Siraba v Development Finance Co. of Uganda (Civil Appeal No. 18 of 2000) [2001] UGCA 58 (24 July 2001)

Full Case Text

## TIII] REPUBLIC OF UGANDA

#### IN THE COURT' OI.'APPEAL OF UGANDA AT KAMPALA

#### CORAM: HON. JT]S-I'ICE G. M OKELLO, JA HON. JT]S'I'ICE A. E MPAGI. BHIGEINE,. IA. HON. JT]S'I'IC]E A. TWINOMUJUNI, JA.

# CI\ II, APPEAL NO. I8 OF 2OOO

## ALHAJI YAHYA ZIIiABA APPELLANT

# VERSUS

#### DEVELOPMENT FIN,\NCE CO. OF UGANDA RESPONDENT

(,\ppcal from Judgment/Decree of the Higlr ('ourt of Uganda (Okumu-Wengi, J) dated I .lrr' October 1999 in HCCS No.99/1998)

## JUDGMENT OF T\\ I\()}IUJTINI JA

)D b

This is an appeal against the decision of the High Court of Uganda whereby the appellant's suit was dismissed with costs. The undisputed facts of the case are as follows:

(

The appellant is the registered owner of the suit property situated at plot No.17, Aki-Bua Road (lbrrnerly known as Stanley Roadand comprised in Leasehold Register Volume 102, folio 6. In 1982 he gave his Certificate of Title to the property to his brother HAJI TEZIKUBA who lived in the house on the suit property until 1998 when the respondent took possession of it claiming to be a registercd rnortgagee.

In 1995 a company kno\*'n as Affasat lntemational Ltd in which Haji Tezikuba and his wife n,ere the major shareholders and Directors, pledged the Certificate of Title to the respondent for a loan under a mortgage which was registered on24't'May 1995. The Title was pledged by virtue of a Power of Attomey allegedly donated to Affasat International Ltd in 1994 by the appellant. The mortgagor defaulted on payment of the loan and in l99g the property was adverlisecl in the newspapers for sale. The Auctioneers, on the instructions of the resltondent, evicted Haji Tezikuba and his family from the property and put it on the market for sale. The appellant filed a suit in the High court against the respondent for wrongful detention of his title deeds and trespass to his land and sought the following remedies: -

- (a)A declaration that he never signed a Power of Attomey dated2}/ll/94 and registered on 09103195 with the Registrar of Documents authorising the suit property to be rnortgaged to the respondent. - (b)An order directing the respondent to deliver up to the appellant the aforesaid Certificate of Title free from encumbrances. - (c) General damages for rrespass and or detention. - (d)Costs of the suit.

At the trial the following issues were agreed: -

- (1)Whether the Power of Auomey dated 20ll l/94 (Exhibit p2) was signed by the plaintiff. - (2)If (l ) is not true, whether it was a forgery. - (3)Whether the defendant is entitled to realise the suit property as security consequent upon the detault of the debtor, Affasat Intemational Ltd.

- (4)Altematively, whether the defendant is a trespasser upon the suit property and or is in wrongfirl detention of the Certificate of Title. - (5)Remedies.

After a full hearing the learrred trial judge determined that: -

"This case rests cntirely on the question if a brother entrusted with a title deed owns a company and the company pledges the title deed the mortgagee in such a transaction has not got a legal mortgage and may not enforce the securit'r'. Put in another way if the power of Attorney is provctl to be false would this render the transaction voitl?"

In a judgment dated l4'r'October 1999, the learned trial judge answered the above issue in the negative and dismissed the suit with costs to the respondent, hence this appeal.

The appellant filed a Menrorandum of Appeal with the following grounds of appeal: -

- 1. The Ag. trial learnedjudge erred in law and in fact when he failed to evaluate the evidence as a whole thereby making erroneous findings. - 2. The Ag. trial leamed judge erred in law and in fact when he based his decisions on matters \*,hich were not pleaded and facts which were not proved before court.

3. The learned Ag. trial judge erred in law and in fact when he found that there were no particulars of fraud in the pleadings.

