THE REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA
(CORAM: ODOKI, C.J, TSEKOOKO, MULENGA, KANYEIHAMBA, KATUREEBE, JJ.S.C.)
CIVIL APPEAL NO. 10 OF 2005
IMMELDA NASSANGA ::::::::::::::::::::::::::::::::::: APPELLANT
STANBIC BANK ::::::::::::::::: RESPONDENTS
BAMUGUZANGA FARM (U) LTD
JUDGMENT OF KANYEIHAMBA, J.S.C
The background and facts of this appeal may be summarized as follows:
The second respondent, M/s Bamunguzanga Farm Limited (the Farm) obtained a loan from the Uganda Commercial Bank Ltd (UCB), the predecessor of Stanbic Bank Ltd, the first Respondent on or about the 13 April, 1992. The loan was for the purposes of expanding the farm situated at Kyewanise, Singo, Busunju in the District of Mubende. The loan was given to the second respondent in the form of materials, namely a tractor, a trailer together with other agricultural equipment. The terms and conditions of the loan were reduced into a loan agreement and signed by the parties. One of the terms contained in the written agreement was that both the tractor and the trailer would be registered in the names of and remain the property of the UCB and would be transferred to the company only when the loan was fully paid. Indeed, the tractor and trailer were registered in the names of the bank.
As a consideration for the supply of the tractor, trailer and other materials, it was agreed that the Farm would repay to the UCB the sum of Shs. 33,221,880 as the principal sum borrowed with interest thereon. The loan was repayable in 48 equal monthly instalments commencing after a twelve months grace period.
Prior to repayment of the loan, Christopher Iga, the Managing Director of the Farm was sued in HCCS NO.956/93 for a personal debt in sum of shs. 5,000,000 he owed to one Livingstone Mukasa. Thereafter, the decree – holder took out execution proceedings that resulted in the issue of a Warrant of Attachment and sale of tractor and trailer which were seized from the compound of Christopher Iga by Intercity Auctioneers to whom the warrant was addressed.
The warrant of attachment was addressed to one S.N. Kasirye of the Intercity Auctioneers of Kampala. At the time of issuing the attachment warrant, M/s. Bamunguzanga Farm Limited had not yet completed paying the bank loan. The Intercity Auctioneers seized the tractor and trailer from the compound of Christopher Iga on or about 16.04.1994 and took it to Kampala.
On the discovery of the seizure of the tractor and trailer, the Chief Manager of the legal services of the Uganda Commercial Bank Ltd, wrote a letter to the Intercity Auctioneers protesting against the seizure and warning that the tractor and trailer were owned by, and registered in the names of the Uganda Commercial Bank and not liable for attachment. Meanwhile, the warrant of attachment expired. These events notwithstanding, the auctioneers went ahead and sold the tractor and trailer to Imelda Nassanga, the appellant. Nassanga paid for the tractor and trailer and took possession of both and registered them in her name as the new owner. Later, the Uganda Commercial Bank Limited had the tractor and trailer impounded by its agents, M/s Key Agents and Auctioneers and took them into its own custody and possession at its premises in Kampala.
The appellant who believed that she was the legal owner of both the tractor and trailer filed High Court CS No. 76 of 1995 for recovery of the tractor and trailer against UCB together with general damages and interest. Subsequently, UCB took out Third Party Proceedings to join the Farm to the suit,
In the High Court and with the consent of parties, the following issues were framed for determination by the learned trial judge:
2. Whether the tractor and trailer were sold at a public auction.
3. Whether the title to the tractor and trailer belong to the plaintiff or the Uganda Commercial Bank Ltd.
4. Which remedies if any, are the parties entitled to.
Dissatisfied with the judgment and orders of the High Court, the appellant appealed to the Court of Appeal which dismissed the appeal. Hence this appeal.
The appellant’s Memorandum of Appeal to this Court contains three grounds framed as follows:
2. That the Honourable Court of Appeal erred in law in holding that it was within the powers of UCB Ltd to order the seizure of the tractor without instituting objector proceedings or a substantive suit.
3. That the Honourable Court of Appeal erred in law and fact in holding that the plaintiff was not a bona fide purchaser.
I will first consider submissions of Counsel and then dispose of the grounds of appeal. On ground 1, Mr. Lubega contended that while he would concede that the sale was an irregularity because of the expiry of the warrant of attachment, nevertheless this was an irregularity that did not go to the root of the sale by auction.
Counsel contended further that despite the irregularity, the 1st respondent had no right to seize the tractor and trailer from a third party who obtained lawful possession from a sale effected under a court order except if the 1st respondent had sued and obtained a court order for recovery of the same. Counsel contended further that the 1st respondent had no authority to take the law into its own hands by seizure of the tractor and trailer. Counsel for the appellant relied for his submissions on this ground on Aloysius Tibamanya v. Januario Tibamanya HCCS.15/94 at Mbarara, unreported, in which the learned trial judge, Karokora, J, as he then was, cited with approval the case of Iron and Steel Ware Ltd v. C.W. Marty and Co. (1956) 23 EACA 175.
Counsel therefore submitted that the courts below were wrong to hold that the 1st respondent was justified to seize the tractor and trailer without first filing a suit in court which would authorize it to do so, if at all. Counsel cited Order 19 rule 71 which provides that “no irregularity in conducting the sale of movable property shall vitiate the sale.” He further submitted that the same rule goes further to provide that every person who suffers injury by the irregularity may institute a suit for compensation against the person responsible for the irregularity which the 1st respondent failed to do.
For the 1st respondent, Mr. Kanyemibwa opposed all the grounds of appeal. On ground 1, it was