THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
CIVIL SUIT NO.265 OF 2007
ATTORNEY GENERAL………………………………………… PLAINTIFF
- ALIBHAI RAMJI LIMITED
- HAMU MUGENYI ………DEFENDANTS
- M/S MUGENYI &CO. ADVOCATES
BEFORE HONOURABLE LADY JUSTICE EVA K. LUSWATA
The Plaintiff’s claim is based on alleged fraud by the defendants with respect of property comprised in FRV 48 Folio 23 at Plot 6 Perryman Gardens, in Kololo, Kampala which is a property claimed to have been expropriated in 1972 by the Government of Uganda following the expulsion of the Asians. In their plaint they sought remedies by order for cancellation of the 1st defendant’s repossession certificate, special and general damages, interest and costs. The gist of the complaint is that the 1st defendant made a false representation that they had been issued with repossession certificate in respect of the suit property and thereafter used that certificate to act as the owner and landlord of the suit property to collect rent from the Ministry of Defence. Further that the 2nd and 3rd defendants wrongfully acted as the agents of the 1st defendant, and using a forged Board resolution and Power of Attorney, signed tenancy agreements and collected rent from the Ministry of Defence in respect of the suit property.
In defence to the suit, the defendants denied all allegations of fraud and wrong doing. The 1st defendant claimed that they fulfilled all pre-requisites to repossession of the suite property and that the repossession certificate was properly granted to them. They further claimed to have properly authorized the 3rd defendant to act on their behalf in notifying the Ministry of Defence of the fact of repossession and later to enter into tenancy agreements with both the Uganda Land Commission and the Ministry. It was contended for the 2nd defendant that as a partner in the 3rd defendant, his actions were meant to give effect to the instructions from the 1st to the 3rd defendant.
In addition, the 1st defendant raised a counterclaim for rental arrears/mesne profits, an order directing the plaintiffs to hand over the suit property, or an eviction order, general damages, interest and costs.
During scheduling conference, the following were recorded as facts in agreement:
- The property in dispute is Plot 6 Perryman Gardens FRV 48 Folio 23 was expropriated in 1972 under the Expropriated Properties Act No. 9 of 1982.
- On the 12/5/1983 Alibhai Roshanali Mohamedali on behalf of the first defendant applied to repossess the suit property.
- The occupants of the suit property were employees of the Ministry of Defence.
- The Director of legal services wrote to the 2nd and 3rd defendants seeking for clarification of the ownership of the suit property.
- On 17/11/1996 the defendants entered into a tenancy agreement with the Ministry of Defence and the defendants were paid rent arrears in 2001 and 2002.
- That on 15/1/2001 the 2nd and 3rd defendants wrote to the Departed Asians Property Custodian Board (DAPCB) about the ownership of the suit property and the DAPCB replied and confirmed that the suit property belonged to the 1st defendant and that the 3rd defendant was their true agent.
- On 15/5/1998 the 1st defendant passed a resolution and gave the 3rd defendant Powers of Attorney over the suit property.
Repossession of the suit property by the 1st defendant remained in dispute.
The plaintiff prayed for the following orders;
- Cancellation of the Repossession Certificate.
- A declaration that the plaintiff is entitled to a refund of all the money wrongfully obtained by the defendant in form of rent.
- General damages.
- Interest from the date of wrongful acquisition of rent to the date of payment.
- Costs of the suit
- Any other just and equitable relief deemed fit by court.
- Whether the 1st defendant lawfully repossessed the suit property in 1992 and later in 2004.
- Whether the repossession was fraudulent.
- Whether the actions of the 2nd and 3rd defendants on repossession, negotiation of the tenancy agreements and receipt of money as rent from the plaintiff were fraudulent.
- Whether the 2nd and 3rd defendants were properly sued.
- Whether the Plaintiff is vicariously liable for the actions claimed in the counter claim.
- What remedies are available to the parties?
