[2025] UGCommC 189

## 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO. 305 OF 2019**

**BUKOYO JAGGERY MILL LIMITED ::::::::::::::::::::::::::::::::::: PLAINTIFF** 10

#### **VERSUS**

# **1. CO-OPERATIVE BANK LTD (IN LIQUIDATION) 2. SIL INVESTMENTS LTD :::::::::::::::::::::::::::::::::::::::::::: DEFENDANTS**

### 15 **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA**

#### **JUDGMENT**

#### Introduction

The Plaintiff instituted this suit against the Defendants jointly and severally, seeking declarations that; the loan purportedly granted to the Plaintiff by the 1st Defendant in April, 1999 is illegal, the 1st 20 Defendant illegally and fraudulently lodged a caveat on the Plaintiff's land comprised in LRV 1594 Folio 15, measuring approximately 1.547 hectares, the Defendants are illegally holding the Plaintiff's aforementioned certificate of title, the interest being charged by the Defendants is illegal, an order for 25 the Defendants to hand over the aforementioned certificate of title to the Plaintiff; an order directing the Commissioner for Land Registration to release the caveat lodged by the 1st Defendant against the Plaintiff's land and a permanent injunction restraining the Defendants, their agents or servants from disposing of the suit property.

30 The Plaintiff also claimed for general damages, interest and costs of the suit.

#### 5 Brief facts

The brief facts constituting the Plaintiff's claims are that the Plaintiff Company, a registered proprietor of land comprised in LRV 1594 Folio 15 land at Kigulu Bulamogi, Bukoyo, Iganga measuring approximately 1.547 hectares (hereinafter referred to as **"the suit property"**), had two 10 shareholders, the late Musolo Moses, and Musolo Sarah, who was a minor at the time of its incorporation. In May, 2014, the 2nd Defendant illegally advertised the suit property for auction over NBS Radio in Jinja, claiming that the Plaintiff had allegedly defaulted on a loan with the 1st Defendant, which it had never taken out.

15 That the officials of the 2nd Defendant informed the surviving shareholder and the beneficiaries of the estate of the late Musolo Moses that the Plaintiff had borrowed UGX 6,977,858/= in 1999 from the 1st Defendant, which continues to accrue interest and that it was then UGX 32,564,662/= as per the loan statement issued to them. That the entire 20 purported transaction was tainted with several illegalities and fraud, including the Defendants' illegal and fraudulent lodging of a caveat on the suit property on 7th April, 1999 and the 1st Defendant's giving a loan to the Plaintiff in 1999, when there was no board resolution, the surviving shareholder was not aware and nor did she consent to the issuance of the 25 same.

On the other hand, the Defendants denied the Plaintiff's claim, contending that they were wrongfully sued by the Plaintiff because they dealt with Musolo Moses t/a Bukoyo Jaggery Mill and not the Plaintiff. That in 1999, a one Musolo Moses t/a Bukoyo Jaggery Mills executed a Loan Agreement 30 with the 1st Defendant and deposited the certificate of title of Bukoyo

5 Jaggery Mill, comprised in LRV 1594 Folio 15 land at Kigulu Bulamogi, Bukoyo, Iganga measuring approximately 1.547 hectares.

## Representation

The Plaintiff was represented by Learned Counsel Mulondo Aiden of **M/s Kagera Advocates**, while the 2nd Defendant was represented by Learned 10 Counsel Stella Okumu of **M/s OSH Advocates**.

## The Hearing

At the hearing, the parties proceeded by way of witness statements. The Plaintiff had one witness Mr. Ndase Ronald Beaker (**PW1**), one of the Administrators, son and beneficiary of the estate of the late Musolo Moses.

15 The 2nd Defendant also had one witness Ms. Evelyn Nanyonga (**DW1**) the 2nd Defendant's Managing Director.

Both witnesses were duly cross examined and re-examined. The parties also adduced documentary evidence as contained in their respective trial bundles.

20 The parties further filed written submissions, as directed, and this Court has considered the same.

## Issues for Determination

In their Joint Scheduling Memorandum filed in Court on 6th October, 2021, the parties agreed on the following issues for determination:

- 25 1. Whether the 1st Defendant lawfully lodged a caveat on the suit property? - 2. Whether the Defendants' action of advertising the suit property for sale was lawful?

- 3. Whether the Plaintiff entered into a Loan Agreement with the 1st 5 Defendant? - 4. Whether there was breach of the Loan Agreement? - 5. What remedies are available to the parties?

