Court name
High Court of Uganda
Case number
Civil Appeal 91 of 2019
Judgment date
28 September 2020

Erina Lam Oto Omgom v Opoka and Anor (Civil Appeal 91 of 2019) [2020] UGHC 185 (28 September 2020);

Cite this case
[2020] UGHC 185
Short summary:

Land Law — Sale—It is trite that the right to sell un-registered land is vested only in the person who holds valid title to that land. He or she who has no title cannot sell. Consequently; land should be purchased after taking reasonable care to ascertain that the transferor has the requisite power to transfer the said land. Parties must act in good faith. Only a good faith acquirer, in circumstances in which there is nothing to suggest that the seller does not have a right of disposal, would be protected. — A Court of equity will not allow an owner of land, who permitted a third party to expend money on the land based on the supposition that the land was his or her own, afterwards to assert his or her title to the land. — Tracing and claiming —There is a distinction between tracing and claiming. Tracing seeks to locate a thing, usually in order to assert pre­existing rights to it. Tracing identifies the passage of value from one asset into its substitute it identifies the traceable proceeds of the claimants’ property. It enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. But it does not affect or establish his claim. —A plaintiff who brings an action involving following or tracing must show that the defendant is in receipt of property which belongs beneficially to him or its traceable proceeds — Equitable interests — An equitable interest is valid against the entire world, except for the bona fide purchaser of a legal estate for value without notice actual, constructive or imputed.

The onus is on the purchaser to establish himself as such; and it is a heavy burden to discharge.

Succession — a beneficiary may trace estate property wrongfully disposed and recover the property or proceeds from the property — Court must first, trace the asset into the appropriate property; and, secondly, identify the best remedy to bring against that property and may order compensation. — Prior to the distribution of the estate of a deceased person, a beneficiary's interest in the land can subsist only in equity -

Coram
Mubiru, J

 

 

IN THE HIGH COURT OF UGANDA SITTING AT GULU

Reportable

CivilAppeal No. 0091 of 2019

In the matter between

APPELLANT

ERINA LAM OTO OMGOM

 

And

  1. OPOKA BOSCO
  2. LAPYEM ALFRED                                                                                    RESPONDENTS

Heard: 23 June, 2020

Delivered: 28 September, 2020.

Land Law — Sale—It is trite that the right to sell un-registered land is vested only in the person who holds valid title to that land. He or she who has no title cannot sell. Consequently; land should be purchased after taking reasonable care to ascertain that the transferor has the requisite power to transfer the said land. Parties must act in good faith. Only a good faith acquirer, in circumstances in which there is nothing to suggest that the seller does not have a right of disposal, would be protected. — A Court of equity will not allow an owner of land, who permitted a third party to expend money on the land based on the supposition that the land was his or her own, afterwards to assert his or her title to the land. — Tracing and claiming —There is a distinction between tracing and claiming. Tracing seeks to locate a thing, usually in order to assert pre­existing rights to it. Tracing identifies the passage of value from one asset into its substitute it identifies the traceable proceeds of the claimants’ property. It enables the claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. But it does not affect or establish his claim. —A plaintiff who brings an action involving following or tracing must show that the defendant is in receipt of property which belongs beneficially to him or its traceable proceeds — Equitable interests — An equitable interest is valid against the entire world, except for the bona fide purchaser of a legal estate for value without notice actual, constructive or imputed.

The onus is on the purchaser to establish himself as such; and it is a heavy burden to discharge.

Succession — a beneficiary may trace estate property wrongfully disposed and recover the property or proceeds from the property — Court must first, trace the asset into the appropriate property; and, secondly, identify the best remedy to bring against that property and may order compensation. — Prior to the distribution of the estate of a deceased person, a beneficiary's interest in the land can subsist only in equity -

JUDGMENT

STEPHEN MUBIRU, J.

Introduction:

The appellant sued the respondent for recovery of land measuring approximately 25 metres by 40 metres, comprised in Plot 25 Ring Road, now described as Commercial Plot 25 Ring Road, situated at Layibi Central “A” and “B” village, Tegwana Parish, Pece Division Gulu Municipality in Gulu District, a declaration that the sale of the property by the 2nd respondent to the 1st respondent was null and void, revocation of the grant of letters of administration issued by court in respect of the estate of the appellant to the 1st respondent, general damages for trespass to land, a declaration that the respondents are trespassers onto the land, general damages for trespass to land, mesne profits, an order of eviction, permanent injunction, interest and costs.

