Court name
Commercial Court of Uganda
Judgment date
17 December 2014

Mukasa v Cooperative Bank Ltd (In Liquidation) (Miscellaneous Application-2014/799) [2014] UGCommC 180 (17 December 2014);

Cite this case
[2014] UGCommC 180

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APPLICATION 799 OF 2014

PROSCOVIA MUKASA:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF

VERSUS

COOPERATIVE BANK LTD (IN LIQUIDATION):::::::::::::::::::::::::: DEFENDANT

 

BEFORE THE HON. MR. JUSTICE HENRY PETER ADONYO

RULING

  1. Background.

This application is brought under Order 41 rules 1, 2, and 9 of the Civil Procedure Rules seeking a temporary Injunction to retrain the Respondent and/or their Agents and all persons claiming under it from selling, alienating, dispossessing or dealing with the Applicant’s property comprised in LRV 1776 plot 65B Jinja Road Mukono in any way, pending the disposal of HCCS No. 615 of 2014. The application is grounded in the affidavits of Allan Kimera a donee of a Power of Attorney from the Applicant.

 

  1. The law.

The criteria for the grant of a Temporary Injunction are well established and there are numerous judicial decisions in that respect. They are to the effect that such an applicant must show that;-

  1. She/he has a prima facie case with a probability of success in the main suit-the term prima facie case means that there is a triable issue.
  2. She/he  would suffer irreparable injury which damages would not be capable of atoning if the temporary injunction is denied; and
  3. Where the court is in doubt as to whether an applicant would suffer an irreparable or substantial injury which would not be adequately compensated by an award of damages, then the court normally decides such an application based on the balance of convenience between the parties that arises by either the grant or refusal of the temporary injunction. See:  Francis Babumba & 2 others v Bunju.

 

  1. Resolution of this matter.

In the instant application, the applicant has submitted strongly that she has triable issues in the main suit HCCS No. 615 of 2014 including facts that the intended sale of suit property without sanction of court was illegal in that she states the enforcement an equitable mortgage under section 129 of the Registration of Titles Act requires the leave of court which remedy of sale the respondent was seeking to exercise with this principle having been well pronounced upon by the learned author of Principles of Land Law in Uganda by John T Mugambwa at page 123 of 124 and in the Court decision of Rehema Namuli versus James Mulwana HCCS 613 of 2004 in 2013 where my learned sister Justice Percy Tuhaise held that ‘the law is that an equitable mortgagee cannot sell property mortgaged to him/her without first seeking and obtaining a court order of foreclosure after filling a suit against an equitable mortgagor’.

Thus that by referring this decision the instant matter, it would be found that the affidavit of Evelyn Nanyonga that no court order of foreclosure had been obtained by the respondent for the sale of the suit property making the intended sale of property without sanction of court to be illegal and hence making the applicant believe that she has made a prima facie case which has a probability of success to warrant the grant of the temporary injunction that is sought.

Secondly, in regards to whether the respondent has any equitable or legal interest in the suit property, the applicant argues that are two aspects to it, that is, extinction of the respondent’s purported mortgage and the grant of the credit facilities is contested. In regards to the extinction of respondent’s purported equitable mortgage, the applicant argues that even assuming that such right existed in the first place, then such interest was extinguished under the Limitation Act as the said transaction of 30th August 1991 which was sought to be enforced in August 2014 was twenty three years late being that such interest in the suit land must be shown within twelve years as per Section 18(4) read together with section 18(1) and Section 16 of the Limitation Act. Section 18(4) of the Limitation Act provides thus;-

‘Nothing in this section shall apply to a foreclosure action in respect to mortgaged land, but the provisions of this Act relating to actions to recover land shall apply to such an action’.

that when read with the provisions of the Limitation Act relating to actions to recover land as regards disclosure contained in Section 16 which provides that;-

“Subject to Section 8 and 29 of this Act, and subject to the other provisions thereof, at the expiration of the period prescribed by this act for any person to bring an action to recover land(including a redemption action), the title of that person to the land shall be extinguished.”,

then the Respondent would have no case as  the period prescribed for bringing an action to recover money secured by a mortgage can only be  twelve years as provided for by section 18(1) of the Limitation Act which provides as follows;-

‘No action shall be brought to recover any principal sum money secured by a mortgage or other charge on property whether real or personal, or to recover proceeds of the sale of land, after expiration of twelve years from the date when the right to receive the money accrued.’

