Mugabi v China Road Corporation Limited (Civil Appeal No. 7 of 2017) [2022] UGCA 208 (12 July 2022)

Full Case Text

# 5 THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL NO. 07 OF 2(lI7 (ARTSTNG FRoM HCCS N0. 649 0F 2013) (CORAM: MADRAMA, MULYAGONJA, MUGENY, JJA)

10 EVAR|STo MUGABT) APPELLANT

#### VERSUS

#### cHrNA RoAD C0RP0RATT0N LTD) RESPONDENT lAppeal from the Ruling and Orders of the Learned Hon. Justice Alfonse Chigamoy Owiny Dollo of the High Court in HCCS No 679 of 2003 delivered on 27h September 2015) 15

## JUDGMENT OF CHRISTOPHER MADRAMA, JA

This is an appea[ from the Ruling and orders of Hon Justice Alfonse Chigamoy Owiny Dotto, in HCCS No. 649 of 2013 delivered on 25rh September 2015.

The Respondent filed HCCS No. 64j ot 2013 against the Appettant for a declaration that it is the tawfut owner of leasehotd comprised in LRV 3326 Fotio l7 Plot 99, Kyadondo, Btock 197 at Kitetika Mutuba I Wakiso, an order for specific performance compelling the Appettant to execute a proper

25 lease in respect of the suit [and in its favour, and a permanent injunction to restrain the Appetlant from interfering with its quiet enjoyment of the suit property.

The brief background to the dispute is contained in the judgment of the learned triat Judge. The parties executed a lease agreement in favour of the

30 Respondent showing that the [ease to the respondent was out of the Appellant's Maito land comprised in Kyadondo Block 197 Ptot 99 at Kitetika. The [ease agreement provided for a lease of 99 years and the Respondent paid UGX 91,901,000/= as fu[[ and final payment for premium for the lease, and UGX 1,000/= as fu[[ payment for the ground rent for 99 years. Thereafter

the Respondent took possession of the suit property. The parties executed $\mathsf{S}$ and registered a lease memorandum under instrument No. KLA 268927.

The Appellant filed HCCS No. 84 of 2013 in the High Court Land Division against the Respondent seeking nullification of the lease. Kwesiga, J, found in favour of the Appellant and ruled that the Certificate of Leasehold Title

- and the Lease memorandum pursuant to which the leasehold title had been $10$ issued contravened the provisions of section 147 of the Registration of Titles Act which provides for disclosure of the identity, capacity and qualification of the person who attests to the Lessor's signature; and section 148 of the Registration of Titles Act which provides for signing a lease memorandum in Latin character. The Respondent then filed HCCS No. 649 of 2013, from 15 which this appeal now arises, in which it claimed that it was a lawful lessee - on the suit land and was entitled to an order of specific performance against the Appellant to compel him to perform the terms of the agreement to lease executed by the parties. - Before the hearing of HCCS No. 649 of 2013, the Appellant filed 20 Miscellaneous Application No. 112 of 2014 in which he raised a preliminary point of law to the effect that the suit was res judicata since the subject of contention had been adjudicated by the High Court in HCCS No. 84 of 2013. The learned trial Judge sustained the preliminary objection in part on the ground that the Court had in the previous suit, HCCS No. 84 of 2013, declared 25 the lease illegal, with the effect that the Respondent held no lease from the Appellant. However, the learned trial Judge further held that the part of the claim touching the Respondent's prayer for an order that the Appellant - executes a proper lease pursuant to the negotiated agreement between the parties was not res judicata since it did not form part of the subject of 30 contention in the previous suit. Consequently, the learned trial Judge found that the lease agreement executed by the parties constituted a valid contract, inter partes, enforceable by law and binding on the parties, the cancellation of the lease memorandum and leasehold Certificate of Title - notwithstanding. 35

- 5 The learned trial Judge made an order for specific performance that the lease contract executed by the parties is vatid and binding on the parties and the Appellant shall within one month of the judgment execute a proper and registrable lease pursuant to the lease contract executed by the parties which shatt embody the exact terms and covenants of the lease agreement, - and lastly, costs sha[[ be payabte to the Respondent with interest of 8% per annum on the unpaid from the date of judgment titl payment in futt. 10

The Appettant being dissatisfied with the Ruting and orders of the [earned triat Judge appealed to this court on six grounds, that:

- l. The learned triat Judge erred both in fact and taw by faiting to find that the suit was wholly res judicata. - 2. The learned trial Judge erred both in fact and law by finding that the parties entered into a valid contract for a [ease and thereby arriving at a wrong conclusion occasioning a miscarriage of justice. - 20

- 3. The learned triat Judge erred both in fact and law by attering the agreed facts outlined in the Joint Scheduling Memorandum, thereby arriving at a wrong conclusion occasioning a miscarriage of justice. - 4. The learned tria[ Judge erred in taw by ordering for the specific performance of an agreement for a [ease and thereby arriving at a wrong decision occasioning a miscarriage of justice. 25 - 5. The learned triat Judge erred both in law and fact by finding that the Respondent acquired an equitable interest in the Appettant's [and and thereby arrived at a wrong conclusion occasioning a miscarriage of ju st ice. - 6. The learned triaI Judge erred both in taw and fact by finding that the lease hitherto hetd as invalid, was a valid contract between the

Appellant and the Respondent and thereby erred occasioning a $\mathsf{S}$ miscarriage of justice.

The Appellant prayed that this appeal be allowed with costs of the appeal and of the Court below, and the Judgment of the High Court be set aside.

#### **Representation**

At the hearing of the appeal, the Appellant was represented by learned 10 counsel Brian Othieno while the Respondent was represented by learned counsel Paul Ekochu.

#### Appellant's submissions

The Appellant's counsel submitted on grounds 1, 5 & 6 jointly. He submitted that there was a lease between the parties which was declared void and 15 cancelled in HCCS No. 84 of 2013. This implied that all the matters concerning the lease, whether legal or equitable, were concluded in HCCS No. 84 of 2013 and could not be raised again in a fresh suit. Learned counsel relied on Tukamuhebwa George & another v Attorney General, Constitutional Petition No. 59 of 2011 where the Constitutional Court held 20 that a decision made on a point of law finally determines the matter unless there is an appeal. He also relied on; Sunday Edward Mukooli v Administrator General SCCA No. 6 of 2015, Kamunye & others v Pioneer General Assurance Society Ltd (1971) EA 262, at 265, and Maniraguha Gashumba v Nkundiye CACA No. 23 of 2005 for the same point. 25

The Appellant's counsel submitted that the matters raised before the trial court in HCCS No. 649 of 2013 were substantially in issue in the earlier suit, HCCS No. 84 of 2013, before the same court, which rendered the suit res judicata. He relied on Ponsiano Semakula v Susane Mugala & others (1993)

Kalr 213, where this court held that the test of whether a suit is barred by 30 res judicata or not is whether the Plaintiff in the second suit is trying to bring before court in another way and in the form of a new cause of action, a transaction which he has already put before a court of competent jurisdiction in earlier proceedings and which has been adjudicated upon.

The court further held that the ptea of res judicala apptied not only to points upon which the first court was actua[[y required to adjudicate but to every point which property belongs to the subject of titigation and which the parties, exercising reasonable diligence, might have brought forward at the time. Counset relied on section 7 of the Civil Procedure Act. He submitted that the Respondent ought to have raised the matter of the agreement for a 10 5

lease in the former suit.