The appellant’s claim was that at all material time the land in dispute belonged to her and her late husband, Micira Ongom. They occupied the land as husband and wife until the demise of Micira Ongom that occurred during the year 1995. The appellant was forced by the then prevailing circumstances to leave her children and grandchildren as caretakers on the land. To her surprise, one of her grandchildren, the 1st respondent, fraudulently sold off the land to the 2nd respondent without her knowledge and consent, and banked the proceeds on her bank account. Upon learning of the transaction, the appellant offered to refund the money deposited onto her account without her approval. The 2nd respondent acted fraudulently in undertaking the transaction, most especially since he was cautioned regarding the 1st respondent’s lack of capacity to sell.

In the written statement of defence, the 1st respondent contended that the land in dispute belonged to his late mother, Jerolina Abdul who died during the year 1999. The 1st respondent applied for and during the year 2001, was granted letters of administration to her estate. By the time she sold the land to the 2nd respondent, the 1st respondent had lived thereon for over 35 years. He had during that time constructed a permanent building on the land without anyone opposing him. He had at all material time been paying all Municipal rates in respect of that property. The 1st respondent sold off only his portion, comprised in plot 24 and not that of the appellant.

The appellant's evidence in the court below:

P.W.1 Dr. Abonga Daniel testified that the land in dispute belongs to his grandmother Erina Angom. Together with her late husband, Micira Ongom, they bought the land in 1964 and established a semi-permanent house and gardens on the land. During the subsequent construction of Ring Road and Mama Kef Road, the house was demolished and the family was compensated. The 1st respondent came onto the land during the year 1990 as a child, with his mother, the late Jeroline Adul, after the breakdown of her marriage. Jeroline Adul was a daughter of the appellant. During the year 2006, the 1st respondent sold off part of the land without consulting the appellant. The appellant warned the 1st respondent never to dispose of any part of the land again. In violation of that prohibition, the 1st respondent once gain sold off another part of the land to the 2nd respondent. A family meeting was convened on 21st October, 2016 at which it was resolved and the 1st respondent undertook to refund the purchase price to the 2nd respondent within three days. In the meantime, the 2nd respondent had demolished the buildings he found on the land, fenced it off and exhumed the bodies that had been buried on the land.

P.W.2 Omona Richard testified that during the year 2016 the 1st respondent sold their grandmother’s land to the 2nd respondent. A family meeting was convened at which it was resolved that the 1st respondent refunds the purchase price. The 1st respondent promised to refund the money but he has never done so to-date. P.W.3 Oyella Pasca testified that she is the appellant’s biological daughter. She lived on the land for ten years during her childhood. P.W.1 Dr. Abonga Daniel obtained a grant of letters of administration to the estate of the late Micira Ongom. After the 1st respondent sold part of the land to the 2nd respondent, the body of the 1st respondent’s mother, Jeroline Adul, was exhumed. The 1st respondent was only a caretaker of the land. He had been stopped from selling the land. It was resolved at a family meeting that the 1st respondent should refund the purchase price. Part of the land had been given to the 1st respondent’s mother, the late Jeroline Adul, when her marriage failed. The 1st respondent is the holder of letters of administration to the estate of the late Jeroline Adul.

The respondents’ evidence in the court below:

D.W.1 Opoka Bosco testified that he acquired the land in dispute by inheritance from his late mother Jeroline Adul. By the time of her mother’s death during the year 2001, they had lived on that land for over 30 years. He obtained a grant of letters of administration to her estate without anyone objecting. It is the appellant who on 12th February, 2006 shared the land between her late mother and P.W.1 Dr. Abonga Daniel (exhibit D. Ex.3). The appellant can only lay claim to half of the plot, not the entire plot. The 1st respondent has blocked all activities on the entire plot. P.W.1 Dr. Abonga Daniel sold off a portion of the land to raise money for his school fees. After the 1st respondent sold off his part of the land to the 2nd respondent, he offered more than one third of the proceeds to P.W.1 Dr. Abonga Daniel but he rejected it saying he was entitled to half of the proceeds, and that sparked off the current dispute. The 2nd respondent proposed to take only the 1st respondent’s side of the land but P.W.1 rejected that as well. The appellant and her late husband Micira Ongom never lived on the land in dispute.

