Nassanga v Stanbic Bank ganda Limited and Another (Civil Appeal 119 of 2003) [2005] UGCA 88 (21 July 2005)

Full Case Text

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

#### ) CORAM: HON MR. JUSTICE G. M. OKELLO, JA HON LADY JUSTICE A. E. N MPAGI-BAHIGEINE, JA HON LADY JUSTICE C. K. BYAMUGISHA, JA .

## CIVIL APPEAL NO I19 OF 2OO3 a

#### BETWEEN

#### IMELDA NASSANGA: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :APPELLANT

#### AND

(r) STANBTC BANK( U)LTD I

20 (2) BAMUNGTIZANGA FARM LTD I::RESPONDENTS

{Appeal orising from the decision ofthe High Court, (Tabaro, J) dated 6th August,2002 at Kampala in Civil Suit No 76 of 1995.j

### JUDGMENT OF G. M. OKELLO JA

This appeal arose from the judgment of the High Court (Tabaro, J) dated at Kampala on 6'h August,2OO2, in Civil Suit No 76 of 1995, whereby the appellant's suit was dismissed with cost.

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The background facts are briefly as follows:-

M/S Bamungtzanga Farm Ltd, the 2nd respondent, had obtained a loan from the Uganda Commercial Bank Ltd (UCB), the predecessor of Stanbick Bank Ltd, on or about l3'h April 1992, for the purpose of expanding the farm situated at Kyewanise Singo Busunju in the District

# PU\*re.-r5q

of Ir4bede. Apparently, the loan was extended to the Company in the form of materials. A ffactor and its trailer were part of the items availed to the Company under the terms of the loan agreement.

was that the tractor and its Uganda Commercial Bank Ltd and would be transferred in the name of the Company only when the loan was fully repaid. Thefgrctor and its frailer were duly registered in the name of Uganda Commercial Bank Ltd as UPR757 and UPR752 respectively. M/S Bamunguzanga Farm Ltd later took possession of the {ractor and appeared to have operated it for some time. 5 One of the copditions of the loan agreement trailer would fuei"t"r"ain tte nul\*. of tf l0

Subsequently, Christopher Iga, the Director of M/S Bamunguzanga Farm Ltd, bought land from one Livingstone Mukasa on or about 1110511992. He was to pay for the land by installments. He defaulted on the payments and Livingstone Mukasa sued him in High Court Civil Suit (HCCS) No 956 of 1993. Judgment was entered in favour of Livingstone Mukasa for the sum of 5 million shillings.

In pursuit ofthat decree (Exh 112), a warrant ofattachment and sale (Exh D2) was issued attaching the Tractor and its Trailer in question. At the time of the attachment, M/S Bamunguzanga Farm Ltd had not yet completed paying the loan. The warrant of attachment was addressed to Intercity Auctioneers. 20

Intercity Auctioneers seized the Tractor and its Trailer when it was in the compound of Christopher Iga on or about 1610411994 and brought it to Kampala. From Kampala, the Auctioneers sold the Tractor allegedly by public Action to Imelda Nassanga, the appellant, on or about 22'd or 23'd of May 1994.

UCB Ltd later impounded the Tractor claiming that it was still the owner since M/S Bamunguzanga Farm Ltd had not yet completed repaying the loan.

Imelda who felt that she was the purchaser at an Auction, sued UCB Ltd under HCCS No 76 of 1995 to recover the Tractor. At the time of filing her suit, the Tractor had already been registered in her name.

At the instance of UCB Ltd, a third Parfy Notice was issued upon M/S Bamunguzanga Farm Ltd.

l5 Justice Tabaro heard the suit and dismissed it with cost, hence this appeal.

There are four grounds ofappeal as follows:-

(l) The learned trial Judge erred in law and fact when he held that the sale or Auction of the Tractor and Trailer was unlawful or conducted without authority.

(2) The learned trial judge erred in law and fact when he failed to properly evaluate the evidence on record and thereby came to a wrong conclusion that the plaintiffls Attorney (Fred Mubiru) was party to the defective or dishonoured sale or ought to have established the defects in the sale arrangement since he carried out an inspection of the warrant.

