Vivo Energy Uganda Ltd v Lydia Kisitu (Civil Appeal No. 193 of 2013) [2015] UGCA 2037 (16 July 2015)

#### THE REPUBLIC OF UGAITDA

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# IN THE COURT OF APPEAL OF UGANDA AT I{AIVIPALA CIVIL APPEAL NO.193 OF 2013

(Arising from High Court Civil Suit No. 5O7 of 2OO5f

vlvo ENERGY UGANDA LTD ..................................... APPELANT

(formerly SHELL UGAITDA LIMITEDI

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Vs

LYDIA KISITU................o....r.......r......r.................. RESPONDENT

CORAM: HON. JUSTICE SOLOMY BALUNGI BOSSA, JA.

HON. MR. JUSTICE KENNETH I{AKURU, JA.

### HON. JUSTICE PROF LILLIAII EKIRIKUBINZA TIBATEMWA, JA.

#### JIIDGMENT Or. COURT

This is an appeal from the Judgment and orders of Hon. Mr. Justice Rubby Aweri Opio J. (as he then was) wherein he entered judgment for the Plaintiff now Respondent and awarded her UGX.273,OO4,4507: as mesne profits, general damages of UGX.8O,OOO,0OO/= together with interest and costs of the suit.

#### Representation

Mr. Steven Musisi of M/S Mubiru-Musoke, Musisi & Co. Advocates appeared for the respondent while Joseph Luswata of M/S Sebalu & Lule Co. Advocates appeared for the appellant.

Both counsel filed skeleton arguments or conferencing notes which were adopted as part of their submissions which we have taken into account while determining this appeal.

#### Background

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The background to this appeal is as follows:

Semu K Kiwanuka was the registered proprietor of the suit property comprised in Mailo register Volume 810 Folio 1O which later became Kibuga Block 38 Plot 63. He granted a 49 year lease of the said property to Gulam Hussein Alibhai, who was registered as proprietor of the leasehold interest comprised in LRV 382 Folio 14 under instrument number No.453O on 12th April 1956.

Subsequently, the Appellant bought the leasehold interest from Gulam Hussein and was registered as proprietor in L964 and went on to operate a fuel station on the said property and employed a one Bob Kasule as the fuel station manager.

In 2OO4, the Respondent Lydia Kisitu a daughter to Christopher K Mukasa, the mailo holder returned to Uganda and found that her father had become of unsound mind since 199L. In the same year, the station manager Bob Kasule had obtained proprietorship of the mailo interest and transferred the same to the Appellant in 1995. The Appellant had gone ahead and merged the leasehold interest with the reversionary mailo interest.

The Respondent then applied to court and obtained an order to manage her father's estate on account of his being of unsound mind. She then instituted a suit against the Appellant at the High Court and judgment was granted in her favour. The Appellant being dissatisfied with the judgment has now appealed to this court, on the grounds set out in the memorandum of appeal as follows:

1. The Learned trial Judge erred in law and fact in holding that the registration of the Appellant as proprietor of Block 38 Plot 63 was fraudulent.

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- 2. The Learned trial Judge erred in law and fact in awarding unproved/ unclaimed special damages in form of rent and mesne profits to the Respondent. - 3. The Learned trial Judge erred in law and fact in awarding general damages which are: - Excessive in the circumstances; and $i)$ - were not due to the Respondent in the circumstances. ii)

At the joint scheduling conference at this Court, the following facts were agreed upon:-

- That the Respondent is the manager of the estate of her $i)$ father C. K. Mukasa. - That Semu Kiwanuka was proprietor of the land comprised ii) in Mailo Register KIBUGA BLOCK 38 PLOT 63 which he leased to Gulam Hussein. - That the lease was eventually transferred to the $1^{st}$ iii) Defendant (Shell Uganda Ltd now Vivo Energy Uganda) who used the land as a fuel service station. - That upon the death of Semu Kiwanuka the ownership of $iv)$ the land devolved to his son Christopher K Mukasa in 1981. - That the 1<sup>st</sup> Defendant dealt with the said C. K. Mukasa as $\mathbf{v}$ ) its landlord and paid him rent. - That the 2<sup>nd</sup> Defendant (Bob Kasule) was appointed a dealer vi) by the $1^{st}$ Defendant to run the service station. - That the $2^{nd}$ Defendant became a registered proprietor of vii) the suit land on 21.06.1991 vide KLA INSTRUMENT NO 146565. - That the $2^{nd}$ Defendant transferred the land to the $1^{st}$ viii) Defendant on 18<sup>th</sup> April 1995 vide KLA NO. 172616. - That the 1<sup>st</sup> Defendant later merged the mailo and leasehold $ix$ interests.