Secondty, learned counsel for the Appettant submitted that it was not open for the [earned triat Judge to canvas issues relating to the [ease which had already been determined in the earlier suit. He relied on Greenhalgh v

Ma[[ard (19A712 Att E. R. 255 and Fidetitas Shipping Co. Ltd v V/0 Exportchteb 0965) 2 Att E. R. 4 where it was hetd that a ptaintiff was barred by res judicata from instituting a new ctaim by way of a new cause of action, the substance of which was adjudicated in an earlier suit. Counset submitted that the Respondent having lost in the earlier suit on the ground of invatidity 15

of the lease could not bring the same matter up by way of a new cause of action in a second suit. 20

Thirdty, counseI submitted that the Ruting of the triat Judge in HCCS No. 84 of 2013 where he dectared the [ease ittegat and invatid did not only cover the question of registration of the lease but also declared the [ease itself ittegal. He submitted that the tease contract which the triat Judge dectared vatid in HCCS No. 649 ol 2013 had been dectared ittegat and invatid in the earlier suit and therefore, the triaI Judge erred by revisiting the matter. CounseI invited court to uphotd grounds l, 5 & 6 of the appeat and find that the whole suit was res judicata. 25

With regard to ground 2 & 4, the Appettant's counsel submitted that the parties entered into a contract for a [ease, which is different from a lease contract. He submitted that by way of a contract for a lease, the parties agreed to enter into a [ease. This was a precursor to a lease and its terms are different from those of a lease. ln the premises, counse] submitted that 30

the learned trial. Judge erred in [aw and fact by finding that the parties entered into a valid contract for a [ease. 35

Secondly, counsel submitted that the trial Judge erred by finding that it was $\mathsf{S}$ discernible from the parties' pleadings, evidence and agreed facts set out in the scheduling memorandum that the parties agreed to enter into a lease. He contended that this claim was denied by the Appellant in paragraph 4 of his Written Statement of Defence and formed part of the issues for adjudication by the trial Court. In the premises, counsel submitted that it 10 was erroneous for the trial Judge to find that the matter was agreed between the parties and that it was discernible from the evidence adduced by the parties that there existed a contract for a lease.

The Appellant's counsel submitted that the payments for premium and ground rent, and possession of the suit land were all done pursuant to the 15 lease agreement, which was declared illegal by the court in HCCS No. 84 of 2013, and not pursuant to the contract for a lease which the trial court declared valid. He contended that the contract between the parties came into existence at the execution of the lease agreement which was declared null and void by the High Court in HCCS No. 84 of 2013 thereby leaving no 20 contract in existence between the parties. Counsel submitted that the negotiations between the parties to enter a lease agreement did not constitute a contract between the parties. He referred to Green Boat Entertainment Ltd v City Council of Kampala HCCS No. 580 of 2003 for his submission. 25

Learned counsel for the Appellant submitted that the trial Judge erred when he ordered specific performance of a non-existent agreement. He submitted that the trial Judge erred when he ordered the Appellant to specifically perform a lease contract which had been nullified by order of Court.

On ground 3, counsel submitted that the learned trial Judge erred in law and fact when he altered the agreed facts contained in the parties' Joint Scheduling Memorandum by holding that it was discernible from the agreed facts in the parties' scheduling memorandum that the parties agreed to

enter into a lease contract. He submitted that it was never agreed in the 35

5 Joint Scheduling Memorandum or anywhere else that the parties had agreed to enter into a contract for a lease.

Counsel prayed that the appeal is allowed with costs of the appeat and of the High Court.

#### Respondent's submissions in repty

ln repty, the Respondent relied on its conferencing notes and authorities which it adopted as its submissions in the appeal with the permission of the co u rt. 10

ln repty to ground one, the Respondent's counsel submitted that the right of appea[ is a creature of statute and appeals do not lie as of right from interlocutory orders. Counsel submitted that the Appettant erroneously sought to argue ground one of the appeal which arises from orders given by the High Court in Misce[taneous Application No. ll2 of 2014. He referred to 0rder 44 rute 2 & 3 of the Civit Procedure Rules for the proposition that an appeaI shal[ not Iie from any other order except with leave of Court. ln the premises, counsel submitted that the Appettant shoutd have first sought for and obtained leave of court to argue ground one of the appeat. ln the 15 20

- alternative, counsel submitted that the tearned triat Judge duly considered the law and principtes relating to res judicata and came to the right conclusion. - ln repty to submissions of the appellant on grounds 2 & 6, the Respondent's counseI reiterated the triat Judge's finding that the parties entered into a vatid and binding contract for a lease. He submitted that the triat Judge properly evaluated the evidence before him inctuding the lease agreement executed by the parties and properly deduced the intent of the parties. Counsel relied on: Halsbury's Laws of Engtand 4th Ed. Vot 9 at paragraph 203, Lord Denning; The Disciptine of the Law, ?th Ed, Butterworths, 1979, 32, and Souza Figuerado & Co. Ltd v Moorings Hotet Co. Ltd 1956 EA 925, which state the requirements of a valid contract. He submitted that the parties' agreement met a[[ requirements for a valid contract thereby creating a vatid and binding contract. 25 30 35

5 With regard to ground 3, counsel submitted that the triat Judge based his judgment on the evidence and facts placed before him during the triat. He contended that the triat Judge did not import or alter facts as atteged by the Appettant.

0n ground 4, the Respondent's counsel submitted that the learned trial Judge having found that the [ease agreement was valid and binding on the parties, it was a matter of course to enforce the contract by ordering specific performance. Counsel relied on Manzoor v Baram [2003] 2 EA 58 and Smt. Mayawantiv Smt Kaushalya Devi, 1990 SCR (2) 350, 1990 SCC (3) l, for this submission. 10

ln repty to ground 5, counseI reiterated the trial Judge's finding that the Respondent acquired an equitable interest in the suit tand. He relied on lsmail Jaffer Attibhai & 2 others v Nandlat Harjivan Karia & another SCCA No. 53 of 1995, where it was hetd that the equitable titte which passes to the purchaser is considered to be superior to the vendor's tegat titte, which is extinguished on payment of the purchase price. Counsel reiterated the triat Judge's findings that the Respondent acquired an equitable interest in the suit property in tight of the actions taken by the parties in performing the 15 20

The Respondent's counset prayed that the appeat be dismissed with costs

#### Appetlant's submissions in rejoinder 25

contract.

ln rejoinder to the Respondent's submission on ground one, the Appettant's counsel submitted that comptaints against orders made in the course of a hearing may be considered when appeating against the finat decision whether a right of appeal against the interlocutory order exists or not. He

- 30 relied on The Returning Officer Kampala & others v Catherine Naava Nabagesera, CACA No. 39 of 1997, where it was hetd that in an appeal against a final decision, the Appettant may argue grounds of appeal related to interlocutory orders made in the course of the hearing. Further, counsel relied on Nobte Buitders (U) Ltd v Sietco, SCCA No. 3l of 1995, and J. - 35 Hannington Wasswa & others v Maria Ochola & others, SCCA No. 5 of 1995,

5 where it was held that it was not necessary to fite separate appeals; one against intertocutory orders made in the course of the hearing and another one against the finat decision. CounseI relied on Gurdia] Singh v Kaur (1960) EA 795 where the court found that to hotd otherwise might lead to a muttipticity of appeals upon incidentaI orders made in the course of the hearing when such matters can more conveniently be considered in an appeal from the final decision. 10

With regard to the Respondent's submission on ground 2, the Appettant's counsel submitted in rejoinder that the Respondent did not show any evidence that the triat Judge relied on to find that there was a valid and binding contract between the parties to enter into a lease. Counsel reiterated his submission that the triat Judge faited in his duty to evaluate the evidence on record and appty the law to it.

ln rejoinder to the Respondent's submissions on grounds 3, 4, 5 & 6, the Appettant's counsel reiterated his main submissions on the respective grounds and prayed that the appeal be allowed with costs in this court and the court betow.

### Resolution of the Appeat

I have duty considered the written submissions of the parties to this appeal through their respective counsel, the record of appeat, the judiciat precedents and law referred to and the law generally.

The duty of this court as a first appettate court is to reappraise the evidence on record and arrive at its own inferences of fact. This duty is expressed under rule 30(l)(a) of the Rules of this Court. The East African Court of Appeat in Pelers v Sunday Post Limited [1958] I EA 424 at page 429 hetd that the duty of a first appellate court is to review the evidence adduced in the tria[ court in order to determine whether the conclusions drawn by the triat

court should stand.

ln this appeal, the main mixed question of fact and [aw relates to whether there was an agreement to lease property as we[[ as a lease agreement

that was registered and subsequently nullified by order of court. Secondly, $\mathsf{S}$ the crux of the matter is whether the nullification of the registration of a lease amounted to nullification of the agreement between the parties to the extent that the ruling in HCCS No 84 of 2013 rendered the subsequent suit in HCCS No 649 of 2013 res judicata. This further begs the question as to whether there was an agreement between the parties that is reflected in

the nullified lease agreement or any other evidence.

