Equity Bank Uganda Limited v Begumisa (Miscellaneous Application 144 of 2024) [2024] UGHCLD 241 (15 October 2024)

### **THE REPUBLIC OF UGANDA**

### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

## **(LAND DIVISION)**

### **MISC. APPLICATION NO. 0144 OF 2024**

### **(Arising from HCCS No. 1260 of 2023)**

### **EQUITY BANK UGANDA (LTD) :::::::::::::::::::::: APPLICANT**

### **VERSUS**

# **BEGUMISA GEREVAZIO :::::::::::::::::::::::::::RESPONDENT BEFORE; HON. LADY JUSTICE NALUZE AISHA BATALA RULING**

### *Background*

- 1. This Application was brought by Notice of Motion under Section. 98 of the Civil Procedure Act, Section 33 of the Judicature Act, Order 6 Rule 28, 29 & 30 and Order 52 Rule 1& 2 of the Civil Procedure Rules for orders that; - i. The Pleadings in HCCS No.1260 OF 2023: Begumisa Gerevazio vs Equity Bank (U) Ltd & Others be dismissed as against the Applicant Bank, for failure to

disclose a reasonable cause of action against the Applicant or in the alternative the suit be dismissed with costs, for being incompetent and demonstrably frivolous by its pleadings.

ii. Costs of this Application be provided for.

## *Grounds of Application;*

- 2. The grounds of the application are contained in the application and supporting affidavit of the Applicant sworn by Charles Isiko the Legal Officer of the Applicant Bank which briefly are; - i. That the Plaint in HCCS No.1260/2023 filed by the Respondent against the four Defendants including the Applicant Bank is centered on claims over the cancellation of a Certificate of Title in which he claims an interest as purchaser. - ii. That in the said suit, the Respondent is seeking an order reinstating his title, and in the alternative an order for recovery of the purchase price he allegedly paid to and in favor of the vendor of the suit property.

- iii. That the Applicant filed a written statement of defence opposing the competence of the suit as against the bank and therein put the Respondent on notice that it would raise a preliminary point of law against the suit hence this Application. - iv. That the Respondent's plaint fails to disclose any reasonable cause of action against the Bank, sufficient and capable of sustaining any of the reliefs sought therein, as against the Applicant. - v. That upon perusal of the Respondent's plaint, the pleadings fail to demonstrate any right owed to the Plaintiff by the Applicant Bank, which was breached and for which the Bank is answerable. - vi. That from the perusal of the pleading and its Annexture, the sale Agreement, it is apparent that the Applicant was not party to the contract between the parties as to form a legible party to answer to a claim arising from a written contract.

- vii. That the plaint states that the cause of action as against the Defendants therein to be "for illegal and wrongful cancellation of certificate of title" however the pleadings fail to demonstrate with material particularity how the Applicant Bank was a party to the process leading to the impugned or alleged cancellation of the suit title as to form a legible party to the suit. - viii. That the suit is barred at law as against the Applicant under the doctrine of privity of contract and estoppel and assert that no reasonable cause of action has been demonstrated against the Applicant Bank in the pleadings in HCCS No.1260/2023.

### *Respondent's evidence;*

- 3. The Grounds of Opposition of this Application are contained in the affidavit deponed by Begumisa Gerevazio, the Respondent in this Application and states that; - i. The orders being sought by the Applicant are premature and based on misconceived preliminary points of law

that require evidential proof for this Honorable Court to effectively pronounce itself on them.

- ii. That on the 3rd day of November 2022, the Applicant through M/S Miima auctioneers and Court Bailiffs placed a notice of intention to auction the suit land under a mortgage. - iii. That the respondent contacted the auctioneers and obtained further information in respect of the sale and expressed his interest to purchase the same. - iv. That upon engaging and negotiating with a one Magambo Ronald Masembere who was the registered proprietor and the Applicant, it was agreed that the Respondent pays the outstanding loan sums to the Applicant and the remaining balance of the purchase price be paid to Mugambo Ronald Masembere the registered proprietor. - v. That in a letter dated November 11, 2023 the Applicant wrote to the Respondent confirming the transaction and availed him with the Loan Account details on which its funds arising from the sale were to be deposited.