- 4. The learned Ag. trial judge erred in law in failing to give judgment to the appellant on the ground ofnon-joinder. - 5. The leamed Ag. trial judge erred in law and in fact when he based his decision on speculations assumptions and fanciful theories. - 6. The learned Ag. trial judge erred in law and in fact when he failed to find that the Powers of Attorney were a forgery. - 7. The leamed Ag. trial judge misdirected himself on the principle of "exturpi causa non oritur action".

counsel for both parties submitted written submissions in accordance with Rule 97 of the rules of this court. In his written submissions, leamed counsel for the appellanr noted, correctly in my view, that the leamed trial judge had reduced the llve issues agreed at the beginning ofthe trial to one single issue. He did not seek to challenge the decision of the judge in that regard. However, he seents to have misunderstood the single issue which was framed. According to him, the issue which was framed and considered by the trial judge was: -

"Whether the Powcr of Attorney was forged and or not authorised by the plaintiff and as such the mortgage was invalidated."

In my view, the above is completely different from the real issue which the trial judge framed which was: -

# "If the Power of Attorney proved to be false would this render the transaction void."

Order 13 rule 5 of the Civil Procedure Rutes (CpR) gives a trial judge unfettered discretion to arnend issues framed by parties and/or to frame additional issues. It n,as held in the case of Joval n Barngaire vs. Attornev General S.( . C..'\ No.28 of 1993 ( u nreportetl) that: -

"It is clear fronr the above provisions that the issues are to be framed bv the court after consultations with the parties or their advocates at the beginning of the trial. The trial Judge is not bound by those issues. On the contrary the Judge may amend the issues, strike out some of them or even ntltl new ones anytime before passing the decree."

There is therefore, no doLrbt that the leamed trial judge was within his rights when he reduced the llvc-framed issues to one single issue. That issue however, has been understood by learned counsel for the appellant. As a result he meandered into rnany matters that were really not necessary or relevant to the determination of the framed issue. I shall not in this judgment consider those matters that are not relevant to the determination of the issue which in my view was correctly framed. Given the matters which were agreed upon before the trial, the only real issue remaining was whether, even if the Power of Atto.,ey was forged, it invalidated the mortgage in the circumstances of this clsc.

I have carefully studied the pleadings, the evidence, all the relevanr documentary exhibits and the written submissions made both in the High court and in this court. I am mindful of this court's powers under Rule 29(l)(a) of the rules of this court to re-appraise the evidence and draw inferences of fact. I will rrow keep these factors in mind and consider the unchallenged one issue that the leamed trial judge considered.

I think there is no disfutc. and it was so agreed before the trial that ,,the defendant has in his possession the original of exhibit pl (the Land Title) having received it from AFFASAT INTERNATIONAL (U) LTD as security for a loan pursuant to the powers of Attorney dated 20/tt/1994."

I think there is equalll'no clispute that the resulting mofigage was registered on 24'h May 1995 at rhe l.ands office as required by the Registration of Tittles Act (RTA). It fbllorvs therefore, that the respondent is a proprietor of the suit property as dellned in section 2 of the Registration of Titles Act (Cap.205).

Section 184 of the Registration of Titles Act provides: -

"No action of rc.jectment or other action for recovery of any land shall lie or be sustained against the person registered as proDrietor under the provisions of that Act, except in any of the following cases: -

(a)the case of a nrortgagee as against the mortgagor in default;

- (b)............. - (c)the case ofa person deprived of any land by fraud as against the person registered as proprietor of such Iand through frirud or as against a person deriving otherwise th:r n as a transferee bone fide for value from or through a person so registered through fraud; - (d) (e)

and in any case other than the foresaid the production of the registered Ccrtificate of Title or lease shall be held in every court to be ln absolute bar and estoppel to any such action against thc person named in such a document as the guarantee, o\l,ner, proprietor or lessee of the land therein dcscribetl. anv rule of law or equity to the contrary notwithsta nding." IEmphasis minel

It is now well established that section 184 Registration of Titles Act protects a mortgagee as well as the registered proprietor - Gibbs vs. Messer Mclatvres vs. Cresswcll ( r 99r ) A. C 248.