In her submissions, Learned Counsel for the 2nd Defendant raised a 10 preliminary objection asserting that the Plaintiff's suit and the claims therein are barred by the law of limitation.

**Order 6 rule 28 of the Civil Procedure Rules SI 71-1**, is to the effect that a point of law that is pleaded when so raised is capable of disposing of the suit, may by consent of the parties or by order of the Court on the 15 application of either party, be set down for hearing and disposed of at any time before the hearing.

As to whether to dispose of a preliminary point first before hearing the merits of the matter, the Supreme Court, in the case of *Uganda Telecom*

*Ltd Vs ZTE Corporation, SCCA No. 3 of 2017,* held that a trial Court 20 has the discretion to dispose of a preliminary point either at or after the hearing. However, the exercise of discretion depends on the circumstances of each case. It is therefore trite that where preliminary objections are capable of disposing of the matter in issue, it is judicious to determine the objections before embarking on the merits of the case. (See also:

25 *Metropolitan Properties Ltd Vs Mayimuna Muye Amin SCCA No. 04 of 2022).*

Guided by the above authorities, I shall proceed to resolve the preliminary point raised.

Whether the suit is barred by limitation?

30 2nd Defendant's submissions

5 Learned Counsel for the 2nd Defendant relied on **Order 15 rule 2 of the Civil Procedure Rules** and submitted that the Plaintiff's pleadings show that the Plaintiff's cause of action is based on recovery of land. That as per **Section 5 of the Limitation Act, Cap. 290,** such an action must be brought before the expiration of 12 years from the date, the cause of action

10 arose.

Learned Counsel contended that the loan in issue was disbursed on 12th October, 1998 as per **DEX 3** and no grounds have been pleaded by the Plaintiff to exclude them. That much as the claims are premised on allegations of fraud, the Plaintiff did not specifically state when the alleged 15 fraud came to their attention and therefore, the plaint was filed outside the limitation period and is thus incurably barred and ought to be rejected as per **Order 7 rule 11(d) of the Civil Procedure Rules**.

### Plaintiff's submissions

In rejoinder, Learned Counsel for the Plaintiff explained that the gist of the 20 Plaintiff's claim under paragraph 4 of the plaint is that the suit property was illegally and fraudulently mortgaged and advertised for sale by the Defendants.

That the said cause of action arose in May, 2014 when the 2nd Defendant advertised the suit property for sale on NBS Radio station in Jinja stating that the Plaintiff had failed to pay off a loan obtained from the 1st 25 Defendant, as averred by the Plaintiff under paragraph 5(d) of the plaint.

That under **Section 25 of the Limitation Act**, it is provided that the limitation period for legal actions involving fraud do not begin until the Plaintiff discovers or could reasonably have discovered the fraud.

5 That therefore, the Plaintiff's cause of action arose upon discovery of the fraudulent mortgage in May, 2014, making the suit well within the prescribed limitation period.

## Analysis and Determination

**Section 5 of the Limitation Act** provides that no action shall be brought 10 by any person to recover any land after the expiration of 12 years from the date on which the right of action accrued.

It is undisputed between the parties that the Plaintiff's cause of action also lies in fraud. **Section 25(a) of the Limitation Act** stipulates that:

*"Where, in the case of any action for which a period of limitation is* 15 *prescribed by this Act, either the action is based upon the fraud of the Defendant or his or her agent or of any person through whom he or she claims or his or her agent, the period of limitation shall not begin to run until the Plaintiff has discovered the mistake or fraud…"*

In the case of *Patrick Lyamulemye Vs Stephen Kwiringira & 3 Others*

20 *Civil Suit No. 118 of 2019*, it was held that the law on limitation for cases based on fraud is that the time begins to run from the moment fraud is discovered.

Under paragraph 5(d) of the plaint, the Plaintiff averred that in May, 2014, the 2nd Defendant advertised the suit property for auction allegedly over a 25 defaulted loan. **PW1** also testified that he and the other beneficiaries as well as the surviving shareholder of the Plaintiff went to the offices of the 2nd Defendant, and confirmed that the suit property had been advertised because the Plaintiff had borrowed UGX 6,977,858/=, which it failed to repay. The 2nd Defendant does not dispute the advertisement.

5 With the above and in my considered view, the Plaintiff's undisputed evidence shows that the only surviving shareholder and the beneficiaries of the estate of the late Musolo Moses discovered the alleged acts of fraud in May, 2014 when the suit property was advertised.