- vi. That as consideration for the Applicant to release its mortgage interest on the suit land, the Respondent paid a sum of UGX 214,000,000/= ( Two Hundred and Fourteen Million Shillings) to the Bank. - vii. That at all material times, the Applicant negotiated with Magambo Ronald Masembere and the Respondent on the sale of the property. - viii. That the Applicant owed the Respondent a duty of care to ensure that he acquired a title having acted on its assurances to make the purchase, let alone carrying out searches at the land registry and confirmed the Applicant's mortgage interests. - ix. That the said sale agreement arose from a transaction initiated by the Applicant in advertising a notice of sale. - x. That the pleadings clearly outline the sequence of events leading to the transaction in question including the involvement of the Applicant. - xi. The negotiations and conduct of the transaction among the registered proprietor, the Applicant and the

Respondent amount to a tripartite agreement that binds the Applicant.

- xii. That he has perused the application and supporting affidavit and he responds thereto on points of law only as the law allows him to. - xiii. That the Respondent's claims against the Applicant are rooted in its alleged negligence and failure to fulfil its obligation as a professional entity engaged in the business of banking financial services. - xiv. That this suit is already fixed for hearing and the current applications are merely delaying tactics and setbacks.

## *Representation;*

- 4. The applicant was represented by M/S Kimara Advocates & Consultants whereas the respondent was represented by M/S Mwesigwa Rukutana & Co. Advocates. - 5. Both Counsel for the Applicant and Respondent filed written submissions which have been relied on in the determination of this application.

## *Issues for determination;*

- **i. Whether the Plaint raises a reasonable cause of action against the Applicant?** - **ii. Whether the suit is barred at law under privity of contract.** - **iii. Whether the suit by its pleadings is demonstrably frivolous?**

### *Resolution and determination of the issues;*

#### *Issue 1 and 3*

- 6. Counsel for the Applicant submitted that it is a requirement of law that in order for a plaintiff to sustain a competent suit against a defendant, their plaint or pleading, must on the face of it clearly disclose the existence of a valid and tenable cause of action against the Defendant. Counsel stated that the plaint must demonstrate (i) that the Plaintiff enjoyed a right (ii) such right was breached, (iii) and the defendant is the party liable for the breach. - 7. Counsel cited the case of **Ismael Serugo vs Kampala City Council and Attorney General Supreme Court Constitutional Appeal No.02/1998, Mulenga JSC held**

that, where a preliminary objection to dismiss or strike out a suit is brought by Application under Order 6 Rule 28, 29 and 30 of the Civil Procedure Rules for lack of a reasonable cause of action, in those instances all pleadings are taken into consideration. The supreme Court held further that even where the plaint seems to disclose any commonly raised cause of action, the Court is enjoined to also consider whether such a cause of action is maintainable against the Defendant.

- 8. Counsel further submitted that on the face of the pleadings, the actual substance of the dispute in the suit lies between the Plaintiff (a purchaser) and 2nd Defendant (Vendor), 1st Defendant (as claimant of a competing interest) and the 4th Defendant (the designated government institution responsible for cancellation of the suit title). - 9. Therefore, counsel states that the Plaint fails to demonstrate any right the Plaintiff enjoyed, which was breached by the Applicant Bank. That the Plaint and all its annexures fail to demonstrate the basis of bringing Civil Suit No.1260 of 2023 against the bank.

- 10. In reply, counsel for the Respondent submitted ad cited the case of **Auto Garage & Others vs Motokov (No.3)(19777) EA at 519** where it was noted that in considering whether a cause of action is revealed by the pleadings, court must look out for the following elements; - *i. The Plaint must disclose that the Plaintiff enjoyed a right,* - *ii. The right was violated,*

#### *iii. The defendant is liable.*

11. Counsel cited the case of Ismael **Serugo vs Kampala City Council and Attorney General Supreme Court Constitutional Appeal (supra), Mulenga JSC** held that where a preliminary objection to dismiss or strike out a suit is brought by an application under Order 6 Rule 28, 29 and 30(1) of the Civil Procedure Rules for lack of a reasonable cause of action, in those instances all pleadings (the plaint, the written statement of defence and reply if any) are taken into consideration.

