Pentecostal Assemblies of God Ltd v TransSahara International (U) Ltd and Another (CIVIL APPEAL NO.23 OF 2006) [2006] UGCA 61 (13 January 2006)

Full Case Text

## THE REPUBLIC OF UGANDA

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

#### CIVIL APPEAL NO.23 OF 2006

#### CORAM:

# HON. LADY JUSTICE A. E. N. MPAGI-BAHIGEINE, JA HON. MR. JUSTICE S. G. ENGWAU,JA HON. LADY JUSTICE C. N. B. KITUMBA, JA

# PENTECOSTAL ASSEMBLIES OF GOD LTD :::::::::::::::: APPELLANT VERSUS

#### l5 I. TRANSSAHARA INTERNATIONAL (U) LTD

# 2, THE UNITED NATIONS AFRICAN INSTITUTE :: RESPONDENTS (Arising out of High Court Civil Suit No. 711 of 2003 before Hon. Mukasa l.)

# JUDGEMENT O|.tI IION. A. E. N. MPAGI. BAHIGEINE. JA

This appeal arises from the ruling and orders of the High Court, dated 13-01-06, in Miscellaneous Application No. 1O of 2OO5 (arising from HCCS No.711 25 of 2005).

o The appellant, Pentecostal Assemblies of God Ltd, is a company limited by guarantee while the defendant, TransSahara International (U) Ltd. is a private limited company, engaged in selling motor vehicles.

On 13th January 2006, the learned judge allowed the application, by way of objector proceedings, to release from attachment the parking yard leased out to Trans Sahara International (U) Ltd. He also granted costs of the application.

The facts leading to this appeal arose out of a failed business transaction between Pentecostal Assemblies and TransSahara International (U) Ltd.

On 22"d June 2004 TransSahara International offered to sell a oTogota Hllux', double Cabin pick-up truck, to Pentecostal. Pentecostal agreed to purchase the truck for a sum of Ug Shs. 40,000,000 (Uganda Shillings Porty Million). TransSahara never delivered the truck to Pentecostal as agreed. On 10th August TansSahara agreed to transfer two other vehicles to Pentecostal as security for the performance of the original contract. l5 20

TransSahara International did not complete this agreement either, and on 10th September, 2OO4 Trans Sahara issued a cheque to Pentecostal in the amount of Ug. Shs. 40,000,000 as a refund. The cheque was returned unpaid.

t0 Subsequent to such dismal failure of the contract, Pentecostal initiated High Court Civil Suit NO 717 of 2OO4. The parties then agreed to a consent judgement in which TransSahara was to pay Pentecosta-l a total of Ug. Shs. 44,000,000. (Uganda Shillings Forty-Four Million.) which was the subject matter of the suit plus costs of HCCS. NO 711 of 2006. TransSahara was to pay the monies in three installments, the first of which was due on 26th November, 2OO4. The defendant Trans Sahara defaulted on the payments and the judgement creditor Pentecostal sought to execute the decree by an execution order and a warrant of attachment.

20 On 7rh December, 2OO4, the judgement creditor Pentecostal was granted a warrant of attachment in execution. The warrant was "Bg utag of attachment and sale of judgement debtors' ttn registered lease

o interest in immoaable propertg to utit - in Land Car Depot (IC. D) called Tro,nsSahara International (U) Ltd on Plot 7 Nagunt Road near Unafri plus demurrage, storage and all fees due to Trans Sahara International (U) Ltd exclusiae of Goaernment taxes to recoaer Ug. Shs 4S. OOO. OOO. PIus costs of execution. Estimated aalue of Ug. Shs SO,OOO,OOO/=.n

The judgement creditor Pentecostal attempted to attach the parking yard located at Naguru which the judgement debtor TransSahara had leased from the United Nations African Institute for the Prevention of Crime and Treatment of Offenders (UNAFRI). l0

UNAFRI was created in 1988, by the member states of the United Nations Economic Commission for Africa, with the purpose of creating policies to prevent crime, promoting cooperation among member states, and reforming the criminal justice system. The headquarters of UNAFRI is located in Kampala Uganda. l5 20

o That being the situation, UNAFRI contended that the land which TransSahara had leased was no longer owned by them (Judgement debtors) because they had defaulted on the rent payment and as a result UNAFRI had cancelled the lease agreement. In response to the attempt to attach the parking lot, UNAFRI filed Miscellaneous Application No. 11 of 2005. UNAFRI sought an interim order for stay of execution of the judgement pending linal resolution of Miscellaneous Application No 10 of 2005. This interim order for stay of execution was granted on the 10th of January, 2005.

