Total Seeta Service Station v Stanbic Bank Limited Uganda and Julius Baale (Civil Appeal 165 of 2019) [2025] UGCA 173 (12 June 2025)

#### THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

(Coram: Dr. Aso Mugengi, Muso Ssekaana, & Stella Alibateese, JJA)

### CIVIL APPEAJ, 165 OF 2019

# Arislns from Hieh Court Kampala HCCS 4O7 of 2O111

TOTAL SEETA SERVICE STATIOIT APPELLANT

#### VERSUS

| | I. STANBIC BANK LIMITED UGANDA | | |----------------------|-------------------------------|-------------| | 2. JULIUS BArE ====== | | RESPONDENTS |

# JUDGMENT OF DR. ASA MUGENYI. JA

#### INTRODUCTION

1 This is an appeal arising from the decision of the High Court by Godfrey Namundi J. delivered on 14th February 2019, where he dismissed the suit of the appellant who was seeking to overturn a sale of mortgaged property by the 1"t respondent to the 2nd respondent.

#### BACKGROUND

- 2 On or about the 11th December 2008, the 1"t respondent extended an overdraft facility of Shs. 150,00O,O00 to the appellant. The parties executed a mortgage deed where the managing director of the appellant mortgaged his own house comprised in LRV Folio 20, Plot 2865 at Luwafu, Makindye division, Kampala. The appellant defaulted to repay the overdraJt facility within the time prescribed by the deed. - .) After several demands, the l"t respondent through auctioneers advertised the mortgaged property for sale. The appellant requested the 1"t respondent to stop


the sale on the ground that it had applied for an equity release loan from Housing Finance Bank. The auctioneers went on to sell the mortgaged property to the 2"d respondent.

4 The appellant filed Civil Suit 407 of 2011 before the High Court challenging the sale of the mortgaged property. The High Court found in favour of the respondents. The appellate Judge found that the appellant had failed to prove that the sale was unlawful. The appellant being aggrieved by the decision of the High Court Judge has appealed to the Court ofAppeal.

#### GROUNDS OF APPEAL

- The appellant raised the following grounds of appeal. 5 - 1) The learned trial Judge erred in law and fact when he dismissed the submissions of the appellant's counsel that the mortgage was invalid. - 2) The learned trial Judge erred in law and fact when he failed to properly evaluate the entire evidence on record and came to the wrong conclusion.

#### Representation

When the appeal came up for hearing, the appellant was represented by Mr. Peter Kimanje Nsibambi and Mr. Moses Wandera, while the l"t respondent was represented by Mr. Albert Byamugisha and the 2"d respondent by Mr. Magellan Kazibwe. 6

#### ANALYSIS AND DETERMINATION

This is a first appeal from a decision rendered by the High Court in a matter involving a mortgage. Rule 30(1)(a) of the Judicature (Court of Appeal Rules) Directions reads: 7

- "(1) On any appeal from a decision of the High Court acting in the exercise of its original jurisdiction, the court may- - (a) Reappraise the evidence and draw inferences offact; "

ln Banco Arabe Espanol u Bank of Uganda, Civil Appeal 8 of 1998, [1999] UGSC 1, (5ft October 1999) it was held that "the first appellant court has the duty to re-appraise or re-evaluate evidence by affidavit or by oral testimony with the exception of the manner and demeanor of witnesses, where it must be guided by the impressions made on the Trial Judge." Taking the above into consideration, I shall go ahead to determine the appeal.

# DETERMINATION OF GROUNDS 1.

Ground 1. The learned trlal Judge erred ln law and fact when he dlsmlssed the submlaslons of the appellant's counsel that the mortgage was invalld.

# a) Appellants submisslons

- 8 Counsel for the appellant submitted that this mortgage deed executed between the parties was invalid as it did not comply with Sections 132, 147 and 148 of the Registration of Titles Act. This was because the signature of the bank manager was not in Latin character. His name was not given nor was that of the capacity of Mr. Fred Mbabazi, who was the witness of the mortgaging company. No one can tell whether Mr. Fred Mbabazi was a director, company secretary or an officer of the company or whether he had the capacity to witness under Section 147 of the Registration of Titles Act. The appellant submitted that the company opted for signatures instead of company seals as would be permitted under Section 132 of the Registration of Titles Act. Counsel cited Fredrick J. K. Zaabute u Oient Bank Limited, ULR [2007] Vol I page 98. - Counsel for the appellant further submitted that once an illegality is brought to the attention of the court it overrides any question of pleadings including any 9

admissions. He submitted that the trial Judge ought to have immediately considered his submissions that the mortgage was invalid. He argued that the court erred when it did not consider the appellant's submission. Counsel cited Makula Internotional u Cardinal Nsubuga, 1982 HCB 11 and Farida Nantale u Attomeg General, Civil Application 286 of 2014.

