THE REPUBLIC OF UGANDA
IN THE COURT OF APPEAL OF UGANDA AT KAMPALA
CIVIL APPEAL NUMBER 51 OF 2007

GENERAL INDUSTRIES (U) LIMITED:::::::::::::::::::::::::::::::::::::: APPELLANT

VERSUS

1. NON PERFORMING ASSETS RECOVERY TRUST
2. Z.J HASHAM FISH INDUSTRIES LIMITED
3. TASFAH LIMITED
4. DOTT SERVICES (U) LIMITED :::::::::::::::::::::::::::::::::::::: RESPONDENTS

CORAM: HON. MR. JUSTICE REMMY KASULE, JA

HON. MR. JUSTICE KENNETH KAKURU, JA HON. MR. JUSTICE GEOFFREY KIRYABWIRE, JA

IUDGMENT

Brief Facts

The appellant filed Tribunal Claim No. 032 of 1999 before the Non-Performing Assets Recovery Tribunal (NPART) seeking to be discharged from liability to repay a loan debt of Ug shs. 700,000,000 (Uganda Shillings Seven Hundred Million Shillings). When the claim came up for hearing before the Non- Performing Assets Recovery Tribunal, counsel for the first Respondent raised a preliminary point of law to the effect that the claim was res judicata. The second and third Respondents had not filed their Written Statements of Defence (WSD) and hearingof the matter proceeded against the first and fourth Respondents.

On the 22^nd of February 2007, the Tribunal upon considering submissions by counsel for the respective parties rendered its Ruling that the suit was res judicata and barred by Section 7 of the Civil Procedure Act. The plaint was therefore struck out in accordance with Order 7, Rule ll(d] of the Civil 5 Procedure Rules with costs to both the first and the fourth Respondents. The Appellant being dissatisfied with the Ruling and Orders made therein appealed to the Court of Appeal of Uganda at Kampala, hence this Appeal.

Grounds of Appeal/ Issues for Determination

The Appellant filed a Memorandum of Appeal, which details the grounds of appeal. They are Eight (8) in number and these can be rephrased in issues as;

Whether the Chairman and members of the Tribunal erred in law and fact to disallow an application for adjournment to enable the Appellant amend its plaint to its prejudice and went on to proceed with the hearing of the claim.< >Whether the whole Tribunal Claim 032 of 1999 was res judicata or not as against all the Respondents.

Whether Ug. Shs. 700 million had been reversed and demanded from General Parts (U) Ltd as per the judgment in H.C.C.S. 386 of 1993.

Whether the Appellant had ever been foreclosed of his equity in the suit properties.

(a) Whether the acquisition of the suit land (s) by the 4^th Respondent was lawful or not, and;(b) Whether the Appellant's claim against the 4^th Respondent was res judicata.

Whether the Tribunal relied on extrinsic evidence to come to its findings to the Appellants' prejudice.

Whether the acquisition of the suit property by Tasfah Ltd was legal and proper, in the presence of the original validly executed mortgage document.

Whether the sale of the suit properties between the Defendants was proper and lawful.

Representations

At the hearing of this appeal, Mr. Kugumikiriza Moses represented the appellant, Mr. David Ssemakula Mukiibi represented the second and third respondents. Mr. Peter Walubiri and Mr. Musika Brian represented the fourth respondent. The first respondent was unrepresented.

However the appeal against the first respondent was withdrawn and thus is dismissed because the first respondent is no longer in existence.

Duty of Court

It is the duty of this court, being a first appellate court, to subject the evidence on record to a fresh review and scrutiny and come to its own conclusions 20 bearing in mind, however, that it did not see the witnesses testify.

See: Rule 30 of the Judicature (court of Appeal Rules) Directions S.I.13-10. Pandya VR [1957] EA 336, Okeno V Republic [1972] E.A 32 and Kifamunte Henry V Uganda, S.C.C.A No. 10 of 1997 (unreported).

