the application be dismissed with costs.
Counsel for the Applicant applied to make a written reply to the submission of counsel for the respondent on the ground that he was not served with the supplementary affidavits sworn by Ms Hedwige Gariyo and Colonel (RTD) Artur Musinguzi in MA No. 527 of 2010 which were referred to in the submission. His application was granted and he accordingly filed a written submission on the 22nd December, 2010 to which counsel for the respondent filed a rejoinder on the 10th January 2011.
Counsel for the Applicant opened his submission generally by stating that when Civil Suit No. 309 of 2009 was dismissed for non appearance of counsel for the Plaintiff who was indisposed, the applicant without undue delay lodged M/A 527 of 2010 to reinstate the suit on 17th September 2010. He submitted further that, five days later the respondent advertised the suit property for sale by public auction on 22/09/2010 in continuance of proceedings. He then observed that the applicant’s application was meant to be heard but was dismissed hence this application.
In specific reference to the grounds for the preliminary objection, counsel submitted that as indicated in paragraphs 4 and 5 of the Affidavit in Rejoinder, the Applicant lodged a caveat on the suit property vide KLA 392091 of 2008, and the said caveat is still registered on the certificate of title.
He contended that it cannot therefore be true that the suit property has been sold to a 3rd party since ownership of property is proved by registration and the applicant is still the registered proprietor.
He submitted that S.59 of Registration of Titles Act, CAP 230 is to the effect that a Certificate of Title is conclusive evidence of ownership and noted that there is a wealth of authority to affirm this position of the law. He referred to the cases of Famous Cycle Agencies Ltd & 4 Others vs Mansukhalal Ramji Karia & Others SCCA 16 of 1994 [1995]IV KALR 100 and Andereya Lwanga vs Registrar of Titles [1980] HCB 24.
He concluded his submission on this point by emphasizing that the subject matter of the suit has not been transferred to a 3rd a party as alleged since a statement of search from the land office Kampala reveals that the Applicant is still the registered proprietor of the suit land.
Counsel for the Applicant challenged the alleged sale of the property by a Court Bailiff M/s Muluje Auctioneers on two grounds. Firstly, that it was done in continuance of court proceedings touching the subject matter of the suit in so far as by the time the alleged sale took place the Applicant had lodged an application on 17th of September 2010 to reinstate the main suit which had been fixed for determination on 18th November 2010.
He contended that the alleged sale on 25th October 2010 was illegal in the continuance of proceedings and the alleged purchaser’s interests would still be subject to the outcome of civil suit No. 309 of 2009 and the Applicant’s caveat.
Secondly, that a Court Bailiff could not sell unless in possession of a warrant of attachment from this court permitting him to sell the suit property and this was not the case in the present case implying that the alleged sale was illegal.
Finally, counsel for the Applicant attacked the validity of the two supplementary affidavits relied upon in counsel for the respondent’s submission as being improperly before court.
He contended that an examination of the said supplementary affidavits in reply which were sworn by Hedwige Gariyo & Rtd Colonel Arthur Musinguzi show that they were filed before they were commissioned. He observed that whereas the affidavits were filed on the 17th of November 2010, they indicate that they were sworn on the 18th day of November 2010.
He submitted that since the affidavits were intended to bring forward evidence in rebuttal the time for that evidence to be properly before court was at filing. He argued that a statement which is unsworn cannot pass for an affidavit and on that basis alone the affidavits should be struck out.
Counsel for the Applicant concluded his submission on this point by stating that the affidavits which are the basis of the respondent’s preliminary objection were filed in court before being commissioned but were later withdrawn to have them commissioned. He pointed out that at least the Commissioner for Oaths complied with section 5 of the Commissioner for Oaths (Advocates) Act by putting the date to reflect when the documents were sworn to by the deponents.
He pointed out that how this was achieved is a matter that should interest this court on its pursuit of the principles of legality and fairness to all as this would further preserve its dignity and righteousness.
He submitted that equity and law demand that any illegality committed should be faulted at any stage it is discovered as was held in the case of Makula International Limited Vs His Eminence Cardinal Emmanual Nsubuga and Another reported in 1982(HCB]11.
He prayed that the respondent’s preliminary objection be overruled with costs and the application be allowed to proceed on the merits.
In his rejoinder, counsel for the 1st Respondent addressed the issues raised by counsel for the Applicant. On the contention that the sale was void because of the applicant’s caveat that was on the registry copy of the land title, counsel submitted that S. 176(a) of the Registration of Titles Act protects a mortgagee who sells when the mortgagor is in default, as it is in this case here.