In the case of Olinde dc Souza 119621E. A.7s6 it was held that once a mortgage has been registered it could not in the absence of fraud be impeached. Numerous cases decided by the highest Court of Uganda in cases such as Grindlavs (U) Ltd vs. Uganda Bottlers Ltd Civil Appeal No.29i95 S. C. (unreportctl), David Seiiaaka vs. Rebe cca Musoke Civil

fraud. The same rule rvas stated clearlv in the case of Waimiba Saw Milline Co. ltd. Vs. \\'rriobc Timber & Co. Ltd I r996t A. C l0l at Daee 106 that: - Appeal No. l2 of 1982 (unreported) and Kampala Bottlers vs. Daminiko (U) Ltd Civil Appeal No.22l92 (unreported) have all affirmed the principle that a registe'c'd proprietors title cannot be impeached except for

'(The Cardinal principle of the Statute (RTA) is that the Register is evervthing, and that except in case of actual fraud on the partl' dealing with the registered proprietor such a person has an indefeasible title against the whote world."

In the case of Kamrrala Bottlers Ltd vs. Daminico Ltd (surrra) three principle were clearly propounded namely that: -

- (a) where fraud is relied upon to impeach the title of a proprietor, it must be pleaded with particulars of fraud being clearly given. - (b)Fraud must be proved strictly, the burden being heavier than on a balance of probabilities generally applied in civil law. - (c) Fraud must be attributed to the transferee. It must be shown that the transferee is guilty of some fraudulent act or must have known of such act by somebody and taken advantage ofsuch act.

Now in this case, the appellant sought to impeach the respondent's title to the suit property on the ground that, he as the registered owner of the property was not a pat.ty to the power of Attorney that enabled the mortgagor, Affasat International Ltd to obtain a loan from the respondent mortgagee using the title as security. In order for the appellant to succeed, he must have: -

(a) pleaded fraud giving details thereof;

(b)proved fraud and the involvement of the respondent. The burden of proof is heavier than on a balance of probabilities.

I will first discuss whether the appellant pleaded fraud in his plaint. I have carefully perused the plaint and I am unable to find any allegations of fraud against the respondent. The nearest to such a claim is contained in Paragraph a(b) & (c) wliich state: -

- "(b) In or about 1995 M/s Affasat International (U) Ltd (hereinafter called the "debtor company") purporting to be a donee of a Power of Attorney allegedly signed by the plaintiff on 20llll94 (and registeretl l ith the registrar of documents on 09/03/95) mortgaged the title deeds to the suit property for the purpose of securing re-payment of the loan frorn the defendant. Copies of the said Power of Attorney together with the Mortgagee Deed shall bc produced during the trial; - (c)The plaintiff denies having signed the aforesaid Power of Attorney as alleged or at all and shall contend that the same is a lbrgery;

# I PARTICUL,\ITS:

- (D The plaintiff is referred to as ,,yahaya" whereas his proper first name is ttYAhy,il", - (ii) Thc signature on the Power of Attorney was not authorised by the plaintiff.

The report of the Handwriting Expert shall be producetl rluring trial and relied upon to its full meaning' r'a lu e and effect."

Apart from the above allegations which accuse Affasat Intemational (u) Ltd of having pledged the appellant's tittle deed without authority, there is no allegation that the respondent committed any fraud or was in any way involved or a party to any fiaud. Dealing with this issue in his judgment the leamed trial judge obser.ved: -

"This court is of thc view that the act of fraud pleaded in the plaint must anrount to fraud in order for this court to pronounce that thc right of the mortgagee is not a legal right. What is found in the pleadings is an allegation of forgery and that the plaintiff did not sign the power of Attorney. In the particulars of this forgery it is said that the plaintiffs nanrc has been misspelt. To this court this is weak. To plcrrtl that a mistake by a forger goes to

prove a forgerl, is to say the lease unacceptable. Firstly such pleadings tends to highlight infallibility on the part of the genuine rcgistered proprietor. But more seriously the pleading docs not state the name of the forger or the person who perpctrated it nor is he made a parfy to the suit. This is where the alleged forgery falls short of a plea of fraud. 'l-he purported "particulars"(whether particulars of whatl) is nothing but an argument that the forger misspelt I hc registered proprietors name and as such could not havc been the registered proprietor. This is not a particular of fraud. The failure to plead particulars of I'ra utl and the specific allegation that the defendant was rcsponsible for it or the fraud was attributable to it or further that the defendant took advantage ol' a fraud undermines this case fu n damentally."