The Judgement Creditor, Pentecostal, then filed Miscellaneous Application No. 88 of 2005, seeking an interim order to restrain the respondent UNAFRI from leasing out the land which was subject to attachment, pending the resolution of Miscellaneous Application NO 10 of2O05. l5

On 22"d Februar5r, 2OO5, an interim order restraining the respondent UNAFRI from leasing out the land subject to attachment was granted. 20

Miscellaneous Application No. 10 of 2005 came before the Commercial Division of the High Court of Kampala which court (Mukasa J.) ruled that the parking vard was released from any possible attachment by the judgement creditor. Hence this appeal, No. 23 of 2006:

Richard Omongole appeared for Pentecostal Mr. appellant, while Mr. Munanura Andrew represented the two respondents, Trans Sahara and UNAFRI.

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Five issues were agreed upon by the parties, namely that:

- 1. Whether the learned trial judge erred in law and fact when he held that UNAFRI had legal capacity to sue and be sued. - $2.$ Whether the trial judge erred in law and fact when he held that at the time of the Objector proceedings the warrant of received therebu attachment was not concludina that the suit wrongly property was not in possession of the judgement debtor and would not be liable to attachment.

Whether the learned trial judge erred 3. both in law and fact when he held that

by the date the warrant was issued there was no tenancy to attach.

4. Whether the learned trial judge erred in law and fact when he failed to properly evaluate the evidence on record.

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#### Whether the learned judge erred in law 5. and fact when he awarded costs to the objector.

The (Pentecostal) judgement creditor seeks to overturn the entire ruling of the High Court releasing the parking yard from attachment. Specifically, Mr. Omongole submitted that UNAFRI did not have the 15 legal capacity to sue or be sued, and that therefore the attachment on 7th December, 2004 was valid. The 1967 Constitution at the time made it a requirement that Treaties be ratified by cabinet, which had not been done then. $20$

Learned counsel argued that in that respect the UNAFRI statute was never ratified by Parliament, and thus did not have the effect of law. Drawing the court's attention to the 1987 Cabinet minutes when UNAFRI was created, he stated that there was no mention of

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o the cabinet ever ratifying the Statute establishing UNAFRI, so as to make it to the laws of Uganda. Although the Statute was signed in 1988, Mr. Omongole submitted that signing the Act and ratifying the same are separate and distinct events.

In response, Mr. Munanura learned counsel for the objector UNAFRI stated that the statute establishing UNAFRI was ratified on 23.d May 1988 when the Minister of Foreign Affairs, Dr Kawanga Semwogerere as 2'd Prime Minister and Minister of Foreign Affairs signed the statute. Under this statute UNAFRI has the capacity to sue or be sued. Article VIII of the statute states tlrat "the instif;.fie shall haae the capacitg to sue .. and be slted." Further, he stated, that there was no legal requirement that Parliament must act in order to make the statute operational in Uganda. t0

In order to prove that UNAFRI did not have the capacity to sue or be sued, the judgement creditor relied on A. M Okwonga a Aueda & Anor (1984) HCB 45. In that case the learned judge, Opu (RIP) held that the Church of Uganda is not a corporate body per se, 20

o and therefore cannot sue or be sued. Instead it was the Board of trustees which had been created under S. 2(7) and (2) of Tntstees Incorporation Act (Cap U) which had the capacity to sue or be sued.

> This case, with respect, has little relevance to the instant facts in issue. It is uncontested that on 23.d May, 1988, Uganda signed the Statute for the African Institute for the Prevention of Crime and the Treatment of Offenders. As stated therein:

- aa The Institute shall have the capacity to. - a) Enter into contract; - l5

- bl Acquire and dispose of immovable and movable property; and - c) Sue and be sued.

Following that statute, the Republic of Uganda entered into an agreement with UNAFRI for the hosting of the Secretariat Headquarters of UNAFRI in Kampala, Uganda. This agreement was signed on 15th June, 1989 by the Minister for Internal Affairs on behalf of the government of Uganda. Under **Article IV**, **Section** $\mathbf{1}$ of the said agreement (page 48 record):

" $1.(a)$ The Institute as an Intergovernmental body operated under the aegis of the $\mathsf{S}$ ECA, shall have in Uganda, the status of a body corporate with the capacity to contract, to acquire and dispose of immovable or movable $or$ movable property. And to institute legal proceedings."