In so far as the respondent claims that the ruling in Miscellaneous Application No 112 of 2014 arising from Civil Suit No 649 of 2013 was being appealed after the main judgment in Civil Suit No 649 of 2013 and that no leave of court was sought to appeal the interlocutory orders issued prior in 15 time, there is a preliminary objection to parts of the appeal on the ground that there was a ruling that the matter before the court was not res judicata and no appeal was preferred or lies. The contention is that the grounds of appeal arising from the judgment of the court were determined in the interlocutory application and cannot be appealed without the leave of court. 20

Before considering that matter, it suffices to note that the grounds of appeal namely grounds 1, 2, 3, 4, 5 and 6 all relate to the question of whether the suit from which the Judgment appealed against arises is res judicata and it was erroneous for the court to entertain questions relating to an agreement for a lease. Further, if this court finds that the suit was not res judicata, it would have the effect of resolving grounds 2, 3, 4, 5 and 6 of the appeal. I would consider ground 1 of the appeal in detail as it is intertwined with the other grounds of appeal. This preliminary point arises from ground 1 of the appeal that:

#### The learned trial Judge erred both in fact and law by failing to find that 30 the suit was wholly *res judicata.*

The question of whether the suit was wholly res judicata was the subject matter of Miscellaneous Application No 112 of 2014 in which the defendant who is now the appellant brought an application for rejection of the plaint in HCCS No 649 of 2013 seeking for orders that the plaint be struck out on 5 the ground that it is barred by statute for being res judicata. The appe[[ant contended in the High Court that the ctaim had been decided in HCCS No 84 of 2013 between the same parties. Secondty that the suit was bad in taw, vexatious and intended to derai[ and defeat the course of justice.

The appeltant's apptication was allowed in part whereupon the court struck out part of the claim in HCCS No 649 of 2013 for being res judicata. 10

The respondent contends that the appettant is required to obtain [eave of court to appeal against the ruting and therefore cannot raise the question of res judicata again since no leave to appeal was sought or granted.

ln consideration of this issue, I have perused Miscellaneous Apptication No 112ot 2014 in which the appetlant was the appticant therein he apptied by chamber summons under Order 7 rute 11 and 19 of the Civit Procedure Rules and section 98 of the Civi[ Procedure Act for orders that the respondent's plaint against the appticant be rejected or struck out with costs and for costs of the application. The grounds averred were that attowing the suit would tantamount to sitting in appeaI from the decision of the High Court in 15 ln

- HCCS No 84 ol 2013. Further that in HCCS No 84 of 2013, the High Court declared the lease between the parties ittegat and nothing flows from an ittegatity. Secondty the respondents impugned suit is an attempt to legalise an illegality. Further that the suit was bad in [aw, vexatious and intended to - detay and defeat the course of justice to enable the respondent to enjoy ittegaI occupation of the appticant's tand. 25

The learned trial judge hetd that the court did not decide in the former suit whether the respondent is prohibited from entering into a lease contract with the appticant and that the claim in the subsequent suit HCCS No 579 of

2013 is that the parties had agreed to execute a lease and the respondent sought specific performance of that agreement. The learned triat judge specif icalty stated that: 30

> This is a matter this court is entitled to determine on the merits. Furthermore, the ptaintiff (respondent herein) seeks, in the a[ternative, to recover premium and

> > 11

ground rent it claims to have paid to the defendant (applicant herein) as pursuant to the agreement for lease.

It also seeks determination of the issue of its equitable interest in the suit property owing to the premium and ground rent it paid following the agreement to lease the suit property to it. Further still, it seeks award of damages for losses incurred in taking possession of the suit property and the developments it has carried out thereon pursuant to the agreement they entered into regarding the lease of the suit property. These are matters, which were not in issue in the former suit; hence, the court did not deal with them. Therefore, these claims are open for consideration and determination by this court on the merits; and so, are not barred on the grounds of res judicata.

The ruling was delivered on 10th June 2014. The suit proceeded for hearing and judgment in the main suit was dated 25th of September 2015 more than a year later. A decree was extracted on 19th November 2015 and it discloses that judgment came for final disposal of the suit on 2nd October 2015. Notice of appeal is dated $2^{\mbox{\tiny nd}}$ October 2015 and lodged in the High Court on $5^{\mbox{\tiny th}}$ October 2015. In the grounds of appeal, the ground on res judicata arises from the ruling of 10th of June 2014 which had not been appealed within the time set for appeals and no leave to appeal was obtained as submitted by the respondent's counsel.

- The precedents I have reviewed and the provisions of law demonstrate that 25 the matter is not free from controversy on the issue of whether the ruling on res judicata amounted to a preliminary decree or order and whether if it is an order, leave had to be sought first which the appellant had not done. - The question is whether it was necessary to seek the leave of court to appeal from the ruling. The chamber summons in Miscellaneous Application 30 No 112 of 2014 disclose that the applicant moved under order 7 rule 11 and 19 to strike out the plaint or to reject the plaint. Does the rejection of a plaint amount to a decree? Under section 2 (c) of the Civil Procedure Act, the word "decree" means: - (c) "decree" means the formal expression of an adjudication which, so far as 35 regards the court expressing it, conclusively determines the rights of the parties with regard to any of the matters in controversy in the suit and may be either

$12$

$\mathsf{S}$

5 preliminary or finat. lt shatI be deemed to include the rejection of a plaint or writ and the determination of any question within section 34 or 92, but shal[ not inclu de-

(i) any adjudication from which an appeat lies as an appeal from an order; or

(ii) any order of dismissaI for defau[t;

Exp[anation-A decree is pre[iminary when further proceedings have to be taken before the suit can be completely disposed of. lt is finaI when the adjudication completely disposes of the suit. lt may be partly pre[iminary and partly fina]. 10

Ctearty section 2 of the Civit Procedure Act envisages the rejection of a plaint as amounting to a decree because it finatty determines the rights of

the parties. The distinguishing factor is that the controversy arises from the refusaI of the court to reject the plaint on the ground of res judicata. Where the court refuses to reject the plaint and does not find that the suit is barred by res judicata, the question is whether the decision results into an order whose effect is the same as a decree of a preliminary nature. ln other 15

words, does it conclusively determine the rights of the parties with regard to whether that suit is barred or not? The East African Courts have over time adopted difference approaches to the issue either as requiring [eave or as requiring a matter of law to be considered on appeaI even where ]eave has not been sought. These different approaches seem to conflict at some 20

point. 25

> Starting with section 7 of the Civit Procedure Act, the import of the section is that no court sha[[ try any suit or issue in which the matter directty and substantiatty in issue has been directty and substantiatly in issue in a former suit between the same parties or between parties under whom they

- 30 or any of them claim, titigating under the same titte in a court competent to try the subsequent suit or the suit in which the issue has been subsequently raised and has been heard and finatty decided by that court. The gist of the section as interpreted in various precedents is that there is a statutory bar to try an issue or matter which was directty and substantiatly in issue or - 35 ought to have been made an issue in a formersuit between the same parties titigating under the same title.

- The determination of whether such a suit is barred proceeds under Order 7 $\mathsf{S}$ rule 11 (d) of the Civil Procedure Rules. Order 7 rule 11 (d) of the Civil Procedure Rules provides that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law. In other words, where the suit is time barred or where the suit is barred by the - doctrine of res judicata, the plaint shall be rejected. The rejection of a plaint $10$ results into a decree as defined under section 2 (c) of the Civil Procedure Act. There is no similar provision giving the effect of a ruling refusing to reject a plaint as to whether it is a preliminary decree or order and regard shall be had to the precedents to establish how the courts have over time

treated the matter. 15

A plaint may be rejected under Order 7 rule 11 (a) of the Civil Procedure Rules for disclosing no cause of action or under Order 7 rule 11 (d) where the suit appears from the statement in the plaint to be barred by any law. In Auto Garage v Motokov (1971) EA 514 the East African Court of Appeal held that the provision that a plaint be rejected for disclosing no cause of action 20 is a mandatory provision. Secondly, a Plaint which discloses no cause of action is a nullity and cannot be amended and lastly an amendment will not be allowed when the cause of action is barred by the law of limitation. In Iga v Makerere University [1972] EA 65 it was held that a plaint barred by law shall be rejected under Order 7 rule 11 (d) of the Civil Procedure Rules. 25 Finally, in Attorney General v Oluoch (1972) EA 392, the East African Court of Appeal, per Spry Ag. President held at page 394 that:

> In deciding whether or not a suit discloses a cause of action, one looks, ordinarily, only at the plaint (Jeroj Shariff & Co Vs Chotai Family Stores (1960 EA 374) and assumes that the facts alleged in it are true.