On the submission that the property was auctioned by a Court Bailiff, counsel submitted that this was not true because the 1st Respondent instructed an auctioneer, not a Court Bailiff to sell by public auction under the 1st Respondent’s right as a mortgagee against the mortgagor in default.
On the argument by counsel for the applicant that the sale took place when Misc. Appl. No. 527 of 2010 had already been filed and that there was a temporary injunction in place, counsel for the 1st respondent submitted that this cannot hold as in the first place the temporary injunction expired when HCCS No 309 of 2009 was dismissed with costs on 15th September 2010. That secondly, the mere filing of Misc. Appl. No. 527 of 2010 neither reinstated HCCS No. 309 of 2009 nor the temporary injunction that expired with the dismissal of that suit.
He contended that from 15th September 2010, the 1st respondent had powers to sell the suit property and duly sold and the said sale could not be impeached because the subject matter of this application has already changed hands from the 1st Respondent to the purchaser, Mr. Edmund Habaasa and therefore the Application could not stand.
On the contention of counsel for the Applicant that the dates on the affidavits were a day after they were filed in Court, counsel argued that this was a clerical dating error by the Commissioner for Oaths which could not vitiate the affidavit as it does not go to its root. He further argued that if that mistake was to be treated so, then he would invite this court to similarly treat the Applicant’s Notice of Motion, paragraph (b) where the applicant had put “Application Suit” and then attempted to whitewash the word “Suit”. He prayed that the date of 18th November 2010 be treated as a clerical mistake which should not vitiate the affidavit.
He invited court to take judicial notice of the fact that the Applicant and his counsel had been consistently absent from court when the case was fixed by consent of all parties as could be seen from the court record. He concluded that this was an abuse of the court process and reiterated his earlier prayer that the preliminary objection be up held and the application be dismissed with costs.
Upon listening to the objection raised by counsel for the 1st Respondent and reading the written response and the rejoinder as well as perusing all the documents relating to this application, I find that there are four issues for determination. They are;
1.
Whether the 1st Respondent as mortgagee had powers to sell the suit property.
2.
Whether there was a temporary injunction in place at the time of advertisement and sale of the suit property.
3.
Whether the affidavits that were relied upon by counsel for the 1st Respondent to prove sale of the property are valid.
4.
Whether the purported sale was absolute in view of the alleged caveat by the applicant on the registry copy of the title of the suit property.
I will consider these issues in the order in which I have raised them.
On issue number one, counsel for the 1st Respondent has already answered it in his submission that section 20 of the Mortgage Act, Cap 8 of 2009 empowers a Mortgagee (1st Respondent) to sell the mortgaged land when the Mortgagor is in default. I agree with him because this is the position of the law and so I do not need to belabor the point. The first issue is therefore answered in the affirmative.
As regards the second issue, counsel for the 1st Respondent submitted that the argument of counsel for the Applicant that there was a temporary injunction in place cannot hold as in the first place the temporary injunction expired when HCCS No 309 of 2009 was dismissed with costs on 15th September 2010. That secondly, the mere filing of Misc. Appl. No. 527 of 2010 neither reinstated HCCS No. 309 of 2009 nor the temporary injunction that expired with the dismissal of that suit.
I wholly agree with this submission because the temporary injunction that was granted by consent of both parties on the 5th October 2010 restrained the sale of the suit property until the disposal of HCCS No. 309 of 2009. Unfortunately, HCCS No. 309 of 2009 was disposed of by dismissal for non-appearance of the plaintiff and, or his counsel.
Consequently, the temporary injunction went with the main suit since it was meant to preserve the status quo for purposes of determining the dispute in the suit. This answers the second issue in the negative.
On the third issue about the validity of the two affidavits in Misc. Appl. No. 527 of 2010, while counsel for the applicant is challenging them for bearing a wrong date, the copies filed in court actually show that they were not dated. I will therefore determine their validity on that basis. I believe there was an attempt to date the copies retained by counsel without realizing that the court copies were not dated.