D.W.2 Okumu George testified that he had lived on the land with his elder brother, the 1st respondent, since 1988. The land belonged to his late mother Jeroline Adul. The family meeting resoled that the 1st respondent was to refund the purchase price but he has never done so. The 1st respondent shared the proceeds of the sale among his brothers, including P.W.1 but he rejected his share. D.W.3 Olweny Sunday testified that the land in dispute belonged to the late Jeroline Adul. When the 1st respondent sold the first part of the land he distributed the money among the beneficiaries.

D.W.4 Okuttu Julius testified that at the material time he was the L.C1 Chairman when the family convened a family mediation meeting on 12th February, 2006. It was decided that the land be divided into two. One side was given to P.W.1 Dr. Abonga Daniel while the other was given to the 1st respondent. An agreement to that effect was signed. Before her death, the 1st respondent’s mother used to pay ground rent for the land. On 18th January, 2006 the 1st respondent sold his side to a one Oroma Joyce. D.W.5 Kaggwa Geoffrey testified that he is a neighbour to the land in dispute and has seen the 1st respondent in possession thereof for about 30 years. The land belonged to Jeroline Adul. His deceased relatives, including his mother, were buried on that land.

Proceedings at the locus in quo:

The trial court then visited the locus in quo on 3rd May, 2019 where it observed that the land lies in-between two roads; Mama Kef Road to the West and Ring Road to the East. It measures 40 metres x 25 metres, surveyed with mark stones placed at its four corners. There is a four unit building on the land occupied by tenants who pay rent to the 2nd respondent. There was no visible boundary dividing the land into two.

Judgment of the court below:

In his judgment delivered on 11th September, 2019 the trial Magistrate found that the land in dispute did not belong to Jeroline Abdul. Despite the fact that he was married to the deceased, that alone did not confer upon the appellant interest in the land. The land formed part of the estate of the late Micira Ongom, and did not belong to the appellant. There is no evidence attributing fraud to the 2nd respondent. There was no evidence to show that prior to the sale the 2 nd respondent knew of any fraudulent act on the part of the 1st respondent. At one of the subsequent family meetings convened to resolve the impasse, the appellant offered to refund the money paid by the 2nd respondent as the purchase price for the property. Before the impugned transaction, evidence showed that the 1st respondent had sold off part of the land the proceeds of which were shared among all beneficiaries of the estate without anyone challenging the sale. There was nothing that put the 2nd respondent on notice that the 1st appellant had no capacity to sell the land. The 2nd respondent’s purchase was therefore not proved to have been fraudulent and the prayer for its revocation was denied. The appellant could not succeed in a suit for trespass since she was not in possession of the property. She vacated the property following the death of her husband and has never returned to live there. It is clear the appellant had left the property to be shared by her grandchildren, hence the sharing of the proceeds of the first sale. This time round, her attorney Abonga Daniel rejected the share that had been appropriated to him, sparking off the dispute. Since the sale cannot be annulled, the proceeds should be shared by the administrator of the estate of the late Micira Ongom. In the event that there are beneficiaries who did not obtain their shares, and order was made that they are given their shares. Each party was to bear their own costs of the suit.

The grounds of appeal:

The appellant was dissatisfied with that decision and appealed to this court on the following grounds, namely;

  1. The learned trial Magistrate erred in law and in fact when she held that although the suit property belonged to the estate of the late Micira Ongom, its sale by the 1st respondent was valid, thereby coming up with a wrong decision to the prejudice of the appellant.
  2. The learned trial Magistrate erred in law and in fact when she made two distinctive and contradictory orders in regard to the proceeds of the sale of the property of the estate, further validating the illegal sale and rendering the orders impossible to execute, to the prejudice of the appellant.

Arguments of Counsel:

The appellant though did not file submissions in support of the appeal, despite having been notified and given a month’s period to do so. Conseguently, neither did the respondents file submissions.

