[2023] UGHCLD 204

### **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [LAND DIVISION] CIVIL SUIT NO. HCT-00-LD-CS-0286-2017**

**JOHNKAGGWA**

*(Administrator of the Estate of the Late Michael Kaggwa)* **::::::::PLAINTIFF**

## *VERSUS*

- **1. JOSEPH KIZITO BATUME** - **2. KASOMA DENIS** - **3. MOK. ASA HUDSON** - **4. KASOZI EDDIE KITAATA** - **5. TUGUME BENON** - **6. NABANOBAJASCENTA** - **7. BABIRYE AGNES** - **8. WAKISO DISTRICT LAND BOARD**

## **9. COMMISSIONER LAND REGISTRATION ::::::::::::::DEFENDANTS**

# *BEFORE: HON. JUSTICE BERNARD NAMANYA*

## *JUDGMENT*

# *Introduction:*

- 1. This case considers two important legal aspects in land transactions. First, the case considers the legal consequences of failure to declare the true value of consideration on a transfer form. The 7 th defendant, Ms. Babirye Agnes, declared consideration of Ushs 105,000,000 on the transfer form instead of Ushs 892,500,000 that was actually paid. Second, the case considers the legal consequences of creation of a freehold certificate of title in disregard of an unregistered interest in land. - 2. The plaintiff brought this suit by way of ordinary plaint against the defendants seeking for inter alia, a declaration that the plaintiff is a bona fide occupant on the suit land; an order directing the 9 th defendant to cancel the

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entries on the freehold certificates issued to the 2^nd, 3^rd, 4^th, 5^th, 6^th and 7^th defendants; a permanent injunction; general, aggravated, and punitive damages; interest on the damages at 6 % per annum from the date of judgment until payment in full; and costs of the suit.

- $3.$ The plaintiff or his predecessors in title claim to have been in occupation of the suit since the early 1900s, but sometime in the year 2011, the plaintiff was surprised to learn that the 2^nd, 3^rd, 4^th, 5^th and 6^th defendants had fraudulently applied for, and were granted freehold certificates of title in respect of the suit land, after which they transferred it to the 7^th defendant. - The 1^st, 3^rd, 4^th, 5^th, 6^th, 7^th, and 8^th defendants filed their written statement of $4.$ defence denying the claims put forward by the plaintiff.

#### **Representation:**

$5.$ The plaintiff was represented by M/s Kaggwa & Kaggwa Advocates. The 1^st defendant was represented by M/s Sempebwa Musa & Co. Advocates. The 3^rd and 4^th defendants were represented by M/s Mulindwa Associates & Co. Advocates. The 7^th defendant was represented by M/s Jombwe & Co. Advocates. The 8^th defendant was represented by M/s Nambale, Nerima & Co. Advocates.

#### The plaintiff's evidence:

- The plaintiff produced three witness to prove his case. PW1 (John Kaggwa), 6. PW2 (Ssembajjwe Henry), and PW3 (Ssemugoma John Kaggwa). - The plaintiff adduced evidence of the following documents that were 7. admitted in evidence:

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Lener Hemeny

- i). $Exh. P1 - A$ copy of the Power of Attorney: - ii). $Exh. P2 - A$ photo of the pine trees: - $Exh. P3 A$ photo of an old house; iii). - iv). $Exh. P4 - A$ photo of the pens; - $v$ ). Exh. P5 – Letter to the District Staff Surveyor of Wakiso district; - vi). Exh. P6 – Complaint letter dated $3^rd$ April 2017; - vii). $Exh. P7$ – Letter to Henry Ssembajjwe dated 19^th May 2017; - viii). Exh. P8 Survey Report; - $ix$ ). Exh. P9 – Internal memo dated $21^{st}$ June 2011: - Exh. P10 Application for conversion from customary tenure to $x$ ). freehold tenure dated 10^th May 2011; - Exh. P11 Demarcation form for certificate of customary xi). ownership: - xii). Exh. $P12$ Notice of hearing of application; - xiii). $Exh. P13$ Inspection report for conversion of land; - xiv). Exh. P14- Letter from Wakiso District Council: - xv). $Exh. P15(A)$ Deed plan for Busiro Block 598; - xvi). Exh. $P15(B)$ Deed plan; - xvii). Exh. P16 Deed plan for Busiro Block 599 Plot 105; - xviii). Exh. P17 Deed plan for Busiro Block 598-599, Plot 104; - xix). Exh. P18 Certificate of Title for Busiro Block 598-599, Plots 104,105 & 106 in the names of Agnes Babirye; - $Exh. P19(A)$ Transfer to Agnes Babirye; and $XX$ ). - xxi). $Exh. P19(B)$ Application for consent to transfer of land.

#### The defendant's evidence:

The defendants produced five witnesses to prove their case. DW1 (Batume 8. Joseph Kizito) for the 1^st defendant. DW3 (Hudson Mukasa) for the 3^rd

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defendant. DW4 (Kasozi Eddie Kitatta) for the 4^th defendant. DW2 (Babirye Agnes) and DW5 (Joseph Kassajja) for the 7^th defendant.

- The defendants adduced evidence of the following documents that were 9. admitted in evidence: - i). Exh. $D1$ Land Sale Agreement: - ii). Exh. D2 Search Statement dated 29^th June 2011; - iii). Exh. D3 Certificate of Title in the names of Agnes Babirye: - iv). Exh. D4 $-$ A copy of the authority to pay.

