THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
MISCELLANEOUS APPLICATION NO. 0470 OF 2001
[ARISING FROM CIVIL SUITS NO. 0578 & 0595 OF 1998]
1. NECTA (U) LTD }
2. JOHN NDYBAGYE }:::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANTS
CRANE BANK LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT
BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA
This application was brought under the provisions of ss.35 and 40 of the Judicature Statute 13/96 and ss. 35 and 101 of the Civil Procedure Act, as well as Order 48 rules 1 and 2 of the Civil Procedure Rules. The applicants sought for declarations that the decree in the consolidated HCCS 578 and 595 of 1998 was fully satisfied and that the purported sale of the (1st) applicant’s property and developments at Plot 94 High Street in Mbarara was null and void. They also sought for an injunction to restrain the respondent from disposing of the property or threatening the 2nd applicant with civil arrest, and the costs of the application.
It is noted that all the laws cited above have since been revised and the revised versions came into force by virtue of The Laws (Revised Edition) (Principal Laws Commencement Instrument) SI 69/2003 and The Laws (Revised Edition) (Commencement of Statutory Instruments) SI 6/2003. Save for the numbering of the sections in the revised laws, the content of provisions cited remained the same. I will dispose of the application on the basis of the law under which it was filed but will also refer to the current sections of the Laws of Uganda as revised in order to give this ruling the current perspective of the law.
From the onset, it is important to note that this application was consolidated with HCCS No. 197 of 2003, Necta (U) Ltd v. Crane Bank Ltd. & John K. Tumwebaze, by an order made Arach Amoko, J (as she then was) on 29/08/2003. The two matters will therefore be considered together as far as this application goes.
The grounds of the application stated in the notice of motion were that the applicants and the respondent agreed to settle HCCS 578 and 598 of 1998 out of court. That the 2nd applicant assigned shs. 264,382,000/= which he said was held in his favour on the account of Premier Lotteries Ltd. by the respondent and that as a result he does not owe the respondent any money. That there could not have been a valid sale of the 1st applicant’s property as this court did not order any execution against it and the purported sale under a mortgage was null and void. Finally that the applicant(s) would suffer irreparable loss and damage if the property is sold or if further execution is levied against them.
The application was supported by an affidavit dated 10/10/2001 and a supplementary affidavit dated 8/11/2001, both deposed by the 2nd applicant. The respondent filed 2 affidavits in opposition deposed by B. Thirupalu and Sudhir Ruparelia on 7/11/2001. The applicant filed an affidavit in rejoinder deposed by the 2nd applicant on 15/11/2001.
When the application was called on for hearing before Ogoola, J, on the 14/04/2005, Mr. Kakuru who represented the applicant requested for an adjournment because his client was ill and he could not proceed without him. Mr. Nangwala took exception to the proposed adjournment stating that the applicant had been taking the court for “a ride” in the matter. He then disclosed that he would be raising a preliminary objection that, in his view, could dispose of the whole matter.
In order to expedite the conclusion of the preliminary objection, the court ordered that written submissions be filed. By 14/06/2005 when the matter was next called on for hearing, counsel for both parties informed court that they had since the last hearing each filed their written submissions on the preliminary objection raised. The ruling thereon was reserved for 7/07/2005 but for a reason that I could not deduce from the record that did not happen. The case file was allocated to me sometime in February 2011 and I now proceed to make this ruling on the preliminary objection.
In his submission filed on 17/05/2005, Mr. James Nangwala relied on the statement of Mr. Reghu Nair, the head of Credit in the respondent bank dated 28/09/2004 that had been filed in HCCS 578 and 595 of 1998. He submitted that the application was an abuse of the court process because the substance of it had been disposed of in M/A No. 1767 of 2000, wherein my sister, Arach Amoko, J, delivered a ruling on the 10/07/2001. Mr. Nangwala argued that in that application for a temporary injunction, the applicant there and in this application claimed that the decretal sum in HCCS 578 and 595 of 1998 was fully paid and the Judge dealt with the issue. He therefore concluded that the issue was res judicata and that the applicant filed an appeal against that decision but it was not known what the status of the said appeal was.
Mr. Nangwala further stated that the applicant applied for stay of execution of the decree in HCCS 578 and 595 of 1998, in M/A 415 of 2001, but that application was dismissed with costs. He therefore asserted that the instant application, in whatever manner it is disguised, is a repetition of the applications that have already been disposed of by this court. He prayed that the application be struck out with costs to the respondent before evidence is taken in the consolidated matter.
