Wambaya & 4 Others v NC Bank Uganda Limited & Another (Miscellaneous Application 593 of 2023) [2023] UGCommC 271 (21 November 2023)

## THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION NO. 0593 OF 2023 lARrsrNG FROM EMA NO. 290 OF 20211 lARrsrNG FROM CrVrL SUrT NO. 234 OF 20181

I. WAMBAYA ANDREW 2. KALEMA LAWRENCE 3. KIMERA RONALD 4. SSEMUDDU FRANCIS 5. MUWONGE ASUMAN: : : : : : : : : : :: : : : : : : : : : : : : : : : : OBJECTOR/APPLICANTS VERSUS

I. NC BANK UGANDA LTD:::::: RESPONDENT/JUDGMENT CREDITOR 2. JOMAYI PROPERTY

CONSULTANTS LTD:::::::::::::::::RESPONDENT/JUDGMENT DEBTOR

# BEFORE: HON. LADYJUSTICE ANNA B. MUGENYI

## RULING

This Application was brought by way of Notice of Motion under Order 22 rules 55, 56,57, Order 52 rules I & 3 of the Civil Procedure Rules (CPR), Section 33 of the Judicature Act, and Section 98 of the Civil Procedure Act (CPA) for orders that:

a) This Honorable court releases properties Comprised in Kyaggwe Block 148 plot 729 at Mukono (claiming 50 decimals), Busiro Block 42 plot 685 at Wakiso

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(claiming 23 decimals), Busiro Block 127 plot 543 at Mengo (Claiming 11.5 decimals), Busiro Block 410 Plot 299 at Sisa Kawuku (claiming 18 decimals) and Busiro Block 432plot294 at Bugabo (claiming 12.5 decimals) where the Applicants respectively claim portions from execution in respect of a decree in Civit Suit No 234 of 2018.

b) Execution of the said decree concerning properties mentioned above is stayed/set aside.

c) Costs of this Application are provided for.

The Application was supported by the Affidavits of all five Applicants and was opposed by the Affidavit in reply of Brenda Kyokwijuka, the Legal Manager of the I't Respondent and Charles Kasozi, the director ofthe 2nd Respondent.

## BACKGROUND

By an agreement dated the l3th of July 2017,the 2nd Respondent purchased land comprised in Busiro block 410 plot 20 now plot 299 at Ssisa measuring 50.2 acres from the 1 " Respondent at a sum of 1 ,506,000,000/: which land had been mortgaged to the I sr Respondent. The 2nd Respondent failed to pay the agreed sale price and was sued by the l" Respondent vide civil suit no.234 of2018 for recovery ofthe outstanding balance of 1,255,000,000/=. The l,tRespondent and 2nd Respondent subsequently entered into a consent judgment which was endorsed by the court on the 1 1th of September 2Ol9 and a certificate of taxation endorsed on Zl't May 2021 .

The 1't Respondent then applied to this court vide EMA No 290 of 2021 to execute the decree by way of attachment and sale of the 2nd Respondent's immovable assets. On the 30th of March 2023,the court granted the application for execution and issued a warrant of attachment in respect of the properties listed in the application for execution. The Applicants thus brought objector proceedings against the l.tand 2nd Respondent for the properties that are subject to attachment.

## REPRESENTATION

The Applicants were represented by IWs Anguria & Co Advocates, the I't Respondent was represented by IWs AF Mpanga Advocates, and the 2nd Respondent was represented by lWs F. Ampaire Advocates and Solicitors.

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#### SUBMISSIONS

The Applicants submitted that there is sufficient cause and it is in the interest of justice that the Applicants' properties that are subject to execution under EMA No.290 of2021 be released as they purchased the properties before the suit was filed and Judgment was entered against the 2nd Respondent, executed sale agreements and were immediately given physical possession of the said land which they are in occupation. Counsel relied on the case of Mary Nakato vs Nanyonga Rose and Ssekito Edward HCCA No.412l2011 and the case of Chotabhai M. Patel vs Chaprabhi and submitted that the sole question to be investigated by the Court is one ofpossession and interest in the property and in this case, the Applicants have by the sale agreements and concession of the 2nd Respondent demonstrated that the properties were sold to them before the suit was filed. Counsel also relied on the 2nd Respondent's Affidavit in reply where they stated that they informed the l'( Respondent that some of the properties do not belong to them and were already sold offand they have also not objected to this Application.

