Tropical Africa Bank Ltd v Muhwana (Civil Appeal 4 of 2011) [2013] UGSC 25 (5 December 2013)

Full Case Text

### THE REPUBLIC OF UGANDA

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

#### (CORAM: ODOKI, C. J., KATUREEBE, KITUMBA, TUMWESIGYE, $5$ KISAAKYE, JJ. S. C.)

#### CIVIL APPEAL NO. 04 OF 2011

#### **BETWEEN**

#### TROPICAL AFRICA BANK LTD. ::::::::::: APPELLANT

#### AND

#### GRACE WERE MUHWANA :::::::::::::::::::: RESPONDENT

[Appeal from the Judgment of the Court of Appeal at Kampala (Kikonyogo, DCJ, Kavuma & Nshimye, JJA.) dated 20th August 2010, in Civil Appeal No. 39 of 2007].

## **JUDGMENT OF DR. KISAAKYE, JSC.**

This is an appeal against the decision of the Court of Appeal which dismissed in part an appeal brought by the appellant against the respondent.

The brief facts of this case are that on 18th January 1993, Christopher Were-25 Muhwana, (hereinafter referred to as "the respondent's husband"), executed Powers of Attorney appointing M/s Group Procurement Ltd. (hereinafter referred

to'as "the company"), as his attomeys, in respect of a property (hereinafter referred to as "the suit property"), where he lived with his wife, (the respondent).

On 2nd February l993,the Libyan Arab Uganda Bank for Foreign Trade and Development Ltd. (hereinafter referred to as "the Libyan Arab Bank") executed a document titled "Mortgage" with the respondent's husband and two other persons, and who were jointly referred to in the Mortgage Deed as "Sureties". The mortgage was in respect of the suit property and two properties which were individually pledged by the co-sureties ofthe respondent's husband to the Libyan Arab Bank.

The Mortgage Deed provided that the sureties had requested the Libyan Arab Bank to advance to the company, a loar/overdraft facility not exceeding 50,000,000/: million Uganda shillings. The mortgage deed was signed by the sureties only. 10

The company failed to pay the.loan. On 28'r' August 1995, Tropical Africa Bank, (hereinafter referred to as the appellant), issued a Notice of Default addressed to the respondent's husband, and copied to the company. On April 24th lgg7, the appellant advertised for sale of the suit property. The Notice, however, wrongly indicated Nabeeta James, one ofthe co-sureties of the respondent's husband, as the registered proprietor of the suit property.

On 29th August 1997, court brokers, acting on instructions of the appellant, evicted the respondent from the suit property and eventually sold it off, relying on the mortgage that had been executed between the Libyan Arab Uganda Bank and the respondent's husband.

On 7'h October 1997,the respondent filed High Court Civil Suit No. 1022 of 1997 against the appellant and her husband, jointly and severally. The respondent later

filed an amended plaint on 4th October 1999, where she sought for the following 'Orders:

- "(tr) a decloration that the second defendant holtls the soid properly in trustfor the plilntiff, himself tnd lhefamily in equal shores; - (b) a decloralion that the Plaintiff is an equilable ten nt in common of the said property; - (c) a declmation lhal lhe purported power of attorney hy the second defendant appointing M/s Group Procurentent Ltd. as his attorney in respect of the properg' x'os and is invalitl and void; - (d) t declarutiott lhut the purporled suhsequent pledge to the firsl defendant wus uttd is inwlid und voitl; - (e) a declaratiotr thot lhe subsequent eviction ofthe plainliffhy the second defendtnl wrs and is invalid und voitl; - 0 t declaratiotr lhol lhe sale of the suil property wos null and voitl; - (g) an order oJ'cuncelluliott of the purported sale of the suit property; - (h) a permanent injunclion barring the second defendant from offiring for sale the pruperty aforesoitl; - (i) costs of the suil;

#### (j) further or other relieJ" 25

The respondent claimed that she first learnt about the mortgage ofthe suit property by her husband, when the appellant run an advert in the New Vision Newspaper of April24, 1997, for auctioning the property in one month's time if the loan was not fully paid off. She claimed that her husband initially denied this fact but later confirmed that the suit property was up for auction. She further testified that she

lodged a caveat on the suit property dated 23'd June 1997 in the Land Registry, lvhere she indicated that she had an equitable interest in the suit property as a wife.

The appellant, on the other hand, challenged the respondent's claims with respect to the caveat at the hearing of the suit and contended that the respondent was conspiring with her husband to defeat its claims. The appellant did not adduce any evidence at the trial to support its contentions on alleged conspiracy between the respondent and her husband.

The case was heard by Katutsi, J., who found that the respondent (then plaintiff) had proved that she had an interest in the suit property. He further held that the

- Mortgage Deed, which the appellant relied on to evict the respondent and to subsequently sale the suit property, was not a mortgage, as the respondent's husband (then second defendant) could not have signed the Deed as a Mortgager and Surety, all at the same time. Consequently, the trial Judge held that there being no mortgage in place, there was nothing that the appellant could have 10 - properly foreclosed. He ruled that the sale ofthe property by the appellant was irregular and without legal support and so was the purported eviction of the respondent from the suit property. He accordingly entered judgment in favour of the respondent, with costs. 15

Dissatisfied with the judgment of the High Court, the appellant lodged Civil Appeal No. 39 of 2007 in the Court of Appeal. The appellant did not join the respondent's husband as a party to the appeal. 20

The Court of Appeal held that there was a proper mortgage between the appellant and the respondent's husband. It, however, held that the appellant could not sue for enforcement ofthe mortgage through foreclosure ofthe property because ofthe iespondent's interest in the matrimonial home and the caveat she had lodged on the

strit property. The Court accordingly upheld the trial judge's ruling that the 'appellant had unlawfully evicted the respondent from the suit property and awarded the respondent the costs ofthe appeal and one halfofthe costs in the High Court.

5 Being partially dissatisfied with the Court of Appeal's decision, the appellant filed this second appeal to this court on the following ground:

# The learned Justices of the Court of Appeal erred in law in holding that the oppellanl unlawfully evicted the respondent from the suit property."

- The appellant prayed that its appeal be allowed and that thejudgment ofthe Court of Appeal on the respondent's unlawful eviction, as well as the reliefs and orders the Court had made, be set aside. The appellant also prayed for the costs of this appeal and in the two courts below. 10 - The appellant was represented by Mr. Siraj Ali of I\4/s Muwema & Mugerwa Advocates and Solicitors in this appeal. Mr. Roscoe Ssozi of M/s Bossa, Tumwesigye & Ssozi Co. Advocates represented the respondent. Both counsel made oral submissions to the cout"t in support of and against the appeal, respectively. 15

#### A ppe I h n t's S uhm iss io n s

Counsel for the appellant faulted the Court ofAppeal's decision holding that the respondent had been unlawfully evicted from the suit property.

Submitting on this issue, counsel submitted that the Coun of Appeal, having held that the suit property was properly mortgaged by the respondent's husband, erred

when it held that the appellant could not sue for the enforcement of the mortgage 'through foreclosure ofthe property because of the respondent's interest in the matrimonial home and the caveat she had lodged thereon.

