KCB Bank Limited v Formula Feeds Limited and 5 Others (Miscellaneous Application 681 of 2021) [2022] UGCommC 167 (12 September 2022)

Full Case Text

# **THE REPUBLIC OF UGANDA**

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

### **(COMMERCIAL DIVISION)**

### **MISCELLANEOUS APPLICATION No. 0681 OF 2021**

# 5 **(Arising from Civil Suit No. 0289 of 2014)**

**KCB BANK LIMITED ….……………………………….…...…..….…… APPLICANT**

### **VERSUS**

| | 1. FORMULA FEEDS LIMITED | } | |----|--------------------------------------------|---------------------| | 10 | 2. GICHOHI NGARI | } | | | 3. THE COMMISSIONER LAND REGISTRATION | }….….…. RESPONDENTS | | | 4. WOODLANE PROPERTIES REAL ESTATES LTD | } | | | 5. NAMAKULA ANNET | } | | | 6. ATTORNEY GENERAL | } | | | | |

15 **Before: Hon Justice Stephen Mubiru.**

### **RULING**

# a. Background.

On or about 30th June, 2011 the 1st respondent borrowed a sum of shs. 3,700,000,000/= from the 20 applicant, secured by title deeds to eighteen (18) plots of land severally registered in the name of the 1st and 2nd respondents, a debenture and personal guarantees of its directors. Subsequently, the 1 st and 2nd respondents sued the applicant seeking, *inter alia*, a declaration that the mortgage deed they had executed with the applicant was a nullity, the debenture deed executed in favour of the applicant was unenforceable, the personal guarantees executed by the 2nd respondent together with 25 others were unenforceable, and recovery of a sum of money. Before the suit could be heard, the parties entered into a partial consent judgment by which the 1st and 2nd respondents admitted liability to the applicant in the sum of shs. 2,159,000,000/= The applicant then commenced execution of the partial decree by way of attachment and sale of the eighteen (18) plots of land mortgaged to it, situated at Wattuba and Katalemwa registered in the name of the 2nd respondent.

In the meantime, hearing of the rest of the claim proceeded resulting in a judgment which was delivered partly in favour of the 1st and 2nd respondents' favour on 10th February, 2016. By that decision, the mortgage deed was declared null and void, the debenture unenforceable, the personal

guarantees enforceable, but it was declared that the 1 st respondent was indebted to the applicant in the sum of shs. 4,272,740,116/= with interest accruing thereon at the rate of 21% per annum from the date of judgment until payment in full, as well as the costs of the suit. The 1st and 2nd respondents appealed the decree, to the Court of Appeal.

The Court of Appeal in its judgment delivered on 8th July, 2019 upheld the decision of the trial court and found, *inter alia,* that being non-citizens, leasehold title deeds ought to have been issued to the 1st and 2nd respondents, instead of the mailo land title deeds. The court stated as follows;

10 We agree with the finding of the trial Judge. The only challenge remains the mortgage which was illegal because of the underlying mailo land titles were held in the names of non-Ugandans which is prohibited by law. Such a non-Ugandan can only hold a lease under the said titles. So a lease and not mailo titles should have been issued to the first appellant since it paid valuable consideration for the land. This would avoid 15 an absurdity in this transaction. This was clearly an error / illegality made at the time of registration. It would also have the effect of reviving the said mortgage which was the commercial and legal intention of the transaction. There can therefore be no enforcement under the mortgage as it stands unless rectification is done under section 91 of *The Land Act, 1998* to bring the said proprietorship in line with the law……

By the time of that decision, the applicant had completed execution of the partial decree by way of attachment and sale of the eighteen (18) plots of land at Wattuba and Katalemwa registered in the name of the 1 st and 2 nd respondents, to M/s Southgate Properties Limited. However in a decision delivered by the then Executions Division of this court on 26th August, 2020 those sales were declared illegal and were set side on account of the fact that being non-citizens, the 1st 25 and 2 nd respondents were incapable of owning mailo land and therefore the land was not available to attachment in execution of the decree. The applicant was directed to refund the purchase price to the buyer. A permanent injunction was issued restraining the applicant from dealing with the land in any way and from evicting the 1st and 2nd respondents from the land. The buyer, M/s Southgate

30 Properties Limited, was directed to deliver up all the certificates of title to the court for safe custody and subsequent transmission to the 3rd respondent for cancellation of that registration and their return thereafter to the 1st and 2nd respondents for rectification. The relevant part of the ruling reads as follows;

The 3rd respondent [M/s Southgate Properties Limited] is directed to deliver up all the certificates of title from the impugned sale to this court for safe custody and submission to the Registrar of Titles to cancel the illegal registration of the 3rd respondent's entry on the certificates of title and the Register Book and return the same to the applicants 5 for rectification as their current registration as mailo owners is illegal under the law.

The applicant sought a review of the orders which application was dismissed in a ruling delivered on 4th February, 2021. The court however construed the pronouncement by the Court of Appeal as a recommendation towards rectification of the titles to cater for the 1st and 2nd respondents' interest

10 in the land. The court expressed itself as follows;

Upon the [trial] Judge ordering cancellation of the illegal entries, it was imperative that the learned Judge [of the then Executions Division] as an executing court completes the process by ordering rectification of the titles. If the Judge had restrained herself 15 from ordering such rectification, it would mean that she would have had to order the titles to be left in the respondent's name illegally…… I am satisfied that the Learned Judge…. had reasonable ground to make the order for rectification. As it appears from the record, the Learned Judge derived guidance from the judgment of the Court of Appeal which recommended the remedy of rectification of the certificates of title. As 20 shown hereinabove, the Judge's order was a direct consequence of the nullification and setting aside of the illegal execution and sale of the suit properties. The Learned Judge would not have left her orders hanging…..even if the directive of the Court of Appeal was contained in an *obiter dictum*, the Learned Judge of the Executing Court was entitled to derive guidance from the said directive or recommendation of the Court 25 of Appeal. As an executing Court, she had the duty to ensure execution is carried out lawfully and within the confines of the available decisions of the courts in the original suit and on appeal to the Court of Appeal.

Although the Judge in the Executions Division had ordered M/s Southgate Properties Limited as 30 purchaser to deposit the title deeds into the custody of court, it so happened that it was the applicant instead who delivered the title deeds into the custody of this court on 18th December, 2020. Thereafter, by a letter dated 29th March, 2021 the Deputy Registrar of the court submitted them to the 3rd respondent for implementation of that order, where after they were to be returned to the custody of the court, for onward transmission to the 1st and 2nd respondents to cause the 35 rectification directed by court. By the time the duplicate certificates of title were delivered into the custody of the court and transmitted to the 3rd respondent, the 2nd respondent had previously

applied for and obtained special certificates of title to the eighteen (18) plots of land. Thereafter, between 28th April, and 10th May, 2021 the 1st and 2nd respondent caused a transfer of the titles into the names of the 4th and 5th respondents.

# 5 b. The application.

The application is made by Notice of Motion under the provisions of section 34 and 98 of *The Civil Procedure Act*, and Order 52 rule l of *The Civil Procedure Rules*. The applicant seeks orders the 1st, 2nd and 3rd respondents be cited for contempt of court, that the 2nd respondent be detained 10 in civil prison for contempt of court and that the title deeds to the eighteen (18) plots of land issued by the 3rd respondent to the 1st and 2nd respondents in contravention of a court order be cancelled. The applicant seeks further orders that being citizens of Kenya, registration of the 4 th and 5th respondents as proprietors of those titles be cancelled; registration of the 4th respondent as proprietor of fifteen (15) of the said plots be cancelled; registration of the 5th respondent as proprietor of three (3) of the plots be cancelled; the 4th 15 respondent be directed to create leasehold titles in favour of the applicant in respect of the entire eighteen (18) plots in accordance with the Court of Appeal decision; the 3 rd respondent be directed to return the duly rectified title deeds to court to enable execution of its decree to go ahead; in the alternative, that the 6th respondent be directed to compensate the applicant for loss occasioned to it by the illegal acts of the 3rd 20 respondent.

The applicant's case is that the 1st and 2nd respondents fraudulently applied for the issuance of special certificates of title in respect of the eighteen (18) plots of land, well knowing the duplicate title deeds were not lost. With full knowledge that the duplicate title deeds were not lost, the 3rd 25 respondent proceeded to issue special certificate of title in respect thereof. Subsequent registrations

of the 1st, 2nd and 4th respondents as proprietors thereof respectively was illegal in the circumstances, and in so far as they were acts intended to frustrate the applicant's execution of this court's decree passed in the applicant's favour.