An adjudication of the controversy of whether a plaint discloses no cause of action or is barred by statute or by law results into a decree where the plaint is rejected and is appealable as of right. However, where the court determines a point of law, it proceeds under Order 6 rule 29 of the Civil

Procedure Rules and results in an order that the suit is not maintainable or 35 is maintainable. This was considered by the East African Court of Appeal in

5 Nurdin Ati Dewji & others v G. M. M Meghji & Co. and Others (1953) 20 EACA 132. The East African Court of Appeat was critical of the trial judge for failure to distinguish between the rejection of a ptaint under 0rder 7 rute ll of the Civil Procedure Rules and dismissal of a suit on an issue of law under 0rder 6 rule 29 of the Civit Procedure Rutes. They hetd that the [earned triaI judge erred to reject the ptaint when there was an objection to the suit on a point of law and the finat result was that the learned judge rejected the ptaint not on the ground of an inherent defect in the ptaint but because he thought that the suit was unmaintainable. 10

ln this case, the apptication of the Appticant did not rely on pteadings and was therefore an application f or dismissat of the suit for being unmaintainable on the ground of res judicata. lt could not be considered for rejection of a plaint which proceeds upon perusaI of the plaint and anything attached to it forming part of the ptaint only. 15

Section 68 of the Civil Procedure Act bars an appeal from a preliminary decree if it is not appeated after the decree is passed. lt provides that: 20

> Where any party aggrieved by a pre[iminary decree does not appeaI from that the decree, he or she shatt be precluded from disputing its correctness in any appeal which may be preferred from the final decree.

It is therefore cruciaI for the court to estabtish whether the ruting resulted into a preliminary decree to determine whether the question of res judicata can be raised again on appeal. Can the question of whether the suit is barred by section 7 of the Civil Procedure Act be raised again when no appeat had been preferred upon delivery of the interlocutory ruting? Moreover, the suit was found by the ruting of court to be partiatty res judicata. This issue of whether the lease was a nullity was determined in the Judgment of Kwesiga J in HCCS No 84 of 2013 between the same parties. The subsequent judgment of Owiny - Dotto, J (judge of the High Court as he then was) was that in HCCS No 84 of 2013, the appellant had ctaimed that the teasehotd certificate was founded on a lease which did not comply with certain mandatory provisions of the Registration of Tittes Act and Kwesiga J declared the lease of the respondents ittegal on that basis and cance[led 25 30 35

5 the leasehotd titte. To the extent that the subsequent suit in paragraph 3 (a) of the ptaint avers that the ptaintiff held a lease over the tand, that matter was put to rest by the High Court and was res judicata. The claim for execution of a lawfu[ lease was not res judicata and the alternative claims for recovery of premium paid and ground rent pursuant to the lease agreement were not res judicata.

It is not in dispute that the appettant did not appeaI the preliminary decree rejecting part of the ptaint on the ground that it is barred by res judicata. Res judicata is a fundamental doctrine and the suit woutd not have proceeded for triaI with costs as it did, had the appe[[ant appealed the ruting on his contention that the entire suit had been determined in HCCS No. 84 of 2013.

For ease of reference I refer to the ruling of the High Court in Civil Suit No 84 of 2013 is dated 29th of November 2013 wherein the learned triat judge set out the agreed facts. The fact was that the ptaintiff is the registered proprietor of Maito [and comprised in Kyadondo btock 197 Ptot 199 tocated and Kitetika. By a lease agreement dated 4'h of November 2004, the ptaintiff leased to the defendant the suit property for 99 years. The lease was

- subsequentty registered in the land registry on llth of November 2005 under instrument No KLA 268927 as LRV 3325 fotio 17 plot 99 Kyadondo btock 197. The lease agreement provided inter alia for a lease term of 99 years and the payment of premium in one tump sum for the entire 99 years. The defendant 25 - paid the premium and rent due as agreed and was in possession and occupation of the suit property. 0ne of the issues was whether the defendant's lease on the suit property was lawful and valid. The court - considered the lease agreement which was registered under the above stated instrument. The court found that section 148 of the RTA invatidates any instrument that does not compty with the requirements of this section which included the fact that the signature of each party is to be in Latin character or a transtation into Latin character of the signature of any party 30 - whose signature is not in Latin character. The court found that the document shows that the instrument on the part of the respondent was in Chinese 35

5 character and the name and capacity authority of the person who scribbted on the document cannot be ascertained. He found that the instrument and witnessing of the documents offended the provisions of section 148 of the RTA. ln the premises he found that the subject of the suit was invatid and ittegat and the court cannot sanction it and therefore disposed of the suit on the finding that the [ease is ittegal and invatid. He further ordered the registrar of tittes to canceI the ittegatities and remove it from the register of tittes. 10

Respondent did not appeaI against the decision of the High Court dated 29th of November 2013 and instead subsequently fited a suit in High Court Civit

- Suit No 6lt9 of 2013 from which the current appeal emanates. The amended plaint thereof shows that it is a claim for declaration that the ptaintiff is the lawful lessee of the [and comprised in the Leasehold Register Votume 3326 Fotio l7 Plot 99 Kyadondo Btock 197 at Kitetika Mutumba I Wakiso district (the suit property). Secondty it was for an order for specific performance 15 - ordering the defendant to execute a proper lease between the ptaintiff and the defendant in respect of the suit property. Thirdly for a permanent injunction restraining the defendant and servants or agents from interfering with the respondent's quiet enjoyment of the suit property. ln the alternative the ptaintiff who is now the respondent sought punitive damages, generat damages and speciaI damages together with interest. 20 25

Ctearty in its ruling in Misce[[aneous Apptication No 112 ot 2014, the High Court found that the part of the suit contained in paragraph 3 (a) of the amended plaint for dectaration that the plaintiff is the lawfu[ [essee of land comprised in leasehold register volume 3326 fotio 17 ptot 99 Kyadondo bl.ock 197was res judicata. However, the rest of the claims were not res judicata.

The appeltant did not appeat the above ruling and instead waited for the suit to be completed and appealed finatty against the judgment wherein he also raised the question of whether the court was right to hold that the entire suit was not res judicata. An appeal from a preliminary decree or order can

avoid inconvenience to the parties. The ruting of the triat court in the interlocutory apptication seeking to strike out the plaint or to reject the 35

- plaint proceeded from an application by chamber summons. However, any $5$ challenge to a plaint on the ground that it discloses no cause of action or that it is barred by law does not require an interlocutory application by chamber summons or notice of motion for it to be considered. It is clear from the authorities cited above that, the determination of whether a plaint should be rejected is based on only a perusal of the plaint under Order 7 - 10 rule 11 cited by the appellant in the chamber summons.

In my judgment, the procedure under Order 7 rule 11 was erroneous. An application to determine whether a suit is not maintainable from facts other than what is averred in the plaint proceeds under Order 6 rule 29 of the Civil Procedure Act which provides that:

29. Dismissal of suit.

If, in the opinion of the court, the decision of the point of law substantially disposes of the whole suit, or of any distinct cause of action, ground of defence, setoff, counterclaim, or reply therein, the court may thereupon dismiss the suit or make such other order in the suit as may be just.

The provision allows the court to dismiss the suit for not being maintainable on a point of law such as res judicata. However, to proceed under Order 7 rule 11 (d) of the Civil Procedure Rules requires a perusal of the plaint. In the premises, the matter and could not have proceeded under Order 7 of the Civil Procedure Rules because the applicant who is now the appellant gave facts by affidavit evidence. In the affidavit he stated that the matters concerning the lease were settled by the court in HCCS No 84 of 2013 and therefore was res judicata. He attached the relevant ruling in HCCS No 84 of 2013.