5 He contended that the leamed Justices of Appeal erred when they relied on the inherent powers granted to the Court ofAppeal under Rule 2 of the Judicature (Courl of Appeal Rules) Directions, to support their holding. He further contended that it was wrong for the learned Justices of Appeal to invoke and to rely on the inherent powers of Court to dispose of Civil Appeal No. 39 of 2007, when there were specific legal provisions which governed all the issues that were

- under consideration. He argued that the Mortgage Acl, Cap 229, Laws of Uganda (now repealed), was the law that was obtaining at the time when the cause of action arose and that the said Act had specific provisions which the Court of Appeal should have relied on. These include section 2 which set out the remedies available to the mortgagee upon breach of covenant; section 3 which related to 10 - realization of security by a mortgagee; section 8 which related to foreclosure by a mortgagee; section 9 which related to sale by foreclosure; section l0 which related to sale otherwise than by foreclosure and section I I which applied to the application of proceeds from the sale of mortgaged property by the mortgagee. 15

Counsel for the appellant also submitted that the appellant Bank had relied on section l0 of the Mortgage Act, which provided for sale otherwise than by foreclosure. He contended that the mortgage deed granted the appellant a specific power to sell the mortgaged property in the event of the mortgager's default. He cited paragraph 5 (iv) (e) of the Mortgage Deed, which provided that the statutory power of sale conferred by the Registration of Titles Act and the Morlgage Decree 20

may be exercised by the Bank, in addition to its statutory powers, to sell the mortgaged property either by Public Auction or by Private Treaty, without first 25

applying to court and without the service ofany further notice on the Surety. Counsel for the appellant contended that the appellant sold the suit property by public auction, in accordance with the terms of the Mortgage Deed.

He contended that all the above sections clearly laid out the law relating to foreclosure and sale of mortgaged properties. That being the case, he submitted, the Court of Appeal erred when they relied on the inherent powers of court to reach their decision instead of following the provisions of the Mortgage Act.

Counsel for the appellant prayed that the appeal be allowed; that thejudgment of the Court ofAppeal in relation to ground 3 ofappeal be reversed; that the orders and reliefs granted by the Court ofAppeal be set aside; and lastly that his clients be granted the costs of this appeal, and those in the two lower courts.

#### Respondent's Submissions

Counsel for the respondent supported the decision ofthe Court ofAppeal in respect of the respondent's eviction from the suit property. He submitted that the Court's decision was founded on the facts that the respondent was evlcted, and her property was sold at a time when the appellant was aware of the existence of her interest in the suit property. He contended that the appellant had knowledge of the respondent's caveat prior to evicting her and selling offthe suit property. He further contended that during the trial, the appellant never contested the issue of the respondent's interest in the property. He drew court's attention to the Record ofAppeal, where the trial Judge had noted all the issues that had been settled by the parties' pleadings, which included that ofthe respondent's interest in the property.

Counsel argued that having established the interest ofthe respondent and having found that the respondent lodged a caveat on the suit property in June 1997,the Court of Appeal was correct in holding that the eviction of the respondent in August 1998 was unlawful.

- He relied on section 139 of the Registration of Titles Act, Chapter 230, Laws of Ugonda, which forbids the Registrar from registering any instrument when a caveat has been lodged on any land, without giving notice to the caveator. On the basis of this provision, counsel argued that no other party could enter into any dealings affecting the interest that is being protected by the caveat to the detriment 5 - of the caveator, as the appellant did in this instance, without giving notice to the caveator. 10

Counsel for the respondent also submitted that the appellant should not have evicted the respondent after it had notice of the respondent's interest. He submitted that the fact that the mortgagee got notice of an equitable interest of the respondent in the suit property, even after the mortgage had been registered but before the mortgage was enforced, was sufficient notice to prevent the mortgagee from affecting the interest ofthe respondent in this land.

He contended that the only point the Court ofAppeal was addressing during the appeal was the conduct of the appeilant vrs - a -vis the interest of the respondent.

Secondly, counsel for the respondent disputed the contention ofcounsel for the appellant about the date when the suit propefty was sold. While conceding that the record of appeal does not clearly state when the sale was concluded, he submitted that neither the respondent nor the appellant knew the specific date when the sale was made. He drew the court's attention to the assumption made by the Court of 20

Appeal that the sale must have been made on the 24th May 1997, which was ' exactly one month after the notice was issued in the New Vision Newspaper.

Counsel for the respondent further argued that right from the trial court to the Court of Appeal, it was recognized that the respondent's interest in the suit property was not merely a right to consent to her husband's transactions in the land. Rather, he argued, the respondent's interest in the suit property was as an equitable tenant in common. He argued that this made the respondent a partial owner of the suit property in equity and that this was the spirit in which the Court of Appeal made its ruling.

Respondent's counsel further argued that the mortgage could not be enforced against the suit property because of the interest of the respondent which was reflected on the register, and which the appellant had notice of, at the time of evicting and subsequently selling offthe suit property. 10

Counsel for the respondent also contested appellant counsel's submission that the property was sold upon default by the respondent's husband. He contended that the respondent's husband was not the principal debtor, but rather that it was the company, which had been granted Powers of Attomey by the respondent's husband over the suit property. He argued that the respondent's husband signed the Mortgage Deed as a surety only and that he did not receive any Notice of the default, as was clearly brought out during the cross-examination ofthe appellant's witness, DWl. 15 20

Counsel for the respondent also contended that the advert that was placed by the appellant in the Newspaper, which wrongly indicated Nathan Nabeeta as the registered proprietor of the suit property, was never corrected. Yet, he argued, this was the advert that the appellant relied on to evict the respondent and to subsequently sell offthe suit property. He contended that the Notice in the advert was irregular and so were all the transactions that followed it.

Counsel for the respondent further contended that although the suit property was supposed to be sold by public auction under the mortgage deed, the property was actually sold by private treaty. He prayed for the appeal to be dismissed with costs.

#### Contpetence of the Appeal

Before I consider the merits of this appeal, I need to dispose of a matter that was raised by the Court, concerning the Coram of the Court of Appeal which heard this matter and the absence of the judgment of one of the members on the Coram. 10

The lead judgment of Kikonyogo, D. C. J. (as she then was), and the concurring

judgment of Kavuma, J. A., indicate that Justice Kitumba, J. A. (as she then was) was part of ihe Court's Coram. While it is indeed true that Justice Kitumba was initially on the Coram when the matter first came up for hearing, the appeal was adjoumed unheard. By the time the appeal was heard by the Court of Appeal on 2I " January 20 I 0, Justice Kitumba had ceased to be a member of the Court of Appeal, following her elevation to this court in August 2009. 15 z0

Hence, according to the record of appeal, the Coram which eventually heard Civil Appeal No. 39 of 2007 was constituted by Kikonyogo, D. C. J., Kavuma and Nshimye, JJ. A. Unfortunately, Justice Nshimye's narne was omitted from the Coram indicated in both the lead judgment and the concurring judgment of

Kavuma, J. A. Worse still, the judgment of Justice Nshimye is missing from the

record of appeal. This is despite this Court taking up this matter with appellant's ' counsel during the hearing of this appeal and subsequently by writing to the appellant's lawyers.

5 This Court tackled a similar issue in Komaketch & Anor. v Akol & 2 Others, Supreme Courl Civil Appeal No. 2l of 2010, when counsel for the third respondent raised a preliminary objection in which he challenged the competence ofthe appeal, due to the fact that one ofthe Justices had neither sat in the proceedings from which the ruling which was being appealed was heard, nor writtenherdissentingjudgment. WeconsideredtheprovisionsofArticle 135(l)of the Constitution of Uganda and Rule 33(5) of the Court of Appeal Rules, which provides as follows: 10

#### 15

# "(5) In Civil Appeols,, seporote judgments shall be given by the Members of the Court unless the decision being unanimous, the presiding judge otherwise directs."

We accordingly held that because the Court of Appeal had ruled on the Notice of Motion without Coram, the matter should be remitted back to the Court of Appeal so that it could be heard before a proper Coram. In so holding, we noted that:

> "... the word 'sholl' used in lhe provisions of Rule 33 is mondslory and not direclory ond therefore judges shoultl follow the procedure prescribed by the rules."