# c. The affidavits in reply.

By an affidavit in reply sworn by the 2nd respondent, the 1st and 2nd respondents contend that the applicants had deposited the title deeds in court without notifying the respondents. The applicant 5 sought to have the mailo land titles converted into leasehold titles based on a misinterpretation of the ruling that directed cancellation of the sale. Those acts of the applicant constituted dealings in the land that contravened the court's permanent restraining order. It is on basis of a well-founded belief that the buyer had refused to deposit the title deeds in court as directed by court, that the 2nd respondent applied for issuance of special certificates of title on 6th November, 2020 for purposes

- 10 of undertaking the court ordered rectification, only to discover during the month of February, 2021 that the applicant had previously deposited the titles in court without notifying the 1st and 2nd respondents. Issuance of the special certificates of title followed publication of a notice to that effect in the Uganda Gazette of 13th November, 2020. Those titles were eventually cancelled in April, 2021 when the applicant deposited the Deputy Registrar of the court delivered the duplicate - certificates of title. Transfer of the titles into the names of the 4th and 5th 15 respondents constituted rectification of the proprietorship, as one of the valid options a opposed to creation of leasehold preferred by the applicant. - By an affidavit in reply sworn by the 5th respondent, the 4th and 5th respondents contend that they are bona fide proprietors of the land in issue who compensated the 1st and 2nd 20 respondents of its value, after confirmation of the fact that the court had declared the hitherto subsisting mortgages thereon and previous sale in execution illegal. The two respondents further ascertained that the applicant had no legal interest in the land and had been restrained from dealing with the land in any way. Registration of the land in the names of the 4th and 5th respondent was aimed at 25 rectification of the proprietorship of the land as directed by court

# d. Affidavit in rejoinder.

The applicant contends that its action do not constitute a dealing within the meaning of the court's restraining order. The 2nd 30 respondent had no basis for applying for special certificates of title, having been declared incapable of being proprietors. Similarly, they lacked capacity to pass any

interest to the 4th and 5th respondents in the same land. There is no proof that the 4th and 5th respondents compensated the 1st and 2nd respondents for the land. There is no evidence to show that the special certificates of title were cancelled.

# 5 e. Submissions of counsel for the applicant.

M/s Kabayiza, Kavuma, Mugerwa and Ali Advocates, on behalf of the applicant submitted that pursuant to the ruling of the then Executions Division of this court delivered on 26th August, 2020 the applicant duly delivered the eighteen (18) certificates of title in court on 16th December, 2020. They were duly forwarded to the Registrar of titles on 29th March, 2021. By that time the 1st 10 and 2 nd respondents had already fraudulently procured special certificates of tile and caused a transfer thereof to the 4th and 5th respondents. Causing the creation of special certificates of title was in

contempt of court. Transfer thereof to the 4th and 5th respondents too was in contempt of court since the rectification envisaged by the Court of Appeal was by way of creation of leases in the 1st and 2nd 15 respondents' names. With full knowledge that both the High Court and the Court of Appeal had declared that he had no legal interest in the land, the 2nd respondent executed transfer forms in favour of the 4th and 5th respondents. This was done with the intention of avoiding registration of leases in favour of the 1st and 2nd respondents as directed by court. He ought to be committed to

- prison until he purges himself of that contempt. In absence of evidence of cancellation of the special certificates of title, the court ought to direct their cancellation. The 1st and 2nd 20 appellants had no title capable of being transferred to the 4th and 5th respondents, who in any event did not offer consideration for that transfer. The 3rd respondent should be order to create the leasehold titles in fulfilment of the rectification directed by court, which title should them be returned to court to enable the execution of its decree to be undertaken. In the alternative, in the event that court declines to void the transfer made to the 4th and 5th 25 respondents, it ought to order - compensation to the applicant by the 3rd and 6th respondent for loss occasioned by the act of the 3 rd respondent when he / she issued unwarranted special certificates of title.

# f. Submissions of counsel for the $1^{st}$ and $2^{nd}$ respondents.

M/s GEM Advocates together with M/s Ambrose Tebyasa and Co. Advocates on behalf of the 1st and $2nd$ respondents jointly submitted that in order for civil contempt to arise, there has to be in $\mathsf{S}$ place an order of court issued for the benefit of another party. In so far as the applicant was restrained from further dealings in the land and from evicting the $1^{st}$ and $2^{nd}$ respondents, the order was issued for the benefit of the $1st$ and $2nd$ respondents. The applicant cannot claim to be the beneficiary of the order when it unsuccessfully appealed the order. The accusation of contempt is based on a wrong interpretation of the order. Creation of special certificates of title was not prohibited by the order and therefore does not constitute a contempt of court. In any event, the $10$ special titles were cancelled as soon as the duplicate titles were submitted. The court-directed rectification was not restricted to any specific mode. The mode opted for by the 1st and 2nd respondents does not violate the order in so far as it resulted in the two respondent's ceasing to be the registered proprietors of the land. Both the Court of Appeal and this court left the 1st and 2nd respondents with a discretion to select a mode of rectification and the one they chose is not in 15 violation of any law and was undertaken with no ulterior motive. It is the applicants and their advocates that violated the order and not the $1^{st}$ and $2^{nd}$ respondents. What the $1^{st}$ and $2^{nd}$ respondents did was not a transfer but rather a re-registration of the title deeds in the names of the $4th$ and $5th$ respondents qualified to hold the mailo interest. The court may not cause issuance of leasehold titles except under statute or by agreement of the parties. Since the 1st and 2nd respondents $20$ were compensated, they have no further claim over the land. The applicant's mortgages having been nullified, the applicant no longer has any claim to the land and therefore has no basis or claiming compensation. The application should therefore be dismissed.

#### g. Submissions of counsel for the $4^{th}$ and $5^{th}$ respondents $25$

M/s HNK Advocates on behalf of the 4th and 5th respondents submitted that the 4th and 5th respondents were not party to the underlying litigation that resulted in the orders alleged to have been violated. The application is intended to invalidate the transfer of the land to the 4th and 5th respondents. The applicant cannot seek to impeach the respondents' titles by an application for contempt of court; the proper procedure is by way of an ordinary suit. The order allegedly violated

$\overline{7}$

never prohibited transfer of the 4 th and 5th respondents. There is no proof that the applicant's directors authorised the litigation. The application is frivolous and an abuse of process in so far as it is an attempt by the applicant to avid the order restraining in from further dealings with the land. The special certificates of title having been cancelled, the order sought to that effect is moot. The

law protects impeachment of the 4 th and 5th 5 respondents' registered proprietorship save for fraud and illegality. The applicant neither pleaded nor proved any fraud or illegality committed by the 4 th and 5th respondents. The 4 th and 5 th respondents have no desire to create leasehold titles over the land and cannot be compelled to do so. Even when created, the leasehold titles cannot be the subject of execution proceedings by virtue of the illegality of the original transaction of mortgaging 10 the mailo land from which the leases arise. The application should therefore be dismissed.

### h. The decision.

"Contempt of court" is a generic expression descriptive of conduct in relation to particular 15 proceedings in a court of law which tends to undermine that system or to inhibit citizens from availing themselves of it for the settlement of their disputes (see A*. G v. Times Newspapers Ltd. [1974] A. C. 273 at 307*). In law, contempt of court is defined as an act or omission tending to"unlawfully and intentionally violate the dignity, repute or authority of a judicial body, or interfering in the administration of justice in a matter pending before it" (see *Principles of Criminal*

- 20 *Law* 1 ed (Juta, Cape Town 1991) at 627; *R v. Almon (1765) 97 ER 94 at 100; Ahnee and others v. Director of Public Prosecutions [1999] 2 WLR 1305 (PC)* and *R v. Metropolitan Police Commissioner, Ex parte Blackburn (No 2) [1968] 2 All ER 319 (CA*). The recognition given to contempt is not to protect the tender and hurt feelings of the judge, rather it is to protect public confidence in the administration of justice, without which the standard of conduct of all those who - 25 may have business before the courts is likely to be weakened, if not destroyed.