Duties of a first appellate court:

That notwithstanding, it is the duty of this court as a first appellate court to re­hear the case by subjecting the evidence presented to the trial court to a fresh and exhaustive scrutiny and re-appraisal before coming to its own conclusion (see Father Nanensio Begumisa and three Others v. Eric Tiberaga SCCA 17of 2000] [2004] KALR 236). In a case of conflicting evidence, the appeal court has to make due allowance for the fact that it has neither seen nor heard the witnesses, it must weigh the conflicting evidence and draw its own inference and conclusions (see Lovinsa Nankya v. Nsibambi [1980] HCB 81).

In exercise of its appellate jurisdiction, this court may interfere with a finding of fact if the trial court is shown to have overlooked any material feature in the evidence of a witness or if the balance of probabilities as to the credibility of the witness is inclined against the opinion of the trial court. In particular, this court is not bound necessarily to follow the trial magistrate’s findings of fact if it appears either that he or she has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on demeanour of a witness is inconsistent with the evidence in the case generally.

It is trite that the right to sell un-registered land is vested only in the person who holds valid title to that land. He or she who has no title cannot sell (see Mortgage Business pic v. O’Shaughnessy [2012] 1 WLR 1521). The common law principle of nemo dat quod non habet has long held that a person cannot convey a superior title to the one already held. Accordingly, one can sell only what one owns or is authorised to sell, and the buyer can acquire no more than what the seller can transfer legally. Consequently, land should be purchased after taking reasonable care to ascertain that the transferor has the requisite power to transfer the said land. Parties must act in good faith. Only a good faith acquirer, in circumstances in which there is nothing to suggest that the seller does not have a right of disposal, would be protected. The principle will apply in the absence of statutory provision to the contrary. For example, the principle of indefeasibility ousts the operation of the nemo dat rule in respect of registered land, since the purchaser’s title upon registration is indefeasible and free from defects affecting the vendor’s title, save for fraud or illegality.

It was the appellant’s case that the land in dispute belonged to the estate of the late Micira Ongom. P.W.1 Dr. Abonga Daniel testified that his mother, the appellant Erina Lamoto Ongom and her late husband Micira Ongom, bought the land in 1964. The 1st respondent came onto the land during the year 1990 as a child, with his mother, the late Jeroline Adul. P.W.3 Oyella Pasca though testified that part of the land had been given to the 1st respondent’s mother, the late Jeroline Adul, when her marriage failed. The 1st respondent’s case on the other hand was premised on the version that the land belonged to his mother Jeroline Adul, who by the time of her death during the year 2001, had lived on that land for over 30 years. D.W.1 Opoka Bosco testified that it is the appellant who on 12th February, 2006 shared the land between her late mother and P.W.1 Dr. Abonga Daniel (exhibit D. Ex.3). D.W.4 Okuttu Julius, the L.C1 Chairman, corroborated that when he testified that before her death, the 1st respondent’s mother used to pay ground rent for the land and that at a family mediation meeting on 12th February, 2006 it was decided that the land be divided into two. One side was given to P.W.1 Dr. Abonga Daniel while the other was given to the 1st respondent.

The suit by the appellant sought to recover, by way of tracing or following, land in dispute on grounds that it forms part of the estate of his deceased grandfather, Micira Ongom, for whose estate he is the duly appointed administrator. There is a distinction between (i) following, (ii) tracing and (iii) claiming. The process of following seeks to locate a thing, usually in order to assert pre-existing rights to it. Tracing identifies the passage of value from one asset into its substitute: what is traced is not the physical asset itself but the value inherent in it. Following is the process of following the same asset as it moves from hand to hand. Tracing is the process of identifying a new asset as the substitute for the old. Where one asset is exchanged for another, a claimant can elect whether to follow the original asset into the hands of the new owner or to trace its value into the new asset in the hands of the same owner. Tracing is thus neither a claim nor a remedy. It is merely the process by which a claimant demonstrates what has happened to his property, identifies its proceeds and the persons who have handled or received them, and justifies his claim that the proceeds can properly be regarded as representing his property. Tracing is also distinct from claiming. It identifies the traceable proceeds of the claimants’ property. It enables the

 

claimant to substitute the traceable proceeds for the original asset as the subject matter of his claim. But it does not affect or establish his claim (see Foskett v. McKeown [2001] 1 AC 102, at 128 - 9). A plaintiff who brings an action involving following or tracing must show that the defendant is in receipt of property which belongs beneficially to him or its traceable proceeds.

