[1977] UGHCLD 1

## JOHN KATARIKAWE V KATWIREMU & ANOR [1977] H. C. B 211

John Katarikawe V 1. William Katwiremu (Deceased (Maria Nyamihanda - Administrator and Litem)

2. Oneziforo Bakampata

Hight Court (Ssekandi, J.): July 15th, 1977

(Civil Suit No. 2 of 1973)

Contract - sale of land - contract of sale of land is not perfect until an effective transfer of title has been made, but failure to do so does not affect the contract until the land is transferred to other persons.

Land Law - protection of purchaser's interest in land before transfer - purchaser would ordinarily protect his interest in land by filing caveat or charge - mere taking of land possession of title deeds is useless inless caveat is lodged on title.

Land Law - interest of purchaser before transfer - before transfer of land, purchaser acquires only an equitable interest under contract of sale - purchaser acquires an indefeasible registered estate once transfer has been effected.

Land Law - rights of a purchaser before transfer - where default is made in effecting transfer - purchaser can sue on contract of sale for damages - he also has a right in equity - his equitable rights are good against all persons except a bona fide purchaser of a registered estate for value - s. 145 of Registration of Titles Act.

Land Law - equitable remedies - equity will not intervene to provide a remedy to a party in case an oral contract unless there has been an act of part performance of the contract - act of part performance must have been done by plaintiff with knowledge of defendant and must have been unequivocally referable to land suffiecient act of part performance is concerned with possession of land - mere payment of contract sum without taking actual possession of land is not sufficient act of part performance.

Land Law - position of buyer on an oral contract of sale of land - aa buyer on an oral contract of sale of land is in the same position as a buyer on a written contract - both are entitled to sue for damages and specific performance in case of breach - but buyer on oral contract is not entitled to specific performance unless he has performed some effective act of part performance - mere payment is by itself no evidence that it was for the purchase of land.

Land Law - taking possession of land - possession is decisive as evidence of contract to part with ownership of land on part of payee and will operate as notice to anyone dealing with that land fraudulent dealings in land - meaning of fraud under R. T. A. - fraud covers dishonest dealings in land.

The plaintiff John Katarikawe instituted this suit against the first and second defendants on a contract for sale of land between him and the first defendant. The second defenant was joined in the suit because he was at the time of filing the case the registered owner of the land in dispute. The plaintifff had occupied the land since 1971 when the contract was concluded.

The undisputed facts were that the first defendant, who at the time of the suit was dead, was the registered proprietor of 11.3 acres comprised in block 8 plot 77 in Ruzumbura county Kigezi district. The second defendant was his brother-in-law being the brother of his wife Maria Nyamihanda who had since been joined as administrator ad litem.

The plaintif produced agreements entered into with the first defndant in which the defendant agreed to sell his land to the plaintiff on 24th April, 1971 for for Shs. 5,300/=. This was paid in instalments and by 24th January, 1972 there was only a balance on the purchase price of Shs. 800/=. The plaintiff did not complete the payment because he discovered in May 1972 that the land had

been transferred to the second defendant. The balance was to be paid on completing the transfer which was never done.

The plaintiff took the possession of the land immediately after the sale, on 24th April, 1971, and had been occupying the land ever

since. The first defendant had promised to effect a transfer of the land but said the title deeds had been stolen and he was in the

process of getting duplicate certificate of the title after which he would effect the transfer. Later, the plaintiff discovered from the land office that the title had been transferred into the names of the second defendant, hence this suit.

The transfer to the second defendant of the land in dispute was effected after the agreement of sale had been entered into between the plaintiff and the 1st defendant.

The transfer was effected on 4th May, 1972. But, the second defendant contended that he had bought the land in 1968 from the first defendant for Shs. 4,600/= on an oral contract. He did not effect the transfer immediately because he had no funds to pay for the transfer. No agreement of sale was made but he took possesssion of the title deeds.

The issue before the court was what effect the transfer of the land to the second defendant had on the contract of sale between the first defendant and the plaintiff.

HELD:

1. In law an oral contract is as effective as a written one. The Contract Act (Cap. 75)

2. A contract of sale of land is not perfected until an effective transfer of title has been made but, failure to do so does not affect the contract until the land is transferred to other persons.

