[2024] UGCommC 133

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO. 830 OF 2022**

#### 10 **NASSIMBWA FATUMAH MAGALA :::::::::::::::::::::::::: PLAINTIFF**

#### **VERSUS**

### **1. HAJJI MAGALA SULEIMAN**

**2. OPPORTUNITY BANK ::::::::::::::::::::::: DEFENDANTS**

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

### 20 **JUDGMENT**

#### Introduction

This matter was filed by the Plaintiff on 26th September, 2022 seeking declarations that; properties comprised in Block 106 Plot 75, land at Lubogo Ssabagabo, Mpigi District and land comprised in LRV No. 2898 25 Folio 4 Block 57 Plot 867, land at Zirobwe, Bulemezi in Luwero District, are matrimonial properties which were acquired during the marriage from which the family derives sustenance; the mortgage transaction(s) between the 1st and 2nd Defendants involving the suit properties are illegal, void and fraudulent on account of lack of statutory spousal consent; the 1st 30 Defendant be held personally responsible and liable in settlement and or payment of the debt with exclusion of the suit properties, an order directing the 2nd Defendant to immediately release the mortgages registered on the suit property and handover their titles to the Plaintiff free of any encumbrances, a permanent injunction against the Defendants or 35 their agents, employees and any other person claiming title from interfering with the Plaintiff's possession or occupation, sale or any

5 dealings with the suit properties in any manner that prejudices the interests of the Plaintiff, general and punitive damages and costs of the suit.

#### Background of the suit

- 10 The brief facts of the Plaintiff's claim are that on 27th July, 2007, the Plaintiff and the 1st Defendant celebrated a Mohammedan marriage and that they later acquired the suit properties in 2014 and 2015 respectively which are considered as matrimonial properties. On 14th September, 2022, the Plaintiff was surprised to see their matrimonial properties advertised - 15 by Gweta Honest Associates (U) Ltd in the Daily Monitor newspaper for sale by public auction as a result of a loan facility obtained by the 1st Defendant. The Plaintiff contended that she never consented to using the suit properties as security for the loan. - 20 In his defence, the 1st Defendant admitted that he is married to the Plaintiff, that both of them acquired the properties in issue and that he did not get the Plaintiff's consent because his first wife Nampiima Sarah consented to the same. - On the other hand, the 2nd Defendant contested the Plaintiff and 1st 25 Defendant's marriage and that Nampiima Sarah was the 1st Defendant's legal wife. The 2nd Defendant also filed a counterclaim seeking declarations that the 2nd, 3rd and 4th counter Defendants in the counterclaim are indebted to it to the tune of UGX 1,130,270,939.47/= and that the suit 30 properties are not matrimonial properties. The 2nd Defendant contended that the mortgage transaction between the counterclaimant and 2nd counter Defendant involving the suit properties was lawful and prayed for costs of the suit.

- 5 On 26th March, 2024, the parties entered into a partial consent whereby the Plaintiff consented to the mortgage and the 2nd Defendant rescheduled the loan facility. The 2nd Defendant now seeks for costs of the suit from the 1st Defendant. - 10

# Representation

The Plaintiff was represented by M/s Springs Advocates while the 1st Defendant was represented by M/s Musangala Advocates & Solicitors and the 2nd Defendant by M/s Okalang Law Chambers.

15 Issue for Determination

# Whether the 2nd Defendant is entitled to the costs of the suit from the 1st Defendant?

The parties were directed to file their written submissions on this issue to which they did although the parties did not comply with the timelines given

20 by Court. The 2nd Defendant was to file their submissions by 4th April, 2024 and Counsel filed on 9th April, 2024. The 1st Defendant was to file submissions by 11th April, 2024 but Counsel filed on 17th April, 2024 at 4:58pm.

Court fixed delivery of the Judgment on 18th April, 2024 as stated by

25 Counsel for the 1st Defendant in her submissions. Nevertheless, Court has considered the submissions of both parties. I however urge both Counsel to always endeavor to comply with Court directives to facilitate disposal of matters in an expeditious manner.

# 2nd Defendant's submissions

30 In his submissions, Counsel for the 2nd Defendant contended that in October, 2023, the parties met under the auspices of the 2nd Defendant 5 and a loan restructure dated 31st October, 2023, was executed. Counsel submitted that the import of the loan agreement was a restructuring of the loan and that as a result of the above, the parties executed a partial Consent which is on Court record.

On that basis, Counsel referred to **Section 27 (1) of the Civil Procedure**

10 **Act,** to argue that whereas costs follow the event, Courts have discretion to award costs to any deserving party.