Therefore, a beneficiary may trace estate property wrongfully disposed and recover the property or proceeds from the property (see Ciro Citterio Menswear pic v. Thakrar and Others [2002] 1 WLR 2217 and Re Diplock, [1948] Ch. 465). The main advantage of tracing in equity is that it will not be defeated by the irretrievable mixing of property (see Agip (Africa) Ltd v. Jackson [1991] Ch 417; Re Hallett’s Estate (1880) 13 Ch D 696 and Sinclair v. Brougham [1914] AC 398). The beneficiary, with only a proprietary interest in equity, could protect that interest by either "tracing" or "following," both of which are not remedies but processes (see Boscawen and others v. Bajwa and another [1996] WLR 328).

Therefore, the court must do two things: first, trace the asset into the appropriate property; and, secondly, identify the best remedy to bring against that property. The court may order compensation (see Target Holdings Ltd v. Redferns [1996] 1 AC 421)\ order that the property be restored by transferring it to original owner (see Foskett v. McKeown[2001] 1 AC 102)\ order the property to be held on resulting trust (see El Ajou v. Dollar Land Holdings Pic [1995] 2 All ER 213)\ or constructive trust (see Westdeustche Landesbank Girozentrale v. Islington LBC [1996] 2 All ER 961; [1996] AC 669; [1996] 2 WLR 802)\ or be subject to a charge (see Vaughan v. Barlow Clowes International Ltd [1992] 4 All ER 22).

Prior to the distribution of the estate of a deceased person, a beneficiary's interest in the land can subsist only in equity. As a matter of basic land law, an equitable owner of land cannot grant a legal interest. A person cannot grant a greater interest than he or she possesses. Before distribution of the estate of the deceased by the legal representative of the deceased, the beneficiary has only a proprietary interest in equity, in the estate property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice.

An equitable interest is valid against the entire world, except for the bona fide purchaser of a legal estate for value without notice actual, constructive or imputed. The onus is on the purchaser to establish himself as such; and it is a heavy burden to discharge (see Pilcher v. Rawlins (1872) 7 Ch. App. 259). The purchaser must show that his absence of notice was “genuine and honest” (see Midland Bank Trust Co Ltd v. Green (No. 1) [1981] A.C. 513).

Circumstances in which the right to trace is lost are in four categories which can be identified, as follows: (1) where the property is in the hands of a bona fide purchaser for value without notice (see In Re Diplock [1948] 1 Ch 465 and Bishopsgate Investment v. Homan [1995] 1 All ER 347)-, (2) where the property has been dissipated (see Snell’s Equity, 33rd Edition: page 792 para 30.064); (3) where it would be inequitable to allow the claimant to trace his property (see Snell’s Equity, 33rd Edition: page 792 para 30.066): and (4) where the property is in the hands of a person who can show that, following receipt, he or she has changed his position in good faith.

In the instant case, there are a number of factors that rendered it inequitable for the appellant Erina Lamoto Ongom to trace the land into the hands of the 2nd respondent. Firstly, she never adduced evidence of the joint purchase with her late husband Micira Ongom. Although P.W.1 Dr. Abonga Daniel testified that his parents, that is his mother the appellant Erina Lamoto Ongom and father the late Micira Ongom bought the land in 1964, it was never clarified whether they purchased the land as tenants in common or as joint tenants. This ambiguity in the conveyance that constitutes the root of the appellant’s claim is reflected in the contradiction of her suing to recover land that she claims to belong to the estate of her late husband, yet her son P.W.1 Dr. Abonga Daniel is the holder of letters of administration to that estate. If the land forms part of the estate of the late Micira Ongom, then the suit by the appellant was incompetent. According to section 264 of The Succession Act, after any grant of letters of administration, no person other than the person to whom the same has been granted has power to sue or prosecute any suit, or otherwise act as representative of the deceased, until the letters of administration have been recalled or revoked.