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It defies logic to suggest that the agreement between $15$ the Republic of Uganda and UNAFRI that has been in place for nearly twenty years is not effective as to the provision which creates in UNAFRI the ability to sue or be sued. If Article IV, Section 1 is ineffective, then the entire agreement is null and void and UNAFRI has 20 absolutely zero protection at its headquarters in Kampala.

The statute was signed on $23rd$ May, 1988 by the Prime Minister. The agreement to host UNAFRI $25$ headquarters was signed on 15th June, 1989 by the

o Minister for Internal Afiairs. Uganda is a member of the United Nations, and both the Statute and the Agreement were signed by the appropriate personnel under the provisions of the Constitution as it existed in 19BB and 1989. Since the Statute and the agreement are effective under Uganda law, the provisions therein must also be effective. As such,

- UNAFRI has the capacity to sue and be sued within the Republic of Uganda. - Regarding issue No. 1, I would not fault the learned judge. t0

Irrespective of whether or not UNAFRI has the legal capacity to sue or be sued in Uganda, the judgement creditor next argued that the attachment of the parking yard was effective on 7th December, 2OO4. Mr Omongole argued that the judgement debtor was still in possession of the parking yard because its lease with UNAFRI did not end until 30th September, 2OO8. l5

According to Mr. Omongole, the lease did not provide a provision whereby the agreement could be terminated for failure of the lessee to pay rent. 20

o Further, Mr. Omongole argued that even if UNAFRI did attempt to terminate the lease agreement, it did so improperly and did not follow the formal procedure as required by law. He stated that the letters to the judgement debtor were merely cautions warning that the lessee should make immediate rent payments. Mr. Omongole relies on the affidavit of Pauline Okello, which states that the attachment of the lease interest was properly completed on 8th December,2OO4.

The judgement creditor Pentecostal further argued that the interest attached was the property of the judgement debtor (TransSahara), and not that of the Objector, UNAFRI.

Mr. Omongole argued, however, that in order for there to be a proper re-entry of the lease, UNAFRI had to actually take back possession of the propert5r, which it never did. Finally Mr. Omongole also noted that the current possession of the property by YUASA is illegal. On 22"d Februar5l, 2OO5, in Miscellaneous Application No. 88 of 2005, Judgement Creditor, Pentecostal, applied for and obtained an order stopping UNAFRI from leasing out the property subject to attachment to t5 20

o anyone else. Mr Omongole argued that the fact that UNAFRI released the propert5r contrar5r to the Court's order is evidence that UNAFRI is attempting to seek justice in bad faith.

In response, Mr Munanura for UNAFRI objector argued that Clause 7.9 of the lease agreement between the judgement debtor and UNAFRI provided that the judgement debtor would only retain possession so long as it continued to perform the covenant of rent payment. He stated that the lease agreement was cancelled on 30th November, 2OO4. Therefore, the warrant of attachment which was issued on 7th December, 2OO4 could never have been properly attached because the judgement debtor was no longer the legal lessee of the property in question. t0 l5

Further, Mr. Munanura stated that for the attachment to be properly completed, it had to be returned to the Registrar with evidence that the warrant had been properly satisfied. He argued that there was no evidence that this had been done and therefore the warrant was never properly executed.

The lease agreement between the judgement debtor and UNAFRI was signed on 1st October, 2003; It provided that the lessee pay Ug. Shs. 5,000,000. (Uganda Shillings Five Million) per month for the five $\mathsf{S}$ year period of the lease agreement. The agreement provided that the lease would terminate on 30th September, 2008. The relevant provision of the lease agreement is 1.9 which states:

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- $1.9$ As long as the Lessee pays rent herein reserved and performs and observes all conditions and stipulations herein contained, the Lessee shall enjoy the leased premises during the tenancy without any interruption by the Lessor or any persons claiming to represent the aforesaid." - According to the affidavit of Mr Sembuya John Ssali, 20 UNAFRI Secretariat, the judgement debtor made payments of Ug. 8,000,000 (Uganda Shillings eight million) between May and October 2004. On 17th November 2004, Mr Sembuya avers that a letter was sent to the judgement debtor threatening termination 25

the lease if the judgement debtor did not pay the capital deficit by the 30th of November, 2004.