Order 44 rule 1 (1) lists the orders from which an appeal shall lie as of right 30 from orders made under section 76 of the Civil Procedure Act. Neither Order 7 Rule 11 nor Order 6 rule 29 of the Civil Procedure Rules are listed as the orders from which an appeal lies as of right. Order 44 rule 1 (2) provides that an appeal shall not lie from any other order except with the leave of

5 court making the order or of the court to which an appeal would [ie if leave were given.

Appeats that may be commenced as of right are catered for under section 76 of the Civil Procedure Act and do not include orders made under 0rder 7 rute ll (a) and (d) of the Civit Procedure Rules or 0rder 6 rute 29 thereof. 0n the other hand, no appeat lies from any other order except with the leave of court. Such orders can be made a ground of appeal in the main appeal from the decree. This is made clear from section 77 (l) of the Civil Procedure Act which provides that:

77.0ther orders.

- (l) Except as otherwise expressly provided, no appeal shatt tie from any order made by a court in the exercise of its originaI or appe[[ate jurisdiction; but, where a decree is appeated from, any error, defect or irregularity in any order affecting the decision of the case may be set forth as a ground of objection in the memorandum of appeat. 15 - (2) Notwithstanding subsection (1), where any party aggrieved by an order of remand from which an appeal [ies does not appeal from it, he or she shall thereafter be prectuded from disputing its correctness. 20

Section 77 (l) of the CPA only excepts any error, defect or irregularity in an order when appealing from the main decree for purposes of formutating any grounds of appea[ arising therefrom. As noted above, the decision of the triat court was preliminary and finatty determined the rights of the parties on the question of whether the suit was res judicata or not. The court having found that part of the suit was not res judicata, and the appettant having not appeated the decision of the court in High Court Miscel[aneous 25

Apptication No ll2 of 2014, is the appetlant prectuded f rom appealing it at this stage after the court dealt with the merits of the suit and made its finat judgment more than a year [ater? This question can onty be addressed by considering the judiciat precedents. 30

Judiciat precedents on the issue are as considered below:

- In Kuna Arap Rono v Swaran Singh Dhanjal [1966] EA 184, the term "decree" $\overline{5}$ under section 2 of the Civil Procedure Act was considered by the High Court of Kenya per Trevelyan J. In that case, the respondent objected to the appeal for being incompetent on the ground that in the lower court the magistrate was invited to strike out the plaint under Order 6 rule 29 of the rules. The - court found that the word "decree" includes the rejection of a plaint. In that $10$ matter the plaint of the respondent had been struck out and this claim dismissed by the magistrate. The court found that the magistrate had conclusively determined the rights of the parties in the judgment which was appealable. This interpretation is persuasive because its consistent with the - statute though other interpretations of superior courts take another 15 approach.

In Michael Kamau v Gregory Gecharu [1953] 20 EACA 59 the East African Court of Appeal considered the question of preliminary judgment whether it is appealable within the time limited to appeal. The facts were that there was a suit alleging a partnership and suing for its dissolution and for undertaking of accounts whereupon judgment was entered for the plaintiff on the issue of existence of the partnership and an order was made for its dissolution. Subsequently other prayers for consequential orders were made after subsequent proceedings and judgment. It was agreed that the

- two judgments were preliminary and final decrees within the meaning of 25 section 2 of the Civil Procedure Ordinance. The subsequent judgment was delivered 12 months after the preliminary judgment was entered and the appellant appealed with the leave of court from the final judgment. The respondent objected to the appeal on the ground that it was filed out of time - in the relation to the preliminary judgment. The court considered section 68 30 of the Civil Procedure Ordinance which is in pari materia with the section 68 of the Ugandan Civil Procedure Act which provides that:

Where any party aggrieved by a preliminary decree passed after the commencement of this Ordinance does not appeal from such decree, he shall be precluded from disputing its correctness in any appeal which may be preferred from the final decree.

$20$ ## 5 The East African Court of Appeat hetd that:

The decision of the Privy CounciI in Ahmed Musaji Sateji and Others v. Hashim Ebrahim Sateji and 0thers ('19'14) L. R.42 l. A.9l is good authority for saying that the judgment detivered on 7rh February, 1951, was appea[ab[e within the time timited by rule I of the l925 Rules of this Court i.e. within 90 days.

- ln G. R. Mandavia v. Rattan Singh [1965] EA tl8, the East African Court of Appeat considered the question of whether a dismissal of the preliminary objection that the suit was res judicata was appealable in the circumstances. ln that case there was a preliminary issue as to whether the suit was res judicata and the triat judge ruled that the suit was not res 10 - judicata whereupon the defendant without teave of court appealed against the ruting. At the hearing of the appeal, the respondent objected to the appeal on the ground that the ruting did not amount to "a preliminary decree' as defined by section 2 of the Civit Procedure Act of Kenya (in pari materia with the Ugandan section 2 of the Civil Procedure Act). The East 15 - African Court of Appeat found that the sole question on which the ruting of the court is required to be made is whether the decision or ruling of the learned triat judge amounted to a "preliminary decree" from which an appeal lies as of right to the Court of Appeat. Crabbe J. A. at page 123 stated that: 20 - Where in any suit res judicata is pteaded the court can do one of two things ('l) it may uphold the plea and dismiss the suit, or (2) dismiss the ptea and hear the suit on the merits. ln the first, the resu[t is that the ptaintiff is debarred from estabtishing his riqht to the relief which he seeks from titigating an issue, and in my view it is an adjudication which conclusive[y determines a right upon a matter or matters in controversy in the suit. ln the second, the matter in controversy are stitl at large, since there has been no adiudication affecting the rights of the parties, and a[[ the issues remain alive. lt seems to me therefore that a finding or decision in [imine which permits the suit proceed is not a pre[iminary decree. Thus a decision of the court on a pre[iminary issue framed on the ptea of res iudicata is not a pre[iminary decree and is, therefore, not appealabte..... 30 35 25

Law J. A. stated that:

5 The position is, in my opinion, clear: when a suit is disposed of on a preliminary point, an appeaI woutd lie from the decree dismissing the suit, and where an issue such as tiabitity is tried as a preliminary issue and fina[[y disposed of at first instance, preliminary decree arises from which an appea[ ]ies; but where a pretiminary issue a[[eging misjoinder, Iimitation, [ack of jurisdiction or res judicata fai[s, no pretiminary decree arises from which the unsuccessful party has a right of appea[. lt fotlows that in my view the pretiminary objection succeeds. This appeat is incompetent and must accordingly be dismissed. 10

Ctearly the refusal of a plea of res judicata is not appealabte. However, in this case, res judicata partiatty succeeded and that part which hetd that the registered lease agreement was a nuttity is no longer in issue. The rest of the of the ptea in relation to the contract for a [ease was disallowed and the suit heard. The decision of the East African Court of Appeal in G. R. Mandavia v. Rattan Singh (supra) foltowed the Privy CounciI decision in Tzamburakis and Another v Rodoussakis [1958] EA 500. At the High court the issue was whether the suit of the respondent was time barred. The time bar objection was overruled and the suit heard on merits. 0n appeat the appettant raised the issue of [imitation again. The East African Court of Appeat held that since there was no appeal from the preliminary ruting hotding that the suit was not time barred, the ground of appeat bringing up the issue for determination by the court was incompetent. 0n further appeal it was argued for the appellants that they were entitled to raise the issue at appellate leveI even when they did not appeal the preliminary ruting and the suit was determined on merits. At pages 404 and 405 Lord Tucker stated that: 15 20 25

The Court of Appeat hetd that there having been no appeal entered within time from the decision of MAH0N, J which in their view was a pre[iminary decree within the meaning ol s.2 (2) and s. 97 of the Code of Civil Procedure, the grounds of appeaI seeking to attack this decision were incompetent. 30

Their [ordships do not agree. They prefer the decision of the Fut[ Court Bench in Bombay in the case of Chanmalswami v. GangadharaPPa (1) (1915), 38 Bom, 339 which overruled the case ot Sidhanath Dhonddev v. Ganesh Govind (2) (1912), 37 Bom.60 in which it had been held that decisions as to misioinder, limitation ad 35

jurisdiction were pre[iminary decrees from which unsuccessful parties must at once appeal by reason of s. 97 of the Code.