The I't Respondent submitted that if the 1",2nd,3'd,and 5th Applicants have any interest in the land; it is only an equitable interest since they do not have any certificates of title to the said pieces of land. The land claimed by the 4th Applicant does not belong to him and he cannot claim the same as it is subject to a mortgage for which the 1 't Respondent is a mortgagee and in possession of the certificate of title. Counsel further submitted that as a principal for objector proceedings, there has to be proof of possession and no proof of physical possession has been laid by all the Applicants in respect of the land and all the certificates of title are in the name of the 2nd Respondent. He also stated that the Application is a syndicated Application between the Applicants and the 2nd Respondent a reason why the same is not being opposed by the 2nd Respondent.

Counsel for the 2nd Respondent submitted that they do not oppose the Application as they indeed sold those pieces ofland as it is the nature oftheir day-to-day business and they brought this to the attention of the Court in the presence of the I't Respondent. There is no connivance between the 2nd Respondent and the Applicants as insinuated.

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Counsel for the Applicants in rejoinder submitted that the claims by the I't Respondent that they are a syndicate do not align as there are 29 properties listed and the properties objected to are only a few ofthose and ifindeed it was a syndicate the Application could be affecting all the properties. Pursuant to the Application for Attachment by the 1't Respondent, the next cause of action will be the sale of these properties yet the same no longer belongs to the 2nd Respondent.

## RT]LING

The purpose ofObjector Proceedings is to prevent property from being attached if that property is at the date of attachment not in the judgment debtor's possession or if the judgment debtor is holding it in trust for another. An application for objector proceedings therefore acts as a bar to a warrant of attachment. (Senteza Erieza & Anor vs Twesigye Eliyasi & Anor HCMA No.57 of 2020)

The provisions that provide for Objector Proceedings are Order 22 rules 55, 56 and 57 of the CPR which are reproduced below:

## Order 22 Rule 55 of the CPR provides that:

" Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that the property is not liable to the attachment, the court shall proceed to investigate the claim or obiection with the like power as regards the examination of the claimant or obiector, and in all other respects, as if he or she was a party to the suit; except that no such investigation shall be made where the court considers that the claim or objection was designedly delayed ".

## Order 22 Rule 56 CPR provides that:

"The claimant or objector shall adduce evidence to show that at the date of the attachment, he or she had some interest in the property attached".

This order therefore places the duty on the objectors to adduce evidence that on the date ofthe attachment, they had some interest in the property in issue.

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#### Further Order 22 Rule 57 CPR provides that:

"where upon the investigation under rule 55 the court is satisfied thatfor the reason stated in the claim or objection, the property was not, when attached, in the possession of the judgment debtor or of some person in trust for him or her, or in the occupancy ofa tenant or other person paying rent to him or her, or that, being in the possession of the judgment debtor at that time, it was so in his or her possession not on his or her own account or as his or her own property, but on account of or in trust for some other person, or partly on his or her own account and partly on account of some other person, the court shall make an order releasing the property, wholly or to such extent as it thinlu fit, jlom attachment ".

The guiding principles in cases of this nature were considered in the case of Chotabhai M. Patet v Chaprabhi 119581 EA 743 which was cited with approval in David Muhenda and 3 others v Margaret Kamuje SCCA No. 9 of 1999 as follows:

- l. Where an objection is made to the attachment of any property attached in execution of a decree on the ground that such property is not liable to attachment the court shall proceed to investigate the objection with the like power as regards examination of the Objector, and in all other respects as if he was party to the suit. - 2. The Objector shall adduce evidence to show that at the date ofattachment, he had some interest in the property attached. - 3. The question to be decided is, whether on the date of attachment, the Judgment Debtor or the Objector was in possession, or where the court is satisfied that the property was in the possession of the Objector, it must be found whether he held it on his own account or in trust for the Judgment Debtor. The sole question to be investigated is, thus, one ofpossession of, and some interest in the property. - 4. Questions of legal right and title are not relevant except so far as they may affect the decision as to whether the possession is on account ofor in trust for the Judgment Debtor or some other person. To that extent, the title may be part of the inquiry.

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In objector proceedings, the question to be investigated is therefore one of interest and possession.

In the present Application, the Applicants stated that they bought land from the 2nd Respondent and attached land sale agreements as evidence of their interest in the said properties. The Applicants' assertion that they have interest in the said properties was corroborated by the 2nd Respondent's admission in paragraph 5 of their affidavit in reply that they had sold offsome ofthe properties that are a subject of the attachment to their clientele. During the proceedings for execution, the 2nd Respondent also objected to the aftachment ofthe properties listed and disclosed to both the trial Registrar and I't Respondent that some of the properties attached were already sold off and in possession of third parties.

The I't Respondent admits and states that the certificates of title to the disputed properties are still in the names of the 2nd Respondent and submits that if at all the Applicants have any interest in the land then it is an equitable interest.

