UgandaOnlineLawLibrary

IN THE COURT OF APPEAL

AT MENGO

(CORAM: WAMBUZI, C.J, LUBOGO AG. J.S.C, ODER J.S.C.)

CIVIL APPEAL NO. 5 OF 1986

Ug

BETWEEN
a

EDWARD MUSISI::::::::::::::::::::::::::::::::::::::::::::::: APPELLANT

nd

AND

GRINDLAYS BANK (U) LTD ()::::::::::::::::::::::::: RESPONDENTS

BASEKA HOUSE LTD ()
a

(Appeal from the Judgment and

On

Order of the High Court of Uganda

At Kampala (Masiko C.J) dated
21st December, 1984
lin

IN

Civil Suit No. 869 of 1981

e

JUDGMENT OF WAMBUZI, C.J

La

The appellant was the registered proprietor of Lease Hold Property Volume 796 Folio
12 Plot No. 151 at Namasuba, Kyadondo County, and Mpigi District. The Property
was mortgaged to Grindlays Bank (U) Ltd, the 1st respondent, to secure a loan to the
appellant. The loan was not repaid as stipulated and the 1st respondent gave
w

instructions to its lawyers, Hunter and Greig, to arrange for the sale of the property
under the powers reserved under the mortgage deed. Hunter and Greig in turn
instructed Ssempala Musoke, a Court Broker and Auctioneer to effect the sale. The
Li

Court Broker effected the sale by public auction to Baseka House Ltd, the 2nd
respondent. In the meantime the appellant, apparently encouraged by the 1st
respondent, borrowed funds from Cardinal Nsubuga and Father Mulebwa which were
br

used to repay the loan.

The Cardinal and Father Mulebwa lodged a caveat against the property claiming
ar

interest in the property as purchasers which interest was recorded on the original
certificate of Title. For reasons stated the 1st respondent refused to execute a transfer
of the property to the 2nd respondent on the ground, inter alia, that the price was too
y

low. The 2nd respondent filed an action in the High Court against the 1st respondent,
Civil Suit No. 705/80, and obtained an order directing the 1st respondent to execute
the transfer with which order the 1st respondent complied.

At the land Registry in Kampala the original Certificate of the Title was no where to
be seen and the Registrar of Titles issued a substitute Certificate of Title on which

uoll.com 1 of 11 uoll.com
 UgandaOnlineLawLibrary

was entered the name of the 2nd respondent as proprietor. Subsequently, however, the
original certificate of Title somehow surfaced and the Registrar of Titles entered
thereon the name of the 2nd respondent as proprietor and cancelled the substitute
Certificate of Title.

The appellant filed an action in the High Court against the two respondents and the
registrar of Title claiming, inter alia, that the sale of the property was null and void
Ug
alleging fraud on the part of the respondents.

At the hearing in the High Court the suit against the Registrar of Titles was
a

withdrawn. Musika C.J., as he then was, found that the sale was proper and that fraud
had not been proved. He dismissed the action against the respondent and awarded
nd

damages to the appellant against the 1st respondent for negligence.

The appellant has now appealed to this court against the decision of the High Court on
five grounds with the sixth ground as an alternative ground against the quantum of
a

damages.
On

For convenience, I will first deal with ground 3 of the Memorandum of Appeal, which
is that the learned Chief Justice erred in law when he held that the sale of the suit
premises was lawful and proper. It was not contended that the 1st respondent had no
power to sell the property in question. Mr. Kityo, counsel for the appellant, argued
that the sale was not lawful and proper because the 1st respondent had refused to
lin

recognise the sale. Learned counsel referred to a letter dated 16th July, 1980, Exhibit
15, addressed to 1st respondent's lawyers, Hunter and Greig, by the Territorial Credit
Officer of the 1st respondent advising that the 1st respondent was not prepared to
e

accept the proceeds of the sale because the property had recently been valued at Shs.
850,000 and it would be ridiculous to accept a mere Shs. 300,000.
La

According to the Valuer’s evidence, Oringo (PW1), the property was valued on 23rd
July, 1980 approximately 11 days after the sale which took place on 12th July, 1980.
Apparently the original value of the property was shs. 200,000 according to a
w

valuation report, Exhibit DW1 (d1), dated 14th May, 1976. Another valuation report,
Exhibit DW (d2), dated 6th October, 1977 put the value of the property at shs.
330,000.
Li