The Appellant seeks the following orders from court:

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- The appeal be allowed and the Judgment of the High Court $i)$ be set aside and the order allowing the suit be substituted with an order dismissing the suit. - The Respondent pays costs in the lower court and in this ii) court.

# Duty of a $1^{st}$ Appellate Court

This being a first appellate court, we are guided by **Rule 30 (1) of** the Rules of this Court which obliges us to re-evaluate and reappraise the evidence adduced at the trial and come up with our own conclusions on all issues of law and fact.

**Rule 30 (1) (a)** provides that:

"On any appeal from a decision of the High Court acting in the exercise of its original jurisdiction, the court may—

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(a) reappraise the evidence and draw inferences of fact..."

The above rule has been expounded upon in a number of authorities. In **BANCO ARABE V BANK OF UGANDA SCCA NO.8** of 1998, the Supreme Court held interalia that, the first appellate court has a duty to re-appraise or re-evaluate evidence by affidavit as well as evidence by oral testimony, with the exception of the manner and demeanour of witnesses, where it must be guided by the impression made on the trial Judge. We shall therefore proceed to do so.

#### Ground 1

It was argued for the Appellant on this ground that there was no fraud involved or if it was proved, that it could be attributed to the Appellant. That there was no linkage of fraud or evidence adduced to support fraud between Bob Kasule who transferred the land and the Appellant. However, it was conceded by counsel for Appellant that the mode by which the Appellant became registered as proprietor of the suit land was illegal as it was carried out through

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a mutation form and not a transfer instrument as required by Iaw. That the lodgment register did not show that stamp duty had been paid in respect of the said land transfer as the law requires.

It was further argued that the Appellant was a bonafide purchaser for value without notice as the Appellant through its agent carried out the necessary verification at the land registry which showed that Bob Kasu1e was the registered proprietor. That where the person has presented the duplicate certificate of title in his name and the white page at the land registry shows his name, one was not obliged to go behind the register to see the instrument by which he became registered. Counsel cited Section 136 of the Registration of Titles Act to support this argument.

The Respondent on the other hand asserted that the property was never lawfully transferred by her father to the 2"d Defendant who later transferred to the appellant but that the transfer was effected fraudulently using a mutation form.

## Resolution of Court.

The Law, principles and definitions concerning fraud in land matters have been well established overtime. Section 59 of the Registration of Titles Act Cap 23O, is to the effect that possession of a certificate of title by a registered person is conclusive evidence of ownership of the land described therein. Further, Section 64 of the Registration of Titles Act, is to the effect that the estate of a registered proprietor is paramount save in the case of fraud; and under Section L76 (cl, a registered proprietor is protected against ejectment except in the case of a person deprived of any land by fraud as against the person registered as proprietor of that land through fraud or as against a person deriving otherwise than as a transferee bonafide for value from or through a person so registered through fraud.

From the foregoing, it is trite law that a certificate of title by a registered proprietor is conclusive evidence of ownership of the land and has indefeasible title against the whole world save for fraud. (See OLINDA DE SOUZAV I{ASAMALLI MANJI 17-962l E. A 756}.

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A plethora of legal authors and case law have defined what fraud is in regard to land transactions. This Court shall rely on two of the many definitions. In **PYRAMID BUILDING SOCIETY (in** liquidation) V SCORPION HOTELS PROPERTY LTD (1997) VIC **CA**, Hayne JA stated that, fraud may take various forms including, pretence and collusion in the conscious misuse of a power or a dishonest course.

In the case of FJK ZAABWE V ORIENT BANK & 5 OTHERS, SCCA No.4 of 2006 at page 28 Katureebe JSC in his lead Judgment relied on the definition of fraud in **Black's law dictionary (6<sup>th</sup> Edition) at page 660** to mean:

"... An intentional perversion of truth for purposes of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations or by concealment of that which deceives and is intended to deceive another so that he shall act upon it to his legal injury."