Fuftherrnore, we held that:

"Tltese provisions are inlended to ensure consislence ond certainly in practice and procedure in decision making by the Court. Individuol Juslices who are part of a ponel in civil cases musl give reasons in writing for dissenting. Thal would enable onybody lo undersland the Courl's decision. Allowing indivitlutl judges to ignore prescribed mandatory rules con lead to undesiroble consequences."

In the instant case, apparently, Nshimye, J. A. dissented because Kikonyogo, DCJ. (as she then was), noted in her lead judgment that "since Kavuma J. A. also agrees, the appeal is dismissed in-part." Justice Nshimye's judgment is, however, not available on the record ofappeal. Yet, there is also nothing on the record of appeal to indicate that the then presiding Deputy ChiefJustice gave an order dispensing with the writing of separate judgments by the other Justices of Appeat.

- A strict interpretation of rule 33(5) would lead this Court to order that this appeal be remitted back to the Court of Appeal for lack of the third judgment of Nshimye, J. A. This would, however, appear not to be proper considering that counsel for the respondent did not raise any objection challenging the competency ofthis appeal, even after the Court pointed out that the said Judgment was missing. Secondly, the situation in this appeal differs from that in the Komakech appeal, because the record ofappeal in this case indicates that the appeal was actually heard by a full Coram of three Justices of Appeal. Thirdly, there was a majority decision of the court in this case because Justice Kikonyogo, Deputy Chief Justice (as she then was) and, Justice Kavuma, J. A. who was the second member of the Coram, agreed on the outcome ofthe appeal. Fourthly, this dispute has been in the court system 15 20 ',c - since 1997. This is a very long time for the parties to wait for the resolution of their dispute.

'J.2

In light of all the above reasons, I am convinced that it is in the best interests of justice and of the parties, for this court to dispose of this matter on its merits. I accordingly invoke Rule 2(2) of the Supreme Court (Judicature) Rules to proceed to consider the merits ofthis appeal despite the absence on record ofthe third judgment.

### Appellont's locus stondi in lhese oroceedings

Before I consider the parties' submissions and the merits of appeal, I need to dispose of another matter which also has a direct bearing on the competence of this appeal; that is the issue of whether the appellanthad locus standi in this case. 10

It is clear from the face of the Mortgage Deed that is the subject of this appeal that the mortgagee was the Libyan Arab Bank. On the other hand, it was the appellant which eventually evicted the respondent and sold the suit property. There is nothing on the record ofappeal to show how the appellant came to be the beneficiary of the Mortgage Deed that the Libyan Arab Bank signed with the respondent's husband. 15

Paragraph 6 (i) of the Mortgage Deed provided as follows:

# "In this morlgage, where lhe context so permils, ... te expression "the Bonk" sltall include its successors ond assigns...."

In spite ofthis clause being in the mortgage deed, the appellant did not plead either in its written statement of defence or in its reply to the Amended Plaint that it was 25

![](0__page_12_Picture_9.jpeg)

an assignee or successor in title to the Libyan Arab Bank Ltd. Similarly, the Trial ' Judge did not give this matter any consideration.

On the other hand, Court of Appeal considered this issue as follows:

"Anolher agreement enlilled 'Morlgage' was entered into on 02/02/1993 between the Libyan Arab Uganda Bankfor Foreign Trade & Development and three surelies: Chrislopher ll/ere Muhwana, Nathan Nabeta, and Dr. Fred Konyuka.

Apparenily the interests of the Libyan Arab Uganda Bank for Foreign Trode ond Developmenl in lhe property os morlgagee passed lo lhe appellant, Tropical Africa Bonk Ltd. However, thisfact was not ascerloined by either the leorned lrial Judge or learned Counsel for the parties. Hereinafler, assuming the lwo banks ure lhe same entity, we shall refer to bolh as "the bank".

15 It is evident from the above quote that the Court of Appeal made an assumption that the interests of the Libyan Arab Bank passed on the appellant, and that the two banks were the same entity. The Court made this assumption, when there were neither specific pleadings to that effect nor documentary evidence on the record of appeal confirming the assignment or takeover.

Clearly, the Court of Appeal failed to properly address itself to the pertinent question whether the appellant was an assignee or successor in title of the Libyan Arab Bank. This omission was an error on the part of the court, because the question whether the appellant, which is as a corporate legal entity, legally took over the benefits arising out ofa contract executed by another corporate legal entity (the Libyan Arab Bank), could not simply be assumed by court. It was 25 incumbent on the appellant, as the party which was relying on the Mortgage Deed

executed between the Libyan Arab Bank and the respondent's husband to justiff its actions, to adduce documentary evidence to prove that it had legally taken over all the mortgagee's rights in the said Mortgage Deed. It failed to do so at the trial stage where it was the defendant. This omission was, in my view, fatal to the appellant's case. Without proving this relationship, the appetlant cannot rely on the Mortgage Deed executed by the Libyan Arab Bank to justifo its actions when it was not a party to the agreement.

I am aware that this issue was never raised by either party at the trial stage as well as in the Court of Appeal. I am however of the view that this is immaterial because this is an error of law, which this Court cannot overlook.

The appellant's lack of locus standi would be enough to dispose of this appeal. However, given that the appellant's actions, taken pursuant to the said Mortgage Deed adversely affected the interests ofthe respondent, I have found it necessary to consider the merits of the substantive appeal to enable the court to conclusively deal with the matters in dispute.

### Considerdiou of lhe purties' sttbtttissiotts uttl lhe groutrd of aDoetl

The single ground of appeal is that the learned Justices of the Coun of Appeal erred in law in holding that the appellant unlawfully evicted the respondent from the suit property.

Let me now tum to consider the parties' submissions vis a vis the merits of this ground of appeal. I will start by deating with counsel for the appellant's first argument that the Court of Appeal wrongly relied on the Court's inherent powers of the coun to hold that the respondent was unlawfully evicted. 20

#### lv invoked its inherent iurisdiction Il/hether the Court of Appeal wron

In making his submissions, counsel for the appellant relied on the case of Hussein vKakiza & Another, IIgg5-lg9Sl 2 EA t35 (SCU), where this Court held that while section l0l of the Civil Procedure Act, Cap. 71, Laws of Uganda, saves the inherent powers ofthe court to make such orders as may be necessary for the ends ofjustice or to prevent abuse ofthe process ofthe court, it is only called in aid when there are no specific provisions governing the matter at issue. Counsel contended that the holding in Hussein (supra), equally applied to the exercise of the inherent powers granted by Rule 2(2) of the Court of Appeal Rules.

Counsel for the appellant took issue with the judgment of the Court of Appeal 10 which, he contended, clearly showed that the court relied on its inherent jurisdiction to rule in favour of the respondent. In her lead judgment, Kikonyogo, DCJ (as she then was) stated as follows:

> "Thefunction of lhis courl is to decide whether the decision in issue was made according to the law and to ensure lhat there had been no miscarriage of justice. It is the duty of lhis court to see that justice is done in any case brought before it for the ends ofiustice.

> It isfor lhe aforesaid reasons thot courts of low ore given inherent powers for example rule 2(2) of lhe Judicolure Courl of Appeol Rules (Directions) and seclion 98 of the Civil Procedure Acl gives powers lo lhe Courl of Appeal ond Higlt Court respeclively lo moke orders thal may be necessary for the ends ofjustice. Further, Article 126 (2) (e) of the Constitution emphasizes that subslanlive justice be ulminislered without undue regard lo lechnicolities.

"Acling wilhin the inherenl powers in the inlerest of justice I conclude thot while the properly was properly morlgaged, lhe appellanl connot sue for enforcemenl of the mortgage through foreclosure of the property because of the respondenl's interest in lhe matrimonial home and tlte caveat lodged lhereon,"

Counsel for the respondent supported the decision ofthe Court of Appeal. Responding to counsel for the appellant's contention that the Court ofAppeal ignored the substantive provisions of the Mortgage Act, and instead invoked, counsel argued that the Constitution ofUganda protects the right to property. He argued that both the trial Court and the Court of Appeal made a finding that the respondent was an equitable tenant in common, whose interest was protected by the Constitution.