# b) 1tt Respondent's submlssions

10. The lst respondent submitted that at the trial the agreed issues in the joint scheduling memorandum were:

1. Whether the plaintifl's suit discloses a cause of action against the 1st and 2nd defendant?

- 2. Whether the sale of suit land to the 2"d defendant was lawful? - 3. What remedies are available to the parties?

He contended that the issue of the validity of the mortgage never arose.

- <sup>1</sup>1 . The l"t respondent submitted that the appellant's claim was that the lst respondent unlawfully sold mortgaged property despite having reviewed the overdraft facility. It also claimed that the bank halted the sale. The sale of the land to the 2"d respondent was illegal. The 1"t respondent argued that the appellant did not plead on the issue on the validity of the mortgage. - 12. The l"t respondent submitted that the appellant did not lead any evidence to challenge the validity of the mortgage. He argued that to make a judgment in respect thereof would be a breach of the right to fair hearing enshrined under Article 28(1) of the Constitution. The appellant cited Ma Fing Min u Belex and Tours and Trauel Limited, Civil Appeal No.1 of 2014 and Luteza Clags Limited <sup>u</sup> Kizito Lututama Moussa u Tropical Bank Limited, SCCA No. 15 of 2018.


# cl 2ad Respondent's submlsaiona

- 13. The 2"d respondent submitted that during the trial there was no challenge on the validity of the mortgage during the testimonies. The appellant was aware that the mortgage signed was valid. The 2"d respondent argued that it was not raised as an issue. The 2"d respondent cited Ma Fing Min u Belex ond Tours and Trauel Limited (supra) ard Interfreight Fonuarders (U) Limited u East African Deuelopment Bank, Civil Appeal No. 33 of 1992 and Julius Ruabinumi u Hope Bahimisomue, Supreme Court Civil Appeal No. 10 of 2009. - 14. The 2"d respondent submitted that without prejudice, the mortgage deed was va-lid. It is not true that the appellant and l"t respondent did not comply with Sections 132, 147 and 48 of the Registration of Titles Act. He submitted that the manner in which the mortgage deed was executed did not go to the substance of the document and did not invalidate it. He submitted that Fredick J. K. Zaabue u Oient Bank Limited (supra) did not apply. There was no power of attorney executed.

# Analysls and determlnatlon

15. The hrst ground was that the learned trial Judge erred in law and fact when he dismissed the submissions of the appellant's counsel that the mortgage was invalid. I have perused the pleading of the appellant in the High Court. A perusal of the plaint shows that the appellant did not raise the issue of the validity of the mortgage in his pleading. There was no evidence that was lead on the validity of the mortgage. Parties are bound by their pleadings. ln Fa Min u Belex Tours and Trauel Limited, SCCA No. 6 of 20 13 consolidated with Crane Bank Limited u Belex Tours and Trauel Limited, CA No. 1 of2OL4 Odoki JSC said:

> "This court has on severa.l occasions emphasized the need for pleading in civil proceedings to describe the respective cases for the parties and to define the

> > pc. 5

issues in dispute for resolution by the court. In, Civil Appeal No. 33 of 1992, Oder JSC. Said:

"The system of pleading is necessarlr in litigation. It operates to define and deliver clarity and precision ofthe real matters in controversy between the parties upon which they c.rn prepare and present their respective cases and upon which the Court will be called upon to adjudicate between them. It thus serves the double purpose of informing each party what is the case of the opposite party will govern the interlocutory proceedings before the trial and when the court will have to determine at the trial. See Bullen & l,eake and Jacobs Precedents of Pleading 12tt' Edition page 3. Thus, issues are framed on the case of the parties so disclosed in the pleadings and evidence is directed at the trial to the proof of the case so set and covered by the issues framed therein. A party is expected and bound to prove the case as alleged by him and as covered in the issues framed. He will not be allowed to succeed on a case not set up by him and be allowed at the trial to change his case or set up a case inconsistent with what he alleged in his pleadings except by way of amendment of the pleadings."

ln Tanganyika Farmers Association Ltd. u Ungamuezi Deuelopment Corporation, [1960] EA 620, the court held:

"An appeal court has a discretion to allow a new point to be taken on appeal but it will permit such a course only when it is assured that full justice can be done to the parties.'

I do not think that ground 1 the appellant raised was only on a point of law. It required evidence to be led on it.

16. At the trial the agreed issues in the joint scheduling memorandum were:

1. Whether the plaintiffs suit discloses a cause of action against the lst and 2nd defendant?

2. Whether the sale of suit land to the 2"d defendant was lawful?

3. What remedies are available to the parties?

There was no issue on the validity of the mortgage .