In my judgment, this hording by the leamed trial judge cannot be faulted. The plaint did not make any allegations of fraud against the respondent and in my view the plaint did not disclose any cause of action against the respondent. The suit should have been dismissed under order 6 Rule 2g of the civil Procedure Rules since the written Statement of Defence had pleaded that the plaint disclosed no cause ofaction against the respondent.

This holding is enough to dispose of this appeal. However, should it be necessary' I should express here my opinion as to whether any fraud was in fact proved against the r-espondent.

3 The main evidence on this matter was the evidence of pw2 Ezati Sammuel who was put forward as a l{andwriting Expert. His testimony was that he examined the appellant's specimen signature and compared it with the questioned signature orr the Power of Attomey. In his opinion the appellant is not the one who signed on the Power of Attomey. He however, admitted that he did not see the appellant sign the specimen signatures he examined and that they were senr to him by the appellant's advocates, He further admitted that the questioned signature on the power of Attorney that he examined was a photocopy and not the original. In my judgment, whatever may be the worth of this evidence, it certainly does not prove or implicate the respondent either in fl'audulent execution of the power of Attomev or in its registration.

Again the leamed trial .iudge dealt with this point in his judgment and stated:

I cannot see thc lcts or omissions by the defendant that prove his own frirucl in this case. Similarly, any illegality alleged was not perpetrated or known to the defendant who has taken arlr,:rntage of such illegality (sic)............ there is no omission or act by the defendant in this case whatsoever which can be shown to be fraud or illegalify by him."

This conclusion was in ,ry view, very iustified. If indeed there was any forgery of the appellants signature on the power of Attomey, that was a matter between his brother HAJI TEZIKUBA and his company Affasat International (U) Ltd and did not in any way affect the respondent's rights as a mortgagee of the suit property which rights are secured under section 184 of the Registration of Titles Act. I would therefore dismiss the appeal with costs here and in the court below to the respondent.

Dated at Kampala this. $24$ TK July. 2001. Illeu $\overline{\cdots}$ Amos Twinomujuni JUSTICE OF APPEAL

# THE REPUBLIC OF UGANDA

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

# HON. JUSTICE G. M. OKELLO, JA. **CORAM:** HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA. HON. JUSTICE A. TWINOMUJUNI, JA.

# **CIVIL APPEAL NO.18 OF 2000**

# ALHAJI YAHYA SIRABA :::::::::::::::::::::::::::::::::::

### **VERSUS**

DEVELOPMENT FINANCE CO. OF UGANDA ::::::::::::::: RESPONDENT

[Appeal from Judgement/Decree of the High Court of Uganda (Okumu-Wengi, J) dated 14th October 1999 in HCCS No.99/1998].

# **JUDGEMENT OF A. E. MPAGI-BAHIGEINE, JA**

I have read in draft the Judgment of Twinomujuni J. A. I entirely

agree with it and have nothing more to add.

Dated at Kampala this $\cdots$ $\overrightarrow{A}$ .... .... day of... $\rightarrow$ .2001. A. E. MPAGI-BAHIGI JUSTICE OF APPEAL

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

#### CORAM: HON. JUSTICE G. M. OKELLO, JA. HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA. HON. JUSTICE A. TWINOMUJUNI, JA.

# CIVIL APPEAL NO. 18 OF 2000

#### **BETWEEN**

# ALHAJI YAHYA SIRABA:::::::::::::::::::::::::::::::::::

# AND

#### DEVELOPMENT FINANCE CO. OF UGANDA:::RESPONDENT 20

# JUDGMENT OF G. M. OKELLO, JA.

I have read in draft the judgment of my brother Justice Twinomujuni, JA. I agree with his conclusion and reasonings. I have nothing useful to add. As Justice Mpagi-Bahigeine, JA also agrees, the appeal shall and is hereby dismissed on the terms proposed by Twinomujuni, JA.

Dated at Kampala this. 24th day of July, 2001. 30

G. M. OKELLO. **JUSTICE OF APPEAL.**