It is also defined as the wilful disobedience to any judgment, decree, direction, order or other process of a court or wilful breach of an undertaking given to a court, or the publication (whether by words, spoken or written, or by signs, or by visible representations, or otherwise) or any matter 30 or the doing of any other act whatsoever which scandalises or tends to scandalise, or lowers or tends to lower the authority of, any court; or prejudices or interferes or tends to interfere with, the

due course of any judicial proceeding; or interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner, will constitute contempt of court

Civil contempt usually arises where there is a disobedience to the courts' orders, decrees or 5 undertakings by a party to a proceedings in which the court has generally no interest to interfere unless moved by the party for whose benefit the order was made. Criminal contempt on the other hand is committed when there is an interference with the administration of justice in the nature of a public wrong that requires punishment from the public point of view, which is punitive in nature. It goes a step further by requiring proof that the person accused intended to interfere with or impede 10 the administration of justice especially if it occurs in circumstances where the conduct amounts to public defiance, involves a public injury and this calls into play a penal or disciplinary jurisdiction to deal with criminal contempt (see *Phonographic Performance Ltd. v. Amusement Caterers (Peckham) Ltd. [1964] Ch. 195*). The principal theoretical basis of the distinction is that disobedience to the process and orders of the court in civil proceedings is said to be a civil wrong, 15 a matter between party and party, enforcement being for the private benefit or interest of the party seeking enforcement, whereas impeding the administration of justice is a public wrong. If the contempt primarily benefits the opposing party, it is civil.

While a criminal contempt primarily benefits the court itself, by vindicating the dignity or authority 20 of the court, a civil contempt is designed to coerce the contemnor into compliance, whereas a criminal contempt punishes the contemnor. Civil contempt is prospective because it focuses on getting the contemnor to comply with the court order in the future, while criminal contempt is retrospective because it focuses on punishing the contemnor for past conduct. However, the fact that conduct occurred in the past does not necessarily imply that the contemnor must be held in 25 criminal contempt. In a civil contempt sanction, the contemnor must hold the "keys to his cell," in that no further contempt sanctions are imposed upon the contemnor's compliance with the pertinent court order, e.g. imprisonment until the contemnor complies with the court order. In criminal contempt, sanctions are fixed and the contemnor has no chance to avoid such sanctions once imposed. A contingent sanction, such as being jailed until compliance with a court order, 30 serves to coerce the contemnor and benefits the opposing party hence it is for civil contempt while vindication of the court's authority by way of punishment of the contemnor is criminal contempt. In making the determination whether a contempt is civil or criminal, the court may analyse; (i) whether the opposing party benefits from the contempt action or the contempt vindicates the authority of the court; (ii) the trial court's purpose in the sanctions to be imposed; (iii) whether the contempt seeks to punish past conduct or coerce future conduct; and (iv) the nature of the sanction

5 to be imposed. In *Scott v. Scott [1913] AC 417,* the House of Lords identified a third form of contempt, contumacious civil contempt which is a hybrid of criminal and civil contempt. This involves an element of obstinacy, rebellion or defiance (see *Worthington v. Ad-lib Club Ltd. [1964] 3 All. ER 674*). Such proceedings are launched by the party as in civil contempt, but the character of the contempt has a criminal aspect so that the provisions of criminal contempt attach to it.

Contempt proceedings occupy a unique procedural position because they are often classified as *sui generis*. Any direct contempt may be summarily punished, a process where the judicial officer immediately finds the contemnor in contempt and announces a sanction, unless the judicial officer wishes to impose serious criminal penalties, where the contemnor would have a right to trial. In 15 contrast, in direct contempt, if it is unnecessary to punish the contemnor immediately to preserve courtroom order, the judicial officer has the option of waiting until the end of the proceeding before imposing punishment. Should a judicial officer wait until the end of a proceeding to impose punishment, the contemnor must be given notice and an opportunity to be heard. If a contempt is not summarily punished and the contempt consists of a personal attack on the judicial officer, 20 another judicial officer may be required to hear the proceeding.

Whereas interference with the course of justice includes interference with the authority of the courts in the sense that there may be a detraction from the influence of judicial decisions and an impairment of confidence and respect in the courts and their judgments, the courts have stressed

- 25 that the summary power of punishing for contempt in should be used "sparingly and only in serious cases" (see *Parashuram Detaram Shamsdani v. King-Emperor, [1945] AC 264, at 270 (PC*). Court should be reluctant to use its contempt powers when the object of the litigation can be achieved by other means (see *Danchevsky v. Danchevsky [1974] 3 All ER 934 (CA*). It should be considered only where the disobedience of the party impedes the course of justice. The test to be applied in 30 determining whether or not the conduct constitutes a contempt of court is the tendency of that conduct to obstruct the administration of justice. There is no need of proof of actual obstruction - 10

resulting from an act, but only the character of the act done and its direct tendency to prevent and obstruct the discharge of judicial duty.

The right to a trial is triggered only in a criminal contempt case where "serious" criminal penalties 5 are to be imposed. Criminal contempt sanctions may not be imposed unless the contemptuous conduct is proven beyond a reasonable doubt. Criminal contempt proceedings must generally conform to the same constitutionally mandated procedural requirements as other criminal proceedings. To be found in contempt, there must be a clear and undoubted disobedience of a clear and unequivocal command. It must be proven that the party accused: (i) knew the order existed, 10 (ii) had the ability to comply with the order but violated it knowingly, and (ii) lacks just cause or excuse for the violation. Civil contempt is a strict liability violation; all that must be proved is that the order was served on the respondent, and that a prohibited action (or a failure to carry out an order) occurred. Once the applicant has proved noncompliance with the court's order, by showing the existence of the order and the respondent's noncompliance, the burden then shifts, and the

15 potential contemnor must prove inability to comply or justifiable cause.

## i. Existence of a clear, unambiguous, valid and lawful court order;

It is an accepted legal proposition that for a decree or order of court to suffice as the basis of 20 contempt proceedings by reason of a party's disobedience to or noncompliance with it, it should be clear, direct, and unequivocal. It should not be hedged about by conditions and qualifications which cannot be performed or which may be confusing to one of ordinary intelligence. it must be specific and definite so as to inform the party to be bound thereby what he is to do or what he is not to do. A person should know with complete precision what it is they are required to do or 25 abstain from doing. An indefinite, uncertain or ambiguous decree or order of a court cannot be enforced in a contempt proceeding.

The order should therefore be as definite, clear and precise in its terms as possible, so that there may be no reason or excuse for misunderstanding or disobeying it. It should plainly indicate to the 30 respondent all of the acts which he or she is required to do or restrained from doing, without calling on him or her to make inferences about which persons may well differ (see *Alken Connections*

*Limited v. Safaricom Limited and 2 others, Nairobi Miscellaneous Application 450 of 2012 [2013] eKLR*). There should be no vagueness or uncertainty as to the things required to be done. Where the order is ambiguous or the disobedience is doubtful, there cannot be a finding of contempt. Ambiguities cannot be removed by examining the evidence underlying the decree or order in 5 which the ambiguous language is found. Orders of court must be strictly construed and any ambiguities in the interpretation of the order claimed to have been flouted should be resolved in

favour of the person accused of contempt. The respondent will not be held in contempt if, in order

10 In the instant case, while both counsel in their submissions seem to agree, and rightly so, that the High Court Executions Division Order sought to implement the directive or recommendation of the Court of Appeal by ordering rectification of the titles, counsel for the 1st and 2nd respondents contends that the order of rectification was capable of two modes of implementation; by transfer of the titles to citizens of Uganda, or issuance of leases to the 1st and 2nd respondents, and that the

to do so, the scope of the order would be expanded beyond its plain meaning.

15 respondents rightly opted for the former. Counsel for the applicant disagrees and contends that it is only the latter that was directed and that the 1st and 2nd respondents, with ulterior motive, deliberately opted for a wrong interpretation of the order for purposes of avoiding the creation of lease titles. The question then is whether the terms of the order were so uncertain or ambiguous so as to be confusing to a person of ordinary intelligence.

An order or decree of court which forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application will not form the basis of proceedings in contempt of court. The terms of an order or decree of court are ambiguous only if they are susceptible of more than one meaning and reasonably 25 intelligent persons would differ as to which meaning is the proper one. If determining the meaning of the order requires leaps or logic or a detailed knowledge of the parties' history, then the order is generally ambiguous for the purposes of a contempt finding. In the instant case, the operative words of both the Court of Appeal decision and that of the High Court Executions Division read together state as follows;

….so a lease and not mailo titles should have been issued to the first appellant since it paid valuable consideration for the land. This would avoid an absurdity in this transaction…..made at the time of registration…. [and would have the] effect of reviving the said mortgage which was the commercial and legal intention of the 5 transaction…… There can therefore be no enforcement under the mortgage as it stands unless rectification is done under section 91 of *The Land Act, 1998* to bring the said proprietorship in line with the law…. cancel the illegal registration of the 3rd respondent's entry on the certificates of title and the Register Book and return the same to the applicants for rectification as their current registration as mailo owners is illegal 10 under the law (emphasis added).