#### *Locus in quo visit:*

- 10. On the 19^th day of April 2023, I carried out a locus in quo visit to the suit land in the presence of counsel for the plaintiff; and counsel for the 1^st, 3^rd, $4^th$ and $7^th$ defendants. - 11. Parties present were John Kaggwa (plaintiff), the 1^st defendant (Joseph Kizito Batume), Mukasa Hudson (3^rd defendant) and the 4^th defendant (Kasozi Eddie Kittata). - 12. PW1 (John Kaggwa) took the oath, gave evidence at the locus and was cross examined and re-examined by counsel. DW4 (Kasozi Eddie Kitatta) took the oath, gave evidence at the locus and was cross examined and reexamined by counsel. - 13. I observed that there were several developments on the suit land as identified in the survey report prepared by Survey Tech Solutions dated 25^th March 2019 ( $Exh. P8$ ).

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Dernerottomeny

#### Issues to be determined by the court:

- 14. The parties agreed on the following issues for the court's determination: - i). Whether the plaintiff is a bona fide occupant on the suit land? - ii). Whether the process of conversion of the plaintiff's land to freehold was fraudulent? - iii). Whether the 7^th defendant is a bona fide purchaser for value without notice of fraud? - iv). What remedies are available to the parties?

#### **Preliminary objection:**

- 15. I wish to begin by considering the preliminary objection that was raised by counsel for the $3^rd$ and $4^th$ defendants: whether the plaintiff has locus standi to file this suit and has a cause of action. - 16. Counsel argued that the plaintiff has failed to prove any interest in land recognised under the laws of Uganda. He argued that the plaintiff is neither a customary owner nor a bona fide occupant nor a lawful occupant. According to counsel, the suit land was previously surveyed and registered as Block 598-599 as per cadastral sheet FC19382 U.165. According to counsel, since the plaintiff has not proved any legal interest in the land, he cannot sustain the suit. He prayed for the dismissal of the suit for lack of locus standi or for not establishing a cause of action against the defendants. - 17. With respect to counsel for the $3^rd$ and $4^th$ defendants, I do not agree that this is a matter that can be disposed of, by way of a preliminary objection. It is not in dispute that the plaintiff is in occupation of parts of the suit land, and has even put in place developments on the suit land. At the locus in quo that

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Demarothemento

was held on the 19^th day of April 2023, the plaintiff proved that he is in occupation of parts of the suit land. The matter of how the plaintiff came to occupy the suit land, and the nature of his legal interest in the suit land, will be a subject of further inquiry by this court.

18. In the premises, the preliminary objection raised by counsel for the 3^rd and 4^th defendants is overruled, and I will proceed to consider the merits of the case.

# <u>Issue No.1: Whether the plaintiff is a bona fide occupant on the suit land?</u>

- 19. The plaintiff bears the burden to prove that he is a bona fide occupant on the suit land. See sections 101, 102, 103 & 106 of the Evidence Act (Cap 6). - 20. It was submitted for the plaintiff that he is a bona fide occupant on the suit land whose security of tenure is protected by the supreme law of the land. The defendants dispute the plaintiff's assertion stating that the plaintiff claimed to be both a bona fide occupant and Kibanja owner (tenant by occupancy), and yet the two tenures are different at law. The defendants further submitted that the plaintiff did not adduce evidence on customary ownership of the suit land. - 21. Article 237(8) of the Constitution of Uganda (1995) which provides that: "(8) Upon the coming into force of this Constitution and until Parliament enacts an appropriate law under clause (9) of this article, the lawful or bona fide occupants of mailo land, freehold or leasehold land shall enjoy security of occupancy on the land." - 22. Section 29(2) of the Land Act (Cap 227) defines a bona fide occupant as:

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Bernerstlaneny

"...a person who before the coming into force of the Constitution—(a) had occupied and utilised or developed any land unchallenged by the registered owner or agent of the registered owner for twelve years or more; or $(b)$ had been settled on land by the Government or an agent of the Government, which may include a local authority."

- 23. The Supreme Court of Uganda considered the meaning of the above provisions in the case of Kampala District Land Board & Chemical Distributors v. National Housing & Construction Corporation, SCCA No. 2 of 2004, and held that for a person to successfully claim to be a bona fide occupant, he/she must have been in occupation or possession of the suit land for more than 12 years at the time of coming into force of the *Constitution* of *Uganda (1995)* without any challenge from the registered owner. - 24. PW1 (John Kaggwa), an advocate of the High Court testified that his father, Michael Kaggwa is the son of the late Yozefu Mukasa Ssalongo, who died in 1972. That prior to this date, the late Yozefu Mukasa Ssalongo had been in occupation of the suit land since 1906 (Exh. P5). That Michael Kaggwa succeeded his father in 1972, and has occupied the suit land since then. The fact of the plaintiff's occupation of the suit land is supported by the findings of the survey report by Survey Tech Solutions dated 25^th March 2019 $(Exh. P8)$ . - 25. DW3 (Mukasa Hudson) testified that the suit land was vacant and without any structures. That the sitting tenants of the suit land were UPDF veterans. DW4 (Kasozi Eddie Kitatta) testified that he bought the Kibanja sometime in 2007 from Kayiwa Gastavus through a verbal agreement. That a public hearing for conversion of customary land to freehold was held, and

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Diemers lonery

neighbours were notified including the area LC1 chairman, PW3 (Ssemugoma John Kaggwa). That no third-party claims were raised at the public hearing. That the Katabi Area Land Committee members visited the land and confirmed that he, together with the $2^{nd}$ , $3^{rd}$ , $5^{th}$ and $6^{th}$ defendants were the rightful owners of the land.

26. Whereas DW3 (Mukasa Hudson) claims that the LC1 chairman of Lugumba village, PW3 (Ssemugoma John Kaggwa) participated in the public hearing that concluded that there were no third-party claims on the suit land, PW3 (Ssemugoma John Kaggwa) denied knowledge of the $2^{nd}$ to the $6^{th}$ defendants and testified that:

> "[...] I know that all that land belongs to Mr. Michael Kaggwa who was born there in 1933 and he has built there his house, planted trees, rears goats and has since fenced off his land with a chain link fence."