12. Counsel submitted that as stated in various jurisprudence, if all these elements are present as illustrated below, then the cause of action is disclosed.

a) Initially there was a mortgage between the Applicant and the 2nd Defendant, a one Magambo Ronald Masembere and the Applicant Company where the 2nd Defendant had mortgaged the suit land. Upon default, the Applicant initiated foreclosure proceedings with intent to recover its money from the security.

b) The Applicant having actively participated in the land sale transaction which resulted into the execution of a land sale agreement between the Respondent and a one Magambo Ronald Masembere, the Respondent enjoyed a right as he was entitled to good title.

c) The right owed to the Respondent was violated by the bank when it conveyed a loan facility to a one Magambo Ronald Masembere without doing proper due diligence and still failed to assess his credibility, highlighting any irregularities or lapses in their screening process and/or complying with the Know Your Customer laws and regulations.

d) That it is clear on the face of the pleadings that the Applicant is faulted for its failure to assess the borrower's credibility highlighting any irregularities or lapses in their screening processes and/or complying with the Know Your Customer laws and regulations.

- 13. Counsel for the Applicant cited the case of **R vs Ajit Singh s/o Vir Sigh [1975] EA 822 at 825** where court defined a frivolous suit as one that is Paltry, trumpery not worthy of serious attention having no reasonable ground or purpose. - 14. That the Plaintiff and the vendor agreed by mutual consent that part of the purchase price should be paid to the bank to settle the loan charged against the suit land and in return the bank releases the title to the Plaintiff and the bank hence released the title from the mortgage it held on the suit land and handed the certificate of title to the Plaintiff. That the alternative claim for refund is frivolous and unfolded. - 15. That it is alleged therein that the Plaintiff obtained assurances from the Bank. however, his plaint fails to demonstrate with material particularity on which premise

he bases the claim that such assurances were given by the bank.

- 16. Counsel for the Respondent submitted and cited the case of **John Garuga Musinguzi and Another vs Dr. Chris Baryomunsi and Another HCMC 817/2016** in which frivolous and vexatious claims were defined to mean one that has no serious purpose or value. - 17. Counsel for the respondent submitted that in the instant case, the suit was brought in good faith since the negotiations and conduct of the transactions among the registered proprietor, the Applicant and the Respondent amounted to a tripartite agreement that binds the Applicant. - 18. In addition, the suit is not frivolous and vexatious because the Applicant owed the Respondent a duty of care to ensure that he gets a good title having acted on its assurances to make the purchase.

## **Analysis by court;**

19. **Order 7 Rule 7(a) of the Civil Procedure Rules**, a plaint shall be rejected where it does not disclose a cause of action. In the case of *Auto Garage and Anor vs Motokov (1971) EA 515*, a cause of action is decipherable where the plaint demonstrates the plaintiff to have enjoyed a right, that right was violated and that the defendant is liable, and where one of the essential ingredients of a cause of action is unavailable, the plaint is a nullity and no amendment can be made to it

20. It is now trite law that a cause of action means every fact which is material to be proved to enable the Plaintiff to succeed or every fact which if denied the Plaintiff must prove in order to obtain judgment; and to determine whether or not a plaint discloses a cause of action, the court must look only at the Plaint and its annextures if any, and nowhere else*. (See; Auto Garage vs Motokov*

# *(supra)*

21. A cause of action means every fact, which if traversed, would be necessary for the Plaintiff to prove in order to support his right to a judgment of court must include some act done by the defendant and, it is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove the facts but every fact necessary for the Plaintiff to prove to enable him to obtain a decree and everything that if not proved would give the Defendant a right to an immediate judgment must be part of the cause of action.

- 22. In the case of **Attorney General vs. Oluoch (1972) EA page 392 it** was held that the question of whether a plaint discloses a cause of action is determined upon perusal of the plaint and attachments thereto with an assumption that the facts pleaded or implied therein are true. - 23. I will proceed to examine the plaint to determine whether it discloses a cause of action. - **24.** Paragraph 6 of the plaint states that **the plaintiff's cause of action against the Defendants jointly and severally is for illegal and wrongful cancellation of title of land comprised in Kyadondo Block 208 Plot 3221 land at Kawempe.** - **25.** Under paragraph 7, the facts constituting this cause of action arose as follows;

a) That on the 3rd day of November 2022, the Applicant through M/S Miima Auctioneers and Court Bailiffs placed a notice of intention to auction the suit land under a mortgage.

b) That the respondent contacted the auctioneers and obtained further information in respect of the sale and expressed his interest to purchase the same.

c) That upon engaging and negotiating with a one Magambo Ronald Masembere who was the registered proprietor and the Applicant who had registered on the title its mortgage interest, it was agreed that the Respondent pays the outstanding loan sums to the Applicant and the remaining balance of the purchase price be paid to Mugambo Ronald Masembere.

d) Basing on the 3rd Defendants assurances of its interests in the suit land and in order to relinquish the same, the Plaintiff paid to the 3rd Defendant a sum of 214,000,000/=

e) That at the time of purchase of the suit land, the suit land was occupied by several lawful and/or bonafide occupants. In order to acquire free and uninterrupted vacant possession, the Plaintiff by way of purchase acquired the interests of several occupants on the land.