In an equally brief reply, Mr. Kenneth Kakuru submitted that though the questions raised here were in issue in HCCS 578 and 595 of 1998, the parties decided to settle the two consolidated suits out of court and that therefore the pertinent issues raised in this application were never resolved. That the bank purported to sell the applicant’s property though the mortgage on which the sale was based was not properly executed under the law. He referred to the decision in General Parts (U) Ltd. v. NPART, SCCA No. 4/2000 for the submission that such a mortgage was unenforceable. He went on to state that because the applicant’s property was sold by private treaty on the basis of an improper mortgage to recover shs. 60m, the applicants again sued the respondent in HCCS 197 of 2003, Necta (U) Ltd. v. Crane Bank & John K. Tumwebaze. That in HCCS 197/2003 the applicants challenged the sale of their property and prayed for a declaration that the decree in HCCS 578 and 598 of 1998 had been fully satisfied. He stated that what the applicants seek to establish in this application and the suit is whether the decree in HCCS 578 and 595 of 1998 was satisfied by assignment of certain funds held on account of the 2nd applicant in respect of Premier Lotteries Ltd., and the sale of the property at Plot 94 High Street, Mbarara.
Mr. Kakuru went on to state that several questions relating to the transactions between the parties remained unresolved as follows:-
Whether the sale by private treaty based on a mortgage whose validity was challenged was valid.
2. Whether the respondent could sale the property on the basis of a decree but without a warrant issued by court; and
Whether John Tumwebaze the purchaser obtained a valid title as an innocent purchaser for value when he had first to remove a caveat on the title before he had it transferred into his name.
He finally concluded that the preliminary objection was misconceived and he prayed that it be dismissed with costs.
Section 7 of the CPA provides for res judicata as follows:
“No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try the subsequent suit or the suit in which the issue has been subsequently raised, and has been heard and finally decided by that court.”
There are 6 explanations of the concept/doctrine after the main provision. These are that the expression “former suit” denotes a suit which has been decided prior to the suit in question whether or not it was instituted prior to it; that the competence of a court is determined irrespective of any provision as to right of appeal from the decision of that court; that the matter referred to in the provision must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other. And any matter which might and ought to have been made a ground of defence or attack in the former suit shall be deemed to have been a matter directly and substantially in issue in that suit. Further that any relief claimed in a suit, which is not expressly granted by the decree, shall, for the purposes of the section, be deemed to have been refused. And finally, that where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in that right shall, for the purposes of the provision, be deemed to claim under the persons so litigating. It therefore becomes necessary to consider what the issues in HCCS 578 and 595 of 1998 where.
HCCS 578/1998 was between John Ndyabagye, the 2nd applicant here as plaintiff, and Crane Bank Ltd. as the defendant. In that suit, the plaintiff sought to challenge the defendant’s efforts to enforce the repayment of an overdraft granted to the plaintiff by the sale of the property at Plot 94, High Street in Mbarara. He also sought to challenge the collection of the same overdraft by the cashing of a blank cheque that he had issued to the defendant as security for repayment of the same overdraft. The plaintiff claimed that the defendant’s efforts were premature because repayment of the overdraft was not yet due when the defendant took steps to recover the monies and that therefore she was in breach of contract. The plaintiff therefore prayed that a permanent injunction do issue to restrain the bank from selling the property and that damages be awarded for breach of contract. She also prayed for an order for specific performance requiring the defendant to extend the period within which to pay the debt by one month.
On the other hand, HCCS 595/1998 was between Necta (U) Ltd., the 1st applicant here as plaintiff, and Crane Bank Ltd. as the defendant. In that suit the plaintiff claimed to be the owner of the property known as Plot 94 High Street Mbarara which was offered as a security to the defendant on account of a loan granted to John Ndyabagye. The plaintiff claimed that the bank in breach of contract prematurely froze the facility and demanded payment from Ndyabagye. That the bank then went on to advertise the property for sale before the borrower defaulted on his payments and before making any demand for repayment of the debt. The plaintiff thus sought for a permanent injunction to restrain the bank from selling the property, damages for breach of contract and a declaration that the bank could not sell off the property.
Going by the pleadings in the two suits, the issues that had to be decided in the consolidated suit were:- (i) whether the bank was in breach of contract when it recalled the loan; (ii) what was the quantum of the monies owed by the plaintiffs at the time? (iii) Whether the amount owed was due; (iv) whether the bank had the right to sell off the mortgaged property to recover that amount; and if not, (v) whether the plaintiffs were entitled to a permanent injunction to restrain the bank from selling off the property and to damages for breach of contract.
On 22/02/1999, by consent of the parties the two suits were consolidated and by consent an order and decree was entered in the following terms:-
Both HCCS 595 of 1998 – Necta (U) Ltd. v. Crane Bank Ltd. and HCCS 578 of 1998 – John Ndyabagye v. Crane Bank Ltd. be and are hereby consolidated.