17. Raising a matter that did not arise during a trial would be an infringement of the right to a fair hearing. ln Interfreight Fonaarders (U) Limited u East African Deuelopment (supra) it was further stated that:

> "The right to a fair hearing is a non-derogable constitutional right and it must be observed even where an illegality or fraud is discovered on appeal. Therefore, the Court of Appeal erred when it held that the mortgage and transfer executed by the bank in favour of Ms. Fang Min were invalid, and the certificate of title in favour of Ms. Fang Min should be cancelled, without giving the bank and Ms. Fang Min an opportunity to heard on these matters.

The right to a fair hearing involves the right to be heard on a matter that should have been pleaded and evidence called on it.

18. I do agree that a party is bound by its pleadings. Evidence should be called on issues raised. The appellant did not make any pleading on the validity of the mortgage. No issue was raised on it nor evidence called. I would therefore strike out ground 1. Ground 1 fails.

Ground 2. Tlne learned trial Judge erred in law and fact when he failed to properly evaluate the entire evidence on record thereby coming to a wrong decision.

# a) Appellant's submissions

19. Counsel for the appellant submitted that the duty of the lst appellate court is to subject the evidence adduced before the trial court to a fresh and exhaustive scrutiny so that it weighs the conflicting evidence and draw its own conclusion. Counsel cited Yosamu Kawule u Entsania II977l HCB 735, Sitefano Baraba <sup>u</sup> Haji Edirisa, [1977] HCB 137 and Uga Chick Poultry Breeders Limited v Tadjin Kara, Civil Appeal No.2 of 1997. Counsel submitted that the court failed in its duty to eva.luate evidence. If it had properly evaluated the evidence it would not have come to a wrong decision.

 - 20. Counsel for the appellant cited Fredrick J. K. Zaobu.te u Oient Bank Limited (supra), which defined fraud. The counsel submitted that all the elements of fraud contained in the definition were present in the case subject of the appeal. Counsel submitted that the sale was unlawful. From the evidence adduced, the 1"t respondent at the appellant's request had reviewed the latter's loan facility and sale was put off. Among the reasons for the review was that the appellant had informed the 1"t respondent that he had approached Housing Finance Bank to take over the loan from the former through an equity release loan. The l"t respondent without any notice re-advertisement and sold the suit property to the 2"d respondent. Counsel submitted that the sale was questionable and fraudulent. The counsel submitted that the appellant had secured an equity release loan. A mortgage is always a mortgage. - 21. Counsel for the appellant submitted that the appellant paid auctioneer's fees and the advertisement costs which was debited from his account. The auctioneer testified that the sale was by private treaty which contradicted his testimony that it was by public auction. It was a departure from the pleadings. Counsel cited Bakaluba Peter Mukasa u Nambooze Betty, Election Petition No. 4 of 2OO9 and Commissioner General, URA v William Mukasa, SCCA no. 4 of 2O14 which underscore the importance of sticking to a party's pleadings. Counsel submitted that the agreement of sale shows that the sale was sold in public auction and not by private treaty. - 22. Counsel submitted that the suit property had tenants. The 2"d respondent cannot claim to be a bona hde purchaser. Counsel further submitted that there were a number of bidders including ones who offered Shs. 180,000,000 and Shs. 160,000,000. The lst respondent sold the property to the 2"d respondent at Shs. 150,000,000. The auctioneer wrote to the lst respondent introducing the 2nd respondent as a serious bidder. The l"t respondent accepted the bid immediately. The buyer did not visit the property. Counsel submitted that valuation was done after the property had been advertised. Counsel submitted that it is a well-


established law that a mortgagee has a duty to take reasonable care to obtain the true market value of the property to be sold. The sale must be genuine. He cited Moses Jim Jjague u Standard Chartered Bank, HCCT-00-CC-CS-0375 of 2OO4 and Cuckmere Brick Co. Limited u Mutual Finance and otlers, [197l] 2 ALL ER 633.

- 23. Counsel for the appellant further submitted that the property was not revalued. There was no notice of demand. Counsel submitted that statutory notice was required under Section 116 and 117 ofthe Registration ofthe Titles Act. He cited Mubiru u Uganda Credit and Sauings Limited, [978] HCB 1O9. Counsel also submitted that the appellant was not informed of the impending sale of his property nor was he informed of the sale. The auctioneer had no mandate to sell the property on behalf of the bank. The proceeds of the sale were not accounted for as required as stated in Moses Jim Jjagwe u Standard Chartered Bank (supra). - 24. Counsel for the appellant cited Co-operatiue Bank Limited (in liquidation) u Shell Kasese, HCCS 140 of 2005 which laid the principles for the sale by a mortgagee. He submitted that atthough a mortgagee is selling, he is not a trustee for the mortgagor. He must sell in good faith and at a reasonable price that he knows is obtainable. Counsel submitted that if a mortgagee acts in secret and conceals what is being done from the mortgagor, he exposes himself to suspicion of not having acted in good faith. Counsel submitted that the trial Judge ought to have found that the sale was done in bad faith, against the principles of sale by a mortgagee. The appellant submitted that the trail Judge should have found that the l st respondent was guilty of fraud while disposing of the appellant's suit property.