By its letter dated 29th September, 1980, addressed to Cardinal Nsubuga, Exhibit P3,
br

the 1st respondent assured the Cardinal that it would release the Title Deed to him
since he had provided the funds with which the appellant had repaid the loan. By its
letter dated 30th September, 1980 the 1st respondent advised its lawyers that the
ar

appellant had repaid the loan. Learned counsel argued that on these facts the 1st
respondent was estopped from asserting that it had sold the property by auction. He
relied on section 113 of the Evidence Act.
y

According to the evidence of Sarah Lubwama (DW1), the 1st respondent authorised
sale of the property by auction when the appellant defaulted in December, 1979. It
does not appear that the instructions to sell indicated a reserve price.

uoll.com 2 of 11 uoll.com
 UgandaOnlineLawLibrary

Ssempala Musoke (DW2) testified, however, that the 1st respondent had indicated
through a Mr. Mutaga that the reserve price was Shs. 330,000.

Although there is evidence that the 1st respondent encouraged the appellant to settle
his indebtness, that there was delays of the sale to give more time to the appellant,
there is no evidence that the 1st respondent at any time before 30th September, 1980
counter-manded its instructions to sell the property. In the circumstances I find no
Ug
reason to defer from the finding of the learned Chief Justice that the sale was lawful in
that the 1st respondent had power to sell and exercised the power in accordance with
the terms of he mortgage deed.
a

The 1st respondent does not deny that it encouraged the appellant to redeem the
nd

mortgage by effecting payment after the sale had been effected. Indeed it tried to
avoid the sale after the event. I cannot see that in these circumstances estoppel arises,
as argued by Mr. Kityo. These facts may be relevant on another issue but certainly do
not invalidate the sale. The third ground of appeal must, therefore, fail.
a

Grounds 4 and 5 of the appeal were argued together. Ground 4 was that the learned
Chief Justice erred in law holding that the 2nd respondent was a bona fide purchaser
On

and that issue No. 3 was irrelevant. Ground 5 was that the learned Chief Justice erred
in law in holding that fraud had not been proved.

The third issue was whether the 2nd respondent was not aware before execution of the
lin

transfer was made that the 1st respondent had declined to have the property
transferred. I am not quite sure why this issue was framed this way. However, as far
as the 2nd respondent was concerned it had bought the property at an auction and
e

unless it can be shown that before the hammer fell the 2nd respondent knew that there
was no power to sell, or that there was impropriety in the sale relating to or affecting
La

ownership, I cannot see how its conduct in the matter can be questioned. The contract
of sale was already concluded and execution of the transfer of the property is a matter
which follows after the sale. I would agree with the learned Chief Justice that even if
the alleged knowledge were established at that stage that perse did not establish fraud
w

as it came after the contract of sale had been concluded apparently bona fide. In my
judgment in the case of David Sekajja Nalima vs. Rebecca Musoke, Civil Appeal
No. 12 of 1985, I held that bona fide purchaser means in effect a person who honestly
Li

intends to purchase the property in question and does not intend to acquire it
wrongfully.
br

Be that as it may in his submission on grounds 4 and 5 of the appeal, Mr. Kityo
referred to the three particulars of fraud pleaded in paragraphs 14 and 15 of the Plaint,
that;
ar

1. The 1st respondent was not entitled to sell the property under the
mortgage deed;
y

2. That the property was under-valued, and

3. That the 1st respondent acted negligently and fraudulently in selling the
property and at the same time recovering money from the appellant in
respect of the same debt.

uoll.com 3 of 11 uoll.com
 UgandaOnlineLawLibrary

The learned Chief Justice dealt with the issue of fraud and concluded,

"Having considered all matters relied upon as constituting evidence of

fraud, I hold that fraud has not been proved to my satisfaction."

I think with respect that this is a misdirection on the part of the learned Chief Justice
Ug
on the standard of proof. The learned Chief Justice referred to the authority of
Wallingford and Mutual Society (1879 – 80) Vol. AC 685 in respect of the
allegations in paragraph 15 of the Plaint to the effect that;
a

"General allegations however strong may the words in which they are
nd

stated, are insufficient even to amount to an averment of fraud of which

any court ought to take notice."

That would take care of allegations in paragraph 15 of the Plaint but when a court is
a

considering all the evidence relied upon, the standard of proof in fraud cases is
normally that allegations of fraud must be strictly proved although the standard of
On

proof may not be so heavy as to require proof beyond reasonable doubt, something
more than a mere balance of probabilities is required, there should be some indication
that the judge had this is mind - See Ratilal Gordhanbhai Patel vs. Lalji Makanji
(1957) EA 314 at 317. There is no indication that the learned Chief Justice had this
lin

in mind but no harm has resulted from the omission as the learned Chief Justice found
that fraud had not been proved. Apart from this matter I satisfied that the learned
Chief Justice dealt with the issue of fraud and nothing has been raised in this appeal to
show that he came to the wrong conclusion. Accordingly both grounds 4 and 5 of this
e

appeal would fail.