- (3) The learned trial Judge erred in law and fact when he held that the plaintiffwas not a bonafide purchaser. - (4) The learned trial Judge erred in law in holding that it was within the power of Betty Rukyalekere to order the seizure of the Tractor.

Mr. Erias Lukwago, leamed counsel for the appellant, argued ground I separately, grounds 2 and 3 together and ground 4 separately. I propose to follow that pattem. t0

Ground I challenged the findings of the trial Judge that the sale or Auction was unlawful and without authority because:-

- (l) the attached property did not belong to the judgment debtor and - (2) that at the time the sale was conducted, the warrant had expired.

Mr. Lukwago submitted that the trial judge misdirected himself in law regarfing attachment of movable property. According to Mr. Lukwago, in daw, only possession and not ownership 1\$t was material in attachment of movable property.

He stated that the evidence on record shows that at the time of attachment, the property was in the possession, as of right, of the judgment debtor. That the fact of ownership was butffessed by a letter,

exh. P4, from the judgment debtor who asserted his ownership over the fru"ror. Leamed Counsel submitted that the mere fact that the f,ractor was at the time of attachment registered in the name of some other person was immaterial since registration perse was not conclusive evidence of ownership. He cited Trans Africa Assurance Co vs NSSF, CA No I of 1999 (SC) as his authority for that proposition.

Learned counsel further challenged the trial judge for determining whether or not the \$u.to, was liable to attachment when he was not dealing with an objector proceedings.

On whether the sale was done without authority, Mr. Lukwago conceded that the sale was conducted after the first warrant had expired and before the renewed warrant was issued. He however, contended that sale without a warrant was a mere irregularity which could not vitiate the sale. He relied on 019 r 7l of the Civil Procedure Rules.

Mr. Lukwago further argued that even if the sale was without authority, the I't respondent, had to institute a suit to recover the property wrongly sold. Further, that even if there was a suit by the appellant, the l't respondent did not counterclaim.

Mr Kanyemibwa, leamed counsel for the 1't respondent, stated that at the time of the attachment, the tactor was in the possession of the 2nd respondent, though the l't respondent was the Managing Director of the 2nd respondent.

Learned counsel contended on ground 1 that the sale was unlawful. The tractor and its trailer never belonged to the judgment debtor and were not

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liable to attachment under section 44 of the Civil Procedure Act (CPA). Neither the predecessor of the l't respondent, nor the l't respondent were parties to the suit. He submitted that the trial judge was therefore, right to hold that the tractor and its trailer were wrongly attached within the meaning of section 44 of the CPA.

On whether or not the sale was effected on the order of the Court, Mr. Kanyemibwa contended that there was no order of the Court in place when the sale was effected on 22"d or 23'd of May 1994. At that time, the warrant of attachment had expired on 141511994, more than a week before the purported sale. Therefore, what the Court bailiff did after the expiry of the warrant was not with the order of the Court.

As to whether, Christopher Iga, the judgment debtor, was in possession of the tractor at all material time to the attachment, Mr. Kanyemibwa contended that the letter to which Mr. Lukwago referred us at P57 was sigred by Christopher Iga as Director of the 2'd respondent. That letter put the Auctioneer on notice that the tractor belonged to the 2nd respondent. According to Mr. Kanymibwa, Trans Africa Assurance (supra) was distinguishable from the instant case on their facts. He conceded, however, that the l't respondent did not institute an objector proceedings, but contended that there was already a general notice that the warrant had already expired. Further, there was also a letter informing the Court bailiff that the property in question did not belong to the judgment debtor. l5 20 25

He rejected the argument that the frial judge had no right to open investigations on the ownership of the property when there was no objector proceedings. He submitted that the trial judge had that authority

because there was no way he could fail to investigate the liability of the property to be attached for attachment. Upon investigations, the ffial judge found firstly, that the sale had not been authorised by Court as at the time of the sale the warrant had long expired. Secondly, that the property belonged to the 1't respondent and not to thejudgment debtor.

On whether sale without authority of the Court was a mere irregularity which did not vitiate the sale, Mr. Kanyemibwa contended that, that was a fundamental question of authority. If the Court bailiff was not acting on l0 Court's order, then he was not acting as an ofhcer of the Court.