Section 5 of the Commissioner for Oaths (Advocates) Act, Cap. 5 provides as follows:
“Every Commissioner for Oaths before whom any oath or affidavit is taken or made under this Act shall state truly in the jurat or attestation at what place or on what date the oath or affidavit is taken or made”. (Emphasis added)
Similarly, section 6 of the Oaths Act, Cap. 19 provide as follows:
“Every Commissioner for Oaths or notary public before whom any oath or affidavit is taken or made under this Act shall state truly in the jurat or attestation at what place or on what date the oath or affidavit is taken or made”. (Emphasis added)
Both are mandatory provisions of substantive laws that cannot be argued away as mere technicalities under Article 126 (2) (e) of the Constitution. In the case of Kasirye Byaruhanga & Co. Advocates vs. UDB SCCA No. 2 of 1997 where their Lordships adopted their earlier ruling in the case of UTEX Industries vs Attorney General SCCA no 52 of 1995, they had this to say,
“It is our submission that where legislature prescribes something in mandatory language the relevant provision is imperative and obligatory. Non compliance would affect the validity of the act done in disobedience of them.”
In view of the above authority, I rule that there was non-compliance with Section 5 of the Commissioner for Oaths (Advocates) Act, Cap. 5, as well as section 6 of the Oaths Act, Cap 19 when the two affidavits were commissioned. This therefore, renders them invalid and of no evidential value.
In the circumstances, I order that they should be struck off and they are hereby struck off. Any evidence that they were meant to present are accordingly disregarded.
This answers the third issue in the negative.
On the last issue, counsel for the Applicant submitted that as indicated in paragraphs 4 and 5 of the affidavit in rejoinder, the applicant lodged a caveat on the suit property vide KLA 392091 of 2008, and the said caveat is still registered on the certificate of title. He contended that it cannot therefore be true that the suit property has been sold to a 3rd party since ownership of property is proved by registration and the applicant is still the registered proprietor.
Counsel for the 1st Respondent was a bit evasive in his response on this point. Counsel submitted that S. 176(a) of the Registration of Titles Act protects a mortgagee who sells when the mortgagor is in default, as it is in this case but did not specifically address the issue of caveat.
Section 176 (a) of the RTA provides as follows:
“No action of ejectment or other action for the recovery of any land shall lie or be sustained against the person registered as proprietor under this Act, except in any of the following cases-
(a)
The case of a mortgagee as against the mortgagor in default.”
Reading from the head note, section 176 of the RTA provides for protection of registered proprietor against ejectment under the Act except in certain cases. The case of a mortgagee as against the mortgagor in default happens to be one of those exceptions.
Counsel for the 1st Respondent relied on this provision to defend the sale that was done with a subsisting caveat of the Applicant who is the registered proprietor. The applicant in his affidavit in rejoinder sworn on the 22nd of December, 2010, stated in paragraphs 4 and 5 thereof as follows:
“(4) In further reply to paragraph 4 the purported sale by auction was subject to my caveat lodged on the 5th day of October 2008 vide Instrument No. KLA 392091.
(5) That I have conducted a search in the land registry mailo section and statement of search reveals that the propriety of the property has not changed. A copy of statement of search is attached marked “A”.”
Indeed a copy of statement of search annexure (“A”) signed by Ms Batiibwe Lydia for Ag. Commissioner for Land Registry dated 13th December 2010, confirm that the registered proprietor of Kyadondo Block 255 Plot 459 is Mr. Moses Esimu of P.O. Box 2726, Kampala registered under Instrument number KLA 370341 of 19.3.08.
In the same statement, the incumbrances listed are mortgage by Cairo International Bank Ltd registered under Instrument No. KLA 373180 of 21.4.08 and caveat by Moses Esimu registered under Instrument No. KLA 392091 of 8.10.08.
Court’s request for a certified copy of the white page of the title in order to confirm its current status was vaguely responded to by the Commissioner Land Registration. She responded that the registry copy of the title was not readily available and she confirmed the entries as on 21st April 2008 which does not help court in determining this objection.
This notwithstanding, I believe the status of the entries have not changed since 13th December 2010 when the search information quoted above was obtained. If it had been so, counsel for the respondent would have given contrary information in rejoinder to counsel for the applicant’s submission. I will therefore rely on that information to confirm that there is a subsisting caveat of the applicant on the registry copy of the title to the suit land.
There is no sale agreement exhibited to prove the alleged sale. All that was stated in paragraph 5 of the affidavit in reply sworn by Mrs. Hedwige Gariyo on the 13th December 2010 is as follows;
“That the applicant is wasting courts time and putting the 1st respondent to further legal costs as the said property was sold on 25th October 2010 to Mr Edward Habaasa for Shs. 110,000,000/= who paid the sum of money to the 1st respondent and took possession of the said land and its certificate of title”.
