Kiwanuka v Micro Finance Centre Limited and Another (Civil Appeal 159 of 2014) [2023] UGCA 355 (14 April 2023)

Full Case Text

#### THE REPUBLIC OF UGANDA

#### IN THE COURT OF APPEAL OF UGANDA

[Coram: Catherine Bamugemereire, Stephen Musota, & Muzamiru M. Kibeedi, JJA]

#### CIVIL APPEAL NO 159 OF 2014

s AISHA KIWANUKA APPELLANT

#### VERSUS

# 1. MICROFTNANCE CENTRE LTDI

2. |MAM KTWANUKA 1 RESPONDENTS

10 [Appeal and Cross-Appeal from the decision of Flavia Senoga Anglin, J in High Court Miscellaneous Cause No. 21 of 2013, High Court Commercial Division, dated 0&h April, 2013

#### JUDGMENT OF MUZAMIRU MUTANGULA KIBEEDI. JA

#### lntroduction

The facts giving rise to this dispute are not in contention. ln February 2012,the 1'r respondent lent Uganda Academic Enhancement Company Limited (debtor company) UGX 280,000,000/= (Two Hundred Eighty Million Uganda Shillings Only) with interest thereon against a legal mortgage over three different lands registered in the names of three different persons. One of three properties/securities is the subject matter of this appeal, namely: land comprised in Kyadondo Block 338 Plot 210 at Kiwatule, Kyengera, Mugongo and registered in the names of the 2^d respondent. The Mortgago Deed ls dated the 06th February 2Q12 and was signed by both respondents, the debtor company and each one of the registered proprietors of the two other properties which formed part of the security, namely: Ms Nancy Twashaba Rwaburindore and Haji Kamadi Kiwanuka. 15 20

25 The deblor company defaulted in repayment of the loan, whereupon the 1't respondent embarked on enforcement of the security. Pursuant to the 1rt respondent's instructions, Bemug Strict Auctioneers and Court Bailiffs advertised the intended sale of the 2no respondent's property in The New Vislon daily newspaper of 07th August 2013. The bailiffs simultaneously

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wrote a letter to the occupants of the 2no respondent's property to vacate on or before 22,0 August 2013.

- On 12tt August 2013 the appellant, claiming to be a wife of the 2no respondent, filed an application in the High court of Uganda at Kampala, commercial Division, by way of Notice of Motion under Sections 34, 35 and 36 of the Mortgage Act No.8 of 2009 seeking an order that the Court reviews the mortgage over land comprised in Busiro Block 338, Plot 210 situated at Kiwatule, Kyengera, Mugongo (suit property) and declares it void. The suit was registered as 30 - High Court Miscellaneous Cause No.21 of 2013 35

The grounds upon which the application was based were stated to be;

# 1) That the mortgage was obtained in an unlawful manner in as much as the securi\$ was family land/matrimonial home and there was no spousal consent to mortgage the land.

#### 2) That it was just and fitting. 40

The application was supported by the appellant's Affidavit dated 09th August 20'13. The 1'r respondent filed an Affidavit opposing the application deponed upon by its Manager of Legal Services, Ms. Mariam Ndibuza. She attached to her Affidavit the Statutory Declaralion made by the 2^d respondont on 06m December 2012 ln whlch he, among other thlngs, declared that he was not married. On the other hand, the 2nd respondent filed his Affidavit in Reply dated 25rh February 2014lhe gist of which was an admission of the appellant's claim and conceding to the grant of the application.

The issues for investigation before the trial court were two, namely: 1) whether the appellant was the 2nd respondent's wife. 2) Whether the appellant was entifled to the reliefs sought.

50 The High Court found that the Appellant was a wife of the 2no respondent and that no spousal consent had in fact been obtained by the lno respondent before mortgaging the suit property.

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However, the learned trial judge declined to declare the mortgage void on the ground that the situation was the result of the fraud perpetrated by the lna Respondent, the husband of the Appellant.

55 Being dissatisfled with the decision of the trial court, the Appellant preferred an appeal to this Court.

# Grounds of Appeal

The sole ground of appeal raised in the Memorandum of appeal is: -

That the learned trial Judge erred in law when she declined to make an order invalidating the mortgage after finding that the appellant's consenf as a spouse was not soughf prior to the Appellant's matrimonial propefilfamily land being mortgaged.

### Cross- Appeal

65 On the other hand, the 1st Respondent also cross-appealed against the decision of the trial court on the ground couched thus:

> The learned trial Judge erred in law and in fact and failed to properly evaluate the evldence on record and thereby came to a wrong concluslon thet the Appellant is the wlfe of the ?a Respondent.

# Representation

io Atthe hearing, the appellantwas represented by Mr. Gilbert Niwagaba of KGN Advocates. The 1't Respondent was represented by Mr. Usaama Sebuufu of M/s K & K Advocates while the 2"d Respondent appeared Dro se. The Appellant and 1st Respondent adopted their respective Conferencing Notes as their submissions, while the 2no Respondent filed written submissions on

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l5 7rh December 2010. The resolution of the appeal is therefore largely based on the Writlen submissions of the parties.

#### Preliminarv Obiection

Before the file for Civil Appeal No, 159 of 2014 was called for hearing the '1.1 respondent filed Civil Application No. 169 of 2014 by which it raised an objection to the competence of Civil Appeal No, 159 of 2014 on the ground that it was filed without first seeking leave of the trial court or the appellate court. Counsel for the first respondent argued that no automatic right of appeal is created under the Mortgage Act No.8 of 2009 in respect of decisions made by the High Court under the Act. That, therefore, the Appellant needed to seek leave of court before filing the appeal as the decision of the High Court did not fall under Order 44 Rule 1 of the Civil Procedure Rules. Counsel accordingly prayed that the appeal be struck out for being incompetent.