LEGAL ARGUMENTS

Grounds One and Two

Whether the Chairman and members of the Tribunal erred in law and fact 5 to disallow an application for adjournment to enable the Appellant amend its plaint to its prejudice and went on to proceed with hearing of the claim; and Whether the whole Tribunal Claim 032 ofl 999 was res judicata or not as against all the Respondents.

Arguments for the Appellant

Counsel for the Appellant submitted that before the claim came up for hearing before the Tribunal, an application for adjournment was made by counsel for the appellant to enable him file an application for amendment to the Plaint. However, that application for adjournment was unreasonably disallowed by the Tribunal to the prejudice of the appellant. Counsel further submitted that a case should be decided on merits and the parties should be allowed to present its case on pleadings. Counsel argued that this is the reason courts allow parties to amend their pleadings at any stage of the proceedings and that this opportunity was denied to the appellant which greatly prejudiced the Appellant.

Counsel alluded to the fact that Mr. Lule, a member of the Tribunal had observed that part of the claim was likely to be res judicata and had rightly advised the Appellant to amend its pleadings accordingly. Counsel argued that this would have narrowed down the matters for decision by the Tribunal as the Appellant would have had the opportunity to present matters which are not res judicata. Counsel prayed that this ground of appeal be allowed in favor of the Appellant.

Regarding ground two, it was contended for the Appellant that res judicata is a creature of Statute and in this case it was a creature of Section 7 of the Civil Procedure Act.

Counsel submitted that it is clear that by the time of S.C.CA No. 5 of 1998 between the parties, the sale of the suit properties had not taken place and the to principle of res judicata cannot apply to those parts of the claim in which the sale and transfer of the suit properties was the subject of challenge. Counsel argued that the Tribunal therefore erred in finding that the whole Tribunal Claim 032 of 1999 was res judicata. Court should have gone ahead to investigate and hear the parties on the issue of sale of the suit properties because that part 15 of the claim was clearly not res judicata.

Counsel also submitted that what was in issue in Misc. Cause No. 7 of 1997 are well set out in the ruling of the Court and the issue of illegality of sale was not one of them. It was further submitted that the issue came up later and that is why it was envisaged in the later Tribunal Claim No. 32 of 1999.

Counsel relied on the authority of Makula International vs His Eminence Cardinal Nsubuga, Civil Appeal No. 4 of 1981 as against Section 7 of the Civil Procedure Act and submitted that such illegality over rides all questions of pleadings and the moment it is brought to the attention of Court, any defence including res judicata cannot be raised. Section 7, Explanation 4 of the Civil 25 Procedure Act is therefore not envisaged to bar the suit because Court has to go ahead and investigate the allegation of illegality. Counsel prayed that this ground also be allowed.

Second and Third Respondent's Arguments

Counsel for the respondent opposed the appeal as having no merit in law. He submitted that all the claims under Tribunal Claim number 32 of 1999 are also contained in the appellant's amended plaint in Tribunal Claim No. 4 of 1999, as particularized in paragraphs 7a-n concerning the legality of the legal mortgage and the sum of Ug shs. 700 million.

Counsel further submitted that Tribunal Claim No. 4 of 1999 was appealed to the Court of Appeal in Civil Appeal Number 24 of 1996 and was appealed to the Supreme Court as Supreme Court Civil Appeal No. 5 of 1998. Counsel contended that the subject of the appeal which was whether there was consideration giving rise to contractual liability on the part of the appellant, was ably dealt is with and determined by the Supreme Court. This rendered the matter res judicata finally putting it to rest. Hence, he argued, the same matter could never arise again in Tribunal Claim No. 32 of 1999.

