IN THE HIGH COURT OF UGANDA AT KAMPALA
MISC. APPLICATION NO. 316 OF 2010
(ARISING OUT OF CIVIL SUIT NO. 92 OF 2009)
Mr. Kiwanuka Peter Samuel of counsel for Applicants/objectors
Mr. Enos Tumusime of Counsel for 2nd Respondent
1st Respondent unrepresented.
Mr. Makoha Ojambo
2. An order setting aside the attachment and sale and releasing the property comprised in Bugerere Block 123 Plot Nos. 1116, 1413, and 1616 Kayunga Town Council does issue.
3. Costs of the application be provided for.
2. The Judgment Debtor was never and has never been in possession of the suit property.
3. That it is in the interest of justice that the court does issue an order setting aside the attachment and sale and releasing the property comprised in Bugerere Block 123 Plot Nos. 1116, 1413 and 1616 Kayunga Town Council Bugerere which has been advertised and is due for sale.
The brief background to this application is that on 15th July, 2005, the 1st Respondent, Nikom Systems Ltd, borrowed U.SHS 30,000,000/- at an interest of 22.5% per annum for a year from the 2nd Respondent, Cairo International Bank Ltd. And mortgaged property comprised in Plot 1616 Block 123 Kayunga Bugerere. The 1st Respondent duly repaid the loan.
On 6th February, 2006, the respondents executed a further change on the said, property for a fresh credit facility of Shs. 36,000,000/- at an interest of 24% repayable within 12 months. The 1st Respondent failed or refused to repay the money advanced.
On 31st August 2006 the 1st Respondent was granted a further credit facility of Shs. 65,000,000/= at 25.5% per annum repayable within one year against an additional security comprised in Block 208 Plot 2370 Kawempe, Kyadondo. The 1st Respondent failed or refused to repay the monies advanced.
Also on 12th September 2006, the 1st Respondent granted a Temporary Overdraft of Shs. 20,000,000/= for a period of one month. The 1st Respondent failed or refused to repay the Overdraft in the sum of Shs. 26,573,573/= inclusive of interest.
So the 2nd Respondent filed Civil Suit No. 92 of 2009 against the 1st Respondent seeking to recover a total sum of Ug.Shs 122,301,978/=. Judgment was given in favour of the 2nd Respondent who seeks to recover the decretal sum by way of attachment of land at Bugerere, Block 123 Plot 1116, 1413 and 16161 Kayunga and developments thereon. The land is the subject of this application.
The Applicants are husband and wife. They have filed two affidavits in support. One is deponed to by Mubiru Galiwango Patrick (2nd Applicant) and the second by Mubiru Rose (1st Applicant). The 2nd Applicant avers that he is the registered proprietor of the suit land. That on 1st May 2005 he gave a Power of Attorney to the 1st Respondent (Judgment Debtor), Nikom Systems Ltd to have physical possession of his Certificate of Title to the suit land, to deposit, pledge or mortgage the same to the 2nd Respondent (Judgment Creditor), Cairo International Bank Ltd as security for a loan or overdraft. He contends that the Power of Attorney was to last for a period of six months as per the Memorandum of understanding attached to the affidavit as Annexure “C”. That on 15th July 2005, the judgment Debtor obtained a loan of Shs 30,000,000/- repayable within a period of one year and mortgaged as security only Bugerere Block 123 Plot 1616 Kayunga. He further contends that the said loan was fully paid off by the judgment debtor. That on 6th February 2006, the judgment debtor pledged/mortgaged the same land to the judgment creditor as a further charge in order to obtain a credit facility of Shs. 36,000,000/=. The 2nd Applicant contends that he has never authorized or given power to the judgment debtor to obtain a further charge on the said plot 1616 and that he duly resolved the Powers of Attorney after 6 months. That on 23rd April 2010 an advert was placed in the New Vision whereby his land comprised in Bugerere Block 123 Plot 1116, 1413 and 1616 Kayunga was to be sold on orders of the High Court because the judgment debtor had failed to pay a loan owed to the judgment creditor amounting to Shs. 122,301,978/=. He contends that the above property are not liable because:
- The judgment debtor has never been in and is not in possession of the said plots
- Plots 1116 and 1413 are not subject of a mortgage of the judgment debtor.
The 2nd Respondent, Judgment Creditor, filed an affidavit in reply deponed by Hedwidge Gariyo, the General Manager. She depones to the Credit facilities advanced to the Judgment Debtor and contends that the judgment debtor had deposited as security the Title Deed comprised in Block 123 Plot 1616 Kayunga Bugerere in the names of the 2nd applicant and a Power of Attorney from the 2nd Applicant. In paragraphs 8 and 9 she states:
9. That the 1st Respondent attended court in response to the said Notice to show Cause and the Court ordered for attachment and sale of the 2nd Applicants property, Block 123 Plot 1616 Kayunga, Bugerere to satisfy the Judgment Debt in HCCS No. 92 of 2009.”