Considering that the plaint was filed on 13th April, 2015, I find that this 10 suit is not barred by the law of limitation. Therefore, this preliminary objection fails.

I shall now proceed to determine the merits of the case.

Issue No. 1: Whether the 1st Defendant lawfully lodged a caveat on the suit property?

15 Plaintiff's submissions

In his submissions, Learned Counsel for the Plaintiff, jointly submitted on issues No. 1 and 2. Learned Counsel submitted that as per the pleadings, a loan of UGX 6,977,858/= was advanced by the 1st Defendant on 12th October, 1998, and the suit property, registered in the name of the Plaintiff

20 was pledged as security. That the said security was perfected by lodgment of a caveat registered under instrument No. 300712 on 17th April, 1999, in favour of the 1st Defendant.

That under paragraphs 3, 4 and 6 of their written statement of defence, the Defendants admitted that the impugned Loan Agreement was not 25 advanced to the Plaintiff but to Musolo Moses, as confirmed by **DW1**. That under **Section 184 of the repealed Companies Act,** the management of a company vests in its directors including decisions to borrow money and pledge company property as security. That in the case of *Necta (U) Ltd and John Ndyabagye Vs Crane Bank Uganda Ltd C. A. C. A No. 219 of*

5 *2013*, Court emphasized the need for a valid resolution and the bank's duty is to verify compliance.

Learned Counsel then contended that in her testimony, **DWI** stated that she did not have a board resolution or powers of attorney allowing the loan purportedly forwarded to Musolo Moses to be secured by Company 10 property. That also **PW1** in his evidence in chief, under paragraph 16, corroborates this by asserting that no resolution was found at the Uganda Registration Services Bureau. In conclusion, Learned Counsel submitted that the caveat registered against the Plaintiff's property was not executed in accordance with the requisite legal standards thereby rendering the 15 subsequent advertisement unlawful.

## 2nd Defendant's submissions

Learned Counsel for the 2nd Defendant submitted that as testified by **DW1**, on 12th October, 1998, Musolo Moses trading as Bukoyo Jaggery Mills entered into a Loan Agreement with the 1st Defendant as per **DEX 3**. That

20 the Plaintiff admitted that the 1st Defendant is defunct and in liquidation and that the 2nd Defendant is the official liquidator of the 1st Defendant.

Learned Counsel then submitted that Musolo Moses ought to have paid back the money he borrowed from the 1st Defendant and that the security was for Bukoyo Jaggery Mill, although the Plaintiff attempted to insert 25 LTD; however, it was not countersigned by the Registrar of Titles, which was challenged during cross examination by the 2nd Defendant. That therefore, since Musolo Moses t/a Bukoyo Jaggery Mill borrowed money from the 1st Defendant, then the 1st Defendant was justified to lodge a caveat on the suit property on 7th April, 1999.

### 5 Plaintiff's submissions in rejoinder

In rejoinder, Learned Counsel for the Plaintiff submitted that **PW1** adduced **PEX 11**, a search report dated 1st February, 2017 which indicates that the Plaintiff is the registered proprietor of the suit property. That **DW1** was unable to adduce any credible evidence linking the Plaintiff or its 10 property to the alleged dealings between the Defendants and Musolo Moses. That therefore, the caveat lodged by the 1st Defendant was

fraudulent and illegal.

### Analysis and Determination

I have considered the pleadings, evidence and submissions on Court 15 record while resolving this matter.

It is trite that in civil cases, whoever desires any Court to give judgment as to any legal right or liability must prove the existence of the facts which he asserts. (See: **Sections 101, 102** and **103 of the Evidence Act, Cap. 8)**. The standard of proof is on the balance of probabilities. (See: *Sebuliba*

20 *Busuulwa Vs Co-operative Bank Ltd [1982] HCB 129*).

It is undisputed that the 1st Defendant is defunct and in liquidation and its debt portfolio was sold to Nile River Acquisition Company as per **DEX 3**, a letter of release of legal ownership of all loans specified in the Debt Purchase and Transfer Agreement belonging to the 1st Defendant, issued 25 by Bank of Uganda dated 25th January, 2008. As per **DEX 1**, an Agency Agreement dated 31st December, 2007, the 2nd Defendant was appointed as an agent of Nile River Acquisition Company so as to become the sole and exclusive owner and take full possession of the 1st Defendant's debt portfolio including the debt and security created under the Loan

5 Agreement and mortgage created by Musolo Moses trading as Bukoyo Jaggery Mill in favour of the 1st Defendant.

The Plaintiff averred that the 1st Defendant unlawfully lodged a caveat on its property. On the other hand, the 2nd Defendant contended that the caveat was lawfully lodged since Musolo Moses t/a Bukoyo Jaggery Mill 10 had mortgaged the suit property.