- 27. Notably, in the application form for conversion of customary tenure to freehold (Exh. P10), the $2^{nd}$ to the 6^th defendants were dishonest to the extent that they deliberately omitted the names of owners of adjacent land. And yet surely the adjacent land owners exist. This was a deliberate act of concealment of truth. - 28. At the locus in quo visit on the 19^th April 2023, when DW4 (Kasozi Eddie Kitatta) was shown the plaintiff's developments including houses on the suit land, he testified that:

"I don't know this place. I don't know about these houses. I can't talk about the Kibanja. I don't know anything about it."

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Demarot Hernemy - 29. DW4 (Kasozi Eddie Kitatta) strikes me as someone who is dishonest. He is engaged in deliberate concealment of the truth from court. In view of his purported lack of knowledge about the plaintiff's developments on the suit land, and having regard to the survey report by Survey Tech Solutions dated 25^th March 2019 (Exh. P8) that confirmed that the plaintiff's developments were already in place by the time the freehold certificate of title was created. my conclusion is that the evidence of DW3 (Mukasa Hudson) and DW4 (Kasozi Eddie Kitatta) is unreliable. - 30. Accordingly, it is my finding that the evidence before me proves that up to the time of commencement of the present court proceedings in 2017, the plaintiff and/or his predecessors in title had been in occupation of the suit land for about 111 years. The plaintiff adduced photographs showing developments on the suit land including Exh. P3 which is a photograph of his grandfather's house (an old house), which he claimed has since been improved. In my opinion, the plaintiff needs no further proof that he is a bona fide occupant. I am satisfied that the legal threshold for the plaintiff to qualify as a bona fide occupant under the law has been sufficiently met. - 31. In fact, the $2^{nd}$ to the $6^{th}$ defendants were aware that the plaintiff was in possession of parts of the land, and that is why when they decided to sell the suit land to the $7^th$ defendant, they committed in clause 2(b) of the sale agreement, that the final balance of Ushs 100 million would be paid only upon removal of customary tenants from the land. This is proof that the plaintiff was in possession of parts of the suit land. - 32. My decision is that the plaintiff is a bona fide occupant on the suit land. Issue No. 1 is therefore answered in the affirmative.

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Bernerstamenye

## Issue No.2: Whether the process of conversion of the plaintiff's land to freehold was fraudulent?

33. In the case of Fam International Ltd & Anor v. Muhammed Hamid (Civil Appeal No. 16 of 1993) [1994] UGSC 12, Justice Benjamin Odoki (J. S. C) held that:

> "[...] in fraud cases the standard is more than a mere balance of probabilities though less than proof beyond reasonable doubt $\int \dots \int$ "

- 34. Accordingly, in the instant case, the plaintiff bears the legal burden to prove beyond a mere balance of probabilities, that the process of creation of a freehold certificate of title over the plaintiff's land was fraudulent. See sections 101, 102, 103 & 106 of the Evidence Act (Cap 6). - 35. On the 27^th June 2011, a certificate of title in the names of Kasoma Denis, Mukasa Hudson, Kasozi Eddie Kittata, Nabanoba Jascenta, and Tugume Benon was issued by the Registrar of Titles. The land on the certificate of title is described as Freehold Register Volume 953 Folio 10 Busiro Block 598 – 599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje. The size of the land on this certificate of title measures 42.891 Hectares (approximately 106 acres). The plaintiff is aggrieved that his 49.28 acres that he owns as a bona fide occupant was included in this certificate of title (see Exh. P7 – letter dated $19^{th}$ May 2017 authored by the 1^st defendant authorising a surveyor to carry out a location survey to determine if the Kibanja is included in the certificate of title for the suit land). On the 21^st July 2011, the above registered proprietors transferred ownership of the suit land (presumably including the 49.28 acres owned by the plaintiff) to Babirye Agnes, the 7^th defendant. The District Staff Surveyor of Wakiso

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Generalamenye

district authorised a survey of the suit land to be done. The survey was carried out by Survey Tech Solutions, who authored a report dated 25^th March 2019 (see Exh. P8). The survey report was tendered in court by PW2 (Henry Ssembajjwe). The survey report made the following findings that deserve special mention:

- The Kibanja occupies part of Plots 104, 105 and 106 and measures up $i)$ . to 49.28 acres; - ii). The age of the residential houses and other developments like the Pine trees on the ground suggest that freehold interests were created after such developments were in existence: - The Kibanja holder had customary rights in the said land and under iii). the Constitution and the Land Act, he had the right to apply to the district land board to regularize his interests in the land; and - iv). In the event that the Kibanja claims are found to be correct, the freehold title should be recalled and adjusted to cater for the interests of customary ownership. - 36. It is important to note at this point, that PW2 (Henry Ssembajjwe), the surveyor who carried out the location survey was cross examined by the defendants but they did not rebut his findings. - 37. It was argued for the plaintiff that the defendants obtained a certificate of title for the suit land to defeat the plaintiff's unregistered interest. The plaintiff contends that this was fraudulent. The plaintiff contends that the certificate of title is liable for cancellation under section 64 and 176 of the Registration of Titles Act. - 38. The defendants contend that the suit land had no occupants or developments. DW3 (Mukasa Hudson) testified that the suit land was vacant and without

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Semarett enemp

any structures. That the sitting tenants of the suit land were UPDF veterans. That he was approached by the sitting tenants who desired to process a certificate of title for the land but had no financial capacity. That he provided finances to acquire the certificate of title after which the suit land was sold to the 7 th defendant, Agnes Babirye. DW4 (Kasozi Eddie Kitatta) testified that he bought the Kibanja sometime in 2007 from Kayiwa Gastavus through a verbal agreement. That after buying the land, he was advised that he could get a certificate of title for the land. That a public hearing for conversion of customary land to freehold was held, and neighbours were notified including the area LCl chairman, PW3 (Ssemugoma John Kaggwa). That no claims were raised at the public hearing. That the Katabi Area Land Committee members visited the land and confirmed that he, together with the 2 nd , 3 rd , 4th, 5 th and 6 th defendants were the rightful owners of the land. That after these processes were completed, a certificate of title was issued, after which the suit land was sold to the 7 th defendant.