Furthermore, respondent's counsel argued that the Court did not base its decision on its inherent powers to hold that the respondent had been unlawfully evicted, but

15 rather, on the interest of the respondent in the suit property and the caveat she lodged on the register. He invited the Court to agree with the Court of Appeal's holding without restricting itself to the rule or the law relied on by the Court of Appeal.

Having considered the respective submissions ofcounsel for the appellant and the respondent on this issue, I agree with counsel for the appellant that the leamed Justices ofAppeal should not have relied on the court's inherent powers to rule on a matter that involved substantive law, as in this case. My decision does not, however, dispose of the question whether the Court of Appeal was nevertheless wrong to hold that the appellant unlawfully evicted the respondent from her home, 20

which I wilt deal with later on in this judgment.

Whether the Court o A I erred in rel ln on the res ndent's caveat to hold lhat her eviction from the sttit property was unlawful.

I will now tum to deal with the parties' submissions regarding the caveat that the respondent claims to have lodged on the suit property.

Section I 39( I ) of the Registrotion of Titles Act, Chapter 230, Laws of Ugonda provides for the lodging of caveats as follows:

"Any beneficiary or olher person cloiming flny estale or interesl in land under the operolion of lhis Act or in ony lease or morlgoge under ony unregislered instumenl or by devolution in law or olherwise may lodge a coved with the Registrar in the fornr in the Fifleenth Schedule to this Acl or os neor to thal as circumslances permit, forbidding the regislralion of any percon as transferee or propfietor ofany instrumenl affecting that estote or interesl unlil after nolice of lhe inlended registralion or deoling is given to lhe caveator, or unless the instrument is e-rpressed to be suhjecl to the claim of lhe cavealor as is required in the covest, or unless the covealor consenls in writing to lhe registration."

Section l4l of the same Act further prohibits the registration or dealing in land on which a caveat exists. It provides as follows: 20

> "So long as orry caveal remains in force prohibiting ony registration or dealing, lhe regislrar shall nol, excepl in sccordonce wilh some provision of the caveat, or wilh the consent itr wriling of the covealor, enter in tlte Register Book any change in the proprielorship of or any lronsfer or other

/ inslrumenl purporling to trdnsfer or ollterwise deal with or tffecl the estote or interest in respect lo which thol caveat is loclged."

5 The question that arises in this appeal is whether the respondent ever lodged a Caveat on the suit property. Counsel for the appellant did not contest the existence ofthe Caveat before this court. But the appellant bank had earlier on challenged the existence of a caveat in paragraph 9 of its Reply to the Amended Plaint, as follows:

# "TheJirst defendant pleodsfurther lhot annexure PIII lo the Plaint as presented does nol constitute d caveat as it has no parliculars of ils registralion or a cerliJied copy of the liile againsl which it wos regislered."

Furthermore, the appellant pleaded in paragraph 7 of its reply to the amended plaint that the respondent wrongly lodged a caveat on the suit property "to unfairly delay the appellant's due claim of recovering the monies advanced to the borrower and secured by the suit land." L5

Despite the appellant's pleadings at the trial court, counsel for the appellant submitted to this court that the respondent only lodged a caveat on the suit property on the 23'd June 1997, approximately one month after the sale of the suit property by the appellant. 20

On the other hand, counsel for the respondent also contended that respondent had indeed lodged a caveat on the suit property on June 23rd 1997. He submitted that the Court of Appeal rightly held that the respondent was unlawfully evicted from the suit property because ofa caveat she lodged on the suit property.

The record ofappeal indeed bears a copy ofthe Caveat that the respondent claims to have lodged on the suit property. The caveat bears the date of23'd June 1997 and was swom by the respondent, in the presence ofher counsel at the time, one Jombwe. The caveat does not, however, bear any stamp of the Registry in the Ministry of Lands to show when and where it was lodged and when it was registered. The respondent also attached to her Plaint, a copy ofthe Certificate of Title to the suit property which appears in the record of appeal. The page for encumbrances only indicates the Mortgage to the Libyan Arab Uganda Bank for Foreign Trade and Development Ltd.

In the absence ofany evidence on the record ofappeal to show that the respondent's caveat, though drafted, was ever lodged and registered on the suit property, I have found no basis for the respondent's contentions and the Court of Appeal's holding that the respondent indeed lodged a caveat on the suit property. I, therefore, find that the respondent's caveat was not lodged on the suit property.

I only wish to add that ifthe respondent had indeed lodged a caveat on the suit land on the 23'd June 1997, and had proved this fact before the court, then any subsequent registration or dealing in that property by the Registrar in favour of another party without notirying her, or expressly making the dealing in land subject to her interest, would have been unlawful. This is because the registration would have been in conflict with section l4l of the Registration of Titles Act,(supra) already quoted above. In my opinion, this would have been the case, even ifthe dealing was in respect ofan interest created prior to the registration of the Caveat.

I am also unable to agree with the contention made by counsel for the respondent that the appellant had knowledge ofthe respondent's Caveat before it evicted the respondent from the suit property, because the appellant could not have had knowledge ofa caveat that had not been registered on the suit property.

The question that remains now is to examine whether the Court of Appeal's decision on the eviction of the respondent was valid or not. This will require me to resolve, first whether there was a lawful/valid mortgage executed between the parties and secondly, whether the appellant lawfully evicted the respondent in accordance with the rights and the law governing mortgages in Uganda. I now turn to examine these questions.

### Was there a valid mortgape executed befween the respondent's husband and the Liblgn Arab Bankwhich rendered the respondent's eviction lauaful?

- As I indicated earlier in this judgment, the sole ground ofappeal raises the question whether the appellant unlawfully evicted the respondent from the suit property. The appellant acted as it did, believing that it was a lawful mortgagee by vinue of the Mortgage Deed that was executed between the respondent's husband and the Libyan Arab Uganda Bank. 15 - Counsel for the appellant supported the Court of Appeal's finding that a valid mortgage existed between the respondent's husband and the Libyan Arab Bank (from whom the appellant apparently claims) and submitted that the appellant properly acted under the specific powers granted under the Mortgage Deed and under the Mortgage Act (now repealed) when it evicted the respondent from her home and later sold the suit property. On the other hand, counsel for the 20 25

iespondent submitted that he did not concede that the mortgage was legal but contended that his hands were tied by the Court of Appeal's holding on this matter.

The first ground of appeal for the appellant in the Court of Appeal was framed as follows:

## "The learned Triol Judge erred in ltw ond in fict in holding tlrat tlre suit property was irregularly mortgoged to the Appellanl."

The leamed Justices of Appeal considered this ground at length in their judgment as follows:

"On the first ground the pertinenl queslion lo consider is whelher lhere was o propq mortgage between the respondenl's husband os surety ond lhe appellonl. ,.. I now proceed lo examine lhe relevanl hnguage of the purported morlgage qgreemenl ... titled 'MORTGAG. E" ond ils firsl words are thal "THIS LEGAL MORTGA@ is made the.... The agreement is mode between sureties - one of whom is Christopher Were Muhwana and the appellont. The sureties "are registered as o proprietor of the lands ..." The three plots of lond ue listed in the ogreement - only one is the ltnd relevant to the cutent dispule. Importantly, lhe agreemenl stotes thst "sureties have requesled the Bank to moke advances to M/S GROUP PROCUREMENT LIMITED,., by way of a loan by permitting the company lo ovenlrow its current account ... with the Bonk or by giving to the Company olherfinancial accommodolion from lime to lime to dn amount nol exceeding shillings 50 Million. ..."

