Court name
Commercial Court of Uganda
Judgment date
14 November 2014

Hossana Real Estates Ltd v Wegoye & Anor (Miscellaneous Application-2013/866) [2014] UGCommC 223 (14 November 2014);

Cite this case
[2014] UGCommC 223

                                                 THE REPUBLIC OF UGANDA

                                   IN THE HIGH COURT OF UGANDA AT KAMPALA

                                                      [COMMERCIAL DIVISION]

                                MISCELLANEOUS  APPLICATION No. 866 OF 2013

                                      [Arising out of Civil Suit No. 526 of 2013]

HOSANNA REAL ESTATES LIMITED :::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

                                                                    VERSUS

1. WEGOYE SUZAN    :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENTS

 2. WEGOYE JULIUS

 

                                   BEFORE: HON. JUSTICE B. KAINAMURA

                                                                RULING

The applicant brought this application under Order 36 Rule 4, Order 52 rule 1& 2 of the CPR seeking orders that;

  1. Unconditional leave be granted to the applicant to appear and defend Civil Suit No. 526 of 2013.
  2. The costs of the application provided for.

The brief grounds as set out in the Notice of Motion are that the suit was filed by the respondents prematurely and discloses no cause of action against the applicant, that the respondents were given possession of the land that they purchased and no time frame was agreed upon for processing of titles, and that the applicant is not in breach of the sale agreement and the respondent has a tenable defence to the whole claim.

The grounds for the application are set out in the affidavit in support sworn by Kaaya Francis one of the company directors and are briefly that;

The applicant executed a sale agreement for sale of part of the land on Block 421 to the respondents.

The pieces of land purchased were part of a big estate of over 600 plots and on that basis no time frame was set for processing the titles since this was a huge task.

Possession of land was immediately handed over to the respondents pending the processing of the certificate of title for the plots and that the purchasers/ owners of other plots are enjoying quiet possession of their land.

The process of the survey, sub-dividing and plotting was completed and the delay in processing of the titles is caused by the on-going computerization of the land registry, notwithstanding that no time frame was agreed upon for the processing of the title with the respondents.

The title is being processed and the delays are caused by the land office and not the applicant.

The applicant was not in breach of the agreement of sale of land executed with the respondents and as a result, the applicant has a tenable defence to the whole of the respondents’ claim.

The 1st respondent filed an affidavit in reply in which she deposed that;

She purchased the land described in Busiro Block 621 Plots 549, 550,531, 532, 530 and 529 from the applicant and paid the purchase price in full on the 9th August 2012.

She requested for the land title on numerous occasions and was told that the delay was as a result of computerization of the lands registry yet the delay was because the applicant had mortgaged the land to Global Trust Bank on 28th June 2011. Further still that the Bank sued the applicant for the monies owed in the case of Global Trust Bank Vs Hosanna Real Estates Limited.

The applicant in the sale agreement warranted that it had absolute legal capacity and absolute authority to deal with the land which they did not have because it was already mortgaged which rendered the sale agreement void ab initio.

The applicant did not disclose that the mother title was mortgaged which amounted to a total failure of consideration and thus a fundamental breach of the contract of sale.

The Bank has foreclosed the security for the loan and is going to sell the land to recover its monies.

Finally that the respondents will suffer more loss and injustice if judgment is not entered against the applicant since there are a number of claimants on the very same piece of land.

In rejoinder, Mr. Kaaya deposed that;

The land sold to the respondents was not encumbered and the respondents are free to enjoy quiet possession. He added that the processing of the land titles is in its final stages.

There was a mortgage which they took as working capital from the Bank but the applicant reached an understanding with Global Trust Bank and all issues were settled.

He concluded that the Bank can therefore not sale the suit land and no injustice shall be suffered by the respondents.

Applicant’s Submissions

Counsel for the applicant relying on the case of Toro & Mityana Tea Company vs. Ibingira Charles (1995) IV KALR 20 stated that leave is granted when the applicant demonstrates a tenable defence to the whole of the respondent’s claim and there are triable issues. He submitted that the grounds for this application are set out in the affidavits deposed by Kaaya Francis and among them is the fact that the suit is prematurely filed and discloses no cause of action. Furthermore, that no time frame was set to process the land title and that the respondents were given possession of their land. Counsel further submitted that the claim in the suit based on breach of agreement is untenable and the applicant has a good and tenable defence to such a claim. He added that in the affidavit in reply, the 1st respondent stated that the delay in processing the titles was due to the mortgage between the applicant and Global Trust Bank. Counsel stated that this was a fact that was within the knowledge of the respondents at the time of purchase. Counsel further submitted that the land bought by the respondents is not affected by the arrangement between the applicant and the Bank. Counsel emphasized that the application has demonstrated that the applicant has a good and tenable defence and the same raises triable issues.

In conclusion Counsel prayed that the applicant be granted unconditional leave to appear and defend Civil Suit No. 526 of 2013.

Respondents’ Submissions

Counsel for the respondent submitted that the applicant must not only show that the applicant has a good and tenable defence to the suit, but ought to satisfy court that there is a prima facie triable dispute which court ought to determine. Counsel cited the case of Maluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 65 where it was held that

“the defendant is not bound to show a good defence on the merits but should satisfy court that there was an issue or question in dispute which ought to be tried and the court should not enter upon the trial of these issues at this stage”.