It is trite that a caveat is intended to serve a twofold purpose, on the one hand, it is intended to give the caveator temporary protection, and on the other, it is intended to give notice of the nature of the claim to the person whose estate in the land is affected and to the world at large.

15 As testified by **PW1**, the Plaintiff has one surviving shareholder and it has never obtained a loan from the 1st Defendant. That after discovering that the suit property was being auctioned by the 2nd Defendant, **PW1** conducted a search and it was established that the 1st Defendant had lodged a caveat on 7th April, 1999 as indicated on the search report in 20 respect of the suit property, **PEX 11**, dated 1st February, 2017.

**PW1** also testified that at the time of Musolo Moses's demise, the Plaintiff was the registered proprietor of the suit land, having been entered on the register on 11th August, 1987, for a lease of 49 years from 1st June, 1986. In evidence, **PW1** presented **PEX 1**, **PEX 2**, and **PEX 3**, namely; the 25 certificate of incorporation of the Plaintiff Company, the Memorandum and Articles of Association of the Company, and the certificate of title of the suit land. According to **PEX 1,** the Plaintiff was incorporated on 1st April, 1987 and it executed a Lease Agreement in respect of the suit property on 31st July, 1987 as per **PEX 12**, a Lease Agreement where the Plaintiff was 30 granted a lease in respect of the suit land for 49 years and a certificate of

title, **PEX 3** issued to that effect. This was not disputed by the 2nd 5 Defendant.

On the other hand, **DW1** testified that Musolo Moses t/a Bukoyo Jaggery Mill applied for and obtained a loan from the 1st Defendant which was secured by creating a mortgage on land comprised in LRV 1594 Folio 45

- 10 Kigulu Bulamogi, the suit property. In evidence, **DW1** adduced **DEX 3** the Loan Agreement, **DEX 4**, the Mortgage Deed and **DEX 5** a Memorandum of deposit of the certificate of title. According to **DEX 3**, on 12th October, 1998, Musolo Moses t/a Bukoyo Jaggery Mill applied for and obtained a loan of UGX 6,977,858/= from the 1st Defendant. The loan was secured by 15 the suit property as per **DEX 4** and the 1st Defendant acknowledged receipt - of the certificate of title as per **DEX 5.**

In her testimony, **DW1** emphasized that the 1st Defendant dealt with Musolo Moses t/a Bukoyo Jaggery Mill however, according to **PEX 9**, a medical death certificate and as testified by **PW1**, Musolo Moses one of the

- 20 shareholders of the Plaintiff, died on 6th October, 1989. Learned Counsel for the 2nd Defendant also contended that the 1st Defendant dealt with Bukoyo Jaggery Mill and not the Plaintiff however, as per **PEX 1**, the Plaintiff was incorporated way before the Loan Agreement was executed. - Therefore, considering that Bukoyo Jaggery Mill Ltd was incorporated on 25 1st April, 1987 and Musolo Moses died in 1989 yet the Loan Agreement was executed in 1998, then it can be concluded that either the 1st Defendant dealt with a non-existent party or dealt with another Musolo Moses but not the late Musolo Moses a former director and shareholder of the Plaintiff.

5 Also, during her cross examination, **DW1** confirmed to Court that there was no board resolution on record authorizing a one Musolo Moses t/a Bukoyo Jaggery Mill to use the Plaintiff's property as security.

Therefore, in light of all the above, it is my finding that the 1st Defendant unlawfully lodged a caveat on the suit property.

10 Accordingly, issue No.1 is answered in the negative.

Issue No. 2: Whether the Defendants' action of advertising the suit property for sale was lawful?

The Plaintiff jointly submitted on issues No. 1 and 2, which I shall not reproduce.

15 2nd Defendant's submissions

Learned Counsel for the 2nd Defendant relied on **DW1's** testimony during cross examination that the property Musolo Moses deposited as security to acquire the loan of UGX 6,977,858/= was advertised for sale. That due to **DEX 3**, **DEX 4** and **DEX 5** executed on 12th October, 1998, it can be 20 deduced that there existed a mortgagor-mortgagee relationship between the parties.