Counsel for the appellant did not agree. He submitted that the order appealed from was a final order and appealable as of right under Section 66 of the Civil Procedure Act, Cap. 71. He thus prayed that the objection raised by the 'lstrespondent's counsel be rejected.

90 ln its Ruling in Civil Application No. '169 of 2014 which was rendered on the 25th June 2014, this Court declined to make a conclusive pronouncement on the objection and advised the 1"r respondent that the objection can be re-agitated at the hearing of the Appeal.

When the appeal came up for hearing before us, Counsel for the 'ld respondent re agitated the objection. And below is the resolution of the same.

95 It is settled law that the right to institute an appeal is a creature of statute. See'. Attorney General Vs Sfiaf (No.4) [197] EA 50.

However, the right of appeal does not have to be created by the same law which gives rise to the specific action or relief. See; Pius Niwagaba Vs Law Development Centre, Civil

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Application No. 18 of 2006, [2006] UGCA 48 and Aisha Kwanuka Vs Micro Finance Centre Ltd & lmam Kiwanuka, Civil Application No. 169 ot 2014 (CA-U)

- 100 The contested decision of the trial court arose from an application instituted by the appellant under Sections 34, 35 and 36 of the Mortgage Act No.8 of 2009. A review of the Mortgage Act, 2009 shows that the Act does not create a right of Appeal. But that by itself does not automatically imply that no right of appeal exists from the impugned decision since the Civil Procedure Act already takes care of it. - 105 Under Section 66 of the Civil Procedure Act, Cap. 71, an appeal lies as of right from a decree of the High Court of Uganda to the Court of Appeal. The Section is couched thus:

" S. 66 Appeals from decrees of High Cout

Unless otherwise expressly provided in this Act, an appeal shall lie from the decrees or any part of the decrees and from the orders of the High Court to the Cout of Appeal."

110 A "decree" is defined by Section 2 (c) of the Civil Procedure Act to mean:

> 'lhe formal expression of an adjudication which, so far as regards the coui expressing it, conclusively determines the ights of the parties with regard to any of the matlers in controversy in the suit and may be either preliminary or final ..."

115 A review of the Ruling of the High Court in th6 instant matter and ths resultant impugned order reveals that lt concluslvely determlned the rlghts of the parties to the dispute. Such a decision would in substance qualifo to be a decree in the terms of Section 2 of the CPA and is, as such, appealable as of right lo this court.

I still reiterate and adopt the position of the law that has been repeatedly stated by the Court of Appeal and the Supreme Court of Uganda that where an order is made by the High Courl on a 120 matter brought to it pursuant to some statutory provisions other than the Civil Procedure Act or Rules, it is appealable as of right unless the right of appeal is specifically excluded by some special legislation. See: Makula lnternational Ltd Vs Cardinal Nsubuga & Another, Civil Appeal No. 4 of 1981; Joseph Bayego Vs Registrar of Titles, Civil Appeal No. 20 of 1994;

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Pius Niwagaba Vs Law Development Centre (op cit); and Seyani Brothers & Co. Limited Vs Simbamanyo Estates Limited, Civil Application No.06 of 2009, [20091UGCA 60. t25

ln the premises, I would reject the preliminary objection to the appeal and proceed to its resolution on its merits.

# Duty ol the Court as a 1't Appellate Court

As a lstappellate court, it is the duty of this court to re-appraise all evidence that was adduced before the trial court and come to its own conclusions of fact and law while making allowance for the fact that the court neither saw nor heard the witnesses testify. (See: Rule 30 (1)@ of the Judicature (Court of Appeal Rules) Directions, S.l '13-10; Fredrick Zaabwe vs. Orient Bank Ltd Civil Appeal No. 4 of 2006). 130

Similarly, in Kfamunte Henry vs. Uqanda SCU Cr. Appeal no. 10 of 1997 lhe Suoreme Court. ol 135 Uqanda held that:

> "The first appellate court has a duty to review the evidence of the case, to reconsider the mateials before the tial judge and make up its own mind not disregarding the judgment appealed from but carefully weighing and consideing it."

It is with the above principles in mind that I will proceed to resolve the appeal starting with the re-evaluation of the evidence as to the marital status of the appellant which is the gist of the cross appeal. Thereafler, I will consider the proprlety of the decision of the trial court NOT to nulllfy th6 mortgago which ls the glst of th6 appellant'a sole ground of appeal.

# Marital Status of the appellant,

1,40

Ihe issue of the appellant's marital status arose from the respondent's cross-appeal which was t45 couched in the following terms:

The learned trial Judge erred in law and in fact and failed to properly evaluate the evidence on record and thereby came to a wrong conclusion that the Appellant is the wife of the 2,a Respondent.

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# Submissions of Counsel on the question of Marital Status of appellant

150 155 In his submissions, Counsel for the 1s respondent argued that for the appellant to have /ocus slandi to commence the proceedings before the High Court, she had to prove, to the required standard, that she was the wife of the 2no respondent, Counsel contended that there was no evidence adduced to show that the appellant and Zna respondent ever got married in accordance with the Maniage and Divorce of Mohammedans Act. That the only evidence of marriage on record was the Marriage Certificate which Court found not to comply with the requirements of Section 8 of the Maniage and Divorce of Mohammedans Act.

Counsel for the 1't respondent further submitted that as per Section 101(2) ol the Evidence Act Cap.6, it was the duty of lhe 2nd respondent to prove that he was unmarried. That the 2tu respondent, who is the registered proprietor of the suit property, affirmed under a duly registered Statutory Declaration that he was not married as per the Marriage Laws of Uganda and, as such, authorized the debtor company, Uganda Academic Enhancement Company Limited, to pledge the suit land as security for the loan facility.