He rejected the argument that the l" respondent could not recover the fractor without instituting a suit. His reason was that there was no need for such a suit because the sale was without an order of the court. He stated that the transfer of the tractor into the appellant's name was not conclusive evidence of ownership. Under section 49 of the Traffic and Road Safety Act, such a regulation merely raises a presumption of ownership which is rebuttable. He pointed out that evidence on record shows that the sale was illegal as it was without the court's order. This rebutted the presumption of ownership. 15 20

Mr. Kamugisha-Kamugisha, leamed counsel for the 2nd respondent, invited us to agree with the trial judge that section 44 of the CPA makes a condition precedent that the property to be attached must be liable for attachment. Where a property attached is not liable for attachment, then 019 r 7l of the Civil Procedure Rules (CPR) does not come into play. Therefore, court should not sanction the attachment and sale ofproperty which does not belong to the judgment debtor, but to a third party.

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o He stated that the sale outside the time it was supposed to have been effected was a sale without authority. He cited Habre International Co Ltd vs Ebrahim Alakhia Kassam & two others, Civil Appeal No 4 of 1999, where the sale was set aside because it was effected hours after the time it was supposed to have been made.

He pointed out that the record shows that the advertisement indicated the date and time of the sale as 2210511994 at 1 0.00 am with the terms of sale to be cash on the fall of the hammer. Yet PW2, the Court bailiff, stated that by 231511994, there was no valid warrant. On 22"d May, 1994 the bailiff did not appear in his office because it was Sunday. On the 23rd May, 1994 which was a day after the date the auction should have taken place, and no public auction was held. The appellant was with the court bailiff alone.

Learned counsel submitted further that although the l't respondent did not file a suit, there was a suit filed by appellant and the other parties filed their defences and issues were framed. According to him, it did not matter who filed the suit. He prayed that the appeal be dismissed.

The trial judge's findings which formed the basis of the complaint in ground 1 are to be found on page 143 paragraph 2 to page 144 paragraph I ofthe record ofappeal. It reads thus:-

" The two witnesses gave different dates of the Auction. The warrant of attachment and sale (exhibit D2) was dated l4th April, 1994 and that is when it was handed over to the Intercity Auctioneers, the bailiffs. Since the warrant was returnable after 30 days, that is not later than l4th May 1994 , it follows as

day light follows night, that the Auction, if any, conducted on 22"d or 23'd May was held without authority since the mandate given by the Deputy Registrar of the High Court, had expired. Another warrant, exhibit P3, purports to order another Auction within 30 days running from 30th May, 1994. If (exhibit P3) does not attempt to validate the sale of 22nd or 23'd April, 1994 and I am not aware of the law or practice that can refavorate the sale reportedly conducted by Intercity Auctioneers. It is (...indent) that neither the court bailiff, nor the alleged purchaser of the Tractor complied with the law. Since Fred Mubiru claims to have viewed the Tractor and the warrant, as well as visiting the High Court Registry, he ought to have established that there was no valid warrant under which the Tractor could be sold. I am impelled to find that there was no lawful sale at which a valid title could be acquired to the Tractor. Under the circumstances, Betty Rukyalekere, the witness for the Uganda Commercial Bank Ltd, was, therefore, within her powers to order seizure of the Tractor, because it was still the property of the Uganda Commercial Bank Ltd, the defendant."

The learned counsel for the appellant criticised the trial judge for finding that the disputed properfy did not belong to the judgment debtor when the proper matter for consideration was "possession", rather than "ownership" .

In counsel's view, the evidence flf record shows that the debtor was in possession of the tractor at the time of the attachment, as owner.

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To resolve the above issue, it is necessary to note that the law which governs attachment and sale of property in execution of court decrees is to be found in section 44 of the Civil Procedure Act (Cap 71) which sets out properties which are liable to attachment and sale in execution of a decree.

Section 44 (1) as in relevant for this purpose reads:-

" The following property is liable to attachment and sale in execution of a decree, namelyl lands, houses, or other buildings, goods, money, bank notes, cheques, bill of exchange, promissory notes, government securities, bonds or other securities for money, debts, shares in a Corporation and, except as hereafter mentioned, all other saleable property, movable or immovable, belonging to the iudgment debtor, or over which or the orofits of which he or she has a disoosins t0 l5 r which he or she ma exerc\$e r his or her bene whether the DroDertv be held in the name of the iudement debtor or bv another person in ffust for him or her or on his or her 20 behalf: ...." (emphasis added).