It was argued by counsel for the 1st and 2nd respondents that the court-directed rectification was not restricted to any specific mode such that the mode opted for by the 1st and 2nd respondents by way of transfer of the property to the 4 th and 5 th respondents does not violate the order. With due

- 15 respect, nowhere in the said orders combined did any of the courts make reference to rectification by transfer of the land to citizens of Uganda. The courts clearly stated that rectification under section 91 of *The Land Act, 1998* was to be undertaken in order to bring the 1st and 2nd respondents' proprietorship in line with the law, by issuing leases instead of mailo titles, in order to have the effect of reviving the mortgage, which was the commercial and legal intention of the transaction. - 20 A clear and unequivocal order leaves no room for interpretation. The interpretation proposed and adopted by the 1st and 2nd respondents is a clearly strained one. The terms of the order are not ambiguous in so far as they are not susceptible of more than one meaning. An ambiguity is not created simply because a controversy exists between parties, each favouring an interpretation contrary to the other. The 1st and 2nd respondents' argument represents a strained attempt to create 25 ambiguity where none exists. Reasonably intelligent persons would certainly not differ as to the proper meaning of this order.

An order may be found to be unclear if, for example, it is missing an essential detail about where, when or to whom it applies; if it incorporates overly broad language; or if external circumstances 30 have obscured its meaning. Considering that an order is ambiguous if a reasonably intelligent person would be confused by it, or where it can be reasonably interpreted in multiple ways, if the 1 st and 2nd respondents had felt that the order did not clearly define what they were required to do because it is capable of multiple interpretations, the proper remedy would be for them to have filed

an application asking for clarification of the order. A court order is not a suggestion. Where a court order is ambiguous and uncertain, a motion to modify and make more definite is the proper course of action. That notwithstanding, in light of the fact that the surrounding circumstances closely match the order's language, the 1 st and 2nd respondents' interpretation was not a reasonable one, 5 yet nothing is more incumbent upon courts of justice than to preserve their proceedings from being

In conclusion, the Court has considered the arguments of the respondents with respect to the expressions used by both the Court of Appeal and the High Court Executions Division, and 10 concluded that the order is not, in significant respects, too ambiguous to support a proceeding in contempt. Indeed, while the Court is sensitive to the fact that ambiguity lurks in generality and may thus become an instrument of severity, such danger is not presented by finding in this case that the directions of the High Court Executions Division were definite, clear and precise enough so as to rule out any inferences about which persons may well differ. This is a clear and 15 unambiguous court order capable of supporting proceedings in contempt of court.

## ii. Actual notice or knowledge of the order;

misrepresented (see *Roach v . Garvan (1740) 2 Atk. 469; 26 E. R. 683*).

- One of the key requirements in proceedings for contempt of court is notice of the existence of a 20 clear and unambiguous court order. The law is that no order requiring a person to do or abstain from doing any act may be enforced by contempt unless a copy of the order has been served personally on him or her (see *Hon. Sitenda Sebalu v. Secretary General of the East African Community Ref No. 8 of 2012 (EACJ); Jack Erasmus Nsangiranabo v. Col. Kaka Bagyenda and another, H. C. Civil Misc. Application No. 671 of 2019* and *Stanbic Bank (U) Ltd and another v.* - 25 *Commissioner General Uganda Revenue Authority H. C. Misc. Application No. 42 of 2010*). The order must have been personally served upon the respondent against whom sanctions for contempt of court are sought to be enforced but knowledge of its existence or content may sometimes be inferred from the surrounding circumstances. All that is required is knowledge of the mere existence of the order; not its precise terms. It may thus be possible to infer knowledge in the 30 circumstances, or an alleged contemnor may attract liability on the basis of the wilful blindness doctrine.

However, for a person not party to the proceedings, there must be prominently displayed on the front of the copy of an order served, a warning to the person on whom the copy is served that disobedience to the order would be a contempt of court punishable by imprisonment, or (in the case of an order requiring a body corporate to do or abstain from doing an act) punishable by

- 5 attachment of the assets of the body corporate and by imprisonment of any individual responsible (see *Republic v. Commissioner of Lands and 12 others, Ex Parte James Kiniya Gachira alias James Kiniya Gachiri, Nairobi HCMA No 149 of 2002* and *Jacob Zedekiah Ochino and another v. George Aura Okombo and 4 others, [1989] KLR 165*). - At the outset, the Court notes that the record appears to support the view that the 1 st and 2nd 10 respondents' had notice of the order since they were party to the proceedings leading to the order and in their joint affidavit in reply to the application they contend that it is non-compliance with the order by M/s Southgate Properties Limited that prompted them to apply for special certificates of title. As regards the rest of the respondents who were not party to the litigation, there is no proof - 15 of service of the order upon any of them and therefore it has not been proved that they had actual notice or knowledge of the order.

## iii. Intentional failure to act or performance of an act in contravention of that order.

- 20 Having concluded that the order provided a clear and unequivocal command, the next question is whether there was clear and undoubted disobedience of that command. It must be made clear what the respondents are alleged to have done, that constitutes a wilful (rather than casual, accidental or unintentional) breach of an order or undertaking by which they were bound and of which they had notice (see *Australasian Meat Industry Employees Union v. Mudginberri Station Pty Ltd (1986)* - 25 *161 CLR 98; 60 ALJR 608; 66 ALR 577*). Civil contempt applies to a person's wilful failure to comply with a court order when he or she is capable of complying with that order. It is not necessary that the disobedience be contumacious to sustain a finding of civil contempt; rather, the mere act of disobedience, regardless of its motive, is sufficient if such disobedience defeats, impairs, impedes or prejudices the rights of a party, or interferes with the proper administration of 30 justice.

Wilfulness means acting deliberately (see *R v. Senior, (1895) All ER 511*). It amounts to nothing more than knowing what one is doing, and intending to do what one is doing, as a free agent (see *Re, Young and Harston's Contract, (1885) 31 Ch. D 168*). Therefore wilfulness means the voluntary, intentional violation or disregard of a known legal duty. It is the fact or quality of acting

5 purposely or by design, deliberateness, or intention. Wilfulness does not necessarily imply malice, but it involves more than just knowledge. However, generally contumacy need not be proved in order to establish wilfulness (see *Heaton's Transport (St Helen's) Ltd v. Transport and General Workers' Union [1973] AC 15*).

- 10 Although an intentional act or omission that in fact is in breach of a clear order of which the alleged contemnor has notice is enough to establish a contempt of court, casual, accidental or unintentional acts of disobedience under circumstances which negate any suggestion of contumacy, should ordinarily not render the contemnor liable to punishment. A party acting due to misapprehension of the correct legal position and in good faith without any motive to defeat or defy the order of the - 15 Court, should not be liable to a contempt proceeding. But when an act or omission in breach of a court order is done or made consciously, voluntarily and unaffected by any mistake i.e. not casually, or accidentally or unintentionally, it is immaterial that the breach was committed in reliance on a third party's advice, even legal advice. - 20 A person accused of civil contempt can take the following defences: (i) lack of knowledge of the order: (ii) that the act done by him / her was not done wilfully, it was just a mere accident; (iii) compliance of the order is impossible or it cannot be done easily, i.e. inability to comply with the order even after making, in good faith, all reasonable efforts to comply. A person who attempts with reasonable diligence to comply with a court order should not be held in contempt, except 25 where such inability to comply with the court order is attributable to that person's fault; (iv) the order passed by the Court is vague or ambiguous or is not specific or complete in itself. If placed in a dilemma by an ambiguous order, one who acts in good faith and with due respect to the court is not guilty of contempt; (v) the orders involves more than one reasonable interpretation. This defence is available only when a bonafide question of interpretation arises. If the order seems to 30 be given to more than one reasonable and rational interpretation and the respondent adopts one of those interpretations and works in accordance with that, then he /she will not be liable for contempt

of Court. However, reliance on the advice of counsel is not a defence to contempt (see *Re Tyre Manufacturers' Agreement, [1966] 2 All E. R. 849*). Similarly good faith misinterpretation, absence of contumacious disobedience, and lack of intent to violate a decree or order do not constitute a valid defence. Good faith reliance upon the advice of counsel may, however, be considered in 5 mitigation of punishment.