In addressing the issue of fraud in the matter before us, we are mindful of the following principles:

- 1. The fraud complained of must have been directly committed by the transferee himself or the transferee must have been aware of the fraud before and taken advantage of it to register as the transferee.(See KAMPALA BOTTLERS LIMITED V DOMANICO $(U) LTD SCCA NO.22/1992)$ - 2. The standard of proof required to prove fraud is a little higher than the ordinary civil standard of proof. This standard was expressed in the case of **FAM INTERNATIONAL LTD &** ANOTHER V MUHAMMED HAMID SCCA No.16 of 1993 which relied on the case of **R. G. PATEL V LALJI MAKANJI (1957) E. A 314** wherein the Court of Appeal said that:

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"Allegations of fraud must be strictly proved; although the standard of proof may not be so heavy as to require proof beyond reasonable doubt, something more than a mere balance of probabilities is required."

# 3. The burden of proof of fraud lies on the party alleging fraud. (See Sections 11O and 111 of the EVidence Act Cap 6).

This court \#ill p to exarnine if the facts and evidence laid before it involved a fraudulent dealing.

In determining whether or not there was fraud and whether the Appellant was a bonafide purchaser for value without notice, we are guided by the question that Wambuzi CJ poised in DAVID SF^IJAI(A NALIMA V REBECCA MUSOKE SUPREME COURT CML APPEAL NO.12 OF 1985 that: "Did the Defendant honestlg intend to purchase the suit prernises and did not intend to acquire it wrongfully?"

In order to answer this question, we shall elaborately look at the account of the facts on record as to how the Appellant carne into ownership of the suit land.

It is on record that Semu K Kiwanuka the registered proprietor of the suit property comprised in Mailo Register Volume 8 Folio 10 later Kibuga Block 38 Plot 63 granted a 49 year lease of the said property to Gulam Hussein Alibhai. On 12th April 1956, Gu1am Hussein Alibhai registered his leasehold interest as LRV 382 folio 14. Subsequently, in 1964, the appellant purchased the leasehold interest from Gulam, had the interest registered and set up a fuel station.

Upon demise of the l"t registered proprietor- Semu K Kiwanuka, his son Christopher K Mukasa took over the property and became the registered proprietor and thereby became landlord of the Appellant to whom they were paying ground rent.

On 10th January 1988, Christopher Mukasa by letter notified the appellant of his decision not to renew the Appellant's lease upon its

\ t( expiry in 2005 when the Appellant rejected his proposal to have the annual rent increased from Ushs.15O/= to 150,O00/:.

During the operation of the fuel station, between the periods of 1986 and 1992, the Appellant employed a one Bob Kasule as a dealer and manager of their station. By this arrangement, Bob Kasule was to remit some money to the Appellant which had accrued to the tune of 58,268,000/=. In settlement of this debt, Bob Kasule offered the suit land to the Appellant. This arra.ngement was considered satisfactory by the Appellant in offsetting Bob Kasule's accrued debts.

There is nothing on record to indicate that the disputed plot 63 was transferred to Kasule through a transfer instrument or an agreement of sale in the land registry. The only evidence on record is a mutation form lodged and registered on 2l l6l L99L. A mutation form aids sub-division and not transfer of ownership. It is also on record that it is during the period of 1991 that Christopher Mukasa was diagnosed with dementia, a condition that impairs memory.

This Court is satisfied that the above facts elucidate a fraudulent dealing for the following reasons:

First, the fact that there was no evidence to show that the suit land was transfered to Bob Kasule through a proper instrument of transfer save a mutation form points to fraud attributable to the transferee. Secondly, the fact that Bob Kasule was registered as proprietor of the land in 1991 which period coincides with that when the Respondent's father was diagnosed with dementia (a condition that affects memory); gives credence to the possibility that Bob Kasule could have manipulated and or exploited the situation to fraudulently have his name on the certificate of title without any opposition or challenge.

Having found that Kasule who subsequently transferred the land to the appellant had been registered through fraud, this Court has to go ahead and determine whether or not the appellant is a bonafide purchaser for value without notice before its title can be impeached.


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The Appellant in the circumstances cannot claim to be a bonafide purchaser for value without notice for the reason that prior to 1991, it was paying the annual ground rent to the Respondent. This is evidenced by correspondence between the two in which the Respondent had sought to increase ground rent. Therefore, at the moment when Bob Kasule purportedly transferred the suit land to them as the registered proprietor, it should have put them on notice of a possible fraud as to how he had become the registered proprietor. There was no notice to them of change of proprietorship from the respondent.