Furlher, as rightly urgued by the learned counsel for lhe appellants, the mortgage agrcemenl between lhe surelies ond lhe btnk conforms to tlre requirements of lhe Registrution of Titles Act, speciJically lhe form set

r.0

forth in lhe Eleventh Schedule. Minoring lhe schedule, lhe sureties te initially identified os registered proprietors of the land, and the ltnd is identified as security Ior the mortgage. Furthermore, lhe documenl hos been signed by lhe registered proprietors of the land ,... Atfulilionolly, lhe document is correctly stamped, properly lodged for regislralion, tnd all oppropriote fees have been paid to the Minislry of Lond, Housing, and Urban Developmenl.

The oforesaid notwilhstanding, the criticol question regarding lhe nolure of the mortgage agreemenl is whether one con oct both as a surety and o mortgagor in lhe inslrumenl itself, To lhe learned counsel for the respondent one cannol.

On the conlrory to the respondenl, lhe proper mortgogor should have been the comyrny, lhe oclual horrower dthefunds. .,,

Alfirsl glance, it is tempting to conclude that lhe mortgage document is simply a sure|/ agreemenl, obligaling the surety/guaronlor lo pay in lhe event lhe company failed to satisfy ils obligtttions to lhe appellant. Turning to the dgreement ilself, sureties covenanl to "pay to the Bank ,.. nll moneys which ure now or al ony tin e hereafter may be due ond owing by the Comptny to the Bank ....

Be that as il moy, in determining whelher o morlgage exists, we must also anolyze the sureties' promise to pay in conneclion with their obligalions under Parogruph a(l) of lhe agreemenl. It stales, in relevant ptrt, thal while "us belween the Compony ond lhe Surety the Surety is a Surely only for the Company yet ss between lhe Surely and the Bank, the Surety shall be a principol deblor ond the mortgaged properlies sholl be a principal

securily for ilre morrey ,.." In olher words, for purposes of the ogrcement, the sureties are to be considered the morlgagors, ond the bank the mortgogee. Pursuant to lhe ploin lert of lhe dgreemenl, Mr, "lYere Muhwana is a surety as to lhe company, tnd a morlgogor, or principal debtor, as to the appellant. Consequenlly, Ifind that the respondenl's husband could be identified as a surefi) in the mortgage ogreement and slill assume lhe role of principal debtor, or morlgagor,"

It is clear from the above quotation that reaching in reaching its conclusion that a valid mortgage existed between the Libyan Arab Bank and the respondent's husband, the Court of Appeal merely focused on the form of the Mortgage Deed and not the substance of the transaction between the parties. With due respect to the leamed Justices of Appeal, it is my opinion that the Court failed to consider and resolve the question whether the Mortgage Deed that was executed between the respondent's husband was sufficient to create a legal and binding relationship

between the Libyan Arab Bank as the lender; the company, as the principal borrower and recipient of the loan; and the respondent's husband as a surety to the company, so as to be enforceable against the respondent's husband only, as a surety. 15

20 I wish to point out at the onset that I agree that before a mortgage can be considered to be valid, certain formalities must be complied with. These include, for example, the execution of the mortgage deed by the parties to the agreement; the payments of stamp duty, the lodging of the documents in relevant Land Registry; and of course the registration of the mortgage on the Certificate of Title.

While compliance with formalities of creating a mortgage is a must before a legal ?5 mortgage can be created, it is not however true to say that any document which is

tltled 'Legal Mortgage' and which is duly registered following all the formalities required to execute and register a mortgage automatically becomes a valid legal mortgage and should be so construed by a court. For example, ifX buys land from Y and they draw up an Agreement under the Heading 'Leeal Mortgase or

- Mortgage Deed, when the substance of that agreement is no more than an Agreement for Sale of Land, the mere description, compliance with alt the registration formalities and even its registration as a mortgage and as an encumbrance on the Certificate of Title would not make the transaction a valid legal mortgage. 5 - Let me now consider counsel's arguments and the law on whether there was a valid mortgage created between the Libyan Arab Bank and the respondent's husband. 10

#### Arsument that the respondent's husband was both a mortsazor and a suretv

Counsel for the appellant argued and the Court of Appeal agreed with him that the respondent's husband was both a mortgagor and a surety.

It is not clear from the provisions of the Mortgage Act, Cap 229 (repealed) which was the law applicable to mortgages in Uganda at the time that the Act regulated Surety Agreements as well. The Act neither defined sureties nor specifically provided for Surety Agreements. Section I of the Mortgage Act,Cap229 (repealed) only defined a 'mortgage' to mean:

"any mortgage, charge, debenture, loon ogreemenl or other encumbrance, whelher legal or equitable which constitutes a charge over on eslate or interest in land in Uganda or parlly in Ugonda and partly elsewhere and which is regislered under the Act"

a t

In the absence ofa statutory definition, it is necessary that I make resort to the English definitions. According to the Black's Law Dictionary, (supra), a Surety is defined as:

"One who at the requesl of another, andfor the purpose of securing to him a benelit, becomes responsiblefor lhe performance by lhe latler of some oct in favour ofa third person, or hypothecotes property as securily therefor. One who undertakes to poy mone! or to do ony olher act in event thot his principal fails therein. A person who is primarily lifile for payment ofdebt or perforntonce ofobligotion oftnother. See Branch Banking and Trust Co. v. Creasy,30l N. C.44, 269 S. E.2d I17,122."

According to lYords and Phrases Judiciorv Delined, there are three diff'erent kinds of suretyships which are distinguishable as follows

> " (l) lhose in which lhere is on agreemenl to constitute,Ior a particular purpose, the relstion of principol debtor qnd surety, to which agreemenl the credilor secured by it, is a party;

(2) lhose in whiclt there is similar ogreemenl between the principnl debtor snd surety only; lo which tlte credilor is a stronger; und

(3) lhose in which, witltout any such contracl of suretyship, there is u primary and a secondory liobility of two persons for one ond lhe same debt, the debt being, as belween lhe lwo, that ofone ofthose persons only, ond not of both, so that lhe olher if he shoultl be compelled to poy il, would be entitled to reimbursement from lhe person by whom (as belween the two) is oughl to hsve been paitl. (20 Halsbury's Low (4h ed.) paragraph 105)"

Sometimes the term 'surety' is interchangeably used with the term guarantor. For example section 2 of the new Mortgage Act, 8 of 2009 now defines a 'surety' to lrean:

"a person who offers securily in the form of money or money's worlh to ensure the payment of any monies secured by o morlgage snd includes a guoranlor"

Furthermore, according to the Bluck Ltw Diclionary, (supra), while there are some similarities between a 'Surety' and a'Guarantor', they differ as follows:

"A sureQt and guarantor hove this in common, thal lhey are bolh bound for onother person; yet there are poinls of dffirence between lhem, A surety is usually bound with his principal hv lhe same instrument, cxecuted at lhe some tinre ond on tlte some considerotiott. He is an origittal promisor tnd debtor from the bqginuing, unil is held ordinarily to evcry knox'n delhult of his nrincipul.

On the other hand, the contracl of guorantor is his own sepqrote undertaking, in which lhe principal does noljoin. It is usually enlered inlo before or after thal of the principal, and is often founded on o separale consideralion from lhat supporting lhe controct of the principal. The originol contracl of the principol is nol lhe gusrantor's conlracl, and the guorantor is not hound to take notice of its non performance. The surely joins in the same promise as his principol and is primorily liable; the guoronlor makes s seporale ond individuol promise and is only secondarily liqble. His liability is contingenl in lhe defouh of his principtl, tnd he only becomes absolutely liable when such defiult takes place and he is notified lhereof.