Counsel also cited the case of Bob Kasango Vs Paul Nalukoola Muwanga MA NO. 0073 of 2011 for the proposition that the court should examine whether there is a real issue or sham in order to save time and have justice done.

Counsel argued based on the authorities cited that the grounds relied on by the applicant do not reveal triable issues, but rather are a ploy to defeat and delay the respondents’ claim and should be dismissed with costs.

On the issue of breach of contract, Counsel relied on Black’s law dictionary at page 285 which defines breach of contract as violation of a contractual obligation, either by failing to perform one’s own promise or interfering with another party’s performance. Counsel emphasized the fact that the applicant sold land to the respondents which they did not have authority to deal with nor capacity to pass title to the respondents. He argued that the nation that the respondents knew that the land was encumbered is not right because they could not have paid     UGX 100,000,000/= for land that had encumbrances. Counsel submitted that the applicant’s action of selling land that was encumbered amounts to breach of contract which has rendered its performance impossible. Counsel concluded that this alone goes to the root of the contract since the applicants did not have any title and the respondents are entitled to treat the contract as discharged. Counsel cited the cases of Laws Vs Chronicle, [1959] 2 ALL ER 285, and Ronald Kasibante Vs Shell Uganda Limited [2008] HCB 162 to support his argument. Counsel prayed that for the reasons above the application should be dismissed with costs.

In the alternative Counsel submitted that should court find that there are triable issues, conditional leave to appear and defend should be granted under Order 36 Rule 8 CPR. Counsel reasoned that the respondents were treated in a manner far from equitable, and accordingly were court inclined to grant leave it should be granted on condition that the applicant deposits in court security equal to monies that the respondents paid to the applicants.

In rejoinder, the Counsel for the applicant submitted that the applicant is not in breach of contract. Counsel added that the respondents are still enjoying quiet possession and the applicant is willing to hand over the certificates of title for the plots of land sold to them. He added that the land claimed by the Respondents forms part of the available land.

On the question of whether the applicant had no authority to sell, Counsel argued that the mortgage arrangement did not bar the applicant from selling. He added that an investigation into this matter will reveal that the mortgage was released and the land is now unencumbered hence the applicant is not in breach.

In conclusion, Counsel reiterated the earlier submissions praying that unconditional leave to appear and defend is granted since the respondents are in occupation and the applicant is ready to process the respondents’ title.

Decision of court

I have given due consideration to the application and reviewed the supporting affidavits and submissions by Counsel. The principles to be applied by court under O.36 r 4 CPR in considering an application for leave to defend a Summary Suit are now well settled.

The applicant has got to prove that there is a bona fide triable issue of fact or law that he will advance in defence of the suit. In the case of Muluku Interglobal Trade Agency Vs Bank of Uganda [1985] HCB 63 Odoki J (as he then was) had this to say:

“Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bone fide triable issue of fact or law. When there is a reasonable ground of defence to the claim the plaintiff is not entitled to summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court should not enter upon the trial of the issues disclosed at this stage”.

The applicant in this case contends that the piece of land purchased by the respondent was part of a big estate comprising of over 600 plots and that the process of survey, sub division and plotting is yet to be completed partly due to the delays in the land registry. It is the applicant’s further contention that it is not in breach of the agreement for sale of the land in issue and should accordingly be granted leave to appear and defend Civil Suit No. 526 of 2013.

In reply, the respondents contend that the 6 plots of land they bought were to be sub divided from Busiro Block 421, Plots 43, 45, 46 and 49. That this same land was mortgaged to Global Trust Bank (the Bank) and in proof of this they attach an offer letter for a credit facility of June 22 2011 from Global Trust Bank, an acceptance letter and a Credit Facility Agreement all of which are attached to O S No. 1 of 2013 between the Bank and the applicant. Also attached is a consent decree in respect of the above mentioned O S which is to the effect that the Bank shall inter alia sell 16 out of 37 acres of the security related to this case i.e land at Ziru, Kawuku/Kisubi Block 421 plots 43,45,,46, and 49.

The respondents are stated to have purchased the land in dispute on 9th August 2012, the credit facility agreement between the Bank and the applicant is dated 28th June 2011 and the Consent Decree mentioned above is dated 7th November 2013.

It is clear to me that as set out under paragraph 4 of the agreement of sale of land mentioned above, the applicant was under responsibility to hand over to the purchaser the certificate of title in respect of the land it sold to the respondents. To date it has not.

That being the case, the respondent was therefore entitled to proceed against the applicant/defendant for breach of contract.

In courts view the applicant has not demonstrated a reasonable ground of defence to the claim accordingly, the plaintiff is entitled to summary judgment.

In the result judgment is hereby entered for the plaintiff/respondent for the sum of UGX 78,666,000/= (Uganda Shillings Seventy Eight Million Six Hundred and Sixty Six Thousand only) with interest at court rate from 9th August 2012 till payment is full and costs for this application and the suit.   

 

B. Kainamura

Judge

14.11.2014