39. It is to be recalled that I have already found in Issue No. I above, that the plaintiff and his predecessors had been in occupation of the suit land since the year 1906. The survey report by Survey Tech Solutions dated 25 th March 2019 (see Exh. P8) also found that the age of the residential houses and other developments such as the pine trees suggested that the freehold certificate of title was created when these developments were already in existence. According to the evidence adduced by the defendants, at the time of creating the certificate of title, there were no such developments on the land. The defendants also claim that a public hearing was held in the area, and that local residents participated including the area LC 1 chairman. PW3 (Ssemugoma John Kaggwa), the area LCl chairman in his testimony denied knowledge of the defendants. But most importantly, Exh. Pl3, an inspection report by the Katabi Sub-County Area Land Committee dated the 12th March

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2010, does not indicate the attendees of the public hearing, as would be expected.

- 40. I do not believe the evidence of DW4 (Kasozi Eddie Kitatta) that the area LC1 chairman was consulted and attended the public hearing. This is because PW3 (Ssemugoma John Kaggwa), the LC1 chairman of the area denied knowledge of the defendants. Exh. P13, an inspection report by the Katabi Sub-County Area Land Committee, which would have provided information on the people that attended the public hearing is silent, which makes the report suspect and unreliable. In addition, no evidence was adduced of a survey report that informed the creation of deed plans for the freehold certificate of title. The deed plans were admitted in evidence and marked as Exh. P15A, Exh. P16 & Exh. P17. - 41. Regulation 21(1) of the Land Regulations (2004) regulate the conduct of public hearings by the Area Land Committees:

"21. Procedure at hearing by committee

(1) In considering any application $[...]$ a committee shall comply with the rules of natural justice in determining its procedure and shall—

(a) conduct the hearing in public $[...]$

(l) where the committee visits and inspects the land $[...]$ allow both the applicant or his or her representative and any other persons claiming an interest in the land to point out features of the land and make other remarks about the land and their interests in the land:

(m) keep notes of the proceedings made at the hearing including records of any visits made to the land in the course of the hearing

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Deemer Marrany

either by the chairperson of the committee or an official appointed *for the purpose by the chairperson:*

(n) accept as evidence on the boundaries of the land the subject of *the application—*

(i) a statement on the boundaries by any person acknowledged in the community as being trustworthy and knowledgeable about land matters in the parish or the urban area; $[...]$ "

- 42. It is noted that a record of proceedings of the hearing conducted by the Katabi Area Land Committee and a statement of boundaries were not tendered in evidence. Accordingly, there is evidence that procedures for processing the freehold certificate of title were flouted in order to defeat the unregistered interest of the plaintiff. For example, the Area Land Committee did not comply with the regulations for a public hearing and inspection of the land. See the Supreme Court of Uganda case of *Kampala District Land* Board & Chemical Distributors v. National Housing and Construction Corporation, Civil Appeal No. 2 of 2004. - 43. The evidence on record proves that issuance of a freehold certificate of title for the suit land was approved by Wakiso District Land Board on the 10^th May 2011 under minute number 4:1(59)(a)/02/WDLB/2011 (Exh. P9). At this time, the plaintiff and his predecessors were firmly in occupation of the suit land, having been there since the year 1906, and had various developments on the suit land including an old house (Exh. P3). This is confirmed by the survey report by Survey Tech Solutions dated 25^th March 2019 (see Exh. P8). - 44. There is ample evidence to prove that the $2^{nd}$ to the 6^th defendants were fully aware of the plaintiff's unregistered interest in the suit land, and that is why

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Lerman laneny.

they agreed to clause 2(b) of the sale agreement with the 7^th defendant (Exh. D1). The said clause required the 2^nd to the 6^th defendants to first remove customary tenants on the suit land before receiving payment of the balance of the purchase price of Ushs 100,000,000.

45. In the case of <u>Kampala District Land Board & Chemical Distributors v.</u> National Housing and Construction Corporation, Civil Appeal No. 2 of 2004, the Supreme Court of Uganda (coram: Odoki CJ, Oder, Tsekooko, Karokora and Kanyeihamba JJ. SC (per the judgment of Benjamin Odoki, $CJ$ ) held that:

> "It is now well settled that to procure registration of title in order to defeat an unregistered interest amounts to fraud. In Marko Matovu & Others vs Mohammed Ssevivi and Another, Civil Appeal No. 7 of 1978 (CA), Sijaka Nalima vs Rebecca Musoke, Civil Appeal No. 12 of 1985 (SC) and Uganda Posts and *Telecommunications vs Lutaaya Civil Appeal No.36 of 1995 (SC)* this Court approved the holding of the High Court in Katarikawe vs Katwiremu (supra) where it was stated: "Although mere knowledge of unregistered interest cannot be imputed as fraud under the Act, it is my view that where such knowledge is accompanied by a wrongful intention to defeat such existing interest that would amount to fraud."

46. It is my finding that the $2^{nd}$ to the 6^th defendants working in concert with the 8^th defendant, Wakiso District Land Board, were fully aware of the plaintiff's interest in the land as a person in occupation of part of the land, and deliberately set out to defeat his interest. On the authority of Kampala District Land Board & Chemical Distributors (supra), it is my decision that

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Le nervelaneny 9

the issuance of a freehold certificate of title over the plaintiff's unregistered interest in the land amounts to fraud.