Learned Counsel then relied on **Section 25(1) of the Mortgage Act, Cap. 239** and the case of *Housing Finance Bank Limited Vs Seninde Margaret and Another Originating Summons No.7 of 2021*, to define 25 foreclosure.

In further submission, Learned Counsel contended that since the loan granted to Musolo Moses t/a Bukoyo Jaggery Mills had fallen due, the mortgagee moved to exercise its remedy to sale as provided under **Section**

5 **19(e) of the Mortgage Act**. That therefore, the 2nd Defendant lawfully advertised the suit property for sale.

In rejoinder, Learned Counsel for the Plaintiff did not address issue No. 2.

## Analysis and Determination

10 As earlier noted, the 2nd Defendant took over the 1st Defendant's debt portfolio which included the debt with Musolo Moses t/a Bukoyo Jaggery Mill and a mortgage on the Plaintiff's property.

The Plaintiff contended that the 2nd Defendant unlawfully advertised the suit property and on the other hand, the 2nd Defendant avers that there 15 existed a mortgagor-mortgagee relationship between the parties and therefore, it lawfully advertised the suit property since Musolo Moses t/a Bukoyo Jaggery Mill had defaulted on the payment of the loan.

My analysis of issue No. 1 above revealed that at the time **DEX 3**, **DEX 4** and **DEX 5** were executed, the said Musolo Moses was deceased as proved

20 by **PEX 9**. The 2nd Defendant did not challenge the above evidence, nor did **DW1** prove that they had ever contacted him. Having found that a dead man could not have executed the said documents, no transfer of any interests in the suit land was vested in the 1st Defendant, and therefore, the 2nd Defendant could not have acquired, from the 1st Defendant, an 25 interest it did not have at the time of executing the Transfer Agreement **DEX 2**.

Accordingly, the 2nd Defendant had no right to advertise the suit property.

Therefore, issue No.2 is answered in the negative.

I will resolve issues No. 3 and 4 concurrently.

# 5 Issue No.3: Whether the Plaintiff entered into a Loan Agreement with the 1st Defendant?

Issue No.4: Whether there was breach of the Loan Agreement?

#### Plaintiff's submissions

Learned Counsel for the Plaintiff submitted that whereas the Defendants 10 assert in their pleadings that Musolo Moses t/a Bukoyo Jaggery Mill was the recipient of the loan, in his testimony, **PW1**, an administrator of the estate of the late Musolo Moses, adduced a medical certificate of the cause of death as **PEX 9**, provided by the Ministry of Health of the Republic of Uganda, which indicated that Musolo Moses died on 6th October 1989, 15 over ten years before the advancement of the alleged loan. That during her cross examination, **DW1** admitted that Musolo Moses was deceased and that, following **Section 101 of the Evidence Act**, the burden of proving this fact was discharged.

Learned Counsel contended that the 1st Defendant did not discharge its 20 duty to conduct due diligence before issuing the purported loan, and to that Counsel quoted the case of *Necta (U) Ltd and John Ndyabagye Vs Crane Bank Uganda Ltd (supra)* wherein the Court defined due diligence. That the Defendants did not have any form of identification of Musolo Moses on file and that this Court did not look at a passport-size photo of 25 the alleged borrower or a letter of introduction from a village chief or documents pointing to him being a customer of the Bank that would have helped in putting the borrower at the Bank on 12th October, 1998.

That the Mortgage Deed, Loan Agreement and Memorandum of deposit of a security were not properly executed and witnessed and therefore, they 30 are devoid of any credibility before this Court. That the transaction was

5 fraudulent which explains why the Bank issued a loan to a person who had been deceased for over a decade. In conclusion, Learned Counsel submitted that no loan was issued to the Plaintiff or Musolo Moses and as such, there was no breach of contract.