3. A purchaser would ordinarily protect his interest in the land by filling a caveat or a charge. Mere taking possession of the title deeds is useless unless a caveat is lodged on the title. In case of default, however, the purchaser can sue on the contract and is entitled to damages. He could also obtain the equitable remedy of specific performance in certain cases.

4. Before transfer of land, a buyer under contract acquires only an equitable interest. On the land being transferred to him he acquires an indefeasible registered estate unless the transfer was effected through fraud.

5. He could sue for damages on the contract. However, he also acquired rights in equity which rights are good against all persons except a bona fide purchaser of a registered estate for value: s. 145 of the Registration of Titles Act.

6. The plaintiff's taking possession of the land amounted to part performance of the contract and his equitable interest was binding on the vendor as an overriding interest.

7. Section 3 of the Contract Act specifically preserved the rights of the parties to a contract both at law and in equity and the High Court is enjoined by the Judicature Act to administer both law and equity.

8. Equity will not intervene to provide a remedy to a party in case of an oral contract unless there has been act of part performance of the contract which act must have been done by the plaintiff with the knowledge of the defendnt and must have been unequivocally referable to the land.

9. Since in Uganda there is no difference between an oral and written contract, the equitable remedy of specific performance would not be available to a party unless there has been an act of part performance. The only remedy, in case of a breach of an oral

contract, in absence of part performance, would be to sue on the contract.

10. A sufficient act of part-performance must fall within the categories enumerated at p.299 if Megarry's Manual of the law of real property where it is stated that more frequently the act of part performance is concerned with possession of the land it does not appear that mere payment of the contract sum without taking actual possession of the land is sufficient act of part performance, even if the vendor surrender the title deeds to the purchaser so long as no effective transfer of title is made or a caveat is effected on the register.

11. Mere payment is by itself no evidence that it was for the purchase of land for it is explainable on a number of grounds, and there is certainly nothing in it to connect it inevitably with a contract for sale of land by the payee to the payer.

12. The position is that a buyer on an oral contract for sale of land is in the same position as a buyer on a written contract, and both are entitled to sue for damages and specific performance, in case of a breach but, a buyer on an oral contract is not entitled to specific performance unless he has performed some effective act of part performance such as taking posession of the land.

13. The entry into possession is decisive as evidence of a contract to part with ownership of land on the part of the payee and will often operate as notice to anyone dealing with the same land.

14. The provisions of s.61 of the Registration of Titles Act are clear that once a person is registered as a proprietor of land, his title is indefeasible except for fraud. **Kristofa Zimbe v Yokana Kamanza** 7 U. L. R 68

In the land system based on registration there are basically two interest, the registered estate and other registrable interests such as Mortgages. Equity will, however, intervene to protect other unregistered interests in limited circumstances. Registered interest, especially the registered estate are known as rights in reme and bind the whole world. The other interest are rights in personam, such rights may more often arise from contracts for sale of land

15. before transfer. The purchaser acquires an equitable interest in the nature of a right in personam enforceable only against the vendor.

16. If a purchaser, despite knowledge, of the occupation of the land under a contract of sale, proceeds with a transfer of the title in his name in order to defraud the occupier, this would be evidence of fraud.

17. Fraud, though not defined under the Registration of Titles Act, covers dishonest dealings in land such as depriving a purchaser for value in occupation of the land of his unregistered interest.

18. In the result, the second defendant was guilty of fraud in terms of s.185 of the Registration of Titles Act and the transfer of the land in his names was void.

## **Per Curiam:**

"Although mere knowledge of an 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*. In Kenyan statute which defines fraud as "fraud shall on the part of a person *obtaining registration include a proved knowledge of the existance of an unregistered interest on the part of some other person, whose interest he knowingly and wrongfully defeats by*

*such registratio*." I take this view because I doubt whether the framers of the Act ever intended to encourage dishonest dealings in land such as is manifest in this case."

Order of specific performance granted. Upon paying the balance of the contract price of Shs. 800/=, the Administrator ad litem, Maria, was ordered to effect the transfer of the land in the names of the plaintiff.

## Legislation considered:

- 1. Contract Act s.3 - 2. Registration of Titles Act ss.61, 145, 184 and 185

## *Cases cited*

- 1. Isaka Wamala v H. G Muguluma 7 U. L. R 33 - 2. Kristofa Zimbe v Tokana Kamanza 7 U. L. R 68 - 3. Musitafa Ndigejjerawa v Isaka Kizito & Anor. 7 U. L. R 31