Furthermore, counsel submitted that the lst respondent contracted Valuers and Surveyors who inspected the premises on 25tt' October 2011 before approving the loan. That the whole process 16s included entering the house claimed by the appellant to take measurements and pictures. That if the appellant was indeed resident at the premises with her family as alleged, this would have b€en refl€ctsd ln the report and, in any €vent, she should have inquir€d why unknown people

were surveying her matrimonial property and should have discovered that the property was going was to be mortgaged. That the non-occurrence of the above casts a lotof doubt as to

170 whether the suitproperty is matrimonial property as alleged.

Counsel for the 1't respondent concluded that the appellant had failed to prove that she is married to the 2.0 respondent and that indeed the suit property is matrimonial property. Counsel prayed that the cross-appeal be allowed by this cou(.

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The appellant did not agree. lt was submitted for the appellant that the 2nd respondenl in his Affidavit in Reply admitted that the Appellant is his wife and that he had lived in the suit property since 1991 with his wife and children. That, therefore, the Cross-Appeallacked any merit and, as such, ought to be dismissed with costs. 775

180 185 0n his part, the 2no respondent, in response to the Cross Appeal, submitted that the trial Judge rightly held that the 2no respondent and the appellant were married having celebrated their maniage at Nateete Mosque and went through a recognized Muslim marriage ceremony. That the Appellant and the 2no respondent further adduced evidence showing that they stayed together since the yea|1986 after their marriage ceremony, acquired and started staying in the suit house in the year 1991, and that during the year the suit property was mortgaged the appellant and the 2no respondent were still staying in the suit property as their matrimonial/family house.

The 2nd respondent concluded by praying to this court to uphold the findings of the trial court that indeed the appellant was the 2nd respondent's wife.

# Resolution of the Marital Status question

190 The relevance of the marital status of the appellant in the dispute before court can be found in Sections 34 and 35 of the Mortgage Act which grant the right to apply for review of the lMortgage by Court to a spouse of the mortgagor, among others. As such, it was critical for the appellant to furnish evidence before the trial court in order to have /ocus standl to challenge the mortgage in respect of the suit property.

195 The appellanl's evidence as to her marriage with the 2no respondent was sel out in paragraphs 2,3,4,5 and 13 of her Affidavit in support of the Application. She stated that she was the wife of the 2na respondent, the registered proprietor of the suit prope{. She attached a copy of the Marriage Certificate to her Affidavit.

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The appellant further stated that she got married to the 2nt respondent at Nateete Town Mosque on the 08ttt day of May 1986. That they acquired the suit property with her husband in 1991 but the husband was registered as its sole proprietor in 1992. The appellant proved that they have been residing on the suit property as their family landi matrimonial property since '199'l after constructing the house on it. ln her affidavit the appellant deponed that during that period they begat and raised their nine children from there. The appellant denied ever consenting to lhe mortgaging of the suit property by the 2no respondent to the 1st respondent.

205 210 ln reply, the 1.t Respondent through the Affidavit of its Manager of Legal Services, Ms. Mariam Ndibuuza, denied the existence of the marriage on the grounds that the Marriage Certificate attached in the affidavit of the appellant did not meet the requirements of the law, and that in the course of the'lst respondent carrying out a due diligence on the marital status of the 2"0 respondent and the stalus of the suit property, the 2na respondent affirmed a Statulory Declaration that he was not married.

On the part of the 2nd respondent, he stated in his Affidavit in Reply, which was filed before the trial court on the 25t of February 2014, that the Appellant is his wife. Further, since 1991 he has been living in the mortgaged property with his wife and children.

When dealing with the evidence on the marital status of the appellant, the learned trial Judge stated in her Ruling, thus:

> ".,,Couft has power under 5.34 ol the Mongage Act to revlew cenaln mortgages obtained by fraud, deceit, misrepresentation by the mortgagor or in a manner containing a provision which is unlawfuL

220 For the Court to exercise [s powers under 5.34, the applicailon /nusfbe made by a spouse or spouses of the moftgagor among olhers. - S.35.

> The Applicant in the present case produced a certificate of mariage in a bid to prove that she is the wife of the 2na Respondent and that therefore the property in issue is their matimonial home they have occupied since 1991, emphasizing that her consent was never obtained to molgage the land. Further, that the moftgagee did not exercise due

> > ?uge 9 ol 24 diligence lo satlsfy itself that the propety is family land and is occupied by the [appellant's] family.

The 2nt respondent confirms that the [appellanfl is hls wife and he acknowledges that he did not inform her about the moftgage.

- The lst respondent strongly opposed these claims on the ground that the purpoted ceiificate of maniage does nof meet the requiements of the law. And that the Znd respondent signed a statutory declaration to the effect that he was not married. Otherwise, that due diligence was exerclsed to estab/lsh if 2nt respondent was married and if the land in issue was matrimonial propefty. - 240 The [Appellant] and 2tu Respondent are Muslims. The Marriage and Divorce of Mohammedans Act S.8 requires such marriage to be registered. The couple and 2 rvrfnesses must sign the Register. And if a bride is a mirror, then the guardian must slgn. ln the present case, the cerlificate of marriage Annexture "A" availed by the [Appellant] does nol bear the signafures of the couple. lt bears names of the bride's guardian and the name of one witness. However, there are no signatures except where the stamp appears. There is no date on the stamp except that it is indicated on the document that the mariage was solemnized on 08/05/86.

It was the duty of the 1't respondent to check and confirm if the 2nd respondent was manied or not. Without any evidence to the contrary, Court will accept the [Appellant's] evidence that she is the wife of the 2'd respondent. More so in view of 5.16 (a) of the Mariage and Divorce of Mohammedans Act; which is to the effect that a Mohammedan Mariage is not rendered invalid by reason of its not having been registered."

From the above, it is crystal clear that the 1\$ respondent's complaint that the trial judge did not evaluate the evidence as to the marital status of the appellant is unfounded.