It is clear from the above section that the property to be attached in execution of a Court decree must be those saleable property which belong to the judgment debtor or over which he or she has a disposing power for

his or her beneJit whether the property is held in his or her name or in the name of other person in trust for him or her or on his or her behalf. 25

Mr. Lukwago submitted that in law, "possession" and not "ownership" which is material in attachment and sale of property in execution of court decree. Mr. Lukwago did not cite to us the law he meant, but I think that he had in mind rule 58 of Order l9 of the Civil Procedure Rules, which reads:-

" Where the court is satisfied that the property was, at the time it was attached, in the possession of the judgment debtor, as his ll,t, e and not on account o ctfi other rson or was in the oossession of some rson in trust r him or in the occuDancv of a tenant or other person pavine rent to him, the court shall disallow the claim." (emphasis added).

There is no doubt that the provision of that rule is not in contradiction with the provision of section 44 (l) above. Both provisions emphasise ownership. It is not possession perse that matters. Possession must be as the owner.

I endorse the statement made by Odoki J, as he then was, in Labanito Okwajja vs Giripasio Okello (1985) HCB 85, which the trial judge in the instant case referred to. The statement is that:-

" It would be a bad state of the law to allow a judgment debtor to offer for attachment or a decree holder to deliberately attach and sell property which does not belong to the judgment debtor, but to a third party."

In the instant case, the trial judge found that the disputed tractor was not liable for attachment because it did not belong to the judgment debtor. I agree. Even if the judgment debtor were in possession of the tractor, he had to possess it as the owner of the tractor. This was not shown to be the case. Even the letter (Exh p4) which Mr. Lukwago relied on as evidence of ownership of Christopher Iga over the tractor, is not helpful to the appellant's case. The letter was sigred by Christopher Iga as Director of M/S Bamunguzanga Farrn Ltd, the second respondent. He was, therefore, in possession of the tractor as a Director of M/S Bamunguzanga Farm Ltd not as the judgment debtor. The ffactor was thus, in possession of M/S Bamunguzanga Farm Ltd. The tractor was given to M/S Bamunguzanga Farm Ltd as part of the loan accorded to it by Uganda Commercial Bank Ltd.. Under the loan agreement, the title to the ffactor would be transferred to M/S Bamunguzanga Farm Ltd, only upon completion of repayment ofthe loan. There was no credible evidence that Christopher Iga, the judgment debtor was in possession of the tractor as its owner.

The trial judge found also that the sale was effected without authority of the court and ,therefore, it was not lawful. He reasoned that at the time of the sale, the warrant authorising the attachment and sale of the same had expired a week earlier. Mr. Lukwago conceded this fact, but contended that, that was a mere irregularity which could not vitiate the sale. l5

With the utmost respect to the leamed counsel, I do not agree. I agree with Mr. Kanyemibwa that, that was a fundamental flaw as it related to the authority which empowered the court bailiff to attach and sell the property in execution of the court decree. Where a court bailiff acts on the authority of the court, he must act strictly within the authority. When the authority given to him expires, he ceases to have any legal authority to act under the expired warrant. That would tantamount to acting outside the authority.

![](0__page_12_Picture_0.jpeg)

In George Ongom and Anor vs Attorney General and 2 others (1979) HCB 267, the Court Broker made no attempt to isolate the property attachable pursuant to the warrant and attached a third party's property, took money which was in excess of the decretal sum, seized more property and goods, including those exempted from attachment and immovable property.

The execution by attachment was held to be improper and unlawful

Similarly, in the instant case, the sale of the tractor when the warrant authorising the sale had expired a week earlier, was clearly an act without authority. The sale was, therefore, unlawful. l0

Mr. Lukwago further complained, that since there was no objector proceedings, the trial judge had no right investigating whether or not, the tractor was liable to attachment. l5

I agree. That claim or objection against attachment in execution is provided for under 019 r 55 of the CPR. The procedure to be followed is provided for by 048 r 1 of the CPR. That is, by Notice of Motion.