La

I now turn to grounds of appeal 1 and 2 which I will consider together. Ground 1 is
that the learned Chief Justice erred in law when he purported to remove the caveat
and enter the name of the 2nd respondent on the original certificate of title as
registered proprietor.
w

The 2nd ground is in two parts. Part (a) is that, the learned Chief Justice erred in law
when he purported to validate/legalise the transfer of the premises in favour of the 2nd
Li

respondent as from the date of judgment and part (b) is that the learned Chief Justice
failed to find that the Registrar of Titles transferred the property in the suit premises
upon an order made in Civil Suit No. 705/80, the Judgment in which was void against
br

the appellant.

It appears that after the sale of the property by auction to the 2nd respondent
ar

registration of the 2nd respondent as proprietor was a result of a court order made in
Civil Suit No. 705/80 filed by the 2nd respondent against the 1st respondent to compel
the latter to execute a transfer of the property to the 2nd respondent.
y

It appears that as the original certificate of title was not available the Registrar of
Titles had entered the names of the 2nd respondent on a substitute certificate of title as
the registered proprietor. The substitute to title did not show the caveat lodged by the
Cardinal and Father Mulebwa.

uoll.com 4 of 11 uoll.com
 UgandaOnlineLawLibrary

It appears further that when the original certificate of title surfaced showing the caveat
lodged by the Cardinal, the Registrar of Titles simply removed the caveat on the
original certificate and entered the name of the 2nd respondent as the registered
proprietor.

With regard to this point the learned Chief Justice said;

Ug
"…….. When the original certificate of title was discovered with the
caveat on it, the Ag. Chief Registrar of Titles should not have merely
transposed on the original the entries on the substitute. It seems to me
a

that the proper course would be for the Ag. Chief Registrar of Titles to
refer the matter to the competing proprietors and ask any aggrieved
nd

party to move the court. If neither party responded the notice to

caveators would issue …………………

To that extent, therefore, the point taken by Mr. Kityo for plaintiff that
a

the Registrar should not have merely entered on the original certificate of
title the entries on the substitute is valid. The issue arising then was
On

whether the caveat on the original should be removed or whether the

entry of the 3rd defendant on the substitute should be cancelled. It could
not simply be disposed of by an administrative action."
lin

So far with respect I agree with the reasoning of the learned Chief Justice. He went
on to say, however,

"It will be recalled that by the time the caveat was lodged in January,
e

1981, the sale had been completed although possibly exception but
certainly transfer had not been effect. I have already held that the
La

auction sale was properly done. It follows therefore that if proceedings

seeking either the removal of the caveat on the original certificate or the
cancellation of the entry of the 3rd defendant on the substitute title had
been instituted or as in the case merely left to the court, any reasonable
w

court would, on the evidence before me, hold that it is the caveat to be
resolved.
Li

In such a case the Ag. Chief Registrar of Titles should be ordered to enter
the name of the 3rd defendant on the original title and cancel the
substitute title altogether. I would and may do so order. Consequently
br

upon this finding I would answer the issue No. 1 in the affirmative. The
entry on the substitute certificate in the light of the discovered caveat on
the original was invalid and the transfer can not be validated after the
ar

order of the removal of the caveat has been made."

With respect this is a misdirection on the art of the learned Chief Justice it may well
y

be correct that when the caveat the was lodged in January, 1981 the sale had been
completed but there is no way of telling that the evidence before a court before which
proceedings for removal of the caveat are conducted. How one tells what the case of
the caveators would be without hearing them first? The caveators were not before the
learned Chief Justice and they were condemned unheard by the removal of their

uoll.com 5 of 11 uoll.com
 UgandaOnlineLawLibrary

caveat contrary to natural justice. In my view the provisions of section 150 of the
registration of Titles Act are quite clear. The section, provides,

"So long as any caveat remains in force prohibiting any registration or

dealing the registrar shall not, except in accordance with some provision
of such caveat, or with the consent in writing of the caveator, enter in the
register took any chance in the proprietorship of or any transfer or other
Ug
instrument purporting to transfer or otherwise deal with or affect the
estate or interest in respect to which such caveat is lodged."
a