250 255 With regard to the 1!r respond€nt's specific complaint that the Marriage Certificate was not sufficient to prove her marriage on account of the trial Court having found that it did not comply with the requirements of Section I of the Maniage and Divorce of Mohammedans Act, it is my finding thatthe complaint is likewise withoutany basis, The trialjudge while relying on Section 16 (a)of the Marriage and Divorce of Mohammedans Act held that the non-registration of the marriage by itself does not render it invalid. Her finding cannot be faulted. The Marriage Certificate is simply evidence of the Marriage having been registered under the Marriage and Divorce of Mohammedans Act. lssues or shortcomings with the registration process or the Certificate itself do not by themselves render the Mariage invalid. Section 16 (a) of the Marriage and Divorce of Mohammedans Act is unambiguous. lt provides:

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"Nothing in this Act shall be construed to-

?60 (a)render invalid, merely by reason of its not having been registered, any Mohammedan mariage or divorce which would otheruise be valid;

(b)

(c)

(d)affect the religion or religious ites of any persons ln Uganda;

265 270 On a close reading of the whole Act, I am satisfied that the validity of the marriage of persons both of who profess the lslamic faith (otherwise refened to by the Marriage and Divorce of Mohammedans Act as 'Mohammedans') is not directly set out by the Act itself. The components of a valid of maniage of such persons is governed by the rites of their religion and the practices of their respective religious sects which are expressly preserved by Section 2 of the Marriage and Divorce of Mohammedans Act in the following terms:

> "All maniages between persons professing the Mohammedan religion, and all divorces from such marriages celebrated or given according to the rites and observances of the Mohammedan religion customary and usual among the tribe or sect in which the mariage or divorce takes place, shall be valid and registered as provided in this Act."

27s Even Section 16(d) of the Marriage and Divorce of Mohammedans Act preserves the said rites and practlces when lt provldes that "Nolh,ng in this Act shall be construed to... affect the religion or religious ites of any persons in Uganda'.

Said differently, the Act simply provides a legal framework for the registration of the marriages involving persons professing the lslamic faith; it does not prescribe the nitty gritty of what constitutes a valid lslamic marriage, otheruise termed as the "substance" or the components of a valid lslamic marriage.

Needless to add, direct evidence is not mandatory to prove a valid lslamic marriage. ln the case of Momtaz Begum Vs Anowar Hossain Civil Appeal No. 139 of 2003, the Supreme Court of Bangladesh after reviewing several decided cas€s and writings of several jurists on the subject 245 of lslamlc (or Mohammedan) marrlages concludod thus:

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"...[the] unanimous view of the juists and authorities [s] that even in the absence of formal proof of a valid mariage, a [Muslim] marriage can be presumed by evidence of conduct and reputation, and the question of consummation forms often an impoftant element in the status of valid marriage. A presumption of consummation is raised from the retirement of the husband and wife, i.e. there should be no third person at the place and that the place should not be a public one, like a public bath, public road, a mosque etc, Where there has been prolonged and continuous cohabitation as husband and wife, in the absence of direct proof a presumption arises fhal there was a valid maniage. The law permits no speciftc ceremony for the contractual pertormance of a marriage: and no religious ites are necessary for contracting a valid mariage. There are even opinions that a mariage may be constituted without any ceremonial (sic!) and even in the absence of direct proof, indirect proof might suffice."

300 ln the instant matter, the appellant's evidence of having lived with the 2nd respondent in the suit property since 1991 afler constructing it and having begotten nine children with him from there was sufficient evidence of consummation and, consequently, the existence of a valid marriage with the 2nd respondent. And this brings us to the effect of the contradictory evidence of lhe 2'o respondent as regards his marital status.

One of the grounds based upon by the 1s respondent to fault the trial judge's finding that the appellant was the wife of the 2nd respondent was the denial by the 2no respondent himself of 3os being a married man. This denial was contained in the 2nd respondent's Statutory Declaration dated 06tt December 2012in which he, among other things, declared thal he was not married. The Statutory Declaration was attached to the Affidavit of the 1.r respondent's Manager of Legal Services, Ms. Mariam Ndlbuza, which was nled in opposition to the application. My finding is that the 2no respondent's evidence as to his marital status as sel out in the said Statutory

- 310 Declaration contradicted his evidence as set out in his Affidavit of 25th February 2014 which was filed in the trial court in this matter on 25th February 20'14 in which he stated that the appellant was his wife and they had nine children. The contradiction rendered the 2na respondent's evidence unreliable in respect of his marital status. But the lack of credibility on the part of the 2nd respondent did not in any way prejudice the evidence of the appellant as to her marital - 31s status because the 2na respondent's evidence was neither critical nor necessary for the appellant to be able to discharge the burden of proof of her marital status.

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Said differently, the appellant did not need a second or any other witness in order for her to discharge the burden to prove her marital status. Her sole Affidavit evidence was sufficient the moment it passed the credibility test and was about a fact from her own personal knowledge which she personally participated in. lt is settled law that even a single witness can prove any fact provided that the evidence is credible and relevant. As was stated by the Supreme Court of Uganda in Ntambala Fred Vs Uganda, Supreme Couft Criminal Appeal No. 34 of 2015, lhe Evidence Act does not require any particular number of witnesses to prove any fact. What matters is the quality and NOT the quantity of evidence. Fortunately, in the instant matter, the 1't respondent did not allude to the possibility of the Appellant's Affidavit evidence in respect of her marital status as being hearsay or othenvise inadmissible.

The last ground upon which the 1't respondent faulted the trial judge's judgment was her finding that the suit property was a family or matrimonial property contrary to the evidence of the 1sr respondent's Valuers and Surveyors who inspected the suit property and did not find it occupied by the appellant and her children as claimed.