In a similar case of **ROBERT LUSWESWE V KASULE &** COULIBALLY CIVIL SUIT No.1010 of 1983 (unreported), the Plaintiff was the original registered proprietor of two adjacent plots of land that is plot 120 and 121. The Plaintiff had constructed a house on plot 120 while plot 121 was vacant. Due to the political turmoil in the country, the Plaintiff was detained in prison and his absence was exploited to have his property and certificates of title stolen. Upon the Plaintiff applying for a special certificate of title, he discovered that the second plot had been transferred and registered in the 2<sup>nd</sup> Defendant's name (Coullibally) who alleged he had bought the same from one Kasule the 1<sup>st</sup> Defendant, who allegedly had bought it from the Plaintiff. The Plaintiff denied ever selling the land to anyone and sought an order to cancel the registration of the $2<sup>nd</sup>$ Defendant on ground of fraud.

In resolving the issue as to whether the $2^{nd}$ Defendant was involved in fraud. Court interalia held **that there was sufficient** circumstantial evidence to establish fraud against him as the records of the alleged instruments of transfer from the Plaintiff to the $1^{st}$ Defendant, and from the $1^{st}$ Defendant to the $2^{nd}$ Defendant were missing from the registrar's office.

It is no defence for the Appellant to say that the certificate of title was enough in establishing the ownership of Bob Kasule when there was circumstantial evidence that should have put him on notice requiring him to go beyond the certificate of title. In the **Pyramid case** (supra), it was stated that willful blindness may

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amount to fraud. Further, in the case of **UGANDA** POSTS&TELECOMMUNICATIONS v ABRAHAM KITUMBA SCCA NO.36 of 1995, court held that:

"a person who purchases an estate which he knows to be in occupation of another person other than the vendor must *make inquiries* ... "The Court relied on the case of **TAYLOR V STIBBERT [1803-13] ALLER 432** and further held that, "the defendant failed to make reasonable inquiries of the persons in possession and such ignorance or negligence formed particulars of fraud."

This Court, in the case of SIR JOHN BAGEIRE V AUSI MATOVU, **C. A. C. A No. 07 of 1996** has also emphasized the value of land and the need for thorough investigations before purchase wherein Court interalia held that:

> "Lands are not vegetables that are bought from unknown sellers. Lands are valuable properties and buyers are expected to make thorough investigations not only of the land but of the sellers before purchase".

In the premise, we find that the transaction in the appeal before us is tainted with fraud arising from the transferee Bob Kasule which the Appellant had a chance to get to know had he exercised due diligence beyond that which was reflected in the register. For this reason, ground one fails as it lacks merit, and is hereby dismissed.

## Ground 2

On ground 2, it was the Appellant's argument that the learned trial Judge erred when he awarded the respondent a sum of $273,000,000/$ = as mesne profits, as the same had not been pleaded or proved. That mesne profits are special damages that require to be pleaded specifically and since they were not pleaded, they should not have been awarded. It was further argued that the estimated rate of rent of shs.6,000,000/ $=$ per annum was way too high in

comparison to the rate charged by neighbouring fuel stations which were charging between UGX.4, 000,000/ $=$ and 5,000,000/ $=$ .

For the Respondent it was argued that the suit land had always been in the possession of the Appellant from when it was first leased by the Respondent's grandfather. That from 2004, the Appellant had no right to be on the station because the lease had expired. The Appellant had derived substantial benefits from the station. The estimated rate at which the Respondent were claiming the rent was derived from the evaluation made by MPG Associates who put the market value of the fuel station at $6,000,000/$ = per month totaling to a sum of $546,000,000/$ = as rent in arrears that the Appellants owed the Respondent.

The Learned trial Judge held that rent is determined by both parties to the lease. That it is a presumption that both parties could have agreed to a lesser or higher amount than the figure of $6,000,000/$ =. The Learned trial Judge then stated that, he would give the benefit of doubt to the appellant and fixed the rate at $3,000,000$ /=" making the grant of mesne profits at $273,004,450/$ =.

### **Resolution of Court**

Section 2(m) of the Civil Procedure Act cap 71 defines mesne profits as:

"... those profits which the person in wrongful possession of the property actually received or might with ordinary diligence have received from it together with interest on those profits, but shall not include profits due to inputs made by the person in wrongful possession."