Apart from the 1st and 2nd respondents, the rest of the respondents have the defence of lack of knowledge of the order available to them, in light of the fact that the applicant did not adduce evidence to the contrary. The general principle is that a person cannot be held guilty of contempt in respect of an order of which he or she is unaware. As for the 1st and 2nd 10 respondents, even if they sincerely believed that their conduct did not violate the order, they can be found in contempt since they had actual notice of the order and it is clear on its face.

Where the order is clear on its face, even an honest mistake regarding the meaning of a court order 15 can result in a finding of contempt, whether the violation was procured by ignorance or intentionally. Instead, contumacy or lack thereof goes to the penalty to be imposed following a finding of contempt. All that is required to establish civil contempt is proof beyond a reasonable doubt of an intentional act or omission that is in fact in breach of a clear order of which the alleged contemnor has notice. In any event, the 1st and 2nd respondents' interpretation of the order was not 20 a reasonable one.

This is because the Court of Appeal observed that there could be "no enforcement under the mortgage as it [stood] unless rectification [was] done under section 91 of *The Land Act, 1998.*" The High Court Executions Division directed that the titles were to be returned to the applicants

- 25 for that "rectification." The rectification envisaged was such as would render enforcement under the mortgage possible. Clearly such rectification could not be achieved by way of transfer of the nature undertaken by the 1st and 2nd respondents. Misinterpretation of a clear court order cannot avail as a defence for avoiding a contempt finding. - 30 Section 91 (2) of *The Land Act* empowers the Registrar to call for the duplicate certificate of title or instrument for cancellation, or correction or delivery to the proper party, where it; (a) was is

issued in error; (b) contains a mis-description of land or boundaries; (c) contains an entry or endorsement made in error; (d) contains an illegal endorsement; (e) is illegally or wrongfully obtained; or (f) is illegally or wrongfully retained. This provision not only allows for the rectification of errors originating in the land registry, but also preserves the courts' jurisdiction to 5 order rectification on those specified grounds if it is of opinion that the error can be rectified without injustice to any person.

Such powers of rectification protect against any error or mistakes made in the process of carrying out registration as well as preserving the rights as against registered land, of any person who can 10 have recourse to the court to rectify a title on the grounds of actual fraud or mistake. It would also appear that the power to rectify the register extends to any part of it including the description of the land, details of ownership and burdens (see *Norwich & Peterborough Building Society v. Steed (No 2) [1993] 1 All E. R. 330 at 346*). Rectification is thus not limited to errors occurring in the registration process (errors arising from oversight or negligence on the part of the Land Registry, 15 which can be errors of fact or law), but also extends to errors in the instrument itself presented for registration. Under section 177 of *The Registration of Titles Act*, the High Court has power to direct the Registrar to cancel any certificate of title or instrument, or any entry or memorial in the

proprietor thereof by any proceeding, and to substitute such certificate of title or entry as the 20 circumstances of the case require.

In *NRAM Ltd v. Evans, [2017] WLR(D) 491; [2018] 1 WLR 1563*, it was held that there will have been a mistake where the Registrar;- (i) makes an entry in the register that he or she would not have made; (ii) makes an entry in the register that he or she would not have made in the form in 25 which it was made; (iii) fails to make an entry in the register which he or she would otherwise have made; or (iv) deletes an entry which he or she would not have deleted; had he or she known the true state of affairs at the time of the entry or deletion (see also *Norwich and Peterborough Building Society v. Steed, [1993] Ch 116*). The mistake may consist of a mistaken entry in the register or the mistaken omission of an entry which should have been made. Whether an entry in 30 the register is mistaken depends upon its effect at the time of registration. In *Bank of Scotland PLC v. Greville Development Co (Midlands) Ltd, [2014] All ER (D) 100*, the Court considered the rule that the Registrar of Land may alter the land register, without the consent of all interested parties, to correct a mistake in any document accompanying an application for registration if the mistake is of a "clerical or like nature". The court regarded mis-spellings, 5 transposition of letters, names or numbers as a clerical errors, as well as when an advocate omits something that he or she intended to insert. It was held;

What constitutes a clerical mistake depends to an extent on the context in which that phrase or one to similar effect is used. In its most narrow meaning such an error is one 10 made in writing out a document. Thus it will include mistakes as to spellings, transposition of letters, names or numbers and similar errors including at least some omissions. However, whether an error outside these narrow confines is capable of being a clerical as opposed to some other error will depend on the context in which the, or a similar, phrase is used and the circumstances in which the error came to be 15 made

In that case a legal charge to secure bank lending was being offered over land, legal title to which comprised two registered title numbers. Owing to an oversight the bank's solicitor specified only one title number in the charge deed executed by the parties. It might have been thought that 20 amending the description of the property to be mortgaged was actually quite material, but there was evidence that the whole property was intended to have been charged. So the court decided this was just a clerical error which the Land Registry was entitled to correct by noting the charge against the second title number, without the consent of the registered proprietor.

25 Therefore a mistake rectifiable under section 91 (2) of *The Land Act* may consist of a mistaken entry in the register or the mistaken omission of an entry which should have been made. Whether an entry in the register is mistaken depends upon its effect at the time of registration. Apart from a proprietor of land seeking or consenting to rectification of title, a court may make an order for the alteration of the register for the purpose of (a) correcting a mistake, (b) bringing the register up

30 to date, or (c) giving effect to any estate, right or interest excepted from the effect of registration. Rectification against a proprietor in possession, who does not consent, will only be ordered if he or she has caused or substantially contributed to the mistake by fraud or lack of proper care, or if it would be otherwise unjust not to make the order. Section 91 (2) (e) and (f) therefore extends the powers beyond mistakes that are clerical in nature, to situations involving titles that are illegally or wrongfully obtained or retained.

According to Lord Hoffmann's fifth principle in *Investors' Compensation Scheme Ltd v. West* 5 *Bromwich Building Society [1998] 1 W. L. R. 896*, it is open to a court, if it concludes from the face of a contract that the parties thereto have made a mistake (e.g. by including or omitting words in the document), to interpret the relevant document so that it has the meaning which the parties had intended it to have, i.e. corrective interpretation. The remedy of rectification is one permitted by the court, not for the purpose of altering the terms of an agreement entered into between two or 10 more parties, but for that of correcting a written instrument which, by a mistake in expression, does not accurately reflect their true agreement (see *The Nai Genova [1984]1 Lloyds Rep 353 at 359*).

Any change in description in a legal document so that it creates a proprietary interest of a different 15 type, is material alternation. By virtue of section 33 of *The Judicature Act*, this court may grant absolutely or on such terms and conditions as it thinks just, all such remedies as any of the parties to a cause or matter is entitled to in respect of any legal or equitable claim properly brought before it, so that as far as possible all matters in controversy between the parties may be completely and finally determined and all multiplicities of legal proceedings concerning any of those matters 20 avoided. For the court to apply the corrective interpretation approach, it must be satisfied that; (i) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (ii) there was an outward expression of accord; (iii) the intention continued at the time of the execution of the instrument sought to be rectified; and (iv) by mistake, the instrument did not reflect that common intention.

A party seeking rectification must show an outward expression of a common intention that continued down to the date of execution of the instrument sought to be rectified and that the instrument failed to reflect the common intention as a result of a mistake (see *Swainland Builders Limited v. Freehold Properties Limited [2002] EWCA Civ 560*). Rectification can be ordered only

30 if the court is satisfied that the rectification sought will give effect to the parties' common continuing intention. The Court of Appeal in the instant case expressed the view that "the

commercial and legal intention of the transaction" was the creation of a mortgage over a leasehold rather than mailo land. To achieve that intention, the register had to be rectified so has to have the 1 st and 2nd respondents as registered holders of leasehold titles over the land.