However, rules of procedures are hand maids of justice. They are not intended to be obstacles in the path ofjustice.

In the instant case, a suit had been filed by the appellant and the respondents filed their defences. From the pleadings, issues were framed as follows:- 25

l3 - I Whether the tractor and trailer were lawfully attached for sale. - Whether the tractor/trailer was sold at a public auction ordered by court and 2

# Whether the title in the tractor/trailer vests in the plaintiffor the first defendant. 3

From the above issues, the trial judge was justified to investigate the issue, whether or not the tractor/trailer were liable to attachment. This was contained in issue No 1 before him. 10

In the circumstances, I find no merit in this argument. In the result, I would dismiss ground 1. l5

I now turn to ground 2 which complained that the trial judge failed to properly evaluate the evidence on record and thereby wrongly concluded that the plaintifls Attomey (Fred Mubiru) was party to the defective or dishonoured sale as he ought to have established the defects in the sale arrangement having inspected the warrant.

Mr. Lukwago submitted that the evidence on record shows that Mr. Fred Mubiru viewed the tractor and read the warrant of attachment on 81511994. At that time, the warrant had not yet expired. Mr. Mubiru's inspection revealed that the attachment was prudent. There was no evidence that he re-inspected the High Court Registry when the warrant had expired. In counsel's view, the appellant was prudent enough as she did what was expected ofher and was, therefore, a bona fide purchaser.

Mr. Kanyemibwa did not agree. He submitted that the evidence on record is overwhelming and supports the findings of the trial judge. PWI testified that he inquired as to the basis ofthe sale ofthe tractor and read the warrant of attachment. Leamed counsel argued that if the appellant read the warrant and went to the High Court Registry on 8/05/1994, he should have found that the warrant was due to expire on 1410511994. He stated that the judge was justified to find that the appellant ought to have known that the sale was not supported by the court warrant which he read.

As a first appellate, this court is duty bound to re-appraise the evidence on record to determine whether or not the hial judge had properly evaluated the evidence before him. The evidence of Fred Mubiru PWI complained about, as is relevant to this point, reads as follows:-

" I inquired to establish whether the sale was ordered by High Court. The Auctioneers showed me the warrant of attachment. I read the warrant and when I saw the High Court seal, I became satisfied that it was ordered by court. I did visit the High Court Registry itself."

The above piece of evidence is clear. In it, Mr. Fred Mubiru (PWl) admitted to have read the warrant of attachment and sale under which the tractor in question was purportedly sold to him. He also admitted to have visited the High Court Registry, though he did not say what he did there. If he read the warrant on 810511994, then he ought to have noticed that it was due to expire on 14/0511994. Therefore, when he purchased the tractor on 25/0511994, purportedly sold under the authority of that

warrant, he ought to have known that the warrant should have expired on 1410511994. A prudent buyer with the information which Fred Mubiru ought to have had, would have asked if the warrant had been extended. He did not.

In the circumstances, I can not fault the trial judge's evaluation of the evidence before him, nor can I fault his findings. Fred Mubiru who had read the warrant ought to have detected that at the time ofthe sale, there was no valid warrant. Therefore, there was no lawful sale at which a valid title to the tractor could pass to the purchaser. Betty Rukyalekere, therefore, on behalf of UCB Ltd, was within her powers to order seizure of the tractor since title to it was still with UCB Ltd.

Finally, Fred Mubiru, having read the warrant, ought to have detected the defective sale. He, therefore, was not a bona fide purchaser.

This disposes ofissues No 3 and 4.

In the result, I would dismiss the appeal with costs to the respondents.

rfi Dated at Kampala this JI r-l oay or...-J.\*.k\..... 2005.