On the other hand, if the appellant Erina Lamoto Ongom and her husband the late Micira Ongom purchased the land as tenants in common, then the appellant could only maintain a suit in respect of her share of the land. There was no evidence led to show that the part in dispute constituted her share of the land. If they purchased as joint tenants, then the right of survivorship would apply and upon the death of her husband, Micira Ongom, the land vested in her as sole owner. This is because when registered land is acquired by two or more persons jointly, there is a presumption that it is granted as a joint tenancy unless the deed specifies otherwise (see section 56 of The Registration of Titles Act). Joint tenancy being the default form of co-tenancy by statute, and since equity follows the law, it follows that when un-registered land too is acquired by two or more persons jointly, unless the deed specifies otherwise or there is evidence of unequal contribution to the purchase price, there is a presumption that it is granted as a joint tenancy. The claim that the land in dispute in the instant case forms part of the estate of the late Micira Ongom would on that account be misconceived.

The ambiguity in the appellant’s root of title aside, evidence by P.W.3 Oyella Pasca to the effect that part of the land had been given to the 1st respondent’s mother, the late Jeroline Adul, when her marriage failed, was corroborated by that of D.W.4 Okuttu Julius, the L.C1 Chairman, to the effect that that before her death, the 1st respondent’s mother used to pay ground rent for the land. P.W.1 Dr. Abonga Daniel testified that the 1st respondent came onto the land during the year 1990 as a child, with his mother, the late Jeroline Adul. This is consistent with the 1st respondent’s testimony that by the time of her death during the year 2001, Jeroline Adul had lived on that land for over 30 years. P.W.1 Dr. Abonga Daniel refuted the 1st respondent’s claim that the part of the land he occupied belonged to his mother Jeroline Adul, contending instead that she was a mere caretaker thereof. However, the fact that the late Jeroline Adul was in occupation of part of the land for that long and was paying ground rent on the basis of that occupation, is more consistent with a gift than a mere license. A gift is perfected and becomes operative upon its acceptance by the donee and such exclusive occupation and user may suffice as evidence of the gift (Ovoya Poli v. Wakunga Charles, H. C. Civil Appeal No. 0013 of 2014).

In any event, a Court of equity will not allow an owner of land, who permitted a third party to expend money on the land based on the supposition that the land was his or her own, afterwards to assert his or her title to the land. In equity, if a third party begins to expend money on another person's land supposing it to be his or her own, and the owner, perceiving the third party's mistake, abstains from setting the third party right, and leaves the third party to persevere in that error, it considers that, when the owner saw the mistake to which the third party had fallen, it was the owner's duty to be active and to state his or her adverse title; and that it would be dishonest for the owner to remain wilfully passive on such an occasion, in order afterwards to profit by the mistake which the owner might have prevented (see Ramsden v. Dyson (1866) LR. 1 H.L 129). The appellant watched for over thirty years as Jeroline Adul expended money in form of ground rent over part of the land she occupied supposing it to be her own, yet abstained from setting her right, and left her to persevere in that error, she cannot afterwards assert her title to the land.

That before her death Jeroline Adul had acquired proprietary interest in a part of the land in dispute was ultimately proved beyond doubt by the evidence of P.W.3 Oyella Pasca who testified that part of the land had been given to the 1st respondent’s mother, the late Jeroline Adul, when her marriage failed. This was corroborated by D.W.1 Opoka Bosco who testified that it is the appellant who on 12th February, 2006 shared the land between her late mother and P.W.1 Dr. Abonga Daniel (exhibit D. Ex.3). D.W.4 Okuttu Julius, the L.C1 Chairman, corroborated this further when he testified that at a family mediation meeting on 12th February, 2006 it was decided that the land be divided into two. One side was given to P.W.1 Dr. Abonga Daniel while the other was given to the 1st respondent.

Lastly, the appellant’s claim is defeated by the fact that the land is in the hands of the 2nd respondent, who is a bona fide purchaser for value without notice. The 2nd respondent’s proprietary interest could only be defeated by proof of knowing receipt. Beneficiaries have a personal action against any person who receives estate property transferred to such person in breach of trust or fiduciary duty for his or her own benefit and with knowledge that the property is traceable to a breach of trust or fiduciary duty. For knowing receipt, some cases have indicated that constructive knowledge would suffice, (see for example Karak Rubber Co. Ltd. [1972] 1 W.L.R. 602 (Ch) at 632, per Brightman J.; Belmont Finance Corp Ltd. v. Williams Furniture Ltd. (No 2) [1980] 1 All E.R. 393 (CA) at 405, per Buckley L.J.), whereas other cases have required a state of mind which is closer to dishonesty (see Re Montagu's Settlement Trusts [1987] Ch 264at 281, per Megarry V.C.; and Eagle Trust Pic v. S.B.C. Securities Ltd. [1996] 1 B.C.L.C. 121 (Ch) at 151, per Arden J.). What is required is knowledge on the part of the recipient that the assets received are traceable to a breach of fiduciary duty (see ElAjou v. Dollar Land Holdings [1994] 1 All ER 685, at 700).