## 2nd Defendant's submissions

- 10 Learned Counsel recounted the testimony of **DW1** who stated that it was Musolo Moses trading as Bukoyo Jaggery Mill in all the dealings regarding the Loan Agreement, who dealt with the 1st Defendant and not the Plaintiff as per **DEX 3, DEX 4** and **DEX 5**. - That in the alternative, **Table A of the Companies Act** provides for 15 borrowing powers and states that the directors may exercise all the powers of the company to borrow money, and to mortgage its property as security for any debt, liability or obligation of the Company which should not exceed the nominal share capital of the Company without the previous approval of the company (members) in the general meeting. - 20 That since the Plaintiff had one sole director as testified by **PW1**, a board resolution could not have been made since the other shareholder was a minor. That therefore, that is why Musolo Moses opted to use a business name of Bukoyo Jaggery Mill to borrow money from the 1st Defendant where no resolution would be required. - 25 Learned Counsel also contended that the medical certificate, which reflects that Musolo Moses died on 6th October, 1989, adduced by **PW1** was challenged by the 2nd Defendant because **PW1** was unable to differentiate between a proof of death document, such as a death certificate, and the medical certificate. Also, that the medical certificate listed a different year 30 of death for Musolo Moses, 1989 which is distinct from 1987, as reflected

5 under paragraph 5 of the plaint, a grave discrepancy and departure from the pleadings.

Regarding breach of the Agreement, Learned Counsel submitted that **DW1** testified that Musolo Moses trading as Bukoyo Jaggery Mills entered into a Loan Agreement with the 1st Defendant for UGX 6,977,858/= on 12th 10 October, 1998 as per **DEX 3, DEX 4, DEX 5** which has never been repaid for over twenty-seven years. That this amounts to breach of the Loan

Agreement.

## Plaintiff's submissions in rejoinder

Learned Counsel for the Plaintiff contended that Counsel for the 2nd 15 Defendant's submission that the Plaintiff Company had one director and the only remaining shareholder was a minor, discloses that the Defendants did not conduct the required due diligence in the alleged transaction that led to the mortgaging of the Plaintiff's property and that the omission was intended to defraud the Plaintiff. That the 2nd Defendant's submission that

- 20 Musolo Moses opted to use a business name other than a Company when borrowing was self-defeating because this argument does not present any logical hypothesis as to why the Plaintiff's certificate of title is encumbered subject to the same transaction that is purported to have been between Musolo Moses trading as Bukoyo Jaggery Mill. - 25 On the issue of the death of Musolo Moses, Learned Counsel for the Plaintiff contended that **PEX 9**, provided by the Government of Uganda, is sufficient proof of death. That also, there was no objection to **PEX 9** on Court record. That the Defendants had an opportunity to summon the author of the report if they felt the same was not conclusive, but that the 30 right was not exercised, and as such, the evidence produced by the Plaintiff 5 is sufficient and meets the standard set under **Sections 43 and 101 of the Evidence Act.**

Regarding the issue of departure from pleadings, Learned Counsel for the Plaintiff submitted that it was a clerical error rather than a departure from pleadings. To that, Counsel relied on the case of *Honest John Kirya Vs*

- 10 *Attorney General & Another Miscellaneous Cause No. 55 of 2012,* for the proposition that pleadings must be read together with their annexures, which are considered part of the evidential framework supporting the pleaded facts and that the death certificate was attached to the pleadings and must be read together with the plaint. - 15 Analysis and Determination

The **Black's Law Dictionary 11th Edition at page 402** defines a contract as an agreement between two or more parties creating legal obligations that are enforceable or otherwise recognizable at law.

**Section 9(1) of the Contracts Act, Cap. 284** defines a contract as an 20 agreement made with the free consent of parties with capacity to contract, for a lawful consideration and with a lawful object, with the intention to be legally bound.

A valid contract is one that is sufficient in form and substance so that there is no ground whatsoever for setting it aside between the vendor and 25 purchaser i.e. a contract binding on both parties. (See: *Sharif Osman Vs*

*Hajji Haruna Mulangwa SCCA No. 38 of 1995).*

**Hon. Lady Justice C. K. Byamugisha** (as she then was) in the case of *William Kasozi Vs DFCU Bank Ltd HCCS No. 1326 of 2000*, stated that:

5 "*Once a contract is valid, it creates reciprocal rights and obligations between the parties to it. I think it is the law that when a document containing contractual terms is signed, then in absence of fraud or misrepresentation the party signing it, is bound by its terms."*

Turning to the case at hand, the Plaintiff avers that it has never executed a Loan Agreement with the 1st Defendant. On the other hand, the 2nd 10 Defendant contended that it was wrongfully sued by the Plaintiff because the Defendants never dealt with the Plaintiff but with Musolo Moses t/a Bukoyo Jaggery Mill. That Musolo Moses obtained a loan and deposited the certificate of title of Bukoyo Jaggery Mill, comprised in LM/53106 LRV 15 1594 Folio 15 measuring 1.547 hectares at Kigulu Bulamogi, Bukoyo,

Iganga.