Fourth Respondent’s Arguments

Counsel Walubiri for the fourth respondent opposed the appeal and concurred with the submissions of Mr. Mukiibi, counsel for the second and third respondents. He further submitted that the NPART Tribunal was right to hold that the issues raised in Tribunal case No. 32 of 1999 were res judicata. He

contended that the amended plaint raised two broad claims. First, the claim of liability of General Parts. On this point, counsel maintained that the Shs 700 million/= loan was restructured and it was to be paid by General Parts Ltd which he argued, was an issue determined by the NPART Tribunal, the Court of 5 Appeal and the Supreme Court against the appellant. The second broad claim was alleged illegality of the sale of the suit property by NPART to Tasfer Ltd, the third respondent in this appeal.

Counsel went on to submit that the orders under Misc Cause No. 7 of 1999 were that the first respondent is entitled to possession of the properties which were to enumerated. Further, that it was also ordered that the respondent show cause why agents, servants and representatives of the respondent should not be evicted from or vacate the said plots.

Counsel then argued that General Parts (u)Ltd. had the opportunity in its defence to that application to challenge the sale on any ground they so chose. 15 Such grounds were that there was no consideration, or that they sold under the wrong mortgage or that the purchaser of the land was a non-citizen not entitled to purchase the suit properties. Counsel relied on Section 7 [Explanation 4 ] of the Civil Procedure Act which he submitted was very clear in providing that any matter which might or ought to have been made a ground of defense or 20 attack in the former suit shall be deemed to have been a matter directly and substantially in issue in that suit.

Resolution of Court

We have carefully examined the record of appeal and we find that Court of Appeal Civil Appeal No. 49 of 2004 and subsequently Supreme Court Appeal No. 9 of 2005 were concerned with the issue whether there was consideration for the loan; which both Courts decided in the affirmative. However, it was further held in Supreme Court Civil Appeal No. 9 of 2005, that the proper question for determination would have been whether the loan had been restructured and not whether there was consideration for the loan. Justice Mulenga (as he then was) found as follows:

“...Before I take leave of the case, I should, for avoidance of doubt and possible confusion, point to two matters which, though mentioned, have not been subject of adjudication in this appeal. First is the appellant's (General Parts) indebtedness to the respondent. In the High Court Trial, at the close of the defence case, the court granted leave for amendment of the plaint whereby the quantum of the debt owed by the appellant was specified and the plaintiff prayed for an order that the defendant (NPART) pays the same. As a result of the amendment, the following additional issue was added to the 8 which had been framed at the start of the trial namely:-

"Whether the debt of shs2,288,82,473/= was due and owing to the plaintiff and due for payment"

In his judgment, however, the learned trial Judge did not avert to that issue at all, let alone answer it."

The record shows that the appellant then later filed another suit in the NPART Tribunal as Case No. 4 of 1996. Therein, a question arose as to whether there was any consideration that gave rise to any contractual liability on the part of

the appellant to pay to NPART the sum of Ug. Shs. 700million/=. We agree with the Tribunal that this issue as to whether a legal mortgage had been executed, was handled by the Tribunal in Case No. 4 of 1996, and thereafter on appeal to the Court of Appeal and the Supreme Court. That issue was determined 5 substantially in favor of the respondents in Court of Appeal and Supreme Court.

Regarding NPART Tribunal Case No. 32 of 1999, the appellant's claim against the respondents was principally seeking to be discharged from liability to repay the loan debt of Shs. 700 million/= undertaken by the appellant from General Parts (Uganda). The appellant also sought orders that NPART erroneously sold 10 the appellant's property having been forewarned that those properties were discharged from liability due to breach by UCB of the new contractual arrangement restructuring the loan.

From the foregoing it is a fact that it was Tribunal Case No. 6 of 1996 which subsequently culminated into appeals to the Court of Appeal and the Supreme is Court. We accordingly agree with the Tribunal decision that this matter was finally determined and there is a bar at law to re-opening it according to Section 7 of the Civil Procedure Act, Cap 71.

We dismiss this ground of appeal.

Ground Three:

Whether Ug. Shs. 700 million/= had been reversed and demanded from General Parts (U) Ltd as per the judgment in H.C.C.S. 386 of 1993.