A simple juxtaposition of the 1il respondent's aforesaid complaint with the 1'r respondent's Cross Appeal leads to the irresistible conclusion that the complaint does not arise from the sole ground of the Cross Appeal which we have already set out in this judgment. The Cross appeal was limited to faulting the finding of the trial court that the appellant was the wife of the 2no

33S respondent. The finding that the suit property was a matrimonial or family property was not one of the grounds ralsed by the l.trespondent in its Cross Appeal. As such, the 1"t respondent's is barred by Rule 102 of the Judicature (Court of Appeal) Rules, S.l. No. 13 - 10 from raising the complaint without first obtaining leave of the court.

The aforesaid notwithstanding, for the sake 0f completeness of the 1't respondent's case I will

340 resolve the complaint since the appellant was able to reply to it in her Rejoinder and there is no injustice occasioned by such a course of action.

Section 2 of the mortgage Act defines "matrimonial home" in the following terms

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"matrimonial home' means a building or part of a building in which a husband and wife or, as the case may be, wives, and thei children, if any, ordinarily reside together and includes-

- a) where a building and its curtilage are occupied pimarily for residential purposes, that cufllage and outbuildings on it; and - b) where a building is on or occupied in conjunction with agricultural land or pastoral land, any land allocated by one spouse to his or her spouse or in the case of a husband,lo his spouses for his, her, or their exclusive use"

The burden of proving that the subject matter of the appellant's application was a"matrimonial home'which was mortgaged without spousal consent rested upon the appellant. ln her Affidavit, the appellant stated that since 1991 she and her husband have been living in the suit property as their residence and matrimonial home. That they had raised their nine children from there and the appellant was al the time of commencement of the court proceedings still residing there with her husband, the 2nd respondent - See paragraphs 3,8 and 12. The appellant was not cross-examined in respect of that piece of evidence and as such, it remained uncontested. The burden thus shifted to the 1"t respondent to disprove the appellant's evidence.

360 The 1"t respondent's evidence, which consisted of only the Affidavit of its Legal Services Manager, Ms. Mariam Ndibuuza, dld not dlrectly rebut the appellant's evidence that the suit property was her matrimonial home. The closest Ms Ndibuuza came to that subject was when she stated that 'the 1't respondent carried out the necessary due diligence on the suit propety comprised in Block 338 Plot 210 fulengo before approving the loan inclusive of a suruey and

365 370 valuation. (A copy of the suruey and valuation repoft is aftached hereto as annextLtre'C'." I have looked at a copy of the said Survey and Valuation report. lt was signed on behalf of Katuramu and Company Consulting Surveyors by Mr. N. K Ssali, a Registered Valuation Surveyor. The report indicates that the suit property consists of "a modest residential house" and the measurements of the built up area were set out in detail in the Report. The report does not indicate that the 1\$ respondent's Legal Services Manager was present and/or witnessed the process of inspection and valuation of the suit property when it was being done by the

Valuation Surveyors from Ms Katuramu and Co. Consulting Surveyor. As such, the affidavit

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evidence of the 1st respondent's Legal Services Manager as to the contents of the Report and the process of inspection and valuation of the suit property was inadmissible for being hearsay.

Order 19 Rule 3 of the Civil Procedure Rules, S.l No 71-1 restricts the admissible evidence of deponents to matters within their own knowledge unless the Affidavit Evidence relates to interlocutory applications. The Rule is couched thus: 375

> 'Affidavits shall be confined fo such facls as the deponent is able of his or her own knowledge to prove, except on interlocutory applications, on which sfafemenls of his or her belief may be admitted, provided that the grounds thereof are stated."

The application from which this appeal arises was not an interlocutory application. As such, without an Affidavit of Mr. Ssali who carried out the inspection of the suit property and signed the Valuation and Survey Report, the 1't respondent's evidence on the court record about the alleged non-occupancy of the suit property by the appellant at the time of its inspection remains hearsay and is legally incompetent to rebut the affidavit evidence of the appellant that the suit

385 property was her matrimonial home.

ln the result, I would disallow the cross appeal. There is no basis for the l.trespondent to fault the trial judge's finding that the appellant was a wife of the 2na respondent and that the suit property was the appellant's matrimonial home.

## 390 Failure of the Trial Court to nullifu the Mortqaqe

The refusal of the trial judge to nullify the mortgage in respect of the suit property after holding that the requisite spousal consent was not obtained by the 2na respondent was the gist of the appellant's sole ground of appeal. The ground was couched thus:

That the learned trial Judge erred in law when she declrned to make an order invalidating the mortgage after finding that the appellant's consent as a spouse was not sought prior to the Appellant's matrimonial propefi/family land being mortgaged.

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## Appellant's submissions

- 400 ln his submissions, Counsel for the appellant faulted the trial Court for failing to nullify the mortgage in respect of the suit property after establishing that the suit property was a matrimonial home and that no spousal consent was obtained from the appellant before the suit property was mortgaged to the 1't respondent. Counsel argued that the failure to obtain spousal consent prior to mortgaging the suit property breached Section 39 of the Land Act and Sections 5 & 6 of the Mortgage Act, 2009 and rendered the mortgage void for illegality. That the wording in Section 39(4) the Land Act is couched in mandatory terms. As such, the failure on the part of the trial court to declare the mortgage void was akin to sanctioning an illegality. Counsel referred to the case of Makula lnternational Ltd Vs His Eminence Cardinal i/subuga & Anor 1982 HCB ll where it was held that: 405 - "A court of law cannot sanction what is illegal and illegality once brought to the attention of the Court, ovenides all questions of pleading, including any admissions made thereon." 410