2. Judgment is hereby entered for the Defendant against the Plaintiffs jointly and severally in the sum of shs. 105,840,411/= (one hundred and five million, eight hundred and forty thousand, four hundred and eleven shillings).
3. The plaintiff do pay interest on the decretal sum at the bank rate from the date of filing the suit until payment in full.
4. The Plaintiffs do pay the taxed costs of the suit to the Defendant.
The Judgment shall not be executed until expiration of a period of 6 (six) months from 22nd February 1999.
Clearly the terms of the decree reproduced above do not have anything to do with the propriety or otherwise of the sale of the property that the plaintiffs in the suit sought to restrain the bank from selling. All that was agreed upon by the parties and therefore adjudicated upon in the suits was the amount of money that was due from the plaintiffs to the bank, never the question whether the bank had a right to sell the property under the mortgage or not. And I cannot read it into the decree that because the parties did not agree upon it the defendant was allowed to sell the plaintiffs’ mortgaged property to recover the loan. All that the court did was to, in the same decree and by consent of the parties, stay execution thereof for a period of six months and such execution was not necessarily related to the property at Plot 94 High Street Mbarara.
But subsequent to the decree and after the six months had expired, the property was sold. The respondent claims that the property was sold by an order of this court while the applicant denies it. Therefore what is in dispute in this application and HCCS 197/2003 is whether the property at Plot 94 High Street Mbarara was sold in execution of the decree above or pursuant to the mortgage referred to in the consolidated HCCS 578 and 595 of 1998. The questions raised by Mr. Kakuru in his submissions are therefore all still very pertinent and pending determination by a competent court. The facts upon which those issues are based occurred after the decree was entered; they cannot therefore be res judicata.
Regarding the respondent’s contention that the question as to whether the decretal sum in HCCS 578 and 595 of 1998 was satisfied was decided in M/A No. 1767 of 2000, the relevant part of the decision relating to the question needs to be reproduced here in order to establish whether the question was decided or not. At page 6 of her ruling the Judge found and ruled as follows:-
“The circumstances of the said payment are not clear and need(s) to be properly investigated. That being the case, the parties will definitely need to call witness (es) and to adduce documentary evidence to prove that the decree was satisfied as alleged. The evidence will include records of the Applicant’s rights, if any, in Premier Lotteries Ltd, the operations and records of the Respondent bank in respect of any monies held thereon on account of the Applicant which the Applicant has used to satisfy the decree in question. Although I agree with Mr. Kakuru that a Notice of Motion is by definition a suit and that objector proceedings is not the proper procedure in this case, it is my considered opinion that the proper procedure should be a formal suit in order to determine the issue whether the decree has been satisfied or not. This cannot in my view be dealt with under the procedure adopted.
In conclusion, and for the foregoing reasons, I find the application incompetent and I strike it out, with costs to the Respondent.”
There is no doubt from the excerpt above that the issue whether the decree was satisfied or not was not decided because of lack of evidence on the issue. The application was not suited to deciding such questions and perhaps the reasons advanced were not suitable for granting an order for a temporary injunction. Though the application was dismissed that does not mean that the question was decided in favour of the respondent. Applicant was simply advised to bring a suitable action in which it could be decided and she did; she filed HCCS 197/2003, and this application.
I also carefully perused the decision in M/A No. 415/2001 which was attached to the respondent’s submissions. That application had been brought for an order to stay execution of the sale of the property in dispute. The application was not granted, not because the court ruled that the sale of the property was a valid one, but when dismissing the application, the court ruled as follows:-
“It appears from the affidavit in reply (I think rejoinder) of Mr. Ndyabagye (sworn) on 21/9/2001, that he is challenging the sale of the said property. If that is the case, then it is a different matter, in my view; and not one that can be dealt with in an application of this nature. Under the law, a sale under a warrant of execution is valid unless declared null and void or illegal by another court order. Section 101 of the CPA, section 16 of the Judicature Statute and Article 126 [(2)] (e) of the Constitution cannot be used to save the situation. In the circumstances, I am inclined to disallow this application. The property whose sale is sought to be stayed has been sold. There is nothing to save. Court cannot give orders in vain. The application is accordingly dismissed. …”
Given the decision above, it cannot be said that because the Judge found that the property had already been sold, and stay of execution could not issue in the circumstances, she also found that the sale was valid. All she said was that if the sale was following an order issued by this court, which is denied, it could not be set aside except by another court order issued to reverse it.
I would therefore be inclined to agree with Mr. Kakuru’s submission that the issue whether the 1st applicant’s property was properly sold is an issue that has never been decided in a court with competent jurisdiction. It has also never been decided substantively whether the decree in HCCS 578 and 598 of 1998 was fully satisfied by the applicants. There is also a pending issues as to whether the mortgage under which the respondent claims to have sold the property in dispute was valid. The application and suit now pending before court cannot be res judicata as was alleged for the respondent. It also cannot be an abuse of the process of the court.