The plaintiff adduced evidence of Capt Ruhinda Maguru as their sole witness while the defendants adduced evidence of three witnesses namely; Muhammed Alibhai, Ruth Namirembe Olijo and Hamu Mugenyi (the 2nd defendant).
In summary the evidence adduced by the plaintiff was as follows;-
Captain Ruhinda Maguru PW1 testified that he had been in residence of the suit property since 1992. That on 12/7/96, the 2nd defendant issued a notice of sale and directions to vacate against the occupants of the suit property in which notice he mentioned but did not attach the repossession certificate or any other document confirming proof of ownership by the 1st defendant. That this prompted the Director of legal services to write three letters seeking clarity as to the ownership of the suit property. He then admitted seeing Exhibit P2 which is a letter by the Minister of Finance confirming repossession of the suit property by the 1st defendant on an application which was made by Rosenali Mohamedali Alibhai on 14/5/83. Both documents were exhibited as Exhibit D5(a) and D5(b) respectively.
PWI further revealed that he made a search at the office of land registration which showed that the suit property was last dealt with in 1968 and the owner was Alibhai Ramji Ltd. He also confirmed that that there were two tenancy agreements in respect of the suit property. One dated 5/11/1997 signed by Ham Mugenyi and another made in 1999. He also admitted seeing a resolution by the 1st defendant authorizing the 3rd defendant to take over the management of the suit property. He found it puzzling that the resolution was made in Mombasa but filed for registration in Kampala on the same day. He also admitted knowledge of a registered power of attorney dated 22/5/1998 by the 1st to the 3rd defendant. He then testified that the Power of Attorney was made after the tenancy agreement between Mugenyi & Co. Advocates and Ministry of Lands which is dated 5/11/1997.
Muhammed Alibhai was presented as DW1. He introduced himself as a director of the 1st defendant. He testified that the 1st defendant did repossess the suit property and that a repossession letter was issued to them in 1992 and presented in evidence as Exhibit P2. He further testified that the 1st defendant was unable to evict the agents of the Ministry of Defence but the company requested (by a letter marked Exhibit D2) and the Ministry of defence agreed to sign a tenancy agreement and the company were paid some rent for the period 1992 to December 1996. That the initial payments was 800,000/= per month for the two flats, which was later increased to 1,000,000/=. He claimed no rent was paid for the period covered by the agreement of 1/1/97 to 31/3/99. in respect to the agreement. We were paid from the time of repossession in 1992 to 1996.
He reported that the company made an application for repossession in 1983 in the UK. And thereafter received repossession in form of a letter which was similar to what other claimants were given. He further stated that the 3rd defendant had authority of the company to enter into an agreement with Uganda Land Commission (ULC) and that the company resolution dated 15/5/1998 registered on the same day was not a forgery. His explanation was that the resolution was made in Mombasa and flown back to Uganda for registration on the same day. The further testified that the application for repossession was made in time, all the necessary documents for repossession were submitted and the requisite fees paid. He complained that the company had lost rent had made a claim dating back to 1/1/97 up to when the company would regain possession. That the claim was at a rate of 1,000,000/= per month, subject to review every two years at an increment of Shs. 200,000/=
Ruth Namirembe Olijo (Mrs) was presented as DW2. She testified that she worked for DAPCB between 1986 and 2007. She admitted that the suit properly was at one time managed by the DAPCB and that she had as personally handled it under her mandate as legal manager. She admitted receiving a repossession letter 28/1/92 signed by Minister of State for Finance stating in it that all papers were in order and permitting repossession of the suit property with effect from 28/1/92. The repossession letter was addressed to the company.