415 Counsel for the appellant further faulted the learned trial judge's interpretation of Section 36(2) of the Mortgage Act to mean that even where the mo(gage is void or illegal, as was the case in the instant matter, she still had the discretion not to declare it void or not. Counsel argued that Section 36(2) of the Mortgage Act does not amend Section 39 of the Land Act to render Mortgages on Family land or Matrimonial homes obtained without the prior consent of a spouse voidable

The appellant's Counsel also argued thatthe trialjudge also sanctioned an illegality by failing to

420 declare the mortgage invalid solely 0n the ground that Uganda Academic Enhancement Company Limited (the debtor company) which actually mortgaged the suit property was not its owner or registered proprietor. According to Counsel, Section 3 ('l) of the Mortgage Act authorises only owners of land to mortgage their land. Counsel referred to the Recitals in the Mortgage Deed which indicate that the Donors/Sureties (including lmam Kiwanuka) appointed 42s the mortgagor as their Attorney under the Powers of Attorney dated 19m October 2011, but that

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the said Power of Attorney was neither attached to the 1st respondent's Affidavit nor produced in evidence. Counsel cited the authority of Fredrick J. K. Zaabwe Vs Orient Bank Ltd E 3 Ors SCCA IVo.4 of 2006 to emphasize the importance of a Power of Attorney and the prohibition of its use for the benefit of the attorney to the detriment of the principal.

430 Counsel prayed to this court to allow the appeal and declare the Mortgage Deed invalid.

## 1't Respondent's Submissions in Replv

435 440 ln reply, Counsel for the lstRespondent submitted that the relevant provisions in the Mortgage Act, 2009 give the Court discretion to declare the mortgage void if it is satisfied that the circumstances justify it. Counsel argued that the trial Judge in the instant case rightly evaluated all the facts at hand, which included: that the 1't respondent carried out the necessary due diligence on the suit property before approving the loan inclusive of a survey and valuation report; that the 2nd respondent, who is the registered proprietor of the suit property, afflrmed under a duly registered Statutory Declaralion that he was not married as per the Marriage Laws of Uganda and, as such, authorized Uganda Academic Enhancement Company Limited to pledge the suit property as security for the loan facility.

Counsel contended that in those circumstances, the trial court cannot be faulted for declining to declare the mortgage void as it was clear that the 2"d respondent was fraudulently attempting to evade his obligations under the mortgage agreement and simply wanted Court to facilitate the accomplishment of an illegallty.

445 Counsel further argued that the power to nullify the mortgage as conferred upon the trial court was discretionary. As such, this courtas an appellate Courtshould not interfere with its exercise unless it is satisfied the trial Court misdirected itself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the trial Court was clearly wrong in exercise of its discretion and that as a result there was a failure of justice. Counsel for

Pqge l7 o/ 24

450 the 1,r Respondent cited the case of Banco Arabe Espanol Vs Bank of Uganda SCCA IVo. I of 1998, in support of the above proposition.

Counsel also criticized the Appellant's arguments seeking this court to nullify the Mortgage Deed on the basis of the power of attorney which was never produced in the evidence before the trial court. Counsel submitted that said issue should be rejected by this court on the ground that it breached Rule 102 of the Court of Appeal Rules, S.l. No. 13-10 in so far as it was neither raised in the Memorandum of Appeal as one of the grounds of appeal' nor pleaded by the Appellant in the High Court.

Without prejudice to the above, Counsel for the 1\$ Respondent submitted that the 2na respondent granted powers of attorney to Uganda Academic Enhancement Company Limited to Mortgage the property. That the said Powers of Attorney authorized the Donee to take possession of the Certificate of Title and use the title to obtain loan facilities from the 1st 460 Respondent. That the facts in the case of Fredrick J. K Zaabwe Vs Orient BankLtd&3Others (supra) are distinguishable from the instant case. That the 2na respondent indeed signed the Mortgage Deed as a Donor.

465 Furthermore, counsel submitted that the loan facility for which the suit property was pledged as security was personally guaranteed by the 2no respondent. That the 2nd Respondent is a Director in Uganda Academic Enhancement Company Limited and signed the mortgage deed on its behalf. That therefore, it is false to state that the Power of Attorney was for the benefit of Uganda Academic Enhancement Company Limited only to the exclusion and detrimentof the 2nd respondent. Counsel concluded by praying to this court to uphold the findings and orders of the trial court in respect of the Mortgage Deed. 470

## The 2na onde Submis ns

The 2no Respondent agreed with the appellant's submissions about the failure of the trial judge to nullify the mortgage Deed after finding that the appellant was his wife and that there was no

Page 18 \$ 24

- 475 spousal consent obtained prior to mortgaging the suit property to the 1d respondent. The 2nd Respondent cited provisions of the Land Act and Mortgage Act in support of his submissions. He also referred to the case of Hajat Nuriyat Memetebikulwa Kiwanuka v Micro Finance Support Centre & Anor, High Court Civil Suit 466 of 2013 (Unreported), where the same trial Judge declared the mortgage void and illegal for lack of spousal consent. - 480 The 2.0 respondent likewise contended that the refusal by the trial Judge to declare the mortgage void and illegal amounted to Court sanctioning an illegality contrary to the case of Makula lnternational Limited Vs His Eminence Cardinal Nsubuga & Anor (op cit).

485 490 fflg f rrr respondent raised an additional ground of the illegality of the Mortgage under consideration in so far as the 2no respondent, who is the registered proprietor of the mo(gaged property, did not execute the mortgage deed as a mortgagor but only signed as a surety/donor. The 2no respondent argued that this was contrary to Section 3 of the Mortgage Act No.8 of 2009 with the consequence that the mortgage is, in law, non-existent. ln suppo( of his argument, the 2nd respondent cited the case of Tropical Africa Bank Limited Vs Grace Were Muhwana SCCA IVo. 0004 of 2011 (llnreportedl where the Supreme Court held to be invalid the legal mortgage which was signed by the respondent's husband as a surety of the company, in the absence of a separate loan agreement which bound the company as the principal debtor, for whom the respondent's husband was standing as surety. Court further held that:

"For the same reason, I find that although the agreement that was signed betvveen the respondent's husband and the Libyan Arab Bank was titled "Mortgage Deed", and was accordingly registered, the execution and registration of the document as a moftgage deed did not create legal ltabihty which the Libyan Arab Bank or the appellant, even if it had provedits /ocus as a successor in title, could rely on as moftgagee to enforce its ights against the respondent's husband as a surety."