Just as there is no single test of dishonesty so is there no single test of knowledge for knowing receipt. The test preferred by some courts is that of "unconscionable" receipt (see Bank of Credit and Commerce International (Overseas) Ltd (BCCI) v. Akindele [2000] 3 WLR 1423, pp1437-1439), in which case the recipient’s state of knowledge must be such as to make it unconscionable for him or her to retain the benefit of the receipt. The question is not whether the 2nd respondent himself was dishonest, but rather whether he had knowledge of circumstances which made it unconscionable to purchase the land. Actual knowledge rather than mere constructive knowledge is required. A restitutionary claim arises in its nature from the fact of vitiation and the fact of receipt. The consequence is that no change of position defence applies to a proprietary claim of this nature.

In the case of unregistered land, the purchaser is required to make inquiries of the root of title. The rule that no one can transfer what he or she does not own (nemo dat quod non habet) means that the chain of title has to be investigated back to the root of title to confirm that the vendor actually had the interest that was purportedly being transferred. This means identifying the proprietary interest that commenced the chain of ownership which ends with the current owner. This means examining the record of all transactions that could affect the title, e.g., sales, mortgages, deaths and probates. If any transaction earlier in the chain was void because of fraud, forgery, mistake or some other reason, the vendor’s title was defective and void against anyone who had been wrongly deprived of the land or interest in question, and the purchaser’s title would be similarly vulnerable.A good root of title must begin with a recognisable description of the land and vest the ownership of the whole legal and equitable interest in the land in question into an identified person or group of persons, without anything that casts any doubt on the title. The prospective buyer should begin by understanding the history of the property and the issues that affected it over the years. The chain in the ownership of the land should be unbroken right from the root to the present day seller. The description of the land should be consistent and correspond with the actual land physically inspected.

In the instant case, reasonable inquires as to the 1st respondent’s capacity to sell would bring to the 2nd respondent’s knowledge the fact that although there is ambiguity in the appellant’s root of title, since it is not clear as to whether she was a joint tenant or only a tenant in common with her late husband in respect of this land, that part of the land had been given to the 1st respondent’s mother, the late Jeroline Adul, when her marriage failed. Jeroline Adul had by the time of her death in 2001 lived on that land for over 30 years. During that period of time she was paying ground rent for the land. At a family mediation meeting on 12th February, 2006 the proprietary interest of the late Jeroline Adul was confirmed when the appellant divided the land into two; giving one side to P.W.1 Dr. Abonga Daniel while and the other to the 1st respondent. The 1st respondent is the holder of letters of administration to the estate of the late Jeroline Adul. The part he sold to the 2nd respondent forms part of the estate of the late Jeroline Adul. Nowhere in that process is the1st respondent’s title traceable to a breach of any fiduciary duty.

It follows therefore that trial court misdirected itself when it found that the land in dispute did not belong to Jeroline Adul and that it formed part of the estate of the late Micira Ongom. The court though came to the right conclusion when it found that there was nothing that put the 2nd respondent on notice that the 1st appellant had no capacity to sell the land. The court correctly found that the 2nd respondent’s purchase was not proved to have been fraudulent and the prayer for its revocation was rightly denied. It was erroneous though for the court to have directed that since the sale cannot be annulled, the proceeds should be shared by the administrator of the estate of the late Micira Ongom. That order has no basis in light the findings made. It is accordingly set aside.

Order:

In the final result, subject only to the order directing sharing of the proceeds of

sale that has been set side, the appeal fails and it is accordingly dismissed with

costs to the respondents.

Delivered electronically this 28th day of September, 2020 ................... Stephei/v Mu.bi.ru.........

Stephen Mubiru

Resident Judge, Gulu

Appearances

For the appellant

For the respondent :