#### 25

"A surefi)" and "guarantor" are both answerablefor debl, defuult, or miscarriage of anolher, but lhe liability of guaranlor is, slricily speaking, secondary and collaterol, while thil of surety is original, primary, and direcl. In cose of suretyship there is but one contract, and surety is bound by the same agreement which binds his principol, while in cose of guaranty there are lwo conlracls, and guaranlor is bound by independent undertaking. See Howell v. Commissioner of Internal Revenue, C. C. A 8, 69 F.2d.447, at 450."

It therefore follows, from the definitions above of what a surety is and what hrs legal obligations are, that the only way in which the respondent's husband could have lawfully become a mortgagor for the loan that the Libyan Arab Bank extended to the company, was for him to directly pledge the suit land as security for his undertaking to act as the surety for the company. This is what the Libyan Arab Bank attempted to do by making the respondent's husband to execute the Mortgage Deed as a surety. However, for the Mortgage Deed that was executed between him and the Libyan Arab Bank to be legally valid and enforceable against the respondent's husband, there should have been in existence a loan agreement either signed by the company as the recipient and principal borrower on the one hand and the respondent's husband as a surety on the other hand; or signed by the company alone as the borrower, for whom the respondent's husband was standing as a surety. Only in such a case would it have been proper for the Libyan Arab Bank or its successors in title, to sue or enforce its rights under the mortgage deed against the respondent's husband, as a surety, without having first made a demand or exhausted its rights to recover and take any other action against the company, as the recipient of the loan. The absence of a loan agreement legally binding the 10 15 20 ,q,

company as the borrower and principal debtor made the respondent's husband and

his co-sureties to be solely responsible for the loan extended to the company and not sureties in law, and yet his liability for the loan was meant to be concurrent with the company and not sole.

With due respect to the leamed Justices of Appeal, I therefore find, like the trial Judge did, that the respondent's husband could not have been liable as a surety and at the same time as a borrower in the same Agreement/ the Mortgage Deed.

I am also unable to uphold the Court of Appeal's holding that there was a valid legal mortgage between the Libyan Arab Bank and the respondent's husband, as a surety of the company, in the absence of a separate loan Agreement which bound the company as the principal debtor, for whom the respondent's husband was standing as surety.

For the same reason, I find that although the agreement that was signed between the respondent's husband and the Libyan Arab Bank was titled "Mortgage Deed", and was accordingly registered, the execution and registration ofthe document as a

1s mortgage did not create legal liability which the Libyan Arab Bank or the appellant, even if it had proved its locus as a successor in title, could rely on as mortgagee to enforce its rights against the respondent's husband as a surety.

My opinion is based on the following reasons.

First, from the evidence on the record ofappeal, it is clear that it is the company that was the customer of the Libyan Arab Bank and that it is the company that applied for a loan overdraft facility from the said Bank. This fact was brought out in the evidence of Magezi, the appellant's sole defence witness, (DWl ), who testified as follows:

"... Basically, I hondle defaulters. In that capocity I have access to clefuulting occounls. I had access to Group Procuremenl Limiled sccounts. This group oppliedfor a creditfocilityfrom our Bank. They made a formal application. This is the application I tm referring to. Il is daled 7/10/92. Il wos on the headed letler of Group Procurement Ltd. and signed by the Director F. Kamya, Group Procurement Lttl, gove securily comprised of land in Ntindo in the numes of Christopher Were Muhwana as the registered proprielor, .., The Bank olso received a Powers of Attorney, This is the Powers of Attorney. The loan wts grunted to Group Procurement Ltd, A morlgoge wos execuled."

Secondly, it was the company which received the loan funds that the Libyan Arab Bank released under the Mortgage Deed signed with the respondent's husband. These funds were deposited on the Company's Account by the Libyan Arab Bank.

Thirdly, despite the company being the recipient of the money that the Libyan Arab Bank (from whom the appellant apparently claims), the Libyan Arab Bank did not bind the company as a principal borrower. Although DWI testified that the company signed the Mortgage Deed, this testimony was not truthful because the Mortgage Deed that was tendered into evidence did not bear any signatories who had executed the Deed on the company's behalf. On the contrary, the said 15

Mortgage Deed was actually signed by the respondent's husband, not as a borrower, but as a Surety. Surprisingly, the same Deed contained numerous provisions which obligated the company to perform several acts in relation to the mortgage. The Libyan Arab Bank, for reasons best known to it, opted to execute a Mortgage Deed for lending money to its customer, the company, with only the respondent's husband as a Surety, together with his co-sureties and not to bind the Company which was the borrower and recipient of the loan. 20 25

Furthermore, the record of appeal does not bear the request referred to in the Mortgage Deed that the respondent's husband and his co-sureties are said to have made to the Libyan Arab Bank, to enable this coun to assess what the sureties

5 asked the Libyan Arab Bank to do and what their relationship to the company was. There is also no evidence on the record ofappeal to show that the Libyan Arab Bank ever signed a separate mortgage Agreement with the company.

## What is the relevance ofthe Power of Attornev?

Let me briefly consider the relevance if any, of the power of attomey that the respondent's husband executed in favour ofthe company, because the appellant also sought to rely on it to prove that the suit property had been properly and validly mortgaged to the Libyan Arab Bank.

It is clear from the copy of the Powers of Attomey which are on the record of appeal, that the respondent's husband, who was the registered proprietor, authorized the company to exercise all his rights and interest in all or any ofthe land comprised in Leasehold Register Volume 1289 Folio 12, Plot No. M 437 Ntinda, Kampala. He also authorized the company, as his attomeys to sign in his name all such instruments as would be found necessary for carrying out the said powers. He further authorized the said Attomeys to borrow from any bank upon such terms as to repayment and interest as they think fit. Lastly, the Power of Attorney authorized the company as attorneys, to sign a mortgage or create a

charge upon the suit property as the Attomeys deemed fit for any principal sum, at any rate ofinterest, and for any period. The company therefore had the authority to mortgage the suit property.

It is also clear from the record of appeal that the Powers of Attomey was brought to the knowledge of the Libyan Arab Bank. This was borne out from the appellant's pleadings and from the evidence of DWI. Despite this being so, the

- 5 appellant, by its own volition and policy, chose to deal with respondent's husband as a surety and not to execute the loan documents with its own customer, the company, which was also in possession of a Power of Attomey. Having made this choice, neither the Libyan Arab Bank nor the appellant (as successor in title), could turn around and seek to rely on the same Power of Attorney, because the Mortgage - Deed that was eventually executed between the Libyan Arab Bank and the respondent's husband run contrary to the Power of Attomey he had granted in favour of the company. Instead of the company signing the mortgage deed on behalfofthe respondent's husband, it was the respondent's husband who signed the deed. This being the case, the Power of Attomey, was in my view, rendered irrelevant for purposes of the determining the validity or otherwise of the mortgage deed that was eventually executed between the Libyan Arab Bank and the respondent's husband. 10 15

For all the reasons given above, I would, therefore, hold that even if the appellant zo had been able to prove its locus standi in this matter, it would not have succeeded in this appeal. This is because the Libyan Arab Bank failed to bind the company which contracted the debt as the principal debtor, in addition to the respondent's husband, who was a co-principal debtor by virtue of having agreed to be the company's surety. In the result, the "mortgage deed" that was executed between zs the Libyan Arab Bank and the respondent's husband did not create an enforceable

mortgage.

ln the absence ofa valid mortgage, I find, for different reasons than those given by the Court of Appeal, that the eviction of the respondent from her home was unlawful because it was based on a non- existent mortgage and an invalid surety agreement. It also follows that the purported sale of the suit property was also invalid. I entirely agree with the holding and summation made by learned trial judge, Katutsi, J. when he held as follows:

"Ploinliff has proved lhat she hud an interesl in the suil premises. In os far as lhe Firsl Defendant purporled to ase exhibit "D3" as a valid mortgoge it connot suceeed. ... There being no mortgoge in ploce, lhere is nothing lhe First Defendanl coultl haveforeclosed. Itfollows therefore lhat lhe sale of lhe properly by lhe Firsl Defendant was iruegular and withoul legal support. The purported eviction of lhe Ploinliff was unlowful and csnnol be allowed to stond."