500 The 2nd respondent submitted that in the same vein, Uganda Academic Enhancement Company Limited (the debtor company) could not execute the mortgage Deed in the instant matter because it was not the registered proprietor as the law requires. That the argument that Uganda Academic Enhancement Company Limited was granted a Power of Attorney by the 2"0

Pugc 19 tl 24

respondent cannot as well stand for the reason that if the mortgage deed was indeed based on a Power ofAttorney it had to be executed for and in the names of the 2'a respondent and not in the names of Uganda Academic Enhancement Company Limited as it was done in the instant matter. The appellant stated the reason for the above position to be that a Power of Attorney is not a transfer of a property to the person granted the power of attorney. The 2no respondent cited the case of Fredric J. K Zzabwe Vs Orient Bank Limited & 3 Ors SCCA No.4 (op cit) to support his position.

s10 The 2nd respondent concluded by praying to this court to uphold the law.

s20

### Resolution of the qround of failure of the Trial Court to nullifu the mortqaqe

The appellant's right to apply to court for review of the mortgage over the suit property arose from Section 35 of the Mortgage Act, 2009 which authorizes a spouse of a mortgagor, among others, to apply for review of the mortgage on any of the grounds set out in Section 34 of the Mortgage Act namely: that the mortgage was obtained through fraud, deceit, or misrepresentation by the mortgagor; or that the mortgage was obtained in a manner which is unlaMul; or that the mortgage contains a provision which is unlawful. s15

From the appellant's pleadings and evidence, the basis of the appellant's application for review of the impugned mortgage was the absence of spousal consent. lt was lhe appellant's case before the trial court that the mortgage was created over lhe appellant's matrimonial home without her consent as the mortgago/s wife which rendered the mortgage void and illegal.

Ihe trial courtfound that no spousal consentlvas obtained prior to the mortgaging of the suit property. However, it declined to declare the mortgage void as, in the court's assessment, the circumstances of the case did not justify it. The circumstances considered by the trial court when arriving at its decision were: 1) that the 2nd respondent, in breach of his statutory duty under the mortgage Act to act honestly and in good faith towards the mortgagee, deceived the 1d respondent that he was unmarried and pledged the suit property as security without

Puge 20 tl 24

obtaining the consent of his spouse. 2) that the nullification of the mortgage would be facilitating the 2^d respondent and the directors of the borrower company to benefit from their own fraud. 3) that whereas under paragraph '12 of the Loan Agreement, the borrower undertook to indemnify the 1st respondent against any action, loss or damages arising from third party claims to the securities offered by the borrower for the loan facility, court was not in a position to enforce the paragraph under the proceedings before it since Uganda Academic Enhancement Company Ltd was not a partyto the proceedings.

535 ln refusing to declare the mortgage void, the trial court relied on Section 36 (1) (a) of the Mortgage Act which it interpreted as giving it discretion not to declare the mortgage void unless it is satisfied that the circumstances justify it. Court concluded thus:

"ln the circumsfances, lhus court finds that it would not be iustified to declare a morlgage void. The court will take the alternative under Section 36 (2) of the Mortgage Act to dtect the mortgage to have effect to enable the l't Respondent take action to bring the above two provr'sions of the agreement. To direct otheruvise, would be facilitating the Znd Respondent and the directors of the borrower Company to benefit from theirfraud."

545 The appellant faults the trial court for adopting the above course of action instead of nullifying the Mortgage as prayed.

The powers of the court when considering an application for review of the mortgage made pursuant section 34 of the Mortgage Act are set out in Section 36 of the Mortgage Act in the following terms:

## "36. Exercise of powers under section 34 to review certain mortgages

(1) Upon an application made under section 34, the couft may- 550

(a) declare the moftgage void;

(b) direct that the motgage shall have effect subiect to such modifications as the court shall order; or

(c) require the moftgagee to repay the whole or part of any sum paid under .the iortgago or any rclaied or cotldtcral agrcemont by tho moftgagor or any suroty or othor

Page 2I tt/ 24

5s5

person who assu/ned an obligation under lhe mortgage whether it was paid to the moftgagee or any other person.

(2) The court shall not declare a molgage void unless tl ls salisfed that the circum stance s justify it."

560 It is clear from the above provision of the law that the trial court had the power to declare the mo(gage void, among other things. But from the wording of the section, it is also clear thal the powers conferred upon the court are discretionary. Section 36(2) of the Mortgage Act which was specifically relied upon by the trial court not to declare the mortgage void expressly empowers the court " not declare a moftgage void unless rl ls safisfed lh at the circumstances justify it". The

565 question for consideration by this court is the scope of the discretion conferred upon the court.

My understanding of the above provision is that it does not give an open license to the court to disregard the law and issues of illegality under the guise of exercising its discretion. The question of spousal consent to mortgaging of a matrimonial home is a creature of Section 39 of the Land Act, Cap. 227 which, among others, restricts the mortgaging of matrimonial homes in the following terms:

### "39. Restrictions on transfer of familv land

(1) No person shall

(a)sell, exchange, transfer, pledge, moioaoe or lease any familv land: (b)enter into any contract forthe sale, exchange, t'ansfer, pledging, moftgage or lease of any family land; or (c)glve away any famlly land, lnter vlvos, or enter lnto any other transaction in respect of family land; except with the prior consenl of hls or her spouse,

(2)The consent required under subsecllon (1) shall be in the manner prescibed by regulations made under this Act.