The Court order in Civil Suit 705/80 was not made in accordance with any provisions
in the caveat. In my view there is no way the registrar of Titles can avoid complying
nd

with Section 149 dealing with lapse or removal of a caveat. Any other interpretation
would render the provisions of Sections 149 and 150 of the registration of Titles Act
meaningless and I must therefore reject the submission by Mr. Kateera for the 1st
respondent that only the caveators can complain. It is plain that the appellant has
a

sufficient interest in the caveat and in any case the law has been misapplied and the
matter has to be rectified. I would accordingly allow ground 1 of this appeal.
On

If follows that part (a) of the second ground of appeal must also succeed. If, as the
learned Chief Justice had found the entry on the substitute certificate, in the light of
the discovered caveat on the original, was invalid, it must remain invalid until the
lin

caveat has been properly removed in accordance with Section 149 of the Registration
of Titles Act.

In support of his argument on ground 28b9 of the appeal, learned counsel relied on the
e

case of Adonia vs. Mutekanga 1970 EA 429 which held in effect that an order
purporting to divest a registered proprietor of lands without making that proprietor a
La

party was void. I think this case is distinguishable from the case before us. In the
Adonia case the appellant obtained a vesting order in respect of certain lands to
which he was entitled through inheritance. Subsequent to the vesting order he sold
part of the land to a third party who was registered in respect of the land sold. In
w

subsequent proceedings the vesting order was set aside. On appeal it was held that the
order setting aside the vesting order was correct in so far as it affected land still
registered in the appellant's name but that in so far as he order purported to divest the
Li

registered proprietor of the lands sold by the appellant without making that proprietor
a party, the order was void.
br

In the case before us there is no question of the 1st respondent having sold any land to
the appellant. On the contrary, the appellant mortgaged his land to the 1st respondent
to secure the repayment of a loan with power to sell if there was a default in the
ar

repayment of the loan. Paragraph (g) of the Mortgage Deed which was exhibited
reads as follows,
y

"The borrower hereby irrevocably appoints the bank ……….to be his

Attorney and in his name and on his behalf to execute and do any
assurance, acts and things which the borrower ought to execute and do
under the covenants herein…….."

uoll.com 6 of 11 uoll.com
 UgandaOnlineLawLibrary

The 1st respondent was therefore exercising the powers of the appellant in selling the
property. Accordingly part (b) of the second ground of appeal must fail.

What then is the effect of the judgment in Civil Suit No. 705/80? I cannot read the
relevant part of the actual judgment which forms part of the record of this appeal. It
appears, however, that the judgment was to be effect that the 1st respondent was
required to effect the transfer of the property which presumably meant to execute or
Ug
release to the appellant the executed conveyance, Exhibit P9. It seems to me that
matters appertaining to registration of the 2nd respondent as proprietor pursuant to the
conveyance could not be resolved in the suit before the learned Chief Justice. With
a

respect these are matters, which can be dealt with upon execution proceedings to
enforce the judgment in Civil Suit No. 705/80 with all relevant parties before the
nd

court including the caveators.

I see no other way of correcting the record and would accordingly and for the reasons
given in this judgment reluctantly allow the appeal, set aside the judgement and
a

decree of the High Court but in only in so far as they relate to the registration of the
2nd respondent as proprietor. I would direct cancellation of the 2nd respondent as
On

registered proprietor of the property in question and the restoration of the appellant as
registered proprietor and the restoration of the caveat lodged by the Cardinal and
Father Mulebwa.
lin

I would further remit this case to High Court and direct that proceedings be initiated
under section 149 of the Registration of Titles Act to enable the caveators to be heard
if they so wish.
e

This would have disposed of this appeal but in the event of the removal of the caveat
and consequent registration of the 2nd respondent as proprietor pursuant to the order
La

made in Civil Suit 705/80 I must consider the alternative ground of appeal which is
that the award of shs. 800,000/= to the appellant was too small. Mr. Kityo submitted
that at the time of the hearing the property was worth Shs. 6 million and submitted
that Shs. 3 million would be adequate compensation having regard to inflation.
w

On the matter of damages, the learned Chief Justice said in his judgment;
Li

"Mr. Kityo for the plaintiff asked for damages amounting to Shs. 6
million because according to the Valuer, the property at the time of
hearing of this case was worth that much. I do not agree. Damages are
br

assessed at the time of the breach; see Ryde vs. Bushell and another 1967
EA 817. In this case the damages are to be assessed at the time the
auction was held on 12/6/79. The property was valued 11 days after the
ar

sale at Shs. 850,000/= less Shs. 330,000/= which is Shs. 520,000/=. I have
noted other inconveniences suffered by the plaintiff at the instance of the
1st defendant. These must be taken into account when assessing damages.
y

Considering all the above I award the plaintiff Shs. 800,000/= (Eight
hundred thousand, as damages against the 1st defendant.)"