&/\*r. GM. OKELLO . IT]STICE OF APPEAI-

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA **AT KAMPALA**

$\mathsf{S}$ CORAM: HON. MR JUSTICE G. M. OKELLO,JA HON. LADY JUSTICE A. E. N. MPAGI-BAHIGEINE. JA. HON. LADY JUSTICE C. K. BYAMUGISHA, JA

# CIVIL APPEAL NO 119/03

$10$

$15$

$\overline{a}$

### **BETWEEN**

# IMELDA NASSANGA::::::::::::::::::::::::::::::::

#### AND

- 1. STANBIC BANK(U) LTD - 2. BAMUNGUZANGA FARM LTD:::::::::::::::::::::::RESPONDENTS - 20 Appeal from the decision and orders of the High Court of Uganda at Kampala (Tabaro J) dated $6th$ August, 2002 in Civil Suit No. 76/95

# JUDGEMENT OF BYAMUGISHA,JA

I had the benefit of reading in draft form the judgement of Okello, JA. I 25 agree with him that the appeal lacks merit and ought to fail.

The facts leading to the institution of the claim in the court below are set out with sufficient particularity and I need not repeat them here.

However, I have a few remarks to make on the claim by the appellant that 30 she purchased the tractor and trailer at a public auction and therefore she is a bona fide purchaser. The warrant of attachment issued by the Deputy Registrar, High Court, was dated 14/04/94 and the sale took place on or about the $23/05/94$ . The authority given to the auctioneer by the Registrar

was to sell the attached property and return the warrant on or before the 14th May 1994. The auctioneer advertised the sale of the property in the New Vision newspaper dated 8th May 1994. The advertisement stated *inter lia* that the sale was to be by public auction and that it would take

place on $22/05/94$ at 10.00 a.m. The testimony given at the trial by Mr $\mathsf{S}$ Mubiru (P. W.1) was to the effect that the sale took place at 10.00 a.m and he was the only buyer. He was non-committal about the date of the auction. In cross-examination he stated as follows:

"After 10.00 a.m I was the only person in the auctioneer's office. It was a working day. Cannot tell the day of the week, but it was a working $10$ day. It was a Sunday. The auction was there"

Mr Kasirye (P. W.2), the Auctioneer, testified that $22^{nd}$ May 1994 was a Sunday and no sale took place. At page 36 of the record he said:

"The auction took place on 23/5/94, on a Monday. So Sunday was 15 22/5/1994. On that day, 23/5/1994, Nasanga and Mubiru turned up. Others did not turn up. The offer from Nasanga was 8,000,000/ $=$ . There was no other buyer and so Ms Nasanga took it at the offered price. If we get only one person coming to bid we go on with the sale. There was no fall of the hammer." 20

It is clear from the captioned piece of evidence that the sale of the tractor and trailer did not take place on the 22/5/94 at 10.00 a.m in accordance with the advertisement. The issue is whether this was an irregularity that

goes to the root of the sale or it could be waived as Mr Lukwago 25 submitted? The alleged sale of the property took place not only contrary to the terms and instructions given by the Deputy Registrar in the warrant that he issued to the Auctioneer but also the warrant had long expired. These were not mere irregularities. They went to the root of the sale. Even if the property had been liable to attachment (which it was not), it

$\mathsf{S}$ would have been necessary to obtain a fresh warrant and to re-advertise the property in order to make the appellant a bona fide purchaser without notice.

In the result, I would allow the appeal in the terms proposed in the lead judgement.

$10$

Dated at Kampala this. D. May of ... J. V. 2005.

C. K. Byamugisha **Justice of Appeal**

# THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA, AT KAMPALA

# CIVIL APPEAL NO.119/2003

#### IMELDA NASSANGA::::::::::::: **::::::::APPELLANT.**

### VERSUS

1. UGANDA COMMERCIAL BANK LTD

BAMUNGUZANGA FARM LTD::::::::::::::::::::::::::::::::::::

CORAM:

HON. JUSTICE G. M. OKELLO, JA. HON. JUSTICE A. E. N. MPAGI-BAHIGEINE, JA HON. JUSTICE C. K. BYAMUGISHA. JA

# JUDGMENT OF A. E. N. MPAGI-BAHIGEINE, JA.

$25$

I have read in draft the judgement of Okello JA. I entirely agree that the purported sale of the tractor to the appellant was clearly null and void for reasons indicated in his judgement. I have nothing useful to add.

20 Dated this....... $\mathcal{L}$ $\mathcal{L}$ $\mathcal{L}$ Dated this.................................... July $....2005.$ A. E. N. MPAGI BAHIGEINÉ JUSTICE OF APPEAL.

$10$

$\mathsf{S}$