- 5 In order to decide if a transaction is accurately recorded on the register it is necessary to first decide what the nature of the transaction is. This can be a question of law, as for instance where the nature of the estate conveyed by the instrument is not entered correctly on the register. It may be a mistake of fact, where for example, land is included in the registration which are not part of the instrument the subject of registration. There may also be a misstatement as to the extent of a burden on the - 10 land, or an omission where a burden is left off the register altogether or stated to encumber less land than encumbered by the instrument creating it. The Registrar's function is not purely ministerial. As William Erskine Glover notes in *A Treatise on the Registration of Ownership of Land in Ireland*, J. Falconer, 1933 pp.288. - [The Registrar] does not register documents: he registers the effect of them; it is his 15 duty as a conveyancer to interpret correctly, in accordance with the rules of construction recognised and enforced by the courts, the effect of a document presented for the purposes of registration, and to enter its effects correctly on the register … If an entry afterwards is challenged, and the court on consideration of the matter is of opinion that the construction put on the document is wrong, the entry that was made is 20 an official error in registration. - In the instant case, article 237 (2) (c) of *The Constitution of the Republic of Uganda, 1995* provides that noncitizens may acquire leases in land in accordance with the laws prescribed by Parliament. Section 40 (7) (e) of *The Land Act*, defines a noncitizen to include a company incorporated in 25 Uganda whose articles of association do not contain a provision restricting transfer or issue of shares to noncitizens. Attached to the 1st and 2nd respondent's affidavit in reply is the memorandum and articles of association of the 4th respondent. Its articles of association do not contain a provision restricting transfer or issue of shares to noncitizens. The 4th respondent thus is technically a noncitizen company that is disqualified from other tenures of land, save leaseholds. Its registration - as proprietor of the fifteen (15) plots is void for illegality. As regards the 5th respondent, the 1st 30 and 2 nd respondent's title having been invalidated for illegality, they had no capacity to transfer the three (3) other plots to the 5th respondent. That registration too is void on account of the principle

of *nemo dat*. A transferor of land that is registered as proprietor cannot pass a better title than he himself possesses, save to a bona fide purchaser for value without notice. There is no evidence to show that the 5th applicant fits that description and yet at the time of the transfer, the 1st and 2nd respondents were by order of court no longer the registered proprietors thereof.

What the order of the Executions Division directed was the creation of leasehold titles in favour of the 1st and 2nd applicants for purposes of validating the mortgage. Behind that order, the transaction was seen as something which was real and had an objective existence independently of the wishes of the parties. The court did not look at simply at the resultant outcome but rather to 10 the rights and duties that the parties in fact intended to create. It was contended by counsel for the 1 st and 2nd respondents that the court could not direct issuance of leasehold titles except under statute or by agreement of the parties. Furthermore, that it was not possible to create leasehold titles since that would require the parties to agree on the terms of the lease, and there was no such agreement. This argument though fails to address the fact that a lease may come into existence by 15 operation of law, and not necessary by express agreement of the parties.

Section 1 (s) of *The Land Act*, defines "leasehold land tenure" as the holding of land for a given period from a specified date of commencement, on such terms and conditions as may be agreed upon by the lessor and lessee. However section 3 (5) (a) (b) and (e) thereof recognises the fact that 20 a lease may be created either by contract or by operation of law, under which one person, namely the landlord or lessor, grants or is deemed to have granted another person, namely the tenant or lessee, exclusive possession of land usually but not necessarily for a period defined, directly or indirectly, by reference to a specific date of commencement and a specific date of ending, and that its terms and conditions of may be regulated by law to the exclusion of any contractual agreement

25 reached between the parties.

Leases normally have to be created by deed. However, certain leases can be created by operation of law, such as under the concept of "automatic conversion" of mailo interest to leasehold found in section 40 (6) of *The Land Act* applicable in the case of any citizen holding land under freehold 30 or mailo tenure who loses Ugandan citizenship. No registration procedure is required nor provided

for such conversion. The holder of the right of ownership (or his agent) only needs to present the

relevant title deed to the Registrar who then endorses such title deed to the effect that the land tenure right is converted to leasehold, and issues a replacement title to that effect or maintains the old title deed, with endorsement that the land tenure right (mailo) is converted into leasehold. This concept may be extended to noncitizens purporting to hold land under freehold or mailo tenure by

5 honest mistake, in whose case the estate transferred ought to be deemed a lease. The only instance where this should not happen is in cases where a person being a noncitizen, acquires land in freehold using fraudulent means (see section 92 (1) (a) of *The Land Act*), for it is an offence.

For leases created by operation of law, the basic covenants are similarly implied by law. Implied 10 covenants in leases, are obligations that are deemed to exist, even if not expressly stated. They are terms that, unless expressly disclaimed, are found to be a part of every lease. The implied covenant is most generally a tool of interpretation designed to help a court achieve a result that fulfils the court's idea of the reasonable expectations of the parties and to give the contract a spirit. Express covenants, that is obligations spelled out in the case of a written agreement or actually articulated 15 in an oral contract, may or may not be supplied later by the parties, put flesh on the bones of a contract's implied terms, including the manner in which the implied obligations in the lease may be performed.

Implied covenants are not technically favoured by the law. Their use and justification is almost 20 always based on some finding of ambiguity and necessity. It arises from the need to give full effect to the terms of a contract as likely intended by the parties if they had considered the factors in suit at the time of executing the contract. It thus tracks closely with rules of contract interpretation to give full effect to the intent of the parties as established by whatever evidence is allowed depending on whether a finding of ambiguity is a prerequisite. Whereas at common law there can be no 25 implied covenant where the subject is completely covered by the written contract, such that the implication of terms into a written contract must arise from the language used or it must be indispensable to effectuate the intention of the parties; or a term can be implied where it can be rightfully assumed that it would have been made if attention had been called to it, and it must appear from the language used that it was so clearly within the contemplation of the parties that 30 they deemed it unnecessary to express it, implied covenants can be justified on the grounds of legal necessity for the purpose of effectuating the plain, clear and unmistakable intention of the parties.

Necessity may arise out of the terms of the contract or out of the substance thereof and the circumstances attending its execution. Any covenant absolutely necessary to the operation of the contract and the effectuation of its purpose is necessarily implied, whether inferable from any particular words or not. Terms which may clearly be implied from a consideration of the entire

- 5 contract are as much a part thereof as though plainly written on its face. For that reason, Laws that are so central to the bargained-for exchange between the parties, or to the enforceability of the contract as a whole, must be deemed to be terms of the contract. A contract must be construed as having been made in contemplation of applicable law. The laws which subsist at the time and place of the making of a contract, and where it is to be performed, enter into and form a part of it, as if - 10 they were expressly referred to or incorporated in its terms. Existing law becomes part of a contract, just as though the contract contains an express provision to that effect, unless a contrary intent is disclosed.

According to the House of Lords case of *Street v. Mountford [1985] AC 809*, a lease is the grant 15 of a right to the exclusive possession of land for a determinate term less than that which the grantor himself has in the land. This definition identifies three essential elements: exclusive possession, determinate term and a term less than that of grantor. Section 40 (3) of *The Land Act* provides that a noncitizen is not to be granted a lease exceeding ninety-nine years. Whereas other terms and conditions like the nature of rights, duties of lessor and lessee, conditional clauses, termination 20 clause, dispute resolution clause, etc. are crucial factors for the sustenance of any lease and any dispute in respect of the lease, sections 102, 103, 104 and 105 of *The Registration of Titles Act* provide for covenants to be implied in every lease against the lessee, powers to be implied in the lessor, the covenant to be implied on transfer of lease and short forms of covenants by lessees. While the Eighth Schedule to the Act provides for the structure of a lease by owner in fee simple,

25 the Ninth Schedule specifies some of the key covenants in such leases that may be modified to suit the circumstances of each case. For completeness, the parties may put flesh on the bones of the contract's implied terms. The 1st and 2nd applicants therefore could not use the excuse of absence of a written lease agreement to avoid executing the obligation imposed upon them by order of court.

Bad faith will be inferred when a party undertakes a course of action for a dishonest purpose. There is ample evidence of conscious doing of wrong, or breach of duty through motive of self-interest or ill will on the part of the 1st and 2nd applicants when they applied for the issuance of special certificates of title in respect of the eighteen (18) plots of land, well knowing the duplicate title 5 deeds were not lost, and attempted to put the land out of the reach of the execution Court and that of the applicant by causing a transfer thereof to third parties, rather than comply with the order of rectification by way of creation of leasehold titles subject to the applicant's mortgage. A contempt finding is appropriate where steps are taken to subvert a valid and enforceable decree or order of

court. The contempt power exists to preserve and enforce the rights of private parties to suits and

10 to compel obedience of orders and decrees made to enforce those rights.