The applicant further refers to Halsbury’s Laws of England Third Edition at page 228 which has similar provisions of the Limitation Act on a mortgage are explained as hereunder;

‘A foreclosure action by a mortgage is treated as an action to recover land; other actions by a mortgagee are treated as actions to recover money charged on land are dealt with subsequently. After the prescribed period has expired the title of the person whose action has been barred is extinguished.’

The applicant also referred this Hon Court to the case of  Re Hazeldine’s Trusts 1908 1 Ch 35 where the above provisions are demonstrated at page 40 to reinforce its submission. The quoted aspect of which are in the following words;

“I am clearly of the opinion that the effect of the Act of 1833 was to extinguish the title of the mortgagee in a case like the present. That being so, there is nothing which the mortgages can claim, because they have now become creditors without any remedy on the covenant to pay, and without any charge in as much as their title is extinguished,’

In the view of the applicant, this case of Re Hazeldine’s Trusts is at four with the present respondent’s position in that here is respondent who is stated to be a creditor without any remedy on the covenant to pay and without any charge with a title which is extinguished by the Limitation Act. The applicant therefore urged this court to find so.

The other matter which the applicant urged this court to consider is the issue of the credit facility which the applicant contests in that whereas the respondent contends that Vincent Mukasa took out credit facilities and encumbered the suit land, the applicant contests the same on the basis that there is no evidence of a loan application by Vincent Mukasa neither was there any evidence of loan agreement between the bank and the said Vincent Mukasa in addition to any evidence of any disbursement of money to Vincent Mukasa’s account by the bank and so premised on these reasons given above , the applicant urged this Hon court to find that that the respondent prima facie does not have any equitable or legal interest in the suit property in light of the Limitation Act and that credit facility was contested in any event.

Additionally, the applicant urged this Hon Court to find that since the applicant as the registered proprietor of the suit property did not consent to its pledged as security, then the resultant transaction is invalid and cannot be the basis of selling the suit property as was the case in the decision of Henry De Souza Figueiredo v George Talbot 1962 EA 167 at 171 and so  the court ought to allow this application such that the issues raised by the applicant contesting the respondent’s case are put for trial in order to determine the issue of whether the applicant consented to the pledging of the suit property as security or not.

In making these arguments, the applicant thus invited  this Hon  Court to find that this application should be seen to disclose serious triable issues with the probability of success to warrant the grant of an injunction and that the applicant would suffer irreparable damage which cannot be atoned by an award of damages considering that the Respondent was in liquidation, was not carrying out any income generating activities and its liabilities far exceed its assets as shown by Annexture PM6 of Allan Kimera’s affidavit in rejoinder at page 3 where the Deputy Governor Bank of Uganda in his speech to creditors indicates that the respondent is insolvent to the tune of 4.3 billion and hence not capable of paying any damages to the applicant in case the main suit is decided against it if it is not restrained from selling the suit property, leaving the applicant lose her house , be unable to pay her creditors thus occasioning her irreparable damage that cannot be atoned for with an award of damages.

Further, the applicant in paragraph 8 of the affidavit in support indicates that if the suit property is sold she and her dependants will have no place of abode with her being of advance age of over 55 years as indicated in paragraph 9 unemployed with no fixed income with the probability of not affording to rent an alternative property or purchase another and so the selling of the suit property will render her destitute during the pendency of the suit yet she has a high chance of success in the suit. The applicant referred to the case of Francis Babumba & 2 others v Bunju HCCS No. 679 of 1990 where it was held that ‘loss of accommodation counts to irreparable injury as any amount of damages cannot adequately compensate that loss.’

As regards the balance of convenience, the applicant states that it is in her favour in that she is currently in occupation of the suit property thus dislodging her from the same will create more inconvenience to her yet the respondent on the other hand would not be prejudiced in any way if the property is preserved in her possession till the determination of the main suit, in any case the applicant has occupied the property for the last 23 years with and surely the respondent can wait for one or more years for the court to determine the matter substantively since even the property is encumbered by the Respondent’s caveat thus relying further on the case of  Francis Babumba & 2 others v Bunju where the court granted an injunction partly on the basis of the fact that the applicant was in occupation of the suit property and with no alternative accommodation. The Applicant therefore invited the court to follow the above decision and grant the relief sought in the instant application with costs;

In response, the respondent raised as a first a preliminary objection on point of law in that it submits that the application is incompetent for being supported by an affidavit of an unauthorized person under the law since the application contained an affidavit sworn by one Allan Kimera, a son to the applicant. That this is  manifest from the records that the main suit was filed by Proscovia Mukasa personally on the 4th day of September 2014 with the instant Application being filed in the names of Proscovia Mukasa on the 12th September 2014 but the affidavit supporting the application was sworn by one Allan Kimera.