There is, however, another reason why their tordships are of the opinion that the Court of Appeat should have dealt with the issue of [imitation, viz., that s.3 of the lndian Limitation Act, 1908, set out above, in terms requires the dismissal of every suit instituted after the prescribed period of limitation even though this timitation is not pleaded. ...

ln the presence case their tordships are of the opinion that no proceduraI defect could relieve the Court of Appeal of its duty to give effect to the statute on an appeaI from a judgment given in favour of a p]aintiff in respect of a time-barred ca use of action.

Grounds I and 2 of the appeal in so far as they were determined in the ruling in High Court Misce[taneous Apptication No ll2 of 2014 stilt relate to section 7 of the Civil Procedure Act and this court is required to consider any statutory bar to a suit even where it is not pteaded. Such a suit woutd be an iltegatity.

Ground I of the appeal.

l. The learned triaI Judge erred both in fact and taw by failing to find that the suit was who[[y res judicata.

,<, As I have noted above the ruling of the [earned triat judge rested on the proposition that there was an agreement for a lease between the parties that could be the subject of a separate suit for specific performance or for damages and what the court declared to be a nuttity is the lease agreement that was registered.

30 The appellant faults the trial judge for finding that there was a separate agreement for a lease between the parties as a question of fact. This is a very narrow area for discussion as the trial court in the former suit declared the lease agreement a nuttity. Did this nultify the undertaking of the parties or only the registration of a lease and obtaining of a lease title?

I also have carefully considered the question of the existence of a lease 35 which forms the crux of the arguments of the appettant against the finding

of the learned trial judge that there was an agreement between the parties $\mathsf{S}$ for a lease. I do not need to go any further than to consider the summary of facts which were agreed between the parties before Honourable Mr Justice Kwesiga in High Court Civil Suit No 84 of 2013 between the same parties. In that suit the learned trial judge clearly indicated from page 1 to page 2 the agreed facts were set out in writing and formed the basis of the ruling that $10$

the lease instrument was a nullity.

The agreed facts were that the plaintiff is the registered proprietor of the suit property as described therein. Secondly by a lease agreement dated 4th of November 2004, the plaintiff released to the defendant the said land (the suit property). Thirdly the defendant's lease interest was duly registered 15 according to the description of the land under instrument and the registration was done on 11 November 2005. It was also agreed that the lease agreement which was registered provide for a lease term of 99 years. Secondly it provided that the lessee was to pay premium and rent in one lump sum for the entire 99 years. Further the lessee was to hold the lease 20 subject to the covenants and powers implied under the Registration of Titles Act and the Land Act. It was also agreed that the respondent who was the defendant paid to the plaintiff the premium and rent due as agreed in the lease agreement and that the defendant who is now the respondent is in possession and occupation of the suit property. 25

Among other issues agreed upon which is relevant to ground 1 of appeal is whether the defendant's lease on the suit property is unlawful and invalid. The decision of the learned trial judge rested on the provisions of section 148 of the RTA which stipulates how a lease instrument is to be embodied.

- It is on that basis that the learned trial judge found that section 148 of the 30 RTA invalidated any instrument that did not comply with the requirements of this section. This was primarily because the lease instrument was supposed to be signified by the signature of each party in Latin character or in the alternative translation into Latin character of the signature of any party whose signature is not in Latin character. Because the respondent - 35 executed the lease in Chinese characters, the lease was invalidated.

- 5 ln the subsequent suit HCCS No 649 of 2013 and in the ruling of the learned triat judge in High Court miscellaneous apptication No 112 of 2014, the learned triat judge found that the suit was not whotty res judicata and only rejected the part of the plaint in paragraph 3 (a) as sought a declaration that the ptaintiff is the [awful lessee of the land as described in the ptaint. - However, the learned triat judge found that the suit f or specif ic performance ordering the defendant to execute a proper lease was a valid suit and was not res judicata. The other grounds deatt with a ctaim for the remedy of a permanent injunction to restrain the defendant who is now the appellant from interfering with the ptaintiff's quiet enjoyment of the suit property or 10 - in the alternative for speciaI damages as we[[ as for punitive damages and generaI damages. 15

It is therefore the hotding that the lease agreement which was registered was not in Latin character and not duly witnessed and therefore a nuttity which was considered res judicata. I have considered the written statement of defence and paragraph 5 thereof clearty discloses that att the terms of the lease outlined in the ptaint were reduced into a lease agreement which he attached as Annexure "D1". Annexure "Dl" is a lease agreement between the parties.

- 25 30 ln that agreement the [essee was required to pay Uganda shittings 18,400,000/= upon execution of the lease agreement. ln paragraph 7, the balance of Uganda shittings 73,600,000/= was supposed to be paid after the lease had been duly registered. Secondty the lessor agreed and undertook to demotish any buitdings on the property and vacate alt occupants within one month from the date of signing the [ease. Thirdty the lessor was required to remove any encumbrances on the property particularly a mortgage registered in favour of Greenland bank Ltd. Last but not least the lessee was required to take possession of the property immediatety after signing the [ease. The [ease was subsequently registered. ln the previous suit, the [earned triat Judge found that the lease had been registered on llth - 35 of January 2005. The triaI court considered the claim for refund or execution of a valid lease.

- 5 I have carefutly considered the issue and it is ctear that the previous suit deatt with the registration of the tease under the Registration of Tittes Act and particutarty sections 147 and 148 thereof which required certain categories of persons to witness the signature of the parties and the signatures of the parties to the lease to be in Latin character respectivety. - Failure to have the statutory category of witnesses and for the signatures to be in Latin character is onty retevant to registration of the lease and the obtaining of a [ease title under the RTA. lt does not affect the obtigation of the parties under an agreement which was subsisting. The appettant's case was that the agreement was nuttified and no other agreement could be read 10 - after the court decision since there was no evidence of another agreement. However, even a contract dectared void does not absolve the parties of obtigations under certain conditions. This is made evident by the provisions of the Contracts Act, 2010. 15

section 54 of the contracl Act attows an aggrieved party to reclaim from a person who has received an advantage under a contract which has been dectared void, the advantages that person received under the contract. lt provides that: 20

> 54. 0btigation of person who receives advantage under a void agreement or a contract that becomes void.

- (1) Where an agreement is found to be void or when a contract becomes void, a person who received any advantage.under that agreement or contract is bound to restore it or to pay compensation for it, to the person from whom he or she received the advantage. 25 - (2) Where a party to a contract incurs expenses for the purposes of performance of the contract, which becomes void after performance under section 25(2), the court may if it considers it iust to do so in a[[ the circumstances- 30

(a) attow the other party to retain the who[e or any part of any advantage received by him or her;

(b) discharge the other party, whotty or in part, from making compensation for the expenses incurred; or

5 (c) make an order that the party recovers the whote or any part of any payments, discharge or other advantages not greater in value than the expenses incurred.

Under the section 54 (l) where an agreement is found to be void or where a contract becomes void, a person who received advantage under the contract is bound to restore it or pay compensation. The court has power to award compensation after declaration that the contract is void for failure to execute it in terms of sections 147 and 148 of the RTA. Moreover, a [ease is registrable but an equitabte [ease can be considered where it is not registered or where the lease agreement has formal defects for purposes of registration. The respondent paid the [ease premium of 99 years in advance and went into possession. The respondent also paid a[[ the ground rent for 99 years in advance. The appettant signed the lease agreement without due witnesses and the respondent's signature was not in Latin character.