Subsequently, on the 8th of December, 2004, John Kisembo, Deputy Director of UNAFRI, instructed $\mathsf{S}$ UNAFRI's attorneys to proceed with "the necessary formalities and terminate the Lease Agreement." On the 9th of December, legal counsel for UNAFRI notified the judgement debtor by letter that the lease agreement was being terminated due to failure to pay $10$ rent.

warrant of Attachment was issued to The the judgement creditor on $7th$ December, 2004. The warrant stated that the amount owed to the judgement 15 creditor would be recovered "By way of attachment and sale of judgement debtor's unregistered lease interest in immovable property to wit - In land Car Depot (ICD) called Trans Sahara International (U) **UNAFRI."** Ltd on Plot 1 Naguru Road near $20$ According to the affidavit of Pauline Akello, the warrant of attachment "was effected while Trans Sahara International was in occupation and

conducting its lawful business" on 7th December. 2004.

Although UNAFRI argued that the lease was already terminated by the time the judgement creditor $\mathsf{S}$ attempted to attach, it is irrelevant what was contained in the written letters. The law in Uganda was restated in Joseph Mulenga v Fiba (U), Misc. Application No. 308/96 (1996) 11 KALR:

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" It is indeed trite law that an objector application brought under Order 19 R. 55 the investigation the court is required to carry out is restricted to the issue of who was in possession on the date of attachment. The question to answer is 'was the Judgement Debtor in possession?' If the objector was in possession or some other person was $\boldsymbol{in}$ possession on account of the objector, then the property attached will be released from attachment in accordance with Rule 57 of Order 19 of the Civil Procedure Rules. On the other hand, if the judgement debtor was in possession or some other person was in possession on behalf of the judgement debtor, the attached property will be sold."

Order 19 Rule 55 of the Civil Procedure Rules states that:

"(1) Where any claim is referred to, or any objection is made to the attachment of any property attached in execution of a decree on the ground such property is not liable to such attachment, the Court shall proceed to investigate the claim or objection with the like power as regards the examination of the claimant or objector, and in all other respects, as if he was a party to the suit."

*Rule* **57** goes on to state that:

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66 When upon the said investigation the court is $15$ satisfied that for the reason stated in the claim or objection such property was not, when attached in the possession of the judgement debtor or of some person in trust for him or in the occupancy of a tenant or $20$ other person paying rent to him or that being in possession of the judgement debtor at such time, it was so in his possession not on his own account or as his own property, but on account for or in trust for some other person, 25 the court shall make an order releasing the property, wholly or to such extent as it thinks fit, from attachment."

Finally, *Rule* **58** states: 30

66 Where the court is satisfied that the property was at the time it was attached in the possession of the Judgement Debtor as his own property and not on account of any other person or was in possession of some other person in trust for him or in the occupancy of a tenant or other person paying rent to him, the Court shall disallow the claim."

The law is thus abundantly clear. Possession of the $10$ property in question is all that matters when determining whether or not an attachment is possible. The fact that UNAFRI sent letters to the Judgement Debtors matters not. As stated in **Charles Kassaija v**

Registrar of Titles (1992) IV KALR (HCMA NO. $15$ $51/93$ ):

66 Where the term in the lease is that the landlord may re-enter upon breach of a covenant he must actually re enter upon breach of a covenant or he must do that which in law is equivalent to re entry $a$ viz commence an action for the purpose of obtaining possession."

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Also see Moore v VII Coates Mining Co. Ltd. (1908) **Ch. D. 575** cited in **Charles Kassaija.** 5 Here, it is unchallenged that the judgement debtor was in possession on 7th December,2OO4. In fact, the letter requesting that the judgement debtor vacate the premises was not even received until Bth December, 2OO4. Yusuf Manafa, Managing Director of the judgement debtor, company stated in his affidavit that on 11th December, 2OO4, the Uganda Revenue Authority commenced removal of the motor vehicles which were located on the judgement debtor's lot. This is clear evidence that the judgement debtor was still in physical possession of the property as of 7th December 2OO4. As such, it is clear that the property was subject to attachment by the Judgement Creditor at the time when the warrant of attachment was originally issued. This would cover Issue No. 2. l0 t5

However, while the property was subject to attachment starting on 7th December, 2OO4, that does not mean that it was successfully attached. In order to prove attachment, Pauline Akello stated in her affidavit that (the warrant of attachment utas issued on the Vn December 2OO4 and wo,s effected while Trans

Sahara International was in occupation and **conducting its lawful business."** There is further evidence from the Uganda Revenue Authority (URA) in the form of a letter dated 15th December, 2004 in which the URA provided a list of all of the motor vehicles in connection with the attachment warrant. The URA actually began removal of the said vehicles on $11th$ December 2004.