In summary, I find that the Court of Appeal erred in law in relying on its inherent powers to hold that the respondent was unlawfully evicted from the suit property. I also find that the Court of Appeal erred in law in holding that the respondent had lodged a caveat on the suit property when there was no supporting evidence on the record of appeal to support that holding. The Court of Appeal further erred in law in relying on a non-existent caveat to hold that the respondent was unlawfully evicted from the suit property. 20 15

On the other hand, however, I find, for reasons already discussed earlier in thrs judgment, that the moftgage between the Libyan Arab Bank and the respondent's husband was not valid. I further find that since the appellant which ordered the sale of the suit property was not only acting on the basis of an invalid mortgage but it also failed to prove its locus standi in this case, it therefore follows that the

appellant not only wrongfully evicted the respondent but that it also wrongfully sold the said property to the eventual purchasers.

I would hence, for different reasons, uphold the Court of Appeal's holding that the respondent was unlawfully evicted from her home (the suit property) by the appellant because the appellant could not rely on the Mortgage Deed to justifr the eviction of the respondent from the suit property. 5

Having held that no valid mortgage existed between the Libyan Arab Bank and the respondent's husband under which the appellant's actions could have been legally justified, the question arises as to what reliefs is the respondent entitled to? I will now proceed to consider her prayers. 10

The respondent prayed for, among others:

## "(a) u declaration thd the second defendonl holtls the said property in trusl for the plaintffi himself md the finrily in equol sharesl

## 20

## (b) o dechralion that the Plaintiff is an equitable tenant in common of the said property."

At the hearing before the High Court, the respondent claimed that she contributed about 45o/o ofthe total cost of the land and 7 5%o of the cost of construction of the matrimonial home built on the suit property. She further claimed that although the 25 suit property was registered in the sole names of her husband, this was only by mutual agreement. Otherwise, she claimed, the suit property belonged to her husband, herself and the family.

The respondent's husband expressly admitted the respondent's claims above in his Written Statement of Defence and did not participate in the proceedings at the High Court. The respondent's evidence was also supported by another witness, PW2, who carried materials during the construction of the matrimonial home that was built on the suit property. Both the trial court and the Court of Appeal agreed with her.

Having considered the arguments ofboth parties and the evidence on the record of appeal, I have no reason to fault the Court of Appeal and trial judge who believed the respondent's evidence. I agree with the findings of both the trial Court and the 10 Court ofAppeal that indeed, the respondent proved that she had an interest in the property, by virtue ofher contribution.

ln Rwubinumi v Bahimbisomwe, Supreme Court Civil Appeal No. l0 of 2009, this Court upheld the right of a spouse to share in the property acquired during the subsistence ofa marriage, on proofthat the spouse either made a direct financial contribution towards its purchase or development, or an indirect monetary or nonmonetary contribution. We accordingly upheld the division of property between the parties ofall the property they had acquired during the subsistence oftheir one year marriage.

In this particular case, there is ample evidence on the record of appeal to prove that indeed, the respondent had made a direct financial contribution towards the acquisition of the suit property and the construction of the developments thereon as was brought out in her evidence. 20

It is also clear that the evidence adduced by the respondent was sufficient evidence to prove that she had an interest in the suit property. Unfortunately, the respondent's interest was not reflected on the Ceftificate of Title to the suit

irroperty, by the time the respondent's husband gave the Powers of Attomey to the company or by the time he signed the mortgage deed with the Libyan Arab Bank or even as at the time of her eviction. This being the case, it therefore follows that the respondent's interest in the suit property was an equitable interest. As such, the respondent's interest would not have, per se, defeated the rights ofthe Libyan Arab Bank, if the mortgage was valid and also if the mortgage had been registered on the Certificate of Title of the suit property before the equitable interest of the respondent was ever reflected.

The position articulated above was the law that subsisted in 1993 when the Libyan Arab Bank and the respondent's husband entered into this transaction. Under the otd legal regime of the repealed Mortgage Acl, Cap. 229, Laws of Uganda, an unregistered spouse's interest could not defeat the interests ofa mortgagee, arising from a valid legal mortgage which had been duly registered. This law has since 10

been amended by the Land Acl, Act of 1998, Chopter 227, Laws of Uganda (as amended), which now prohibits any person from selling or mortgaging the home where he/she ordinarily resides or where the family ordinarily derive their sustenance, without the consent of his or her spouse, respectively and their children. These protections to spouses are in addition to those provided for in section 5 of the current Mortgage Acl, Act No. I of 2009. 15 20

In the instant case, although it is clear from the facts of this case as bome out in the record ofappeal that the respondent's interest in the suit property remained unregistered and was therefore equitable, I am satisfied, as were the two lower

25 courts, that the respondent established her interest in the suit property. The respondent's prayer for a declaration that she co-owned the suit property with her husband is therefore granted. Since I have held that there was no valid mortgage between the Libyan Arab Bank and the respondent's husband, she is therefore entitled to the reliefs she sought for, as later outlined in this judgment.

5 The respondent also prayed for a declaration that her eviction by the appetlant from the suit property was invalid and void. Based on my findings, I would accordingly declare her eviction ftom the suit property unlawful.

The respondent further prayed for, among others, a declaration that the sale ofthe to suit property was null and void and that the court orders for the cancellation of the sale ofthe suit property. The record ofappeal does not contain any documentary evidence to support the appellant's contention that the suit property was sold to Alfzal Kifan and Hassan Somji and that it has already been transferred to them. The appellant did not tender in evidence the copies oftransfer forms to that effect; 1s how much it realized from the sale ofthe suit property and what happened to the surplus (if any) that remained from the proceeds realized from the sale of the suit property after the outstanding dues under the loan that was granted to the company were paid off.

In spite ofthese evidential gaps, the said purchasers ofthe suit property were not made a party to the legal proceedings between the appellant and the respondent. There is also no evidence on the record ofappeal to show that the purchasers had knowledge that there were any irregularities in the mortgage deed under which the appellant was acting, or that the respondent had an interest in the suit property. For these reasons, I would uphold their purchase ofthe suit property.

In conclusion, I would panially allow this appeal to the extent that the learned Justices of Appeal erred in law in relying on the inherent powers granted to the Court to hold as they did. I would reverse the Court of Appeal's finding that a valid mortgage existed between the appellant and the respondent's husband and dismiss the appeal against the holding of the Court of Appeal that the respondent was unlawfully evicted from her home by the appellant. I would therefore order that:

- a) The appellant refunds to the respondent her proven share in the suit property of 45Yo of the market value of the suit property as at time of its sale. - 10

(

- b) In the event that the value of the suit property was not ascertained as at time of its sale and that it cannot be mutually agreed upon by the parties, the respondent should move the High Court for purposes of establishing this value. - 15

- c) The appellant pays to the respondent, interest on her 45oZ share ofthe suit property, from the date ofthe sale ofthe suit property at the rate of l0% per annum until payment in full. - d) The appellant pays the respondent two thirds the costs ofthis appeal and the full costs in the two courts below. 20

Before I take leave of this appeal, I noted with concem that the record ofappeal that was filed was not only incomplete but that it also included copies of material documentary evidence that were never part of the trial court's record. Another

anomaly observed was that the documents were not arranged in the proper order required under the Judicature (Supreme Court Rules) Directions.