- 26. I have looked at the Plaint and annexures thereto. Paragraph 4 shows the Plaintiff's cause of action as illegal and unlawful cancellation of his title. Paragraph 7 then goes ahead to show the facts constituting the cause of action. - 27. The Plaintiff relied on the assurances of the Applicant who had an interest in the suit land to purchase the suit land and his interest. Furthermore, the Respondent paid all the outstanding balances of the Applicant and was given a mortgage release. - 28. Furthermore, paragraph 7 of the Plaint demonstrates how the Plaintiff's cause of action arose against all defendants including the Applicant who is the 3rd Defendant. - 29. The plaintiff's cause of action is essentially illegal and unlawful cancellation of his Certificate of title. On a perusal of the plaint, I have failed to trace anywhere in the plaint where the applicant bank is linked to the process of cancellation of the said certificate of title. No facts detailed in the plaint whatsoever suggest the bank violated any

right of the respondent as plaintiff and whether any right existed as between the respondent and the applicant at law.

- 30. I have noted that in paragraph 7 (f) of the plaint, it is stated therein that basing on the 3rd defendant's (The applicant) assurances of its title in the suit land, the plaintiff paid to the 3rd defendant a sum of Ugx 214,000,000/=. The applicant's interest as mortgagee in the suit land is not in dispute at all. - 31. Again, the plaint states in paragraph 12 that in the alternative the plaintiff shall contend that he relied on the assurances of the 2nd and 3rd defendants to purchase the suit land and advanced colossal sums of money to them as the purchase price in exchange for their interests thus entitled to recover the purchase price from the 2nd and 3rd defendants for failure to pass title. - 32. From the above mentioned, it appears to me that the facts fronted by the plaintiff to confer to him a cause of action against the Applicant are either actions that were done by the applicant in line with the law or refer to his assured interest which is not in dispute in this case. In simple terms, the plaintiff is blaming the applicant for

legally receiving money without any fault on the applicant's part.

- 33. As I have earlier mentioned, the plaintiff's cause of action is illegal and unlawful cancellation of title. I believe the plaintiff's reliance on the assurance of the applicant to advance money would be proper in a suit based on different claims like negligence, professional or economic loss but not maintainable in a suit of this nature. - 34. The plaintiff cannot at this point be allowed to set up a different cause of action against the applicant as it is now trite law that parties are bound by their pleadings. **(See; order 6 rule 7 of the Civil Procedure Rules and Struggle Limited v Pan African Insurance Co. Ltd (1990) ALR 46- 47)** - 35. I agree with counsel for the applicant that the bank's participation in the suit does not facilitate the plaintiff's case against other defendants. The fact that the applicant's right to receive the sum settling the loan is not challenged anywhere in the plaint is also relevant and demonstrates that the suit is a non-starter against the applicant.

*36.* I find that in the instant case, the plaint falls short of the requirements set in the celebrated decision of **Auto**

**Garage case (Supra)** as to what constitutes a cause of action. Additionally, a statement of claim should disclose sufficient facts to make the action reasonable and sustainable in the suit. *(See; Drummond Jackson v*

#### *British Medical Association [1970] 1 WLR 688.)*

- *37.* In the premises, I find that the plaint in the instant case does not disclose a cause of action that is reasonable and sustainable against the applicant. The suit is therefore dismissed against the applicant (3rd defendant) with no orders as to costs. - *38.* For the foregoing reasons alone, the application succeeds and I do not find it necessary to determine the other issues in this application. - *39.* I hereby make the following orders: - a) The plaint in High Court Civil Suit No. 1260 of 2023 does not disclose a cause of action against the 3rd defendant/applicant. - b) The suit is dismissed as against the 3rd defendant/applicant with no orders as to costs.

**I SO ORDER.**


## **NALUZZE AISHA BATALA**

## **Ag. JUDGE**

## **15/10/2024**

# **Delivered electronically via Eccmis on the 15th of October,2024.**