A sale agreement is a contract between parties and Section l0(l) of the contracts Act defines a contract as an agreement made with the free consent of parties with the capacity to contract for a lawful consideration and with a lawful object with the intention to be legally bound.

It is a settled principle that before the transfer of the land, a buyer under contract acquires only an equitable interest in the land. (John Katarikawe v William Katwiremu and Anor ll977lIJCB 187). Therefore, the legal interest remains with the vendor at this point until a transfer of the same is made to the purchaser of the land.

In the case of Ismail Jaffer Allibhai & 2 others v Nandlal Harjivan Karia & Anor SCCA No. 53 of 1995 U9961 MALR I on page 13, Oder JSC stated that:

"On completion of a contract of sale of immovable property, the property passes to the purchaser, and the vendor holds it as a trustee for the purchaser. The legal title, on the other hand, remains with the yendor until the transfer is effected. The equitable title which passes to the purchaser is considered to be superior to the vendor's legal title, which is extinguished on payment of the purchase price by the purchaser. "

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In the case of Halima N Wakabi v Asaba Selevano HCCA No 6412008, the leamed Judge stated that the rationale behind the passing of the equitable title to the purchaser is that it serves as an insurance or safeguard against any potential mischief by the vendor. It is for this that the purchaser's equitable title is, in the eye ofthe law, superior to the vendor's legal title, as a right in personam (as between the two persons).

Applying the principles as set out in the decided cases above, to the instant case before me, the true meaning to be attached to the expressions contained in the sale agreements attached by the I't, 2od, 3rd' and 5th Applicants is that the parties (Applicants and 2nd Respondent) duly concluded an agreement which was a contract of sale of land. The sale agreements were all executed before the attachment and the 1't Respondent's suit against the 2nd Respondent. The Applicants therefore acquired an equitable title/interest to the land and notwithstanding that had the Applicants not been in possession, the vendor would have held the property in trust for them pending the execution ofthe instrument oftransfer.

In Objector Proceedings, the objectors must prove that they have an interest in the said properties and in this case, the 1't, 2nd, 3'd, and 5th Applicants have proved and demonstrated that they have an equitable interest in the said properties and as stated in the above case of Ismail Jaffer Allibhai (supra), their interest is considered superior to the vendor's legal title. The l't Respondent has not proved and demonstrated that the sale agreement executed by the parties is unenforceable and was an afterthought.

On the issue of proving possession, the 1't,2nd, 3'dand 5s Applicants state in their Affidavit in support that they had not been issued certificates oftitles because the pieces of land had not been subdivided but were in actual possession in the said pieces of land. They however did not demonstrate and provide evidence of their actual possession of the said land. The I'r Respondent stated in their Affidavit in reply that the Applicants were not in actual possession of the land but equally did not adduce evidence or demonstrate this to the Court.

It is however not in dispute that the certificates of title are in the names of the 2nd Respondent and since they sold the land to the Applicants, the Applicants are deemed to be in constructive possession of the said pieces of land. In any case, in

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the land sale agreements, it is indicated that *the vendor grants full possession of the* property to the purchaser on full payment and is free to use his property *immediately...* Therefore, in the absence of any evidence that the said Applicants are not in possession of the land in issue, it is evident that it was the intention of the parties in the agreements that the purchaser is given full possession of the properties in issue upon full payment. The Respondents did not avail any evidence to to show Applicants did not pay in full and neither did they dispute the said land sale agreements.

I, therefore, grant the Application for the 1<sup>st</sup>, 2<sup>nd</sup>, 3<sup>rd</sup> and 5<sup>th</sup> Applicants and order that the said properties be released from attachment and the execution of the same be stayed.

In regards to the 4<sup>th</sup> Applicant who claims an interest in property comprised in Busiro block 410 plot 299 at Sisa Kawuku claiming 18 decimals, the 1<sup>st</sup> Respondent submitted that the said property was mortgaged by JB Ssemwogerere to the 1st Respondent in favor of a facility extended to Value Trading Stores Ltd which defaulted on its loan obligations. The 1<sup>st</sup> Respondent is therefore a mortgagee in relation to the said transactions in which the said property is a subject. This fact is not disputed by the 4<sup>th</sup> Applicant and the 1<sup>st</sup> Respondent.

I am therefore inclined to believe that the 1<sup>st</sup> Respondent has legal interest in the said property and the interest passed by the 2<sup>nd</sup> Respondent to the 4<sup>th</sup> Applicant could not be a good interest. The Application of the 4<sup>th</sup> Applicant is therefore denied.

Costs are awarded to the successful Applicants while the 4<sup>th</sup> Applicant will pay costs of his Application.

Anhitatre

HON. LADY JUSTICE ANNA B. MUGENYI **DATED...................................**