The learned triat judge hetd in HCCS No 84 of 2013 that:

- I consider the issue of general damages and prayers for costs of this suit together. Mr. Evarist Mugabi the ptaintiff is a lawyer with [ong experience who in my view ought to have known that he was entering into an agreement that is ittegat. He took unfair advantage of his knowledge and benefited from this ittegal [ease and received payment of shiltings 9'1,901,000/= as a one-time premium for the invalid lease. lt would amount to sanctioning of ittegat enrichment of the ptaintiff to award him generaI damages over a transaction where he is clearly guitty by executing an instrument where his signature was witnessed by a person whose identity, capacity and quatification to witness his signature was not disclosed. 0n this point alone the lease was found in invaIid. 0n this basis I do not find the ptaintiff an aggrieved person to deserve generaI damages or costs to the suit. The prayers for general damages and costs of the suit are hereby dismissed for the above reasons in addition to the fact that no evidence was adduced to show any injuries that catl for award of generaI damages. Each party wi[[ suffer its own costs. 20 25 30 - The ittegatity only related to the forma[ requirements of a [ease agreement for purposes of registration. This did not affect the equitabte titte since all the elements of a contract were present and consideration was paid after a bargain of the parties whereupon the respondent took possession of the 35

## property. According to Halsbury's Laws of England 4th Edition reissue $\mathsf{S}$ Volume 9 (1) Paragraph 836 at page 595:

"Some contracts may be illegal in the sense that they involve the commission of a legal wrong, whether by statute or the common law or because they offend against the fundamental principles of order and morality. Less objectionable contracts may be simply void by common law or statute"

In my judgment the contract was less objectionable because it breached a formal requirement for purposes of registration. In fact, the learned trial Judge quoted the rationale of enactment of section 147 and 148 of the RTA as held by the Supreme Court of Uganda in Frederick J. K Zaabwe v Orient Bank Ltd and 5 others (Civil Appeal No 4 of 2006) [2007] UGSC 21 (10th July 2007). In that appeal Katureebe JSC considered the rationale for enactment

of sections 147 and 148 of the RTA when he stated that:

Further, Exhibit D5 at page 33 of the record which is the letter from the 1st respondent to the 2nd respondent communicating the availability of credit facilities was accepted by the said directors whose signatures appear on the document. 20 So there may not have been doubt in the mind of the 1st respondent's manager that the persons signing before him were directors of the 2nd respondent. But that was knowledge between the Bank and its customer. However, it has to be appreciated that the mortgage was to be registered at the Land Office. It is a public document in which third parties may have an interest. How was the 25 registrar to know that the scribbled signatures without names or capacity of the signatories, and in absence of the company seal, had the authority to sign on behalf of the 2nd respondent? In my view, the rationale behind section 148 requiring a signature to be in Latin character must be to make clear to everybody receiving that document as to who the signatory is so that it can also be 30 ascertained whether he had the authority or capacity to sign. When the witness attesting to a signature merely scribbles a signature, without giving his name or capacity, how would the Registrar or anyone else ascertain that witness had capacity to witness in terms of section 147 of the Registration of Titles Act?

...

Whatever definition one comes up with, the signature of instruments under the Registration of Titles Act must comply with section 148.

5 10 15 Therefore, as to whether the signature on the mortgage comptied with Section '148, I must note the foltowing: The names of the signatories are not given, nor their capacity to sign on behatf of the company. 0ne cannot te[[ whether they are directors, secretary or even officers of the company at a[[. There is no company seaI or stamp at a[[. Furthermore, even the witness to the signatures has neither disclosed his name nor his capacity to witness instruments as provided by section '147 of the Act. ln the circumstances, how would the registrar know that the persons who signed the mortgage deed on behatf of the company, had authority to execute that deed? 0r that the attesting witness had the [egaI capacity to do so? lt is to be noted that the company had opted for signatures instead of the company seaI as wou]d have been permitted under section 132 of the R. T. A.

> ln my view, the execution of the mortgage by the 2"d respondent did not comply with the provisions of sections 147 and 148 of the R. T. A. I agree with the decision in the General Parts case (supra) that such irregutarity renders the mortgage invatid.

- 20 It is clear from the above two passages that the court considered the rationale being for the registrar of tittes and anybody to know that the document was duly executed and the capacity of the signatories. The fact that the parties to the agreement knew each other was not considered materia[. lt fottows that between the parties some quasi contractual - ,q obtigations can be imptied and enforced. These contractuaI obtigations remained subsisting and are enforceable from time to time. 0btigations of parties in a contract do not necessarity depend on the formaI requirements for registration of the instrument embodying the contract for purposes of notice to the public. Where al[ the elements of a valid contract are availabte, - 30 that relationship is enforceable as between the parties to the contract. For instance, an agreement to execute a lease is enforceable. ln other words, in such cases the lease could be based on a prior agreement and the format requirements of the lease are subsequent requirements to the contract to execute a lease. The question may be one of fact as to what embodied an - 35 agreement to execute a lease and obtained a lease title.

There are i[[ustrations with regard to the doctrine of unjust enrichment for parties under a void agreement to have a cause of action to recover the money had and received unjustty. ln Fibrosa Spotka Akcyjna v Fairbairn

## Lawson Combe Barbour, Ltd [1942] 2 All E. R. 122 Lord Wright at page 135 $\mathsf{S}$ noted that:

$10$

It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which is against conscience that he should keep. Such remedies in English law are generally different from remedies in contract or tort, and are now recognised to fall within a third category of the common law which has been called quasi contract or restitution.

Clearly, upon having the lease declared void, the respondent still had the cause of action to recover money had and received by the appellant and 15 such a cause of action cannot be res judicata since it would be unjust for the appellants who executed the instrument as a party to retain the benefit from it and have the instrument declared null and void. Such an arrangement is unconscionable. Further, according to Halsbury's laws of England 4th Edition Volume 9 paragraph 674 with regard to payment under $20$ a void contract, it is written that:

> Money paid under a contract void at common law is recoverable on grounds of total failure of consideration; and an action in conversion auditing may be brought in respect of goods delivered under such an apparent contract.

- In addition, the appellant having received the full payments under the lease 25 cannot run away from his obligations as a lessor without compensation of the respondent. His obligations are in any case enforceable. To hold otherwise is to use sections 147 and 148 as an instrument of injustice or fraud. - In Rochefoucauld vs. Boustead [1897] 1 Ch. 196 Lindley L. J. who read the 30 judgment of the court held that the Statute of Frauds should not be used as an instrument of fraud. In that case, the Plaintiff had made a conveyance to the Defendant in trust for her but there was no evidence in writing of the trust. The plaintiff brought an action for account of the defendant's dealings - in the property. The defendant claimed that the property was conveyed to 35 him as a beneficial owner. Secondly that the trust was not proved by any 5 writing signed by the defendant as required by the Statute of Frauds. There was however evidence of many correspondences which could prove the trust arrangement. Kekewich J dismissed the action on the basis of the requirement for the trust to be evidenced in writing signed by the defendant and the plaintiff appealed. LINDLEY L. J. who delivered the judgment of the Court (Lord Hal.sbury L. C. and Lindtey and A. L. Smith L. JJ) hetd at pages 10

205 and 206:

This conclusion renders it necessary to consider whether the Statute of Frauds affords a defence to the ptaintiff's c[aim. The section relied upon is s.7, which has been judiciatty interpreted in Forster v. Hale (1) and Smith v. Mathews. (2) According to the authorities, it is necessary to prove by some writing or writings signed by the defendant, not on[y that the conveyance to him was subject to some trust, but also what that trust was. But it is not necessary that the trust should have been declared by such a writing in the first instance; it is sufficient if the lrust can be proved by some writing signed by the defendant, and the date of the writing is immaterial. lt is further established by a series of cases, the propriety of which cannot be questioned, that the Statute of Frauds does not prevent the proof of a fraud; and that it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and ctaim the tand himse[f. Consequently, notwithstanding the statute, it is competent for a person ctaiming [and conveyed to another to prove by parote evidence that it was so conveyed upon trust for the ctaimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and the statute, in order to keep the [and himsetf. 15 20

By claiming the land himself after the ruling of the court showing that the lease agreement which was registered was void under sections 147 and 148 of the Registration of Tittes Act, the appetlant was using the provisions of the law as a vehicle to take back vacant possession of the leased tand whereat he had given vacant possession to the respondent for futt consideration. 30

Coming to the facts of this appeat, the judgment in High Court Civit Suit No 84 of 2013 went beyond the issue of itlegat registration and lease agreement which was the basis of it under sections 147 and 148 of the RTA to suggest that the contract between the parties which cutminated in a formal lease 35

agreement was void. What was void was based on the requirement for $\mathsf{S}$ registration but the obligations of the parties had been partially fulfilled in that the respondents had paid the premium for 99 years and all the ground rent in advance for the same period of time. The Respondent was given vacant possession of the leased property. Even without a formal contract in terms of a formal lease instrument that could be registered, there was an 10 equitable lease which had been paid for and which is implied at law. Last but not least, the statutory basis for part of the cause of action under a void contract is *inter alia* section 54 (1) of the Contracts Act referred to above.