Rule 56 requires the objector to adduce evidence to show that at the time of attachment he/she had interest in the property. While rules 57 and 58 require proof that the property was at the time of attachment in possession of the objector, so held on his/her own account. It is not disputed that the 2nd Applicant is the registered proprietor and owner of the suit property. It is also not disputed that the Applicants occupied, used and stayed on the suit land as a family with their children. I therefore find that the applicants had interest and possession of the suit property at the time of attachment.
It is not disputed that part of the suit land, that is Plot 1616 Kayunga, was mortgaged by the 1st Respondent to the 2nd Respondent pursuant to a Power of Attorney granted to the 1st Respondent by the 2nd Applicant, the registered proprietor thereof. However, it is clear from the pleadings before this Court that the suit property had not been advertised for sale by the 2nd Respondent to release the loan advanced to the 1st Respondent but in execution of a Court Order judgment debt. So it was not being advertised for sale as security to release a loan advanced but in execution or satisfaction of a judgment debt. Of the three plots it was only plot 1616 deposited as security. So if it was an issue of sale of security to release a loan it was only plot 1616 which would be subject to sale and not plots 1116 and 1413 which were not the subject of Mortgage Deed.
However, the Power of Attorney granted to the 1st Respondent was in respect of more than one plot. It was in respect of Block 123 Plots 16161, 1116, 1413, 1414, 1437 and 1043 Kayunga Bugerere and powers granted were, inter alia;
The principles and procedures guiding objection proceeding was summarized in the Supreme Court case of David Muhenda & others vs. Margaret Kamunye SCCA No. 9 of 1999 as follows:
(ii) The Objector shall adduce evidence to show that at the date of the attachment he had same interest in the property attached.
(iii) The question to be decided is whether on the date of the attachment the judgment Debtor or the objector was in possession, or where the court is satisfied that the property was in 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 of possession of and some interest in the property.
(iv) 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 of or in trust for the judgment debtor or some other person. To that extent the title may be party of the inquiring”.
It is an undisputed fact that the 2nd applicant had granted a Power of Attorney to the 1st Respondent to mortgage the Certificate of Title to various plots, the suit land plots inclusive to the 2nd Respondent. I agree with Mr. Enos Tumusime, counsel for the 2nd Respondent, that the Power of Attorney empowered the 1st Respondent to mortgage the suit land to the 2nd Respondent. That the Power of Attorney was unlimited in time and amount. That there is no evidence that the 2nd Respondent was a party or aware of the Memorandum of Understanding between the 2nd Respondent and the 1st Respondent which purported to limit the Grant of Power of Attorney to a loan of Shs, 30,000,000/= for a period of six months. As rightly observed by Counsel Tumusiime, the Power of Attorney is dated 18th May 2005. The Shs. 30,000,000/= Mortgaged is dated 15th July 2005. Yet the Memorandum of Understanding is dated 18th July 2005. So the Power of Attorney before Court and upon which the credit facility was secured by the 2nd Applicants’ described properties predated the Memorandum of Understanding. It is not the Power of Attorney provided for in the Memorandum of Understanding. I also agree with Mr. Tumusiime that there is no evidence to show that the Revocation of Power of Attorney dated 20th November, 2005 was registered or brought to the notice of the 2nd Respondent. All that the 2nd Applicant says in his affidavit is:
I however, do not agree with Mr. Tumusime that the Power of Attorney was unlimited as to number of loan facilities. The Power of Attorney was by the Deed limited to “as security for a loan or Overdraft”.
The use of “a” in the deed cannot be interpreted to mean loan or overdraft facilities. The use of “a” before loan or overdraft imports “one” loan or overdraft. Thus limiting the grant, in the instant case, to the first mortgage or loan facility of Shs. 30,000,000/=. By utilizing the Power of Attorney for the subsequent loan or overdraft facilities without the 2nd applicant’s authority or consent the Respondents were acting contrary to the Grant. Mr. Tumusime argued that the Power of Attorney had the effect of passing power of the 2nd Applicant to the 1st Respondent to give as security and to mortgage the Certificate of Title to the various plots therein and for the mortgagee thereof, in the instant case the 2nd Respondent, to realize the security by sell of the said plots in satisfaction of the mortgage. He submitted that the 2nd Respondent would never have extended credit facilities to the 1st Respondent hadn’t it been for the availability of security pursuant to the Power of attorney. True but such right was limited as per the provisions of the Power of Attorney and to the property actually mortgaged.
See Rehema Nakibbuuka vs. Bank of Baroda HCCS NO. 1492 of 1999.
As to whether the Applicant held the suit land on their own account or in trust for the judgment debtor, a Power of Attorney has no effect of passing title to the Grantee thereof. To hold that the Applicants were holding the land in trust for the Grantee of a Power of Attorney will be defeating the essence of a Power of Attorney. I accordingly find that the Applicants were in occupation of the suit land on their own account and not in trust for the Judgment Debtor.
All in all the Applicants/Objectors have satisfied this Court that they had interest in the suit land at the time of the attachment and they had possession thereof on their own account. The Application is allowed and the said land is removed from attachment. The applicants are awarded costs of this application.