3]Subsecllon (1) of this section shall not apply to any transfer of land by the moigagee in exercise of powers under the moftgage.

(4)Where any transaction is entered into by a purchaser in good faith and for value without notice that subsection (1) of this sectlon has not been complied with, the transaction shall be void but the purchaser shall have the ight to claim from any person

Posc 22 o/ 24

with whom he or she entered into the transaction, any money paid or any consideration given by him or her in respect of the transaction."

The definition of the term "family tand" as sel ouf in Section 38A (4) of the Land Acl, Cap. 227 (as amended by Act No. 1 of 2004) is wide enough to include matrimonial homes otheruvise termed as "land on which ls situafed the ordinary residence of a family".

The requirement for spousal consent has been held by this court to be mandatory. See:-Global Capital Save 2004 Ltd Vs. Alice Okiror & Anor CACA NO. 151/ 2012.

s95 The objective of the restrictions imposed by the Land Act on dealings relating to the matrimonial home is to protect the sanctity of the family as the foundation of society. The Mortgage Act did not repeal the requirement of spousal consent when mortgaging matrimonial homes. lt only set out modalities that are applicable in cases where the matrimonial home is intended to be the subject matter of a mortgage. See: Sections 5 and 6 of the Mortgage Act.

600 From the aforesaid, it is my finding that for the trial court to interpret the discretion granted to the court under Section 36 as including the power to disregard clear provisions of the law would defeat the protection granted by the Land and Mortgage Acts to matrimonial homes. This could not have been the intention of the legislature. The appellant, as such, has a valid complaint.

It is now settled that this court, as an appellate court, has power to interfere with the exercise of discretion on the part of the trial court if it is satisfied that the trial court misdirected itself in some matter and as a result arrived at a wrong decision, or it is manifest from the case as a whole that

failure of justice. See. Ivlbogo and Another Y. Shah (1968) E. A, 93; Uganda Development Bank Vs National lnsurance and Another, SC Civil No.28.95 (unreported) and Banco Arabe Espanol Vs Bank of lJganda, Supreme Court Civil Appeal No. 8 of 1998, [1999] ucsc 1.

the trial courtwas clearly wrong in exercise of its discretion and that as a result there was a

Peqe 23 tl 24

I am satisfied that this case meets the criteria for this court to interfere with the exercise of discretion by the trial court. The trial court clearly erred by not declaring the impugned mortgage void for want of spousal consent. The appeal accordingly succeeds.

### Conclusion

- 1. I would dismiss Civil Application No. 01 of 2014 seeking to strike out this appeal for having 615 been instituted without first obtaining leave of the trial Court or the appellate court. - 2. I would allow this appeal, set aside the orders of the trial court and substitute the same with a declaration under Section 36 (1) (a) of the Mortgage Act to the effect that the mortgage in respect of the suit land is void for lack of spousal consent. - 3. I would dismiss the cross-appeal. 620 - 4. I would order that the costs of the appeal and cross-appeal together with the costs in the court below be paid by the 2nd respondent since this litigation would not have arisen if it were not for the false declaration that he made at the time of mortgaging the suit property to the

Delivered and dated at Kampala this .................................... 2023

Muzamiru Mutangula Kibeedi **JUSTICE OF APPEAL**

## THE REPUBLIC OF UGANDA

## TN THE COURT OF APPEAL OF'UGANDA AT KAMPALA

## CIVIL APPEAL NO 159 OF 2014

[Appeal and Cross-Appeal from the decision of the High Court of Uganda at Rampala, Commercial Diuision (Hon. Ladg Justice Flauia Senoga Anglin) dated 08'h ApiI, 2013 in Miscellaneous Cause No. 21 of 2O13)

AISHA KIWANUKA APPELLANT

#### VERSUS

## 1. MICROFINANCE CENTRE LTD 2. IMAM KfWANUI(A :::::::::::::::::::::::::::: RESPONDENTS

# CORAIVI: HON. WSTICT CATHERINE BAMUGEMEREIRE, JA HON. JUSTICE STEPHEN MUSOTA, JA HON. WSTICE MUZAMIRU M. KTBEEDT, JA

## JUDGEMENT OF STEPHEN MUSOTA. JA

I have had the benefit of reading in draft the judgment by my brother Hon. Justice Kibeedi Muzamiru Mutangula, JA.

I agree with his decision and the orders he has proposed. I have nothing useful to add.

Dated ,ns lLl(^v,r 2023

Hon. Stephen Musota JUSTICI OF APPEAL

## THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA CIVIL APPEAL NO 159 OF 2014

Coram:

[*Catherine Bamugemereire, Stephen Musota, & Muzamiru M. Kibeedi, JJA*]

## AISHA KIWANUKA ::::::::::::::::::::::::::::::::::::

### **VERSUS**

### 1. MICROFINANCE CENTRE LTD

## 2. IMAM KIWANUKA:::::::::::::::::::::::::::::::::::

[Appeal and Cross-Appeal from the decision of Flavia Senoga Anglin in High Court *Miscellaneous Cause No. 21 of 2013, High Court Commercial Division, dated 08th April, 2013*

## JUDGMENT OF CATHERINE BAMUGEMEREIRE JA

I have had the opportunity to consider the Judgment of my learned Brother Muzamiru Kibeedi JA. I am in agreement with his reasoning, conclusions and his orders. Since our learned Brother Musota JA agrees as much, this appeal succeeds in the terms set out in the lead Judgment of Muzamiru Kibeedi JA.

Signed and Dated this. ................................... .......................................

Catherine Bamugemereire Justice of the Court of Appeal