Ms. Olijo further admitted knowledge of a certificate of repossession dated 9/3/2004 issued to the company Ltd in respect of the suit property and submitted as Exhibit P3. That the certificate was issued in respect of the same property to which a letter of repossession had been earlier issued by the same Ministry. She explained that the practice of the Government in the 1990’s was to issue Ugandan Asians and companies with repossession letters in form of Exhibit….. This position was taken because the High Court had held in earlier cases that the assets of Ugandan Asians could not have been expropriated and therefore could not be dealt with under the provisions of the Expropriated Properties Act of 1982. Therefore, the Ministry of Finance drafted an administrative letter which it issued to applicants who were confirmed to be Ugandan Asians allowing them to repossess their properties even without verification. Non-Ugandans would be issued with Certificates of Repossession. She revealed that this position was changed when the in or about 1993 the Supreme Court gave judgment in the case of Trustees of Kampala Institute Vs DAPCB and held that as long as property was in anyway taken over by Government it must be dealt with in accordance with the provisions of the Expropriated Properties Act. That this necessitated all former Asians who had been issued with repossession letters to re-apply for certificates of repossession. That is was for that reason that the company had in their possession a repossession letter dated 28/1/1992 and a Certificate of Repossession dated 9/3/2004. Both documents being issued by the Ministry of Finance and that the requisite fee was paid.
In his defence Hamu Mugenyi DW3 testified being a lawyer in private practice and acted upon the instructions of the company to repossess the suit property and to collect rent arrears. He presented Exhibit D4(1) and D4(2) as certificates of incorporation signifying that the company had changed its name from………..to Alibhai Ramji Ltd. He in addition presented Exhibit D5(1) and D5(2) as the application for repossession dated 12/5/83 and a receipt for payments respectively. He stated that the company had again to pay for a hard copy of the repossession certificate and paid 50 Pound Sterling which was receipted in Exhibit D6.
Mr. Mugenyi denied allegations of fraud. He stated that he acted on proper and rightful instructions from the 1st defendant to claim rent from the Ministry of Defence and all correct procedures were taken. That powers given to the 3rd defendant were by a power of attorney (Exhibit P7) which in turn stemmed from a board resolution of the company (Exhibit P7) and that the company has never denied issuing the power of attorney. He admitted that the power of attorney was given after the date of the tenancy agreement signed with the Uganda Land Commission. He explained that the tenancy agreement was back dated to reflect the period that the soldiers were in the suit property for the reason that procedurally, the ULC only permits claims for agreements that were filed with them. He further explained that they dealt with the ULC as the body that acts on behalf of Government in respect of land and renting of property by Government agents or servants. He referred to Exhibit P5 as the agreement dated 5/11/97 for the period 1/5/94-31/12/96 and Exhibit P6 as the agreement dated 17/11/99 for the period 1/1/97-30/6/99 and claimed to have signed Exhibit P5 as landlord because he had Powers of attorney from the company. He admitted that rent of Shs. 1 million per month was paid up to 30/6/99 and that Exhibit D8 represented letters written to the Ministry of Defence demanding rent arrears.
Before writing this judgment, my attention was drawn to a letter by Mr. Oluka for the solicitor General requesting to reopen hearing of the case for the reason that they had located and were now ready to proceed with Mr. Maguru their first witness and then close their case. At the hearing of 23/8/13, only counsel for the defendants was present and he indicated that a schedule to file written submissions had been given and complied with by the defence. He denied as false that on 24/11/11 the representative of the plaintiff had requested for and allowed to re-open the plaintiff’s case. This state of affairs prompted me to peruse the record and I confirmed as follows:-
Hearing of the case begun……….but did not proceed until 12/3/09 the date on which PWI was presented. He did not complete his evidence and after several adjournments at the instance of the plaintiff, they were given a last adjournment to 21/1/10. Hearing was further adjourned to 10/2/10 and due again to the absence of the plaintiff and their witness, court ordered the plaintiff’s case closed andhearing the It should be noted that because of the copious adjournments and absence of the plaintiff’s counsel and his witnesses, the plaintiffs’ case was closed and hearing of the defence commenced. On 27/4/10, plaintiff’s counsel requested and the defence agreed to stop further defence until PWI returned to finalize his evidence. On 8/6/10, they again failed to produce PW1 and the defence did not have an objection to their request that he be presented at a later date. By the hearing of 24/11/11 (and after several judgments), PWI was still not produced and upon request, court ordered the defence to close their case and then gave directions of filing written submissions for December 2011 and January 2012.