Would the alleged pending appeal be prejudicial to the instant application? The respondent claims that the applicants filed an appeal in the Court of Appeal. In proof of that a copy of a notice of appeal dated 12/06/2001, in M/A 1767/2000 was annexed to the respondent’s submissions. They also admit that they do not know what happened to the said appeal, meaning that they do not have any real proof that the applicants followed up the notice of appeal by lodging an appeal.
M/A 1767/2000 was an application for an injunction brought under s. 16 (2) ( c) of the Judicature Statute and Order 48 rule 1 and 2 of the CPR. S. 16(2) of the Judicature Statute was the equivalent of s.14 of the same statute of the 2000 Edition of the Laws of Uganda. S. 14 (2) (c) of the Judicature Act provides that where no express law or rule is applicable to any matter in issue before the High Court the jurisdiction of the High Court shall be exercised in conformity with the principles of justice, equity and good conscience. The applicant therefore sought for an injunction under that provision of the law by filing a notice of motion under the general provision of the CPR for such applications.
I have carefully considered the provisions of Order 44 CPR which is the equivalent of Order 40 of the repealed rules and which used to provide for appeals from orders as well as s.76 CPA. The same do not provide for appeals as of right from orders following applications for temporary injunctions. And there is no evidence that leave was sought to lodge an appeal against the order dismissing M/A 1767 of 2001. There could therefore be no appeal that would prevent the applicants from bringing this application.
But even if there was an appeal, s. 34 (1) CPA which was then s.35 of the CPA provided that all questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge, or satisfaction of the decree, shall be determined by the court executing the decree and not by a separate suit. S. 35 (2) then provided that the court could, subject to any objection as to limitation or jurisdiction, treat a proceeding under s.35 CPA as a suit, or a suit as a proceeding, and could, if necessary, order payment of any additional court fees.
The rationale of s.35 of the CPA was succinctly stated in The Registered Trustees of Kampala Archdiocese & Dan Mpungu v. Harriet Namakula, Richard Mugaba T/A Bamu Partners & Auctioneers, Kaggwa Nantamu Mike & G. Wakulyaka; H.C.C.A. No. 1024 of 1997, which arose from Harriet Namakula v. The Registrar of Titles, H.C.C.S No 47 of 1996. Ntabgoba, PJ. (as he then was) discussed the purpose of s. 101 and s.34 of the CPA, put together with s.35 of the Judicature Statute (1996), which is now s.33 of the Judicature Act. S.33 of the Judicature Act provides for remedies, generally as follows:-
“33. The High Court shall, in the exercise of the jurisdiction vested in it by the Constitution, this Act or any written law, grant absolutely or on such terms and conditions as it thinks just, all such remedies as any of the parties to a cause or matter is entitled to in respect of any legal or equitable claim properly brought before it, so that as far as possible all matters in controversy between the parties may be completely and finally determined and all multiplicities of legal proceedings concerning any of those matters avoided.”
In Harriet Namakula v. The Registrar of Titles (supra) the Judge observed that s.101 (now s.98) of the CPA is an important provision in that it restates the limitless “inherent power of this Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the court.” He went on to state that subsection (2) of s.35 of the Civil Procedure Act was a deliberate provision made to assist the court in its compliance with s.35 (1) of the Judicature Statute, if the Court must, as is the intention of the two provisions, avoid a multiplicity of actions by determining all the matters arising out of the execution of decrees. His Lordship identified some situations in which the provisions of s.35 of the Judicature Statute, 1996 could be employed as follows:-
“As far as I can understand the law, where in an execution a party to the case assists, connives or colludes with the bailiff, resulting in unlawful execution, then neither the party nor the bailiff can escape liability and the Court then should invoke s.35 (2) of the C.P.A. to avoid a multiplicity of suits so as to settle the matter within the same procedure. Examples are not far to find. They include a situation in which the judgment creditor identifies the wrong property to the bailiff for attachment, where the bailiff is privy to the truth. It also involves a situation in which the bailiff colludes with the judgment creditor to undervalue for sale the attached property. …”
The applicants here complain of several ills in the process of an alleged execution or sale of their property. These include selling the property at an undervalue and illegally doing so on other grounds. Having found that the questions for determination are not res judicata as was alleged by counsel for the respondent, I am of the carefully considered opinion that the matter now before me falls within the ambit of situations envisaged by s.34 of the CPA and this court has the jurisdiction to entertain it.
In conclusion, I have no alternative but to overrule the preliminary objection(s) with costs to the applicant. The application should be allocated a date forthwith and be disposed of expeditiously.
Irene Mulyagonja Kakooza