Arguments for the Appellants

The Appellants contention here is that General Industries (U) Ltd had taken over part of the indebtedness of General Parts (U) Ltd in the sum of Shs 700Million/=. However the indebtedness was later reversed and Shs. 700 million/= demanded from General Parts (U) Ltd as is evidenced by the decision 5 of court in H.C.C.S 386 of 1993. Counsel argued that the Tribunal was not alive to this fact and consequently it came to a wrong decision because the sale of the securities of the Appellant was wrongly exercised in that even the Shs 700 million/= was demanded from the Appellant whereas it was no longer indebted in that sum.

Counsel submitted that the Tribunal should have therefore come to the conclusion that the sale of the suit properties to the second, third and fourth Respondent by the first Respondent was evidently wrong and the Tribunal should have gone ahead to inquire into the issue of sale which was evidently not res judicata.

Arguments by the Respondents

Both counsel for the respondents on this point reiterated their submissions as in grounds one and two above. It was their submission that the matter of indebtedness of General Parts (U) Ltd in the sum of Shs 700 Million/= was res 20 judicata having been determined by the Court of Appeal and the Supreme Court.

Resolution of Court

Ground 4. Whether the Appellant had ever been foreclosed of his equity in the suit properties.

Arguments for the Appellant

The thrust of the Appellants submission on this point is that the Appellant has never been foreclosed of its equity in the suit properties in respect of which it was the registered proprietor. Foreclosure is a process of law the exand an order of the foreclosure must exist in its proof. The tribunal all through the 10 ruling was moving on mistaken belief that the appellant had ever been foreclosed of its equity in the suit properties which was an error both of law and fact. It was this mistake of fact and law that led the tribunal to come to the conclusion that the issue of sale of the suit properties was as well res judicata whereas not. This issue should therefore be found in favor of the Appellant.

Arguments by the Second and Third Respondents

In response to the ground relating to foreclosure, counsel reiterated that the fact that the issue is res judicata was still applicable. Counsel argued that all questions relating to the foreclosure was ably dealt with under Court of Appeal 20 Civil Appeal No. 49 of 2004 and subsequently Supreme Court No. 9 of 2005.

Counsel submitted that the totality of these decisions relied upon by the respondents, is that NPART which was formerly the first respondent (now withdrawn} was entitled to foreclose on all those suit properties. Counsel prayed that the appeal be dismissed with costs as all questions framed as grounds of appeal relating to foreclosure were ably dealt with.

On illegality of acquisition of the suit properties by the Respondents

Arguments for the Appellant

Counsel for the Appellant submitted that the acquisition of some of the suit properties by the fourth respondent was clearly unlawful and illegal and should have been investigated by the Tribunal as the matter was not res judicata. The third Respondent from whom the 4^th respondent acquired the suit property is a foreign owned company that could not own Mailo land in Uganda. No consent of the Minister of Lands was obtained before leasing the suit property to the fourth Respondent and yet on the other hand the first Respondent purported to have executed transfer of property in favor of the fourth Respondent directly to conceal the illegality complained of. Counsel Submitted that all these matters were not res judicata and the Tribunal ought to have investigated them. They is cannot be said to be matters that ought to have been envisaged in the suits that led to S.C.C.A 05 of 1998.

In respect of ground six, counsel for the Appellant submitted that the Tribunal relied on extrinsic evidence to come to its findings to the Appellants’ Prejudice. Before the ruling could be delivered, a request was made to the parties outside proceedings of Court, to furnish the Tribunal with the history of the disputes between General Parts (U) Ltd and General Industries (U) Ltd inclusive of HA]I HARUNA SEMAKULA on one hand and NPART on the other hand. This evidence of correspondences and suits was not part of the record/pleadings before the Tribunal. Counsel argued that the decision as to whether the matter was res judicata had to be based on pleadings and nothing else. The reliance on extrinsic evidence by the Tribunal prejudiced the Appellant and had the Tribunal not relied on such evidence it would have come to a different conclusion.