I perceive that the plaintiff were indeed very negligent in prosecuting their case. Nearly all requests for adjournments were at their instigation and even where the defence did not object to their irregular request that they be allowed to proceed with their evidence during or after closure of the defence, they still failed to produce their witnesses. The order to be followed in taking evidence is provided for under Order……….Rule……….CPR………………………. Although Mr. Byamugisha’s allegation that he did cross examine PW1 is negated by the record, in my considered opinion, hearing of the plaintiff’s case closed at least at any one of the many instances when PWI could not be produced to continue with his evidence and definitely when the Court gave an order closing the plaintiff’s case. It is a Constitutional right of both parties that hearing of this case is expedited and concluded. The plaintiff’s request in their above communication is rejected and they cannot therefore be permitted to re-open hearing of this case. It is upon that background that this honorable court resolves the issues and delivers its findings as follows.
Resolution of the issues:-
Whether the 1st defendant lawfully repossessed the suit property in 1992 and later in 2004
In the instant case a one Alibhai Roshanali Mohammedali applied on behalf of the 1st defendant to repossess the suit property in 1983 which application was accompanied by a receipt. The custodian Board in 1992 authorized the 1st defendant to repossess the suit property by issuing him with a letter of repossession. in respect of the suit property. DAPCB had confirmed that the documents you submitted regarding the above property appears to be in order. It is therefore in accordance with the law to inform you that you are free to repossess your property and that the repossession is effective from the date of this letter. This procedure was effective and proper. This was emphasized by the DW2 in her evidence that was not contested where she stated that;
“In the early 1990’s the practice of Government was that Ugandan Asians as well as conveyances and trusts were issued with repossession letters in form of P3. This is because the High Court had held in the earlier cases that the assets of Ugandan Asians could not have been expropriated and therefore could not be dealt with under the provisions of the Expropriated Properties Act. The Ministry of Finance drafted this administrative letter which it issued to applicants who were confirmed to be Ugandan Asians allowing them to repossess their properties. But for applicants who were not Ugandans they would be issued with Certificates of Repossession…”
This evidence having not been contested by the plaintiff was presumed to have been accepted. As a general rule, in civil cases when it comes to particular allegations made by each party, the principle remains that whoever alleges any fact or set of facts to exist must prove the allegations. It was thus the duty of the plaintiff to prove that the repossession of the suit property by the 1st defendant in 1992 was unlawful. This was not done since counsel for the plaintiff never led any evidence to prove or rebut the evidence that was adduced by the defendants.
In the case of LUTAYA Vs H.G. GANDESHA & ANOTHER  HCB 46 it was held that properties of Ugandan citizens were not lawfully expropriated and were not subject to Act 9 of 1982, the Custodian Board developed a special form under which they returned those properties to the former owners.
This issue was also revisited by the Court of Appeal in the case of JAFFER BROTHERS LTD Vs BAGALALIWO CIVIL APPEAL No. 43 of 1997 (unreported) where it was held that a letter of repossession was in effect a certificate authorizing repossession.
DW2 further testified that;
“…Later in about 1993 the Supreme Court gave judgment in the case of Trustees of Kampala Institute Vs DAPCB and held that as long as property was in anyway taken by Government it must be dealt with in accordance with the provisions of the Expropriated Properties Act. So all former Asians who had been issued with repossession letters were advised to come back and apply for Certificates of Repossession…”
The procedure for repossession is stipulated under the Expropriated Properties Act Cap 87 and Expropriated Properties (Repossession and Disposal) (No. 1) Regulations SI 87-8 as here under:-
- Section 2 of the Act and Regulation 2 of the Regulations are to the effect that any former owner of property or business vested in the Government under Section 2 may, within ninety days of the commencement of this Act, apply to the Minister in writing which application is in the 1st schedule of the Regulations, for repossession of the property or business.