- 47. It was submitted for the 1^st defendant that he was wrongly sued since his involvement was purely in his official capacity as the district staff surveyor for Wakiso district. That whatever he did was in performance of his official duties. He further argued that the responsibility for issuing the freehold certificate of title lies with the Commissioner for Land Registration, and not him in his personal capacity. - 48. In paragraph 6 of his written statement of defence, the 1^st defendant avers that:

" $\lceil \ldots \rceil$ the 1^st defendant diligently and in good faith carried out his duties in his official capacity as the District Staff Surveyor Wakiso District as well as the former Secretary Wakiso District Land Board for which there was no any wrong done but he only executed his official duties $[...]$

- 49. I am satisfied that the 1^st defendant is not personally liable for acts done in his official capacity. - 50. The functions of district land boards are set out in section 59 of the Land Act (*Cap 227*):

"59. Functions of a board

(1) The functions of a board shall be to— (*a*) *hold and allocate land in the district which is not owned by any person or authority:* (*b*) *facilitate the registration and transfer of interests in land;* $(c)$ ...;

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Dennero Harnery. (d) cause surveys, plans, maps, drawings and estimates to be made by or through its officers or agents; $[...]$ "

- 51. The 8^th defendant, Wakiso District Land Board failed to implement its statutory mandate by approving the creation of a certificate of title in favour of the $2^{nd}$ to the 6^th defendants in disregard of the plaintiff's interest in the land. There was a failure by the 8^th defendant to ensure that a freehold certificate of title is not created over land that was already in occupation of the plaintiff. - 52. With respect to 9^th defendant, the plaintiff failed to adduce evidence to prove any wrong doing on its part. The 9^th defendant acted on the recommendation of the 8^th defendant to process a freehold certificate of title for the suit land. - 53. Having regard to the law and evidence, I am satisfied that the 2^nd to the 6^th defendants acted in concert with the 8^th defendant to procure a freehold certificate of title for the suit land in order to defeat the unregistered interest of the plaintiff. Accordingly, it is my decision that the 2^nd to the 6^th defendants were fraudulently registered as proprietors of the suit land, and their registration is void on grounds of fraud. - 54. However, on the 21^st July 2011, the 2^nd to the 6^th defendants transferred ownership of the suit land to the 7^th defendant, Babirye Agnes who is the current registered proprietor of the suit land. I shall deal with this matter in Issue No. 3.

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Derrero Hornerye

## Issue No.3: Whether the 7^th defendant is a bona fide purchaser for value without notice of fraud?

- 55. The plaintiff contends that the $7^th$ defendant was fraudulently registered as a proprietor of the suit land. - 56. The 7^th defendant set up the defence a bona fide purchaser for value without notice of fraud. In paragraph 5 of her written statement of defence, the 7^th defendant avers that she is:

"[...] a bona fide purchaser for value without notice of fraud or any third party claims in anyway whatsoever since she bought the suit land for value at a consideration of Ugshs. 892,500,000 $\int \dots \int$ "

- 57. It was submitted for the 7^th defendant, relying on section 181 of the Registration of Titles Act (Cap 230) and the case of Robert Luswese v. G. W. Kasule & Another, Civil Suit No. 1010 of 1983 (unreported) that a bona fide purchaser obtains good title even if he or she purchases from a proprietor who previously obtained registration through fraud. The effect of this would be that the $7^th$ defendant acquired good title to the suit land even if the $2^nd$ to the $6^th$ defendants obtained the title fraudulently. - 58. The doctrine of a bona fide purchaser for value without notice of fraud is set out in section 181 of the Registration of Titles Act (Cap 230):

## "181. Purchasers protected

Nothing in this Act shall be so interpreted as to leave subject to an action of ejectment or to an action for recovery of damages as aforesaid or for deprivation of the estate or interest in respect to which he or she is registered as proprietor any purchaser bona

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BeenerHonomy

fide for valuable consideration of land under the operation of this Act, on the ground that the proprietor through or under whom he or she claims was registered as proprietor through fraud or error or has derived from or through a person registered as proprietor through fraud or error; and this applies whether the fraud or error consists in wrong description of the boundaries or of the parcels of any land or otherwise howsoever."

59. It is a fundamental rule that a purchaser of a legal estate for value without notice has an absolute, unqualified and unanswerable defence against the claims of any prior equitable owner or incumbrancer. The onus of proof lies on the person putting forward this plea. It is a single plea, and is not sufficiently made out by proving purchase for value, and leaving it to the claimant to prove notice if he or she can. The purchaser must act in good faith. Any sharp or unconscionable conduct may disentitle a purchaser from putting forward this defence. The purchaser must undertake a full investigation of title before completing the purchase. In order to derive benefit from the doctrine, a purchaser must have made all the usual and proper inquiries, and still found nothing to indicate the equitable interest of a third party. A purchaser who falls short of this standard cannot not plead that he or she had no notice of third-party rights which proper due diligence would have discovered. A purchaser is deemed to have constructive notice of a fact if he or she had actual notice that there was some incumbrance, and a proper inquiry would have revealed what it was; or deliberately abstained from inquiry in an attempt to avoid having notice; or omitted by carelessly or for any other reason, to make an inquiry which a purchaser acting on skilled advice ought to have made, and which would have revealed the incumbrance. A purchaser has a duty to inspect the land and make a full inquiry about anything which appears inconsistent with the title offered by

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Demerslaneny

the vendor. Possession of land that is inconsistent with a vendor's tittle constitutes sufficient notice to the purchaser of the rights of the possessor. See Megarry & Wade: The Law of Real Property, 9^th Edition, Stuart Bridge, Elizabeth Cooke and Martin Dixon, Sweet & Maxwell, London, 2019 at paragraph 5-005; 5-016-5-023); See also Mohammed Abdallah Garelnabi v. Diana Irene Nayiga (Civil Appeal No. 231 of 2019) [2022] UGCA 78, the Court of Appeal of Uganda (per Justice Catherine Bamugemerire, JA).