That the appearance of parties to a suit is governed under Order III rules 1 of the Civil Procedure Rule, which is to the effect that any application or appearance in Court shall be made in person or by his or authorized agent.

Rule 2 of Order III defines who authorized agents to include persons holding a power of attorney. The instant application, was filed by Proscovia Mukasa, but supported by an affidavit of Allen Kimera through a purported power of Attorney made on the 3oth August 2014. A Power of Attorney under the Registration of Titles’ Act is governed under section 146 of RTA which requires such power of attorney to be registered in accordance with registration of documents’ Act to be effective. The power of attorney annexed to paragraph 12 of the affidavit in support of the application was never registered as require under the law and therefore the Deponent lacked capacity to act as a recognized agent envisaged under Order III Rule 2 of the Civil Procedure Rules. It therefore follows that the application, which is requires to be supported by affidavit, was supported by affidavit of a party not recognized to do so under the law.

In the case of Kaingana v Dabo Boubou [1986] HCB 59, an affidavit was sworn by a husband on behalf of the wife. Court held that there was no authority given to him to qualify him to act for his wife either as advocate or a holder or power of Attorney. The affidavit was therefore held to be incompetent and defective.

In his affidavit in rejoinder, the said Allan Kimera attached under paragraph 1 of the affidavit in rejoinder a power of attorney registered on the 8th day of October 2014.

Section 85 of the Evidence Act gives guidance on what confers validity on a power of Attorney; the said provision states as hereunder;-

‘The court shall presume that every document purporting to be a power of attorney and to have been executed before and authenticated by a notary public, or any court, judge, magistrate, or representative of any government of the Commonwealth, was so executed and authenticated.

The term ‘authentication’ as used in the above provision is defined in Black’s Law dictionary at page 151 as the act of proving that something is true or genuine, especially so that it may be admitted in evidence.’

The implication of section 85 of the Evidence Act is that execution and authentication before a notary public or some other recognized person is what grants validity to a Power of Attorney. In the instant case, the power of attorney granted to Allan Kimera was executed by the applicant and authenticated by a notary public on the 30th of August 2014 as can be seen in Annexture PM1 of Allan Kimera’s affidavit in rejoinder.

The Applicant therefore argued that from the said date, the power of attorney became effective and valid entitling him to give evidence in the present application.

In any case, if I were inclined to agree with the Respondent’s objection, I find that the affidavit in rejoinder by Allan Kimera dated the 13th day of October 2014 was deponed to after registration of the Power of Attorney on the 8th of October 2014 and so the said affidavit in rejoinder clearly would support the present application thus rendering it competent thus making believe that the same is not as an afterthought and an abuse of court process since  the fact as exists is that there is indeed a power of attorney.

I find from the evidence adduced herein that there is indeed that a prima facie case raised by the applicant with a high probability of success showing that if the applicant’s prayers are not allowed , there is a high chance that she would suffer irreparable injury which are not capable of being compensated by damages as the  applicant is in situ such that any other contrary action would make her be evicted from the said disputed suit property thus my belief is that the balance of convenience is more in her favour than the respondent. Indeed when all these are taken into account, it is imperative that this case has all the ingredients of such a case which ought to be heard inter parties and then decided on its merits.

Further, there are two pertinent issues which have also been shown herein. That is limitation period under Section 18 of the Limitation Act and equitable interest. These two issues which have been raised by the applicant when considered carefully seem to me go to the root of the dispute between the parties before me and in my view the justice of the case would by necessity give the applicant locus to contest the respondent’s proposed action of alienation of the suit property thus making me be of the firm opinion that the there are indeed substantial triable issues which warrant the grant of the prayers in the instant application.

  1. Orders.

In the premises, I am inclined to allow this application with orders that temporary injunction doth issue as prayed in this application and make further orders that the costs of this application be in the cause.

 The consequential order is thus therefore that the dispute between the parties be heard inter parties to determine in full rights of the parties conclusively.

I do so order accordingly.

 

 

 

Henry Peter Adonyo

Judge

17th December, 2014