It is settled law that wrongful possession of the Defendant is the very basis of a claim for mesne profits. In **UGANDA COMMERCIAL** BANK V KIGOZI [2002] 1 E. A 305, the Court of Appeal stated that for mesne profits to accrue, the Defendant must be in wrongful possession of the suit property as against the Plaintiff and deriving the profits from the property together with interest on the

profit. It was further stated that the usual practice is to claim for mesne profits until possession is delivered up, the Court having power to assess them down to the date when possession is actually given.

Mesne profits therefore can only be claimed from the date when the owner of land was deprived of possession of the land or property.

Mesne profits are a special form of damages in that they are compensatory in nature and are assessed from the point at which the Plaintiff loses rightful possession of their property to the Defendant to the point of instituting a suit against the Defendant for ejectment. It is the Respondent's case that from the period of 2005 when the Appellant's lease term had expired to 2012 when the suit was instituted, the Appellant was in wrongful possession. It is this same period that the learned Judge considered in assessing the total rent due to the Respondent as mesne profits.

We reject the Appellant's submission that such mesne profits were special damages and as such had to be specifically pleaded. As we have found above, it is not that mesne profits are special damages in the known legal definition of that term but are a special category of damages accruing from wrongful possession of land or trespass. All that the Respondent needs to show is that the Appellant made an unauthorized entry on the land. It is on record, that the Appellant's lease was due to expire in 2005 and the lessor-Christopher Kiwanuka was not willing to renew their lease of which the Appellants were notified of the same. Therefore, their continued possession of the suit land from the period of expiry of the lease i.e. from 2004 to 2012 amounted to trespass and wrongful possession.

We therefore uphold the learned trial Judge's findings and holding in respect of the award of mesne profits.

Accordingly, ground two also fails.

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# Ground 3

It was argued for the Appellant that the Learned Judge erred in awarding special damages that were not due to the Respondent as no evidence was tendered to prove the same. That it could not simply be assumed that somebody was inconvenienced or annoyed. For the Respondent, it was contended that the Appellant retained the suit land for so long to justify an award of damages as given by the Learned High Court Judge not in the nature of aggravated damages as in the **Zaabwe case** (supra) but admittedly as general damages.

Regarding the claim of general damages by the Respondent, the learned Judge rejected the claim of UGX.100, 000,000/ $=$ finding that such a claim would not be fair especially that mesne profits had also been awarded. The Learned Judge then awarded the Respondent a lesser sum of UGX.80, $000,000/$ = as general damages.

## **Resolution of Court**

Trespass is actionable per se without proof of damages. It is trite law that every injury imports a damage when a man or woman is denied of his or her right. (See ASHBY v WHITE 92 ER 126).

We are also persuaded by the authority of **LANIER V BURNETTE**, 245 Ga App.566 (Ga. Ct. App. 2000) where the appeal court of Georgia held that:

# "Where there occurred a trespass, general damages do not have to be proven with any amount to an absolute certainty for recovery of such damages."

It is also trite law that quantification of general damages is an issue of discretion and an appellate Court can only interfere with the exercise of discretion of the trial Judge only where he has acted on a wrong principle or where the award is manifestly low or high as to occasion a miscarriage of justice. (See: MBOGO V SHAH [1968] **E. A. 93 at 96).** We have found no reason to interfere with discretion of the trial Judge in this case. We do not consider the award to be

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manifestly too high, neither did the Judge apply a wrong principle of law while making the award.

We therefore uphold the award of general damages by the learned trial Judge and find no merit in this ground, too.

#### **Conclusion**

This appeal therefore fails on all the grounds and is accordingly dismissed for lack of merit. The Judgment and decree of the Learned High Court Judge is upheld.

The Respondent is hereby awarded costs of this appeal and in the court below.

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

Robbarg HON. JUSTICE SOLOMY BALUNGI BOSSA, JA. Manu HON. JUSTICE KENNETH KAKURU, JA. Lasatense HON. JUSTICE PROF LILLIAN EKIRIKUBINZA TIBATEMWA, JA. $16.07.15$

Stephen Musici for Despondent Foseph Luswata for Agrellanes<br>Frank Agaba Court clerk Respondent in court. Mr. Musici it in for findement reading Ct furgmene read.