- Regulation 3 of the Regulations provides for the fee and documents which will accompany the application.
- Under Regulation 6 and 8 of the Regulations the Custodian Board Divestiture Committee meets and deliberates on the application.
- Where the Minister is satisfied with the merits of an application for repossession he shall issue a certificate authorizing the former owner to reposes the property. See; Section 6(1) of the Act and Regulation 10(3) of the Regulations.
According to the facts in issue this was complied with by the defendant where in 2003 the 2nd and 3rd defendants applied for a fresh repossession certificate and submitted the necessary documents in 2004 which application was deliberated on by the Divestiture Committee. The repossession certificate was then issued by the Minister. In conclusion, the 1st defendant lawfully repossessed the suit property in 1992 and 2004.
Whether the repossession was fraudulent
In FREDRICK ZAABWE Vs ORIENT BAND LTD & OTHERS SCCA No. 4 of 2006 Hon. Bart Katureebe JSC cited Black’s Law Dictionary to define fraudulent as “To act with intent to defraud means to act willfully, and with the specific intent to deceive or cheat; ordinarily for the purpose of either causing some financial loss to another or bringing about some final gain to oneself.”
The Learned Judge also cited KAMPALA BOTTLERS LTD Vs DAMANICO (U) LTD, SCCA No. 22 of 1992:
“…I think it is generally accepted that fraud must be proved strictly. The burden being heavier than on a balance of probabilities generally applied in civil matters.”
Proof of fraud requires evidence to show that the 1st defendant was fraudulent when he applied for and got repossession of the suit property.
The Plaintiff pleaded the following particulars of fraud under paragraph 6 of the plaint and they include;
- The first defendant alleging to have obtained a Repossession Certificate in 1992 based on an application made in 1983 whereas it was not.
- The second defendants purporting to enter into a tenancy agreement with Uganda Land Commission in 1997 when they had no authority to do so.
- The second and third defendants purporting to enter into a Tenancy Agreement with the Uganda Land Commission when the latter was not a tenant.
- The second and third defendants signed on the Tenancy agreement dated 15/4/1997 as a landlord when they were not the landlords of the suit property.
- The second and third defendants purported to sign a Tenancy Agreement with the Ministry of defence on the 17/11/1999 as a landlord when they were not.
- The first, second and third defendants forged a resolution dated 15/5/1998 and also registered it on the same date when it was allegedly executed in Mombasa.
- The first, second and third defendants used the forged resolution to forge a Power of Attorney.
- The defendants knowingly and willfully obtained huge sums of money as rent payments in respect of the suit property from the Ministry of Defence, where as they were not entitled.
- The defendants obtained a Repossession Certificate without due payment of fees.
- The defendants never submitted the necessary documents before issuance of the Repossession Certificate.
- The defendants obtained money from Ministry of Defence when they were not entitled.
- The first defendant never fulfilled the condition for repossession of the suit property and therefore the property never vested in it.
- The Repossession Certificate obtained was applied for and obtained out of time.
There was no evidence adduced by the plaintiff or the plaintiffs witness PW1 to attribute fraud to the 1st defendant. As a result the repossession of the suit land by the 1st defendant was not fraudulent.
Whether the actions of the 2nd and 3rd defendants on repossession, negotiation of the tenancy agreements and receipt of money as rent from the plaintiff were fraudulent
Having resolved Issue No. 2 in favor of the defendants, and found that no fraud was strictly proved by the plaintiff it goes without doubt that issue No. 3 also fails. Though the plaintiff pleaded fraud he failed to strictly prove it as required by the law that the defendant’s repossession, negotiation of the tenancy agreements and receipt of money as rent from the plaintiff was fraudulent.
Whether the 2nd and 3rd defendants were properly sued.
Counsel for the defendants submitted that a claim for cancellation of repossession certificate, refund of moneys taken by the defendants and so on has not been shown on the evidence to lie against the 2nd and 3rd defendants and the suit against them should be dismissed with costs. They were acting as agents of a known principal, which alone should have been sued.