While judges will not read into an order or decree additional terms or directions, judges will not allow a party to do indirectly what an order or decree makes clear he or she cannot do directly. Courts will not permit judgement debtors to evade responsibility for violating a decree or order of 15 court, by doing through subterfuge a thing which is not in terms a violation, yet produces the same effect by accomplishing substantially that which they were enjoined from doing, or avoiding to do that which they were directed to do. This is a glaring attempt to conceal or make away with property to defeat or defraud a judgment creditor. It is conduct of a devious debtor determined not to pay, attempting to shield his property from his creditor. To allow such behaviour would 20 undermine the efficacy of court decrees and allow anyone to flout the judicial branch.

The test is whether or not the impugned conduct constitutes an obstruction of the court's administration of justice or operates to bring the judiciary into disrespect or disregard. Contempt of court is civil where it consists in the disobedience of some judicial order entered for the benefit 25 or advantage of another party to the proceeding and criminal where it is constituted by acts disrespectful to the court or its process, or obstructing the administration of justice, or tending to bring the court into disrepute. The contemptuous acts in the instant case are not of the nature that requires vindication of the court's authority and dignity, but rather consist of a present refusal to perform an act in the power of the 1st and 2nd respondents to perform, which constitutes injury to 30 the applicant, for whose benefit it is required. This therefore is a case of civil contempt.

Consequently, this Court finds that by causing the transfer of the eighteen (18) plots of land into the names of the 4 th and 5th respondents, instead of causing rectification thereof by issuance of leasehold titles in place of the mailo titles, as the means of reviving the mortgage directed by court, which indeed was the commercial and legal intention of the transaction, the 1st and 2nd respondents

5 intentionally failed or refused to perform an act, in contravention of that order.

## iv. Circumstances necessitating measures to be taken against the respondent;

It is black letter law that Courts generally will not impose sanctions or award damages for minimal

- losses (see *Black's Law Dictionary*, 8th 10 Edition, *de minimis non curat lex* "the law does not concern itself with trifles"). A case is serious where the contemnor acts intentionally, with the purpose of either bringing the court into scorn, disrepute or by interfering with the administration or course of justice, or where the conduct has caused substantial prejudice a party. In any event, the party in whose favour an order has been made is entitled to have it enforced, and also the effective 15 administration of justice normally requires some penalty for disobedience to an order of a court if the disobedience is more than casual or accidental and unintentional. - Any penalty imposed for civil contempt must be designed not to punish but to compensate the injured party, to coerce compliance with the court's mandate, or both. This is because civil 20 contempt deprives a party of the benefit for which the order was made. The party asserting a contempt allegation must therefore substantiate some prejudice or loss resulting from the contempt. It is also imperative to substantiate the nexus between the alleged contempt and actual damages or loss sustained. It may nevertheless be necessary to punish as a contempt, a course of conduct which abuses and makes a mockery of the judicial process and which thus extends its 25 pernicious influence beyond the parties to the proceedings, and affects the interest of the public in the administration of justice, even where the party alleging contempt has not suffered or sustained actual damages or loss. In the instant case, the applicant claims to have been delayed in recovery of the decretal amount by the 1 st and 2nd respondents' contemptuous conduct. - 30 Punishment for contempt serves two functions: (a) enforcement of the process and orders of the court, disobedience to which has been described as "civil contempt"; and (b) punishment

of other acts which impede the administration of justice. Civil contempt sanctions are said to be coercive in nature. Their purpose is remedial, and for the benefit of the complainant, as distinguished from criminal contempt sentences which are punitive in nature. Sanctions in a civil contempt case may serve to either; (i) coerce the contemnor to comply with a court order, or (ii)

5 compensate a party for losses suffered. While coercive sanctions may come with some limitations, remedial sanctions are only limited by the requirement that they be compensatory. When court is satisfied that the respondent's non-compliance with the order was wilful and not casual, accidental or unintentional, the respondent then opens himself or herself up to such measures as are in the court's discretion, whether punitive or coercive, which would best deal with the contempt.

The contempt power is a discretionary one. Courts have extremely broad and flexible powers in contempt cases and have wide discretion in fashioning an equitable remedy. The power though should be used sparingly, with great restraint and only when required to protect the rule of law. It should be exercised only when necessary to prevent actual, direct obstruction of, or interference 15 with, the administration of justice. If courts were to find contempt too easily, a court's outrage might be treated as simply raising a storm in a tea cup that might ultimately cheapen the role and authority of the very judicial power it seeks to protect. Contempt of court cannot be reduced to a mere means of enforcing judgments. Courts have consistently discouraged its routine use to obtain compliance with court orders. The power should therefore be used cautiously and with great 20 restraint. It is an enforcement power of last, rather than first, resort and the court's response must be proportionate to the harm caused. If the penalty is of undue severity and disproportionately greater than that which is appropriate then it will diminish rather than enhance respect for the administration of justice.

25 There are ample precedents where courts have taken strong measures in order penalise or to coerce compliance with an order of the court. In the case of an individual contemnor, a fine may be imposed (see *Doyle v. London Guarantee Co, [1894] 1 Q. B. 244*). For example in *Barbara Nambi v. Raymond Lwanga, H. C. Misc. Application No. 213 of 2017*, a fine of shs. 2,000,000/= was imposed upon a contemnor for re-occupying land in violation of a court injunction; in *Mega* 30 *Industries (U) Ltd v. Comfoam Uganda Ltd H. C. Misc. Cause No. 21 of 2014*, the contemnor was fined shs. 100,000,000/= for continuing to commit an economic tort of passing off in violation of a permanent injunction order; in *Dr. Charles Twesigye v. Kyambogo University, H. C. Misc. Application No. 120 of 2017*, an ward of shs. 20,000,000/= in general damages was made for failure to comply with an order to provide the applicant with a record of proceedings of a disciplinary committee for purposes of appeal, alongside a fine of shs. 2,000,000/=; in *Attorney General v.*

- 5 *Male Mabirizi K. Kiwanuka, H. C. Misc. Application No. 843 of 2021* a fine of shs. 300,000,000/= was imposed upon a contemnor for statements and posts on his twitter handle and Facebook page, contemptuous of a Judge of the High Court. The contemnors was sentenced to eighteen (18) months' imprisonment in default of payment of the fine. - 10 Similarly, in *Nambasi Nelson Ludambisa v. Khan Investments Ltd, H. C. Misc. Application No. 602 of 2018*, a fine of shs. 20,000,000/= was imposed for the sale of a motor vehicle in violation of an order that it is impounded and parked at the applicant's business premises for three weeks pending ongoing litigation; for frustrating execution of a decree, the contemnors in *Semanda David and two others v. No. K 2011 Kaheebwa Geofrey and another, H. C. Misc. Application No.* - 15 *1625 of 2016* the contemnors were fined shs. 1,000,000/= each and ordered to pay aggravated damages of shs. 3,000,000/= and exemplary damages of shs. 6,000,000/=; *Wilfred Bugingo v. Standard Chartered Bank Ltd, H. C. Misc. Application No. 1242 of 2016*, the contemnors were fined shs. 10,000,000/= each and ordered to pay aggravated damages of Shs. 3,000,000/= and exemplary damages of shs. 100,000,000/=; *Jane Sempebwa and another v. Ndibalekera* - 20 *Magdalena, H. C. Misc. Application No. 176 of 2019*, the contemnors were fined shs. 20,000,000/= each and ordered to pay punitive damages of shs. 30,000,000/=

Alternatively, the contemnor may be imprisoned until the contempt is purged. The committal to prison is of a conditional nature, remaining in force until the contempt comes to an end or further

- 25 order is made. As soon as the contempt is purged, the offender is entitled to release *ex debito justitiae* (see *In re Freston, (1887) 13 App. Cas. 20*). In *Mega Industries (U) Ltd v. Comfoam Uganda Ltd H. C. Misc. Cause No. 21 of 2014*, a six months' suspended sentence was meted out against the respondents to be served if the contempt complained of persisted. - 30 Analysis of the above decisions will reveal that fines for contempt of court are at large. Contempt powers thus give Courts almost unlimited power to impose devastating fines on parties, rendering

them highly susceptible to abuse. Heftier fines are imposed where the contemnor's conduct is offensive to the authority and dignity of the court. Massive fines and imprisonment are seen as appropriate remedies in respect of conduct that the court considers so significantly contemptuous. The contemnor has been, in many cases, fined for the benefit of the injured party in an amount

5 approximately equal to the complainant's loss. Criminal contempt fines are imposed as punishment for completed acts of disobedience for the purpose of vindicating the authority of the court, while the civil ones are coercive and compensatory serve to serve a remedial purpose, in the sense that the threat of the sanction serves to coerce the recalcitrant contemnor into complying with the court's Order.