## bf l.t Respondent's submissions

25. The 1"t respondent contended that ground 2 offended Rule86(1) of the Judicature (Court of Appeal Rules) Directions. He cited Agatha Kalanzi u Milly Katongole and Hope Katongole (adminstrators of the estate of the late George Katongole), CACA No. 47 of 2O19 and Lueza Clays Limited v Kizito Lutwama Moussa u Tropical Bank Limited (supra).

### cl 2"d Respondent's submlsslons

26. The 2"d respondent submitted that the ground 2 offended Rule 86(1) of the Judicature (Court of Appeal Rules) Directions. He cited National Insurance Corporation u Pelican Seruices, Court of Appeal Civil Appeal 5of 2003, Arim Felix Cliue u Stanbic Bank (U) Limited, Court of Appeal No. 101 of 2013, Sukuton Ali <sup>u</sup> Augustine KapkuLongongo and 2 others Court of Appeal Civil Appeal 717 of 2012 and Jennifer Nsubuga u Micheol Mukundane and another, Civil Appea-l No. 208 of 2018.

## a) Analysls and determination

27. Ground 2 of the appea-l read "The learned trial Judge erred in law and fact when he failed to properly evaluate the entire evidence on record and came to the wrong conclusion." The said ground is too general and is not concise. It does not state which evidence the appellant is challenging. It offends Rule 86(l) of the Judicature (Court of Appeal Rules) Directions which reads:

## '86. Contents of memorandum of appeal

1) A memorandum of appeal shall set forth concisely and under distinct heads, without argument or narrative, the grounds of objection to the decision appealed against, specifying the points which are alleged to have been wrongfully decided, and the nature of the order which it is proposed to ask the Court to make..."

ln Celtel Uganda limited u Karungi Susan, CACA 0073 of 2013, the impugned ground was framed as follows:

'The learned Trial Judge erred in law and fact when they failed to eva-luate the evidence on record and thereby arrived at a w'rong conclusion."

The said ground is similar to ground 2 in the above appeal. Remmy Kasule JA, struck it off. Taking that into consideration, ground 2 is struck off'

28. Taking the above into consideration, this appeal is dismissed with costs to the respondents.

Dated at Kampala

4. t?- day of dr..^-o- 262t

DR. ASA MUGENYI JUSTICE OF APPEAL

| | THE REPUBLIC OF UGANDA | |----|------------------------------------------------------------------| | | IN THE COURT OF APPEAL OF UGANDA AT KAMPALA | | | CIVIL APPEAL NO: 165 OF 2019 | | | TOTAL SEETA SERVICE STATION :::::::::::::::::::::::::::::::::::: | | | VERSUS | | 10 | STANBIC BANK :::::::::::::::::::::::::::::::::::: | | | |

# JUDGEMENT OF JUSTICE MUSA SSEKAANA, JA

I have heard the benefit of reading the leading Judgment of His Lordship Hon. Justice Dr. Asa Mugenyi and I concur with the same.

| 15 | Dated at Kampala this | |----|-----------------------| | | | | | <b>MUSA SSEKAANA</b> | | 20 | JUSTICE OF APPEAL |

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$\mathcal{A} = \mathcal{A} \cup \mathcal{A}$ $\alpha = \frac{1}{\sqrt{2}}$

#### THE REPUBLIC OF UGANDA

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

(*Coram: Dr. Asa Mugenyi, Musa Ssekaana, & Stella Alibateese, JJA*)

#### CIVIL APPEAL 165 OF 2019

#### Arising from High Court Kampala HCCS 407 of 2011)

TOTAL SEETA SERVICE STATION ================== APPELLANT

**VERSUS**

1. STANBIC BANK LIMITED UGANDA

$\bullet \qquad \qquad \iota$ $\mathcal{L} = \mathcal{L}$

2. JULIUS BAALE ============================ RESPONDENTS

#### JUDGMENT OF STELLA ALIBATEESE, JA

I have had the benefit of reading the draft judgement of Justice Dr. Asa Mugenyi and I agree with the reasoning and orders proposed.

Dated and delivered at Kampala this $\frac{1}{2}$ day of $\frac{1}{2}$ une 2025

Plibateese<br>Stella Alibateese JUSTICE OF APPEAL