Counsel then submitted that though it can be argued in the instant case that there was no successful party, he prayed that the Court contextualize the partial Consent Judgment on the record to find that it was the 15 intention of the parties that the costs of the suit would be payable by the 1st Defendant. Counsel referred to the case of *Katon Manufacturers Limited Vs Liao Ning Middle East and Paper Company Limited M. A No.432 of 2010*.

Counsel for the 2nd Defendant also insisted that the costs sought were out 20 of an agreement between the 1st and 2nd Defendant and the same was reduced into writing that the 1st Defendant would meet the costs. To that proposition, Counsel relied on the case of *Andrew Akol Jacha Vs Noah Doka Onzivua HCCA No. 1 of 2014* wherein it was held that when two parties have made a contract and have expressed it in writing, to which 25 they have both assented as the complete and accurate integration of that contract, evidence whether parole or otherwise, of antecedent understandings and negotiations will not be admitted to vary or contradict the writing.

#### 1st Defendant's submissions

Counsel for the 1st Defendant submitted that Counsel for the 2nd Defendant sought to rely on a provision in the loan reschedule agreement dated 31st October, 2023 which provides that;

10 *"The borrower agrees that all costs and expenses whatsoever incurred by the bank in respect to the recovery or attempted recovery of monies owing under this facility from the borrower shall be recoverable from and payable by the borrower on demand, on a full indemnity as is together with interest from the* 15 *date the costs and expenses are incurred, to the date of full payment, at such rate as the bank may prescribe."*

Counsel for the 1st Defendant submitted that the above provision relied on by Counsel for the 2nd Defendant is based on anticipatory breach as juxtaposed to the issue of costs already under discussion by this Court 20 and that the provision provides for acts of breach after execution. Counsel further submitted that the liability envisaged by the above clause is that which occurs after the date of commencement of the said loan reschedule agreement and that it would not apply to the instant matter.

Counsel also contended that it would be a miscarriage of justice to 25 condemn the 1st Defendant to costs based on a provision of the loan reschedule agreement providing for costs arising from its future breach that has not yet occurred.

5 Counsel for the 1st Defendant relied on the case of *Candiru Vs Amandua & 2 Others Civil Suit No.0019 of 2014* wherein **Hon. Justice Stephen** 30 **Mubiru** held that in circumstances where the parties have compromised all the substantive matters between them, to award full costs to the

- 5 successful party would amount to an unjust result. Counsel argued that in the instant case, the matter was not complex and that the parties came to an agreement on how to resolve the issues. Counsel then prayed that costs are not awarded to the 2nd Defendant and that the loan reschedule agreement cannot surpass the law that grants Court powers to grant costs - 10 at its own discretion.

# Analysis and Determination

I have considered the submissions above together with the authorities cited therein.

- 15 **Section 27 (1) of the Civil Procedure Act**, confers upon this Court, the discretion and power to award costs to any party as required. Furthermore, **Section 27 (2) of the Civil Procedure Act** is to the effect that the costs of any action, follow the cause unless otherwise provided. - 20 In the instant case, the 2nd Defendant's basis for costs is that upon institution of this suit, it filed a reply and a counterclaim stating that the Plaintiff was not legally married to the 1st Defendant and that the mortgage was lawful. However, the 1st Defendant admitted that he was legally married to the Plaintiff, the suit properties were matrimonial properties 25 and that since he has more than one wife, he had sought the consent of a one Nampiima Sarah his first wife to provide spousal consent.

I have considered the partial Consent Judgment on record dated 26th March, 2024, wherein the parties consented before this Court that:

30 1. The suit properties comprised in **Plot 75 Block 106 land at Lubogo Ssabagabo, Mpigi District** and **Plot 867 Block 57 Land at Zirobwe,**

- 5 **Luwero District**, remain as collateral security for the loan facility acquired by the 1st Defendant from the 2nd Defendant. - 2. Prior to the execution of this consent, the 2nd Defendant rescheduled the 1st Defendant's loan pursuant to the terms contained in the loan 10 reschedule agreement. - 3. The 1st Defendant hereby agrees to pay the said loan facility pursuant to the said restructured terms. - 15 4. This consent settles the Plaintiff's case against the Defendants in Civil Suit No.830 of 2022.

According to the terms of the Consent Judgment, the Defendants had an agreement regarding the rescheduling of the loan facility and this is not in dispute. This was pursuant to the fact that the Plaintiff consented to the 20 suit properties remaining as collateral security for the loan facility acquired by the 1st Defendant from the 2nd Defendant.