The decisions also reveal that civil compensatory contempt fines and criminal contempt fines are clearly retrospective in nature while civil coercive remedies are prospective. In all cases, the decisions are designed to act as a warning to judgment debtors, that judgments and orders of the court cannot be evaded with impunity, nor can its orders be simply ignored. The sanctions serve 15 the retributive goal in that they imposes negative consequences on the contemnor for flouting the court's authority. The sanctions also serve the deterrent goal in that they discourage both the particular contemnor before the court and future litigants in general from disobeying court orders. When a court imposes fines and punishments on a contemnor, it is not only vindicating its legal authority to enter the initial court order, but it also is seeking to give effect to the law's purpose of 20 modifying the contemnor's behaviour to conform to the terms required in the order.

As part of its inherent authority to issue orders that are necessary for the performance of judicial functions, a court has the power to enforce obedience to its orders through contempt sanctions. Punitive sanctions for contempt include the imposition of unconditional fines, fixed sentences of 25 imprisonment, or both where the court expressly finds that the person's conduct was offensive to the authority and dignity of the court. On the other hand, remedial sanctions are imposed to force compliance with a lawful order or to compel performance of an act within the person's power or present ability to perform. The Court specifies the means by which the person may purge the contempt, and the sanctions that will be in effect until the contempt is purged. If the contempt

30 consists of the failure to perform an act in the power of the person to perform and the court finds

the person has the present ability to perform the act so ordered, the person may be fined or imprisoned until its performance.

Other than costs, a trial court is without authority to require, as a remedial sanction, monetary payments that do not force compliance with or performance of a court order. Instead of the growing $\mathsf{S}$ practice of awarding damages, aggravate or punitive, the court may have the contemnor fined for the benefit of the aggrieved party, to indemnify him for his damage caused by the contempt. According to section 128 (1) (b) if *The Trial on Indictments Act*, whenever the High Court imposes a fine, or a sentence of which a fine forms part, the court may, when passing judgment, order the whole or any part of the fine recovered to be applied in the payment to any person of compensation $10$ for any loss or injury caused by the offence when substantial compensation is, in the opinion of the court, recoverable by civil suit. Therefore fines by way of indemnity to a party damaged by reason of an act constituting contempt are imposed under both statutory and common law power.

Where the nature of the contempt consists of a present refusal to perform an act in the power of 15 the contemnor to perform, which constitutes injury to others for whose benefit it is required, the court may order the contemnor imprisoned, not for a definite time, but until he or she performs the act which he or she is commanded and is able to perform. Where the nature of the contempt consists of conduct which is derogatory to the authority or dignity of the court, the court may order

- $20$ punishment to vindicate the dignity of the court by fine or imprisonment, or both, which should be definite as to amount and time, regardless of subsequent compliance with the court order. In the former case, the court must, upon hearing, make a finding both of the facts constituting contempt and of a present duty and ability to perform; in the latter case, the court must make a finding of facts constituting misbehaviour and that the conduct is offensive to the authority and dignity of the - $25$ court. In cases where performance is no longer possible or when a party has offended the dignity of the Court so significantly, the Court may impose both remedial and punitive contempt sanctions.

The circumstances of this case, being in the nature of contempt consisting of a present refusal to perform acts in the power of the contemnors to perform, require only remedial and not penal sanctions as against the $1^{st}$ and $2^{nd}$ respondents. Be that as it may, a corporation found in contempt of court is usually sanctioned by one or more of the following: (a) imposition of a fine upon the

corporation; (b) imprisonment of one or more directors or officers of the corporation; (c) imposition of a fine upon one or more directors or officers of the corporation. For example, section 30 (5) of *The Contempt of Court Act, No. 46 of 2016* of Kenya, provides that where it is proved to the satisfaction of the court that the contempt has been committed with the consent or connivance

5 of, or is attributable to any neglect on the part of any accounting officer, such accounting officer is deemed to be guilty of the contempt and may with the leave of the court be liable to a fine not exceeding two hundred thousand shillings. Therefore, since a corporation can only act through its agents, public policy weighs in favour of fining a corporation which benefits from the illegal acts of an agent. It is an elementary proposition that corporations cannot be imprisoned. By far the most 10 common sanction used against corporations is the criminal fine.

When fashioning out sanctions for contempt of court, a variety of factors are considered, including; (i) the character and magnitude of the harm threatened by continued contumacy; (ii) the probable effectiveness of any suggested sanction in bringing about the result desired; and (iii) the 15 contemnor's financial resources and the consequent seriousness of the burden to that particular contemnor. The court must exercise the least possible power adequate to the end proposed. When the court announces that it will imprison or fine a contemnor unless or until the contemnor abides by the court's order, the court is using the announced sanction as a lever to force the contemnor to comply.

I have not found in this case any basis for holding the 3rd, 4th and 5 th respondents in contempt. I however have found that the 1st respondent acted through the 2nd respondent as its director and agent to flout the court order. As a result of their joint actions, the applicant is unable to perfect a mortgage intended to secure a sum of shs. 4,272,740,118/= borrowed by the 1st respondent and personally guaranteed by the 2nd 25 respondent. Furthermore, the applicant has been prevented from achieving full recovery of the sum decreed to it by reason of the 1st respondent's default in repayment. It is imperative in the circumstances that; with regard to the 2nd respondent, he is committed to prison until he purges himself of that contempt; and with regard to the 1st respondent that it is fined in a sum representing 1% of the sum decreed to the applicant, part of which should 30 be applied toward payment of compensation to the applicant for the resultant impediment or prejudice occasioned to it by reason of the delayed enjoyment the rights decreed to it. In conclusion, this court finds, declares and orders as follows;

- a) Both the 1st and 2nd respondents are guilty of contempt of court by flouting the order 5 of the now defunct Executions Division of this court in Misc. Application No. 208 of 2020 requiring them to cause rectification of the titles to land comprised in Kyadondo Block 101 Plots, 190, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270 and 275 at Wattuba, as well as Kyadondo Block 90 Plots 397, 459 and 460 at Katalemwa, by failing to cause issuance of leasehold titles in the names of the 1st and 2 nd 10 respondents respectively. - b) Within fourteen days of this order, the 1st respondent is to pay a fine of shs. 40,000,000/= out of which shs. 38,000,000/= shall be applied as payment of compensation to the applicant. - c) Transfer of the land comprised in Kyadondo Block 101 Plots, 190, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270 and 275 at Wattuba by the 1st 15 respondent to the 4th respondent is null and void, and should be cancelled by the 3rd respondent forthwith. - d) Transfer of the land comprised in Kyadondo Block 90 Plots 397, 459 and 460 at Katalemwa by the 2nd respondent to the 5th respondent is null and void, and should be cancelled by the 3rd 20 respondent forthwith. - e) The special certificates of title issued by the 3rd respondent in respect of land comprised in Kyadondo Block 101 Plots, 190, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270 and 275 at Wattuba as well as Kyadondo Block 90 Plots 397, 459 and 460 at Katalemwa are null and void, and should be cancelled by the 3rd 25 respondent forthwith. - f) If within a period of fourteen (14) says from the date of this ruling the 2nd respondent shall not have; (i) caused the surrender to the 3rd respondent all title deeds to the land comprised in Kyadondo Block 101 Plots, 190, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270 and 275 at Wattuba, as well as Kyadondo Block 90 Plots 397, 30 459 and 460 at Katalemwa; (ii) duly executed all documents required for conversion of the mailo certificates of tile to leaseholds registered in the names of the 1st and 2nd

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respondents respectively; (iii) paid all the fees and taxes required for the completion of that process, and presented to court proof of discharge of each of the said obligations within the said period, the 2nd respondent shall forthwith be committed to civil imprisonment, to be kept in custody until he has so complied, or until further 5 orders of this court.

- g) The 3rd respondent shall surrender the resultant leasehold title deeds so created, to the applicant. - h) Their conduct having necessitated this application, the 1 st and 2nd respondents are to meet the applicant's costs of the application as well as the costs of the rest of the 10 respondents.

| | Delivered electronically this 12th day of September, 2022 | ……Stephen Mubiru………… | |----|-----------------------------------------------------------|--------------------------| | | | Stephen Mubiru | | | | Judge, | | 15 | | 12th September, 2022. | | | | |