I am unable to fault the reasoning of the learned Chief Justice and accordingly ground
6 of the appeal would fail.

uoll.com 7 of 11 uoll.com
 UgandaOnlineLawLibrary

As the appellant has succeeded in his appeal only in part, I would give him half his
costs in this court and would not alter the order made by the High Court in respect of
the costs in that court.

Dated at Mengo this……………..day of………………….1988.

S.W.W. WAMBUZI
Ug
CHIEF JUSTICE
a nd
a
On
lin
e
La
w
Li
br
ar
y

uoll.com 8 of 11 uoll.com
 UgandaOnlineLawLibrary

IN THE COURT OF APPEAL

AT MENGO

(CORAM: WAMBUZI C.J., LUBOGO AG. J.S.C. ODER, J.S.C.)

CIVIL APPEAL NO. 5 OF 1986

Ug

BETWEEN
a

EDWARD MUSISI:::::::::::::::::::::::::::::::::::::::::::: APPELLANT

nd

AND

GRINDLAYS BANK (U) LTD []:::::::::::::::::: :RESPONDENTS

BASEKA HOUS LTD []
a

(Appeal from the Judgment and Order of

On

The High Court of Uganda at Kampala

(Masaka C.J.) Dated 21st December, 1984)

IN
lin

Civil Suit No. 869 of 1981

J U D G E M E N T OF ODER, J.S.C.
e

I have read the judgment of Wambuzi, C.J. and the Order proposed therein, with
La

which I agree.

The 1st respondents' initial reluctance to accept the sale price of shs. 300,000/= for
which the auctioneer had apparently sold the Appellant's mortgaged property and their
w

conduct which appeared to encourage the Appellant to repay the loan did not in my
view, amount to an estoppel under section 113 of the Evidence Act. Moreover both
the reluctance to accept the sale price and the apparent encouragement to the
Li

Appellant occurred long after the sale had been effected on 12.6.1980. Secondly, the
sale was carried out apparently in accordance with the provisions of the mortgage
deed and is my view, unassailable. It is also clear that no fraud on the part of the
br

auctioneer and the 2nd Respondents', which could have vitiated the sale, was proved to
the required standard of more than on the balance of probability.
ar

With regard to grounds 1 and 2(a) of the appeal, it appears to me that after censoring
the Ag. Chief Registrar of Titles for merely transposing on the original certificate of
Title the entries on the substitute title without referring the matter to the competing
y

parties, the learned trial C.J. proceeded to do exactly what he had accused the Ag.
C.R.T. of doing. He removed the caveat and validated the entry to the 2nd respondent
as proprietor without giving the caveators a hearing. Such a step contravened the
provisions of SS 149 and 150 of the Registration of Titles Act. It was a misdirection
to do so.

uoll.com 9 of 11 uoll.com
 UgandaOnlineLawLibrary

The appeal is therefore, allowed in part. There will be an Order in the terms proposed
by Wambuzi C.J.

DATED at Mengo this…………….day of…………, 1988.

Ug

……………………………
a

A. H. O. ODER J.S.C.
nd
a
On
lin
e
La
w
Li
br
ar
y

uoll.com 10 of 11 uoll.com
 UgandaOnlineLawLibrary

IN THE COURT OF APPEAL

AT MENGO

(CORAM: WAMBUZI C.J., LUBOGO AG. J.S.C. ODER, J.S.C.)

CIVIL APPEAL NO. 5 OF 1986

Ug

BETWEEN
a

EDWARD MUSISI:::::::::::::::::::::::::::::::::::::::::::::::: APPELLANT

nd

AND

GRINDLAYS BANK (U) LTD []:::::::::::::::::::::: RESPONDENTS

BASEKA HOUS LTD []
a

(Appeal from the Judgment and Order of

On

The High Court of Uganda at Kampala

(Masaka C.J.) Dated 21st December, 1984)

IN
lin

Civil Suit No. 869 of 1981

JUDGEMENT OF AG. J.S.C.

e

I have had the opportunity of reading the judgments of Wambuzi, C.J. in draft. I
La

agree with him that the appeal be allowed. I also agree with the Orders made there
under.
w

Dated this………..23rd ……..day of………December …1988.

Li

D. L. K. LUBOGO, Ag. J.S.C.

br
ar
y

uoll.com 11 of 11 uoll.com