In evidence, **DW1** adduced the Loan Agreement **DEX 3**, the Mortgage Deed **DEX 4** and the Memorandum of Deposit of the certificate of title **DEX 5** which all point to the fact that a Loan Agreement was entered into between 20 the 1st Defendant and Musolo Moses trading as Bukoyo Jaggery Mill.

As earlier held, **DEX 3**, **DEX 4** and **DEX 5**, were executed in 1998 however, **PEX 9** indicates that Musolo Moses died on 6th October, 1989.

Learned Counsel for the 2nd Defendant contended that **PEX 9** does not support the pleadings because of the variation in the dates of the death of

25 Musolo Moses. That according to the plaint, Musolo Moses died in 1987 while **PEX 9** shows that he died in 1989.

As earlier indicated **PEX 9**, is a duplicate medical certificate of death of Musolo Moses issued on 15th November, 2010 by the Ministry of Health. It indicates that Musolo Moses died on 6th October, 1989 due to cerebral 30 bleeding caused by hypertension. It is pertinent to note that during the

- 5 trial, the 2nd Defendant did not object or challenge the said document. Also, during her cross examination, **DW1** confirmed that it is Musolo Moses who applied for the loan and admitted that they tried to look for him, but were informed that he was deceased. Therefore, the 2nd Defendant's Counsel's submission that an expert witness ought to have 10 been called to tender in **PEX 9** is misconceived because throughout the trial, Learned Counsel did not challenge the document. Further, Learned Counsel for the 2nd Defendant argued that the pleadings are contrary to - the evidence because of a variation in the year of the death of Musolo Moses. In my view, the variation is a minor issue that does not affect the 15 2nd Defendant's case and can be considered a typo error considering that in his testimony **PW1** also avers that Musolo Moses died in 1989.

Also, the 2nd Defendant's argument that they dealt with Musolo Moses t/a Bukoyo Jaggery Mill and not Bukoyo Jaggery Mill Ltd is unfounded since **PEX 3** the certificate of title, in their possession, shows that the suit 20 property belongs to Bukoyo Jaggery Mill Ltd. This is also corroborated by **PEX 11**, the search report dated 1st February, 2017 which shows that Bukoyo Jaggery Mill Ltd, the Plaintiff, registered its lease on 11th August, 1987 as reflected on **PEX 3**. Therefore, considering that the 2nd Defendant did not adduce any evidence to discredit **PEX 9**, it can be concluded that 25 the late Musolo Moses, a former director and shareholder of the Plaintiff died in 1989 and could not have entered into any Loan Agreement with the 1st Defendant in 1998 as alleged. In my view, the above transaction raises a serious issue of fraud given the fact that Musolo Moses was the only adult shareholder and subscriber to the Plaintiff Company. No 30 evidence was adduced to prove that the 1st Defendant carried out due diligence before granting the loan or executing the Mortgage Deed. Since it is established that at the time the Loan Agreement was executed, Musolo

5 Moses was already deceased, it indicates that the certificate of title for the suit land was fraudulently handed over to the 1st Defendant and an Agreement executed.

In light of the above and considering the testimony of **DW1** that the Defendants never dealt with the Plaintiff, no Loan Agreement was ever 10 executed between the Plaintiff and the 1st Defendant.

Consequently, since there was no Agreement, the breach could not have occurred.

In the premises, issues No. 3 and 4 are hereby answered in the negative.

## Issue No.5: What remedies are available to the parties?

15 In its plaint, the Plaintiff sought several declarations, a permanent injunction restraining the Defendants, their agents or servants from disposing of the suit property, general damages, interest on the general damages and costs of the suit.

## i) General damages

20 Learned Counsel for the Plaintiff submitted that the Plaintiff should be awarded general damages of UGX 100,000,000/= contending that it was put through unnecessary inconvenience since they were deprived of the use of the suit property from 1999. In the case of *Kabandize John Baptist and 21 Others Vs Kampala Capital City Authority CACA No.* 25 *36 of 2016*, the Court of Appeal held that:

> *"The general rule regarding the measure of general damages is that, the award is such a sum of money that will put the party who has been injured or who has suffered as adjudged by Court in the same position as he or she would have been had*

5 *he or she not sustained the wrong for which he or she is getting the compensation."*

According to the case of *Takiya Kashwahiri & Another Vs Kajungu Denis CACA No. 85 of 2011*, general damages should be compensatory in nature in that they should restore some satisfaction, as far as money 10 can do it, to the injured Plaintiff. The Plaintiff should, however, lead evidence as to what damage he or she suffered at the instance of the Defendant. As was held in the case of *Uganda Commercial Bank Vs Deo Kigozi [2002] 1 EA 305*, while assessing the quantum of damages, the Court should be guided by the value of the subject matter, the economic 15 inconvenience that a party may have been through and the nature and extent of the breach or injury suffered.