Concerning ground seven, counsel for the Appellant reiterated his submissions on grounds 4 and 5 in general and submitted that the acquisition of the suit property was improper firstly because the first Respondent unlawfully sold the securities without a foreclosure order and even if it was there the amount demanded included Shs. 700 Million/= that had earlier been demanded from 10 General Parts (U) Ltd. Secondly, Tasfah Ltd as a company did not have the capacity to buy land in Uganda particularly Mailo land being a company owned by foreign non-Ugandan Directors/Stakeholders. Thirdly, the mortgage upon which the first Respondent purported to act was/is invalid both in law and fact. The Appellant therefore prayed that this is a matter that was not res judicata 15 and should have been investigated by the Tribunal. In that regard, this appeal had to be allowed with costs to the Appellant both in this Court and the Court below.

Arguments by the Second & Third Respondents

Regarding the question of sale, counsel submitted that in the amended plaint, specifically under claim number 7, paragraph F-m related to the unlawful acquisition of the suit land by the second, third and fourth respondents. Counsel argued that those claims were also ably dealt with under Misc. Application No. 7 of 1997, the parties to it being Tasfer Ltd & Npart vs General Industries.

Therein, it was determined that the first applicant (Tasfer Ltd) was entitled to vacant possession as purchaser of all the land described.

Counsel argued that any questions surrounding illegality of acquisition of land by Tasfer (the third respondent) were determined under Misc. Cause No. 7 of 5 1999. Counsel submitted that any other questions surrounding the same ought to have been dealt with hence rendering the question of sale res judicata. To buttress his point, counsel relied on Section 7 of the Civil Procedure Act and the case of Henderson vs Henderson (Supra) which is to the effect that the plea of res judicata applies, except in special cases, not only to points upon which the 10 Court actually required the parties to form an opinion and pronounce a judgment but to every point which properly belongs to the subject of litigation under which the parties exercising reasonable diligence might have brought forward at that time.

Arguments for the Fourth Respondent

Regarding the alleged illegality of sale of land, there is no pleading about nationality on the face of the plaint. Counsel submitted that since there is nothing new in the pleadings that can allow the appellant redeem the suit properties, the suit was rightly rejected as res judicata.

Resolution of Court

The main thrust of all these grounds which we have decided to determine together is that the sale of the suit properties to the fourth respondent was illegal since the fourth respondent is a foreigner or a non-Ugandan who should not acquire mailo land.

Counsel for the appellant argued that the sale was void ab initio subject to Section 2 of the Land Transfer Act, Cap 202 which provides that:

"No non-African or person acting as his agent shall without the consent in writing of the Minister occupy or enter into possession of any land of 5 which an African is registered as proprietor (otherwise than by receiving rent and profits payable by non-Africans who have gone into occupation or possession with the consent of the Minister) or make any contract to purchase or take on lease or accept a gift inter vivos or a bequest of any such land or of any interest therein other than a security to for money" (Emphasis added)

We have already made our findings in ground four that an illegal sale does not reverse the foreclosure on a debt that is due and owing. In any event this very issue was litigated upon under Misc. Application No. 7 of 1997, the parties to it being Tasfer Ltd & Npart vs General Industries and resolved against the is Appellant. That matter is not on appeal to this Court.

We accordingly also dismiss ground 5, 6, 7 and 8.

Before we take leave of this appeal it is necessary to state that to our mind this appeal at its core is an attempt at a second bite and more at claims and issues already adjudicated upon in the courts of the law and cannot be allowed to stand. It is of no benefit to the parties to craft suits in a way that the courts will always have to reconsider their past decisions. Such persistence ultimately will amount to an abuse of court process.

Final Result

We accordingly dismiss this appeal with costs to the second ,third and fourth respondents. No costs are awarded to the first respondents since the first respondents is no longer in existence.