Order 1 rule 3 of the Civil Procedure Rules SI 71-1 provides that:
“All persons may be joined as defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against those persons, any common question of law or fact would arise.”
Therefore since the 2nd and 3rd defendant were agents of the 1st defendant thus acted for and on behalf of the 1st defendant, they were properly sued by the plaintiff who claimed jointly and severally against all the defendants. There is no law that bars a party to proceed against both the principal and his agent.
Whether the Plaintiff is vicariously liable for the actions claimed in the counter claim
Counsel for the defendant submitted that since the plaintiff put its officers in the 1st defendants building, made some tenancy agreements with 1st defendant and after that refused to pay rent or sign further tenancy agreements as its officers continued to occupy the building. Government is therefore personally liable to the 1st defendant.
The principles of vicarious liability are stated by Sir Charles Newbold in the case of MUWONGE Vs A.G (1967) EA 7 that “Once the acts were done by a servant in the course of his employment, it is immaterial whether he did it contrary to his masters orders or deliberately, wantonly negligently or even criminally or did it for his (servant’s) own benefit, the master is vicariously liable so long as what the servant did was merely a manner of carrying out what he was employed to carry out.”
In relation to the facts in issue, PW1 a UPDF soldier who is one of the occupants of the suit property is an employee of the Ministry of Defence that is an organ of the Government which is represented by the plaintiff. As a result this makes PW1 a servant of the plaintiff and the act of occupying the suit property where the rent was paid by the Ministry of Defence makes the plaintiff vicariously liable for the actions claimed in the counter claim.
What remedies are available to the parties?
- Vacant possession
Having answered the 1st, 2nd, 3rd and 5th issues in favor of the defendant it goes without saying that the plaintiff/ his officers/servants/agents should accordingly vacate and hand over the suit property to the 1st defendant.
- Rental arrears and mesne profits
The defendant in the counterclaim prayed for reasonable rental arrears or mesne profits from 1st February 1992 to date of eviction. However DW1 testified that;
“…We were paid rent in respect to the agreement. We were first paid 800,000/= per month for the two flats afterword’s rent was increased to 1,000,000/=. We were paid from the time of repossession in 1992 to 1996 we entered into another agreement from 1997 to 31st March 1999…”
From the above, it is improper for the defendants to claim for rent arrears from 1992 yet they acknowledge having been paid from 1st February 1992 to 31st December 1996. The defendants are only entitled to the agreed rent from 1st January 1997 to 31st June 1999 at 30,000,000/=.
It is also important to note that the plaintiff remained in possession and occupation of the suit property from 1st July 1999 to date with no tenancy agreement and without paying rent to the defendants. The defendants are entitled to the lost rent during this time when the plaintiff was occupying the property. The sum of 149,000,000/= claimed by the defendants is reasonable considering the market value of the property and the period of 14 years (1999 to 2013) when the plaintiff has been in possession without paying any rent.
- General damages
As for general damages, the law is strict that they have to be pleaded and proved. In the case of DR. DENIS LWAMAFA Vs A.G CS No. 79 of 1983  KALR 21 it was held that the plaintiff who suffers damages due to the wrongful act of the defendant must be put in the position he would have been had he not suffered the wrong. The valuation shall be at the time of judgment.
In the instant case the defendant submitted that he has wantonly been deprived of personal property the suit property having been appropriated to Government use. In that regard the defendants having been deprived of his house for about 14 years and considering the amount of income they have lost inform of rent owing to the plaintiff’s actions. The defendants lawyer prayed for 500,000,000/= in general damages however this honorable court considering the reasons above awards the defendants 200,000,000/= as general damages
- The defendants are also entitled to interest at a court rate of 6% per annum on the rent arrears and mesne profits from the date of judgment until payment in full.
This suit is dismissed with costs to the defendants.
I so order
EVA K. LUSWATA