In the instant case, **PW1** testified that the Plaintiff has been prejudiced and has suffered great financial loss due to the Defendants' action of holding onto its certificate of title and lodging a caveat thus hampering the

- 20 operations of the Plaintiff. Considering that the Plaintiff's certificate of title has been in the Defendants' possession since October, 1998 which has greatly inconvenienced the Plaintiff's operations, I hereby award the Plaintiff general damages of UGX 50,000,000/= (Uganda Shillings Fifty Million Only). - 25 ii) Interest

Learned Counsel for the Plaintiff cited **Section 26(2) of the Civil Procedure Act, Cap. 282** and prayed that the Court awards interest at the rate of 15% per annum on the general damages from the date of Judgment until payment in full.

5 **Section 26 of the Civil Procedure Act** is to the effect that the Court can award interest that is just and reasonable.

As was held in the case of *Milly Masembe Vs Sugar Corporation (U) Ltd and Another SCCA No. 1 of 2000,* the guiding principle is that interest is awarded at the discretion of the Court, but the Court should exercise 10 the discretion judiciously, taking into account all the circumstances of the case.

Further, in the case of *Mohanlal Kakubhai Radia Vs Warid Telecom Uganda Ltd HCCS No. 224 of 2011,* it was held that in determining a just and reasonable rate, the Courts take into account the following:

15 *"The ever rising inflation and drastic depreciation of the currency. A Plaintiff is entitled to such rate of interest as would not neglect the prevailing economic value of money, but at the same time one which would insulate him or her against economic vagaries and the inflation and depreciation of the currency in the event that the* 20 *money awarded is not promptly paid when it falls due."*

The Plaintiff prayed for interest at the rate of 15% per annum from the date of Judgment until payment in full. In my view, the said interest on general damages is high and unjustified.

Therefore, the Plaintiff is awarded interest at the rate of 6% per annum on 25 the general damages from the date of Judgment until payment in full, which in my view is reasonable.

In the premises, interest at the rate of 6% per annum is hereby awarded on the general damages from the date of Judgment until payment in full.

## 5 iii) Costs of the suit

**Section 27(2) of the Civil Procedure Act** provides that the costs of any action shall follow the event unless the Court orders otherwise. In the case of *Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35,* **Hon. Justice Manyindo** (as he then was) held that:

10 *"A successful party can only be denied costs if it is proved, that but for his or her conduct, the action would not have been brought. The costs will follow the event where the party succeeds in the main purpose of the suit."*

In the circumstances, the Plaintiff, being the successful party, is therefore 15 entitled to the costs of this suit.

Accordingly, the following declarations and orders are made:

- 1. It is hereby declared that the 1st Defendant illegally lodged a caveat on the Plaintiff's land comprised in LRV 1594 Folio 15 land at Kigulu Bulamogi, Bukoyo, Iganga measuring approximately 1.547 hectares. - 20 2. It is hereby declared that the Defendants are illegally holding the Plaintiff's certificate of title for the suit property. - 3. An order is hereby issued ordering the 2nd Defendant to hand over the certificate of title for the suit property to the Plaintiff. - 4. An order is issued requiring the Commissioner for Land Registration 25 to remove the caveat lodged by the 1st Defendant on the suit property. - 5. A permanent injunction is hereby issued restraining the Defendants, their agents or servants from disposing of the suit property. - 6. The Plaintiff is hereby awarded general damages of UGX 50,000,000/= (Uganda Shillings Fifty Million Only).

- 5 7. Interest is hereby awarded on the sum in (6) above at the rate of 6% per annum from the date of Judgment until payment in full. - 8. Costs of the suit are awarded to the Plaintiff.

I so order.

Dated, signed and delivered electronically via ECCMIS this **26th** day of

10 **June**, **2025.**

Patience T. E. Rubagumya

**JUDGE** 26/06/2025