In Walsh v Lonsdale (1882) 21 Ch. D. 9 the plaintiff brought an action for illegal distress for rent. The plaintiff had agreed to let and the defendant had 15 granted the right to a lease on certain terms for seven years and the terms were inserted in a certain lease which had a term of four years. What is material being that the terms of the existing lease were different. The defendant demanded one year's rent in advance and other dues which the plaintiff paid. The plaintiff commenced an action for improper distress for 20 rent and for injunction. There was an agreement but no lease instrument had been executed. The question was whether the distress was improper in light of the fact that no formal lease had been executed. It was argued that to justify a distress there had to be a legal tenancy and rent in arrears. In opposition, it was argued that a tenant holding under an agreement for 25 which specific performance could be granted stands in the same position as to liability as if a lease had been executed.

Jessel M. R, noted that there was an agreement for a lease under which possession has been given. He found that the tenant falls under an agreement for a lease. He holds in at the same terms in equity as if a lease had been granted, and in the premises the tenant could not complain of the exercise by the landlord of the same rights as the landlord would have had as if the lease had been granted.

Lindley L. J. held inter alia at page 17 that:

5 lalso think that the rights of the parties in this case turn upon the [ease has it ought to be framed in pursuance of the contract into which these parties have entered.

ln conclusion, the question is whether the parties entered into a contract and the answer is yes. The terms of the contract are also reflected in the lease instrument albeit executed contrary to sections 147 and 148 of the Registration of Tittes Act. This contract was partially futfilted by the respondent paying the sums stipulated thereunder. However, the formal instrument which was registered did not conf orm to the statutory requirements and was void. The respondent however was given possession of the tand and paid for the lease.

ln the premises, the learned triat judge could not be faulted for finding that the suit was not whotty res judicata. What was only res judicata was the issue of whether the formal [ease instrument which was registered and pursuant to which a leasehotd certificate of title had been issued, was void

- because it contravened the provisions of sections 147 and 148 of the Registration of Tittes Act. The question of the relationship between the parties in terms of the payment of premium, and rent as stipulated above remained. The [earned triat judge could not be fautted for f inding that there was an agreement between the parties to execute a lease. This is not based 20 - on the formaI instrument that was nuttified but on the relationship between the parties wearing both parties accepted the terms of a lease in which the respondent was given possession of the lease and paid for it. There was a subsisting equitabte lease which could be formalised by the execution of a contract reftecting the terms upon which the parties had agreed. The question of the signatories to the [ease while formaI requirements. ln the premises, ground 1 of the appeat has no merit and is disatlowed. 25 30

With regard to ground 2 of the appeal, the memorandum of appeaI stipulates that:

2. The learned trial Judge erred both in fact and taw by finding that the parties entered into a valid contract for a lease and thereby arriving at a wrong conclusion occasioning a miscarriage of justice.

- Ground 2 of the appeal has been resolved in my finding in ground one of the $5$ appeal in that the learned trial judge found that there was an agreement between the parties in which consideration was given and the respondent was given possession and there was therefore unenforceable equitable lease. Ground 2 of the appeal has no merit and is hereby disallowed. - 3. The learned trial Judge erred both in fact and law by altering the 10 agreed facts outlined in the Joint Scheduling Memorandum, thereby arriving at a wrong conclusion occasioning a miscarriage of justice.

With regard to ground 3 of the appeal, I find no merit in stating that the learned trial judge altered the agreed facts. It is by implication of the law that an equitable lease was inferred in the relationship between the parties 15 and this was based on a contract in which the parties had executed a formal lease that was nullified. The relationship between the parties was proved by possession of the premises given to the respondent and acceptance of a premium and ground rent by the appellant. Further, the formal lease agreement only reflected the terms of the agreement part of which had 20 been executed by the parties. Ground 3 of the appeal has no merit and is hereby disallowed.

With regard to ground 4 of the appeal the appellant averred in the memorandum of appeal that:

4. The learned trial Judge erred in law by ordering for the specific 25 performance of an agreement for a lease and thereby arriving at a wrong decision occasioning a miscarriage of justice.

Having decided grounds 1, 2 and 3, ground 4 also has no merit because the terms of the lease agreement were evident from the conduct of the parties in that there was payment by the respondent, there was possession given to the respondent and the appellant received the money. Further, there was evidence of the terms of the lease in the impugned agreement which was nullified not because of the terms thereof but because of the signatories which did not comply with the sections 147 and 148 of the Registration of

- 5 Tittes Act. ln the premises ground 4 of the appeat is atso disatlowed for want of merit. - 5. The learned trial Judge erred both in law and fact by finding that the Respondent acquired an equitable interest in the Appettant's [and and thereby arrived at a wrong conclusion occasioning a miscarriage of 10 ju st ic e.

Simitarty, having found that there was an equitabte lease interest in the resotution of grounds l, 2, 3 and 4, ground 5 of the appeal has no merit and is hereby disa[[owed.

ln ground 6 of the memorandum of appeal, the appellant averred that:

15 6. The learned trial Judge erred both in law and fact by finding that the lease hitherto hetd as invatid, was a valid contract between the Appetlant and the Respondent and thereby erred occasioning a miscarriage of justice.

20 Ground 6 of the appeaI has been resolved in grounds l, 2. Ground 6 of the appea[ has no merit and is hereby disattowed on the basis of my findings in ground one of the appeat.

ln the premises, grounds 1,2,3,4,5 and 5 of the appeaI are devoid of merit. I woutd find that the appeal of the appetlant lacks merit and is hereby dismissed with costs.

25 My learned sisters Lady Justice lrene Mutyagonja, JA and Lady Justice Monica Mugenyi, JA also agree that the appeat be dismissed. Accordingly, the appettant's appeal stands dismissed with costs.

Dated at Kampata the -f-Iday ol July 2022

30 Christopher Madrama

Justice of Appeat

$\mathcal{A} = \{ \mathcal{A} \mid \mathcal{A} \in \mathcal{A} \}$

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL NO. 07 OF 2017 (Arising from HCCS No. 649 of 2013)

(Coram: Madrama, Mulyagonja, Mugenyi, JJA)

EVARISTO MUGABI::::::::::::::::::::::::::::::::::::

#### **VERSUS**

CHINA ROAD CORPORATION LTD::::::::::::::::::::::::::::::::::::

# (Appeal against the decision of Justice Alphonse Chigamoy Owinyi-Dollo, J. (as he then was) delivered on 25th September 2015 in High Court Civil Suit No. 649 of 2013)

#### JUDGEMENT OF IRENE MULYAGONJA, JA

I have had the benefit of reading in draft the judgment of my learned brother, Christopher Madrama Izama, JA. I agree with his decision and the reasons for it and the conclusion that the appeal be dismissed.

Dated at Kampala this $12^6$ Day of $\frac{1}{2}$ 2022.

Irene Mulyagonja

JUSTICE OF APPEAL

![](2__page_37_Picture_0.jpeg)

THE REPUBLIC OF UGANDA

## THE COURT OF APPEAL OF UGANDA AT KAMPALA

CORAM: MADRAMA, MULYAGONJA & MUGENYI, JJA

### CIVIL APPEAL NO. 7 OF 2017

EVARISTO MUGABI ....................................

**VERSUS**

CHINA ROAD CORPORATION LTD ...................................

(Appeal from the Ruling of the High Court of Uganda at Kampala (Owiny Dollo, J) arising from Civil Suit No. 649 of 2013)

Civil Appeal No. 7 of 2017

such.

$\mathbf{1}$

## **JUDGMENT OF MONICA K. MUGENYI, JA**

I have had the benefit of reading in draft the lead Judgment of my brother, Hon. Justice Christopher Madrama, JA in this Appeal. I agree with the decision arrived at the reasons therefor and the orders proposed therein, and have nothing useful to add.

Dated and delivered at Kampala this $\frac{1}{2}$ day of $\frac{1}{2}$ , 2022.

Muslingenyi,

Monica K. Mugenyi **Justice of Appeal**