Earlier in paragraph 4 she had stated thus:
“That I reiterate the contents of my affidavits filed in Misc. Appl. No. 527 of 2010, affidavit in reply sworn on 11th October, 2010 and supplementary affidavit sworn on 18th November 2010”.
None of the said affidavits were attached for ease of reference particularly in view of the fact that they were sworn in respect of another application which was dismissed and the file was closed. In the interest of justice I took judicial notice of the said affidavits by referring to the closed file and that is when I discovered that the supplementary affidavit was not dated as indicated under the third issue.
The rest of the evidence to prove sale was adduced from the bar in counsel for the 1st Respondent’s submission giving details of how the advertisement and sale was conducted by the auctioneer. There was no supplementary affidavit sworn by the auctioneer for purposes of adducing evidence to prove sale in this application. Reference was only made to an affidavit he deposed in Misc. Appl. No. 527 of 2010.
Although I find this irregular, I also took judicial notice of that affidavit and I discovered that Colonel (Rtd) Arthur Musinguzi in his capacity as the Managing Partner of M/S Malujje Auctioneers had sworn an undated supplementary affidavit in Misc. Appl. No. 527 of 2010 to confirm that the he advertised and sold the suit property by public auction to Mr. Edmund Habaasa.
He attached a photocopy of the advertisement in the New Vision newspaper of 22nd September 2010, the receipt that his firm issued to Mr. Edmund Habaasa and a photocopy of a letter that he wrote to the Registrar of the High Court, Commercial Division informing her of the sale. No sale agreement was attached to show whether the sale was done subject to the applicant’s caveat.
I have already declared the two affidavits to be invalid in this ruling under the third issue. However, even if for argument’s sake, we were to assume that the alleged sale took place, would it be absolute sale in view of the fact that it was done subject to the applicant’s caveat on the registry copy of the title?
Absolute sale is defined in Black’s Law Dictionary 7th Edition as;
“A sale in which possession and title to the property pass to the buyer immediately upon the completion of the bargain”.
The applicant as a registered proprietor of the suit land registered a caveat under Instrument No. KLA 392091 of 8.10.08 to protect his interest. I take judicial notice of paragraph 5 (d) of the plaint in HCCS No. 309 of 2009 that was dismissed for want of prosecution wherein the applicant/plaintiff had stated as follows:
“That in October 2008 the plaintiff learnt of the 1st and 2nd defendant’s illegal actions of mortgaging his land and lodged a caveat on the land registry which was entered on 8th October 2008”.
The Applicant filed the ill fated HCCS No. 309 of 2009, to challenge the entire transaction but unfortunately, it was never determined on merit. This application is part of his attempt to have the same reinstated but it has met the objection raised by counsel for the 1st Respondent.
There are a number of authorities in our jurisdiction where sales subject to a caveat have been nullified and in deciding this issue I am fortified by them.
In Frederick K. Zaabwe vs. Orient Bank Ltd & Others Civil Appeal No. 4 of 2006, Hon. Justice B. Kaureebe in his lead judgment stated as follows;
“Be that as it may, the caveat on the title was still subsisting at the time when the third party, one Ali Hassan purchased the property and signed a sale agreement with the 1st respondent………..How can a purchaser who buys property subject to a caveat claim not to have had notice, the merits or demerits of the caveat notwithstanding. In my view, Ali Hassan bought property that was subject of a caveat. He cannot be a bona fide purchaser without notice. In the circumstances, the transfer to him is defeated by fraud”.
In view of the above authority I believe that the purported sale of the suit property subject to a caveat is not absolute and that possibly explains why the title has not yet been transferred to the alleged buyer. I am of the firm view that the sale can be successfully challenged by the applicant whose caveat ought to have put the buyer on notice about the applicant’s interest in the property.
It would have been a different case if the mortgagee had exercised his right where there was no caveat by the applicant. In the circumstances of this case, the purported sale (which is not proved) is not absolute and therefore it does not affect the hearing and determination of this application.
In the result having found that the purported sale which is not even proved is not absolute, I overrule the Preliminary Objection for not having merit and order that the application proceeds for hearing on merit.
Costs shall be in the cause.
Hellen Obura
Judge
7th April 2011
Ruling delivered in chambers at 3.00 pm in the presence of:
1.
Mr. Musa Nsimbe for the applicant
2. Mr. Enos Tumusiime for the 1st Respondent
3. Mr. Moses Esimu -Applicant
4. Ms. Ruth Naisamula- Court Clerk
7/04/2011