60. In the case of Yakobo M. N. Senkungu & 4 Others v. Cresensio Mukasa, Civil Appeal No. 17 of 2014, the Supreme Court of Uganda (per Justice Augustine S. Nshimye, J. S. C) held that:

> "In order for one to seek the protection of Section 181 (supra), he/she must prove that he/she is a bona- fide purchaser. The purchaser must act in good faith, ought to have given due consideration and purchased the land without notice of the fraud. Such notice covers both actual knowledge and constructive notice of the fraud. In Jones vs. Smith (1841) 1 Hore the Chancery Court held that: a purchaser has constructive notice of a fraud if he had actual notice that there was some encumbrance and a proper inquiry would have revealed what it was, has abstained either deliberately carelessly from making those inquiries which a prudent purchaser would have made."

61. Accordingly, having put forward the plea of a bona fide purchaser for value without notice of fraud, the onus is on the 7^th defendant to prove the following essential elements: i) that she acted in good faith; ii) that she undertook a full investigation of the vendors' title; and iii) that she undertook a thorough due diligence on the land, including a thorough inspection of the

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Demerved one of

land, and still found no equitable interest that was inconsistent with the vendors' title.

- 62. I will now proceed to evaluate the evidence put forward by the 7 th defendant in order to determine if the plea of "a bona fide purchaser for value without notice of fraud" has been sufficiently established. - 63. DW2 (Agnes Babirye) testified that sometime in the year 2011, she was approached by a one Kasajja who told her that the suit land was available for purchase. She went on to inspect the land in the company of Kasajja. She was thereafter introduced to the LCI chairman of the area who informed her that he knew the owners of the land who were at the time processing a certificate of title for the suit land. She again inspected the land with the LC 1 chairman and it had no occupants. On the 23 rd June 2011, a sale agreement was signed at a consideration Ushs 892,500,000. She paid a commitment fee of Ushs 10,000,000. That a few days later she carried a search at the land office and got a search statement. She then engaged a surveyor to open boundaries of the suit land and it had no occupants, and neither did the land have houses, eucalyptus trees, pine trees, gardens, or a goat farm. That the suit land was a bush. She then went ahead to pay the entire purchase price for the suit land, and thereafter processed a transfer of the suit land into her name. Her evidence was corroborated by DW5 (Yozefu Kasajja) who testified inter alia, that PW3 (Ssemugoma John Kaggwa), the LCl chairman ofLugumba village told him that the suit land was up for sale. - 64. In his testimony, PW3 (Ssemugoma John Kaggwa), the LCl chairman of Lugumba village where the suit land is situated, denied knowledge of the 7th defendant. He also denied having spoken to DW5 (Yozefu Kasajja) about the land. He denied having told the 7 th defendant or Yozefu Kasajja that the suit land was for sale. He denied having inspected the land with 7th defendant

*Page 21 o/31*

or Yozefu Kasajja. He denied having introduced the 7^th defendant to the 2^nd to the $6^{th}$ defendants. In fact, he testified that the $2^{nd}$ to the $6^{th}$ defendants are unknown to him. He denied having participated in the transaction that resulted in the registration of the 7^th defendant as proprietor. He testified that the plaintiff is in possession of the suit land.

- 65. As to the clause 2(b) of the sale agreement (Exh. D1) requiring the removal of customary tenants, the 7^th defendant stated that there were no tenants to remove but that the clause was just put there. - 66. The 7^th defendant testified that she was told that the plaintiff was her neighbour. A survey and boundary opening of the land would have revealed whether or not the plaintiff was just a neighbour or was in fact a possessor of part of the land. Did the 7^th defendant carry out a survey and boundary opening of the suit land? The 7^th defendant claims in her evidence that she did, but no report of the survey and boundary opening exercise was tendered in evidence. - 67. The second point relates to a clause in the sale agreement that tends to suggest that the 7^th defendant had prior knowledge that there were persons in possession of parts of the land whose interest was inconsistent with the vendors' title. Clause 2(b) of the sale agreement (Exh. D1) provides that:

"The balance of Ug. Shs. 100,000,000/= (One Hundred Million *Shillings) shall be paid by the purchaser to the vendors after the* vendors have opened up the boundaries of the said land for the purchaser and after the said land has been cleared off of all the existing customary tenants thereon." (underlining is mine for *emphasis*)

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Decementamente

- 68. The 7 th defendant claims that Clause 2(b) of the sale agreement (Exh. D 1) was just put in the sale agreement with no real significance. Under Clause 2(b) of the sale agreement (Exh. D 1 ), payment of the final balance of U shs 100,000,000 was conditional on the vendors removing customary tenants on the suit land. It ought to be remembered that the other instalments of the purchase price were tied to some conditions to be met by the vendors. The total agreed purchase price was Ushs 892,500,000. Ushs 10 million was paid *upon* the signing of the sale agreement. Ushs 782 million was conditional on the vendors producing and delivering a certificate of title for the suit land. It is noted that the parties entered into a sale agreement on the 23 rd June 2011 before the issuance of the title on the 27 th June 2011. So the vendors could not be paid Ushs 782 million until they had delivered the certificate of title for the suit land. Likewise, the final balance of Ushs 100 million was conditional *upon* the vendors removing customary tenants on the land. Accordingly, I do not agree with the 7 th defendant's explanation that clause 2(b) of the sale agreement had no specific purpose. In fact, the inclusion of clause 2(b) of the sale agreement proves that the 7 th defendant was fully aware that parts of the suit land were occupied by the plaintiff as proved by the survey report that was prepared later after the dispute arose. - 69. As I have already decided in Issue No. 1, the plaintiffs have been on the suit land since the year 1902. The plaintiff proved that by 19 3 3, there was a house on the suit land, and in 1973, Michael Kaggwa built a house on the land. The plaintiff proved that the other developments on the suit land include a cow and goat shade, chicken pen, a gate and chain link fence. - 70. The survey report carried out by Survey Tech Solutions dated 25th March 2019 (Exh. P8) made a finding that the 49.28 acres claimed by the plaintiff are included in the questioned freehold certificate of title. The survey report