5 I will highlight several examples here to support these concems. The appellant's written statement of defence appearing on pages 85-86 and its reply to the amended plaint appearing on pages 92 - 93 of the record of appeal, respectively, made reference to a photocopy ofthe land title to the suit property annexed to the plaint and marked "AA". The appellant later tendered in the copy of the Duplicate Certificate of Title to the suit property which was marked by the court as "Exh. P5". The copy of the Certificate of Title that the appellant tendered in evidence appears at pages 128 - 133 ofthe record ofappeal and is surprisingly neither marked "AA" nor "Exh. P5". Similarly, according to the record of appeal at page 109, the appellant tendered in evidence a copy ofthe loan application form for 60,000,000/=, which Group Procurement Ltd submitted to the Libyan Arab Bank. The trial court marked thls form as "Exh. Dl", but the form is missing on the record of appeal that was filed in this court. 10 15

Similarly, a copy of the Mortgage Deed which was tendered into evidence by the appellant and was marked "Exh. D3" is missing on the file. In its place is an unmarked copy ofthe Mortgage Deed that appears on pages 113 - 125 the record of appeal, which is missing the signature page (page l4). Counsel for appellant, at the request of the Registrar of this court, availed the Supreme Court a complete copy of the mortgage deed. The copy that was provided included page l4 which appears to be the last page ofthe mortgage deed because it bears signatures ofthe respondent's husband, his co-sureties as well as the witness and the official who ZO

signed on behalf of the Libyan Arab Bank. While this page may be authentic, it

does not have a page numbering ofthe record ofappeal. This make it suspect, as so do all the other documents referred to above.

5 These anomalies were also noted in the respondent's documents. For example, the plaint appearing at pages 82 - 84 and the amended plaint appearing at pages 89-91 of the record of appeal respectively, were supposed to have a copy ofcertificate of title to the suit property marked Annexure "AA"; a copy of the advertisement the appellant run in the New Vision newspaper marked Annexure "PPI1"; and a copy ofthe caveat the respondent allegedly lodged on the suit property marked

Annexure "PPl I1". All the copies ofthese documents that appear on the record of appeal do not bear these markings. Furthermore, the respondent did not tender in evidence any ofthe above documents as exhibits. IU

I would like to underscore the importance of the Registrar, Court of Appeal, as well a party lodging an appeal in Supreme Court, to ensure that the record of appeal filed is not only complete and authentic, but that the documents that were adduced in evidence are arranged in the order required under Rule 83(5) ofthe Judicature (Supreme Court Rules) Directions. Documents that are annexed to pleadings should also remain attached and not be randomly placed in the record of appeal. It is the duty ofcounsel for the appellant, before signing and filing the Certificate of Correctness, as was done in this particular appeal, to ensure that the record of appeal supplied with the Registrar's Certificate is complete and accurate. Any omissions or errors identified should be addressed in a timely manner in accordance with Rules 83 and 86 (3) and (4) of the Judicalure (Supreme Court 15 20

Rules) Directions. 25

]

Similarly, counsel for the respondent should always cross-check the correctness of the record of appeal filed by the appellant and may bring any omissions or errors found, to attention of the appellant for correction. Respondent's counsel can also rectify these omissions by filing a supplementary record of appeal in accordance with Rule 86(1) of the *Judicature (Supreme Court Rules) Directions*.

Compliance with these rules will ensure that the court is not only provided with a full and correct record of appeal to rely on to ensure that justice is done to all parties, but also that parties do not mislead court and manipulate the outcome of matters they have brought before the court by relying on documents, which though relevant, were not tendered into evidence at the hearing and were therefore not part of the record of appeal.

Dated at Kampala this Jehr day of December 2013.

HON. DR. ESTHER KISAAKYE JUSTICE OF THE SUPREME COURT

$5$

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

#### CORAM: ODOKI, CJ, KATUREEBE, KITUMBA, TUMWESIGYE AND KISAAKYE JJ. S. C.)

### CIVIL APPEAL NO.04 OF 2011

#### BETWEEN

TROPICAL AFRICA BANK LTD::::::::::::::::::::::::::::::::::::

#### AND

GRACE WERE MUHWANA :::::::::::::::::::::::::::::::::::

[Appeal from judgment of the Court of Appeal at Kampala (Kikonyogo DCJ, Kavuma and Nshimye JJ. A) dated 20th August 2010 in Civil Appeal No.39 of 2007.1

## **JUDGMENT OF KITUMBA, JSC**

I have had the benefit of reading in draft the judgment of my learned sister Kisaakye JSC. I concur with her judgment and the orders proposed therein.

Dated at Kampala, this $5^k$ day of $10^k$ cember 2013.

CALS, Citumba. C. N. B. KITUMBA

JUSTICE OF THE SUPREME COURT

#### IN THE SUPREME COURT OF UGANDA

### AT KAMPALA

(CORAM ODOKI, C. J., KATUREEBE, KITUMBA, TUMWESIGYE, KISAAKYE, JJSC.)

### CIVIL APPEAL NO. 04 OF 2011

### **BETWEEN**

### TROPICAL AFRICA BANK LTD :::::::::::::::::::::::::::: APPELLANT

### AND

GRACE WERE MUHWANA. :::::::::::::::::::::::::::::::::::

[Appeal from the Judgment of the Court of Appeal at Kampala (Kikonyogo, DCJ, Kavuma & Nshimye, JJA) dated 20th August 2010, in Civil Appeal No. 39 of 2007.

### JUDGMENT OF KATUREEBE, JSC.

I agree with the Judgment and orders proposed by my learned Sister Kisaakye, JSC.

Dated at Kampala, this ....................................

willah be

Bart M. Katureebe JUSTICE OF THE SUPREME COURT

,, (

Ir ,t

# IN THE SUPREME COURT OF UGANDA

# AT T(AMPALA

# CORAM: ODOKI, C. J, KATUREEBE, KITUMBA, TUMWESIGYE AND KTSAAKYE, JJ. S. C)

# CIVIL APPEAL NO 04 OF 2O11

## BETWEEN

# TROPICAL AFRICA BANK LTD : : : : : : : : : : : : : : : : : : : : : : : : : : :APPELLANT

## AND

# GRACE WERE MUHWANA : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : RESPONDENT

[Appeal from the iudgment ofthe Court ofAppeal at Kampala (Kikonyogo, DCf, Kavuma and Nshimye, Jl. A) dated 2oth August 2010, in Civil Appeal No. 39 of2007l

# JUDGMENT OF TUMWESIGYE JSC

I have had the benefit of reading in draft the judgment of my learned sister Kisaakye, JSC.

I agree with the judgment and the orders she has proposed.

t ) L ..day of A<J\*-J.lv.... ZOtS Dated at Kampala this

JUSTICE OF. THE SUPREME COURT

## IN THE SUPREME COURT OF UGANDA AT KAMPALA

# (coRAM: ODOKI C. J; KATUREEBE, KITUMBA, TUMWESIGYE AND KISAAKYE, JJ. SC)

### CIVIL APPEAL NO. 04 OF 2011

### BETWEEN

# TROP]CAL AFRICA BANK LTD :::::::::::::::: APPELLANT

### AND

## GRACE WERE MUHWANA RESPONDENTS

IAppeal from the judgment of the Coutt of Appeal at Kampala (Kikonyogo DCJ, Kavuma, and Nshimye JJ. A) dated 20^ August 2o1o in Civil Appeal No.39 of 2oo7l

### JUDGMENT OF ODOKI, CJ

i-f

I have had the benefit of reading in draft the judgment prepared by my learned sister Kisaakye, JSC, and I agree with it and the orders she has proposed.

As the other members of the Court also agree, the appeal is partially allowed wlth orders as proposed by the learned Justice of the Supreme Court.

/k Dated at Kampala this c ...day of .2013

B J Odoki CHIEF JUSTICE