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However, in his affidavit, Yusuf Manafa, Managing $10$ Director of the Judgement Debtor, stated that:

66 The Judgement Debtor entered into negotiations with the Judgement Creditor to settle the Judgement debt thereby releasing the parking yard from attachment."

Further, the warrant of Attachment ordered that the sale ordered would not take place until 14 days after $20$ the publication of notice of sale, which was to confirm the time, place, and conditions of the sale. The notification was to be by:

*Posting onto the Property to be sold.* $a)$ 25

- b) Posting on the notice Board of this Court - c) Any other suitable mode of aduertisement"

There is no evidence whatsoever that such notice was ever made by the Judgement Creditor at any time or by anybody on its behalf. Without doing so, the sale could not take place and the attachment could not be completed. Furthermore, the Judgement Creditor was also ordered to return the warrant by 7tn JanuarSr, 2005and to certiff "the manner ln uthich it ha,s been executed or recr,sons whg it has not been executed." There is also no evidence that this was ever done by the Judgement Creditor. While the Judgement Creditor clearly had the opportunity to attach the property from the period of 7th December to 7th Januar5z, there is insuflicient evidence on record to show that the attachment was ever effected. The life or validity of the Warrant of Attachment ended on 7th January, 2005. It was never properly executed nor was there any attempt to have it renewed. IO l5 20

This would dispose of Issues No. 3 & 4.

Regarding Issue No. 5, the objector would be entitled to the costs since it succeeded. This appeal would therefore, fail.

Since my Lords S. G. Engwau and C. N. B. Kitumba JJ. A both agree, the application by UNAFRI - objector granted by the High Court is upheld.

Dated at Kampala this # day of br lI- C- 2008.

HON. A. . N. M NE JUSTICE OF APPEAL

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t. ' . .

# THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

# CORAM: HON. LADY JUSTICE A. E. N. MPAGI-BAHIGEINE, JA. HON. MR. JUSTICE S. G. ENGWAU, JA. HON. LADY JUSTICE C. N. B. KITUMBA, JA.

## CIVIL APPEAL No.23 OF 2006

## PENTECOSTAL ASSEMBLIES OF GOD LTD ............ APPELLANT

#### **VERSUS**

1. TRANSSAHARA INTERNATIONAL (U) LTD.] ...................................... 2. THE UNITED NATIONS AFRICAN INSTITUTE]

(Arising out of High Court Civil Suit No.711 of 2003 before Hon. Mukasa, J)

# JUDGEMENT OF KITUMBA, JA

I have read in draft the judgement of Mpagi-Bahigeine, JA. I concur.

Dated at Kampala this...... $H$ day of....................................

Cres. Filemas C. N. B. Kitumba JUSTICE COURT OF APPEAL

# THE REPUBL]C OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

# CORAM: HON. JUSTICE A. E. N. MPAGI-BAHIGEINE JA

# HON. JUSTICE S. G. ENGWAU, JA

## HON. JUSTIGE C. N. B. KITUMBA, JA

#### CIVIL APPEAL NO.23 OF 2006

#### BETWEEN

# PENTECOSTAL ASSEMBLIES OF GOD LTD ::::: APPELLANT

#### AND

1 TRANSSAHARA TNTERNATTONAL (U) LTD RESPONDENTS

)

#### 2 THE UNITED NATIONS AFRICAN INSTITUTE

(Appeal from the ruling and orders of the High Court - Commercial Division at Kampala Mukasa,J) dated 13th January, 2006 in Misc Application No.10 of 2005 arising out of H. C. C. S No.711 of 2009.

## JUDGMENT OF ENGWAU, JA:

I have had the benefit of reading the judgment prepared by my learned sister, Mpagi-Bahigeine, JA and I agree with her that this appeal should fail. I concurwith the orders she has proposed.

Dated at Kampala this $\frac{1}{\sqrt{2}}$ day of $\frac{1}{\sqrt{2}}$ $\ldots 2008.$

S. G. Engwau JUSTICE OF APPEAL