*Page 23 o/31*

also confirms that are developments on the land claimed by the plaintiff, in form of two residential houses, goat pen, seasonal crop garden of maize and beans, banana plantation, and pine and eucalyptus trees. Very importantly, the survey report concludes that the age of the residential houses, and other developments like the pine trees on the ground, suggest that freehold interests were created after such developments were already in existence

- 71. The survey report carried out by Survey Tech Solutions dated 25th March 2019 (Exh. P8) also made an important finding that deserves special mention: That FRV 953 Folio 10 Busiro Block 598-599 Plots 104, 105 and 106 Land at Lugumba is within the buffer zone of Lake Victoria of approximately 200 metres off the water shores. The survey report recommended that the certificate of title be recalled and a resurvey be made for a new title respecting the buffer zone of Lake Victoria. - 72. I have evaluated the evidence adduced by both the plaintiff and the 7th defendant. While the 7 th defendant claims that the suit land had no occupants and developments, the plaintiff has proved that the suit land had occupants and developments. Curiously, although the 7 th defendant claimed that she opened boundaries of the suit land, she did not adduce the boundary opening report. Most importantly, the 7 th defendant testified that she was shown the plaintiff as her neighbour. - 73. PW3 (Ssemugoma John Kaggwa), the LCl chairman of Lugumba village where the suit land is located, testified that he does not know the 7th defendant or any of the other defendants. He stated that the suit land belongs to the plaintiff. - 74. From the scrutiny of the evidence on record, I have come to the conclusion that the 7 th defendant did not carry out extensive due diligence on the suit

*Page 24 o/31* land as required by the law. First, the 7^th defendant failed to carry out a full inquiry on the land, by for example, interviewing the LC1 chairman to establish ownership of the suit land. Second, the 7^th defendant claimed to have opened boundaries of the suit land and yet no report was adduced. So, she did not open boundaries of the suit land, prior to purchase. Had the 7^th defendant undertaken due diligence on the suit land prior to purchase, she would have discovered the unregistered interest of the plaintiff. Third, the sale agreement between the $2^{nd}$ to the 6^th defendants and the 7^th defendant. had a clause requiring the sellers to remove customary tenants from the suit land, which proves that she was aware of the plaintiff's developments, and that there would be need to evict the plaintiff.

- 75. By committing herself to buy the suit land in respect of which the certificate of title was still under processing, the 7^th defendant cannot effectively plead the defence of bona fide purchaser for value without notice of fraud. She is deemed to have been aware that the title which was being processed by the $2^nd$ to the 6^th defendants included the unregistered interest of the plaintiff. In fact, she was aware of the plaintiff's unregistered interest, and that is why there was specific clause in the sale agreement requiring his removal before she could pay the final balance of the purchase price. With this knowledge, the 7^th defendant could not to be said to be a bona fide purchaser for value without notice of fraud. - 76. The 7^th defendant entered the scene before the title deed was issued. Effectively, the 7^th defendant was an active participant in the fraudulent creation of the title deed. Her footprints are visible in the transaction that resulted in the fraudulent registration of the $2^{nd}$ to the 6^th defendants as proprietors of the land. Yet the 7^th defendant now wants court to believe that she had no notice of the fraud. I am not persuaded. It is my finding that the

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Le nevr lomenge

fraud committed by the $2^{nd}$ to the $6^{th}$ defendants who processed a certificate of title that included the unregistered interest of the plaintiff is attributable to the 7^th defendant. The plea of bona fide purchaser for value without notice of fraud therefore fails.

77. I am fortified in this conclusion by the Supreme Court of Uganda in the case of Kampala District Land Board & Chemical Distributors v. National Housing and Construction Corporation, Civil Appeal No. 2 of 2004, where it was held that:

> "[...] there was ample evidence of fraud attributable to both appellants that the grant and registration of the suit land in the name of the $2^{nd}$ appellant was intended to defeat the unregistered interest of the respondent $[...]$ "

- 78. It was submitted for the plaintiff that the 7^th defendant declared consideration of Ushs 105,000,000 on the transfer form (Exh. P19(a) & Exh. P19(b)) despite having purchased the suit land at Ushs 892,500,000. She was cross examined on this point, and stated that she believed that her lawyers wanted to reduce stamp duty tax on transfer of the land. - 79. Section 92(1) of the Registration of Titles Act (Cap 230) requires that the true consideration of land must be stated in a transfer instrument. - 80. It is the law, that failure to declare the true consideration of land on a transfer form renders registration of a proprietor for land void for fraud. In the case of Betty Kizito v. David Kizito Kanonya & 7 Others (Civil Appeal No. 8 of 2018) [2019] UGSC 28, the Supreme Court of Uganda (per Justice Prof. Tibatemwa-Ekirikubinza, J. S. C) considered the effect of failure to indicate the true consideration on the transfer form, and held that a buyer is not a bona fide purchaser where he or she inserts a lesser figure on the transfer

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Thermostlandong

form as consideration than was actually paid in order to defraud government of revenue. Such a transaction becomes tainted with fraud and illegality, and a title deed acquired in such circumstances would be void because of fraud.