As provided for under **Section 101 of the Evidence Act, Cap. 6**, whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he or she asserts, must prove

25 that those facts exist. (See also **Sections 102, 103** and **104 of the Evidence Act** and the case of *Sebuliba Vs Co-operative Bank Ltd [1982] H. C. B 129).*

In the foregoing, the 2nd Defendant contended that as per the loan reschedule agreement referred to in paragraph 2 of the Consent Judgment, 30 the 1st Defendant agreed to pay costs incidental to the recovery of the loan and that these are costs of the counterclaim.

7 Furthermore, the counter Defendants were four individuals namely; Nassimbwa Fatumah Magala, Hajji Magala Suleiman, Nampiima Sarah

- 5 and Hajati Nakasinde Madinah. However, the 2nd Defendant's claim for costs is against only Hajji Magala Suleiman and yet the 2nd Defendant/counterclaimant had sought for a declaration that the 2nd, 3rd and 4th counter Defendants are indebted to the tune of UGX 1,130,270,939.47/=. - 10 It is to be noted that this instant case was disposed of when the Plaintiff consented to the mortgage thereby legalising the same as per **Section 5 of the Mortgage Act, 2009**.

Therefore, for the 2nd Defendant to seek costs of the suit where each party compromised to the consent, there has to be justifiable circumstances. In 15 the matter at hand, the 2nd Defendant has not presented any justifiable circumstances to entitle it to costs of this suit. Counsel for the 2nd Defendant contended that according to the loan reschedule agreement, costs incidental to the recovery of the loan were to be met by the 1st Defendant. Counsel for the 1st Defendant reproduced the clause on costs

- 20 in the loan reschedule agreement in her submissions. In my view, the loan amounts have not been fully recovered and the loan was simply rescheduled with the same properties and the clause therein on costs covers future attempts to recover the loan should the 2nd Defendant default on the same. The 2nd Defendant has not taken any recovery measures to - 25 recover the loan amounts under the reschedule agreement to merit the grant of costs in this instant matter. The above clause on costs refers to recovery of monies owing under this facility which is the rescheduled loan facility and not the previous facility which was contested by the Plaintiff for lack of spousal consent. - 30 Further, there is no evidence to show that the costs of this suit were specifically referred to in the loan reschedule agreement as alleged by

- 5 Counsel for the 2nd Defendant. I therefore agree with the submission of Counsel for the 1st Defendant that the liability envisaged by the above clause in the loan reschedule agreement is that which might occur after the date of commencement of the said loan reschedule agreement. Therefore, the clause in issue cannot be relied upon by Counsel for the 2nd - 10 Defendant as the basis to claim for costs of this suit which was filed before the parties reached a consent as well as the loan restructure agreement.

In addition, there is nothing in the Consent Judgment that alludes to an understanding between the parties that the costs of the suit would be payable by the 1st Defendant as averred by Counsel for the 2nd Defendant.

15 Besides that, the aggrieved party in this suit was the Plaintiff since she had not provided spousal consent to the mortgage of their properties which she subsequently gave. My view is that it should have been the Plaintiff to demand for costs from the 1st and 2nd Defendants but she did not. It would thus not be fair and just for this Court to condemn the 1st Defendant to 20 pay costs to the 2nd Defendant given the facts of this matter and the consent terms reached between the parties.

Further, in the case of *Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] H. C. B 35,* **Hon. Justice Manyindo** (as he then was) held that:

*"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."*

Also see cases of *Harry Ssempa Vs Kambagambire David HCCS No. 408 of 2014* and *Lyamuleme David Vs AG SCCA No. 4 of 2013.*

- 5 The 2nd Defendant during the due diligence exercise in my view should have, in accordance with **Section 6 of the Mortgage Act** and **Regulation 3 of the Mortgage Regulations, 2012**, made all due inquiries to ascertain the details of all the spouses of the 1st Defendant. If this had been done effectively, the required consent would have been obtained and the Plaintiff - 10 would not have instituted this Civil Suit; at least not on the grounds of lack of spousal consent. In the circumstances, the 2nd Defendant cannot be said to have been the successful party. In addition, the Plaintiff agreed to settling the matter and the 2nd Defendant and 1st Defendant further agreed on a loan restructure facility and an agreement was accordingly 15 executed.

Given the above, and in the absence of any special circumstances, since the loan was rescheduled with new terms and conditions in relation to the loan advanced and the suit properties remained as collateral security for 20 the loan facility, it is in the best interest for both parties that each party

bears their costs.

Accordingly, I decline to grant the costs of the suit to the 2nd Defendant. Each party shall therefore meet their costs of the suit.

I so order.

25 Dated, signed and delivered electronically this **18th** day of **April**, **2024.**

Patience T. E. Rubagumya **JUDGE**

3018/04/2024