81. Accordingly, in addition to the fraud committed by the 2 nd to the 6th defendants, which was clearly attributable to the 7 th defendant, there is another reason why the registration of the 7 th defendant as proprietor of the suit land is void: she declared Ushs 105,000,000 on the transfer form instead of Ushs 892,500,000 which was the purchase price. According to the Supreme Court of Uganda in the case of *Betty Kizito v. David Kizito Kanonya (supra)* that amounts to fraud, rendering the registration of 7th defendant as proprietor for the suit land void for fraud.

## *Issue No.3: What remedies are available to the parties?*

- 82. The plaintiff prayed for the following remedies: i) a declaration that the plaintiff is a bona fide occupant of the suit land; ii) a declaration that the 2nd to the 6 th defendants were fraudulently registered as proprietors of the suit land; iii) an order directing the Commissioner for Land Registration to cancel the certificate of title for the 7 th defendant; iv) an order directing the 8 th defendant to grant a certificate of title to the plaintiff; v) a permanent injunction against the defendants dealing in the suit land and evicting the plaintiff; aggravated and enhanced general damages of Ushs 200,000,000; interest at court rate of 6% on aggravated and general damages; and costs of the suit. - 83. *Section 176 (c) of the Registration of Titles Act (Cap 230)* provides for cancellation of a certificate of title obtained fraudulently.

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84. In the case of Hilda Wilson Namusoke & 3 Others v. Owalla's Home Investment Trust (E. A) Ltd & Commissioner for Land Registration, Supreme Court Civil Appeal No. 15 of 2017 the Supreme Court of Uganda (per Justice *Prof. Tibatemwa-Ekirikubinza*) held that:

> "Section 177 of the RTA vests powers in the High Court to direct the Commissioner to effect any order of cancellation of a *certificate of title* $[...]$ ."

- 85. Having found in Issue No. 2 that the 2^nd to the 6^th defendants were fraudulently registered as proprietors of the suit land, and having found that the 7^th defendant is not a bona fide purchaser for value without notice of fraud, the inevitable conclusion is that the certificate of title for the land comprised in Freehold Register Volume 953 Folio 10 Busiro Block 598 -599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje measuring 42.891 Hectares must be cancelled. - 86. The plaintiff is entitled to a declaration that he is a bona fide occupant of the suit land. - 87. I grant a declaration that the $2^{nd}$ to the 6^th defendants were fraudulently registered as proprietors of the suit land. - 88. I direct the Commissioner for Land Registration to cancel the certificate of title for the land comprised in Freehold Register Volume 953 Folio 10 Busiro Block 598 – 599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje measuring 42.891 (approximately 106 acres). - 89. There is no legal basis for directing the 8^th defendant to grant a freehold certificate of title to the plaintiff. This prayer is rejected.

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Diemcort Coverney

- 90. I grant a permanent injunction against the defendants from dealing in the plaintiff's land and/or evicting the plaintiff. - 91. The plaintiff prayed for aggravated damages. I reject this prayer since it has no legal basis. - 92. The plaintiff prayed for general damages of Ushs 200,000,000. The plaintiff has suffered inconvenience, suffering and mental anguish as a result of the actions of the $2^{nd}$ to the $8^{th}$ defendants. However, the amount claimed is excessive. I award Ushs 30,000,000 as general damages to be paid by the 2^nd to the $8^{th}$ defendants. - 93. I award interest of 6% on general damages from the date of judgment until payment in full. - 94. The plaintiff is awarded costs of the suit.

## Final order of the court:

- 95. The plaintiff's suit against the 1^st defendant is dismissed with no orders as to costs. - 96. The plaintiff's suit against the 9^th defendant is dismissed with no orders as to costs. - 97. The plaintiff's suit against the $2^{nd}$ to the $8^{th}$ defendants succeeds, and I enter judgment in favour of the plaintiff with the following declarations and orders: - $i)$ . A declaration that the plaintiff is a bona fide occupant of land measuring 49.28 acres situated at Lugumba, Zziba, Kasanje.

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Derment Comment

- A declaration that the $2^{nd}$ to the 6^th defendants (Kasoma Denis, ii). Mukasa Hudson, Kasozi Eddie Kittata, Nabanoba Jascenta, and Tugume Benon) were fraudulently registered as proprietors of the land comprised in Freehold Register Volume 953 Folio 10 Busiro Block 598 – 599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje measuring 42.891 Hectares (approximately 106 acres). - A declaration that the 7^th defendant (Agnes Babirye) was fraudulently iii). registered as proprietor of the land comprised in Freehold Register Volume 953 Folio 10 Busiro Block 598 – 599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje measuring 42.891 Hectares (approximately 106 acres). - iv). An order directing the Commissioner for Land Registration to cancel the certificate of title for the land comprised in Freehold Register Volume 953 Folio 10 Busiro Block 598 – 599 Plots 104, 105 and 106 Land at Lugumba, Zziba, Kasanje measuring 42.891 Hectares (approximately 106 acres). - A permanent injunction against the defendants from dealing in the $v$ ). plaintiff's land and/or evicting the plaintiff. - An order that the 2^nd, 3^rd, 4^th, 5^th, 6^th, 7^th, and 8^th defendants pay Ushs vi). 30,000,000 (Uganda shillings thirty million) as general damages to the plaintiff. - An order for payment of interest of 6% per annum on general damages vii). from the date of judgment until payment in full. - An order that the 2^nd, 3^rd, 4^th, 5^th, 6^th, 7^th, and 8^th defendants pay costs viii). of the suit to the plaintiff.

IT IS SO ORDERED.

ernear Homorry e

**BERNARD NAMANYA JUDGE** 14 July 2023

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## 17 July 2023 at 9:14am.

Isaac Jjombwe Karugaba Jeremaiah James Katono All the parties are absent Allena Kire

Counsel for the 7^th defendant Counsel for the plaintiff Counsel for the 8^th defendant

Court Clerk

## Court:

Judgment delivered in open chambers.

enound onemy e

BERNARD NAMANYA $JUDGE$ 17 July 2023

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