General Parts Survives NPART
Nov 13, 2002
THIS litigation took place in the High Court in kampala recently between Hajji Haruna Semakula and General Parts (U) Ltd as plaintiffs, and Barbara Ackha-Yensu of NPART, Didas Katweihwaho of Key Agencies Auctioneers, and samuel Kasirye of Intercity as def
The plaintiff sued the defendants arising out of a dispute, which arose when his loan portfolio was transferred to NPART from the old UCB. The matter went up to the Supreme Court, which rendered its opinion in 1999, with the plaintiff as the successful party. UCB had sued the plaintiff for recovery of a debt and won before the Principal Judge in 1998.
The plaintiff felt aggrieved that after he had been declared the successful party by the Supreme Court, he became subject of serious action by the defendants to recover a sum of sh2,288,821,473bn.
As a result, he filed this suit to resist these actions contending that the advertising and sale of his property were illegal and not due under the law and alleging bad faith by the NPART Administrator. He prayed for certain declarations and an injunction to freeze acts aimed at disposing of his properties.
For the defendants, it was contended that the sale advertisement was proper since the plaintiff was aware of the debt since 1993. They argued that the Supreme Court judgment did not relate to the validity or otherwise of the mortgage since in the absence of fraud, courts cannot question the validity of registered instruments. They further asserted that the Principal Judge had given judgment to NPART and since no appeal had been raised against that judgment the issue of the debt was res judicata.
I propose to deal with the issues of limitation and res judicata. I would not want to agree that what the Supreme Court decided in this respect was of no consequence. It seems clear that there was no cross appeal and once a claim fails when it is pressed in respect of one security and no cross appeal is made, the matter would become res judicata. It becomes a task to bring up the same claim using collateral securities with exception of guarantees by third parties. In my humble opinion, this claim became res judicata and perhaps that is why there was no counter claim in these proceedings or attempt to secure joinder of NPART as defendant/counter claimant.
This being the case, it is imperative to determine if the sale was authorised. The mortgages were apparently executed in 1991. It is clear that a Power of Attorney related to block 208 plot 280 Kawempe. There is added to it “and others†in ink which is not part of the copy of the power exhibited. The words “and others†are not authorised and are not specific to any property. It is not counter-signed and is alien to the original power giving it a speck of an unauthenticated addition, which is hearsay and its author unknown.
I would agree with Dr Byamugisha that this power did not authorise the making of mortgages whose authority must be found elsewhere. Such authority is, however, unlikely to be found as the mortgage was never duly executed by the mortgagor. This is clear from the exhibit.
there is no signature or sealing or attestation with the result that there was no legal mortgage between UCB and the plaintiffs.
It is important that a legal mortgage relied on to realise security without recourse to court must be duly executed by the mortgagor. As it turns out, everything that can go wrong in the due execution of a mortgage by the owners’ attorney occurred. The result is that the document was never duly signed and and no enforceable mortgage was thereby created.
It is insufficient if not irrelevant that Betty Rukyalekere was present when the mortgage was said to be duly sealed by the mortgagees who did not attest to the sealing nor duly signed it.
The people who executed the mortgage for UCB, Mr. Bagabirwa and Mr. Jagwe were not called to testify and support Rukyalekere’s statement. Her presence did not guide the due execution of the mortgage.
I would thus say that the mortgage was first of all robbed of effect by there being no power for its due execution and secondly by the ineffective execution stated above. Therefore, the defendants would not have advertised the sale of the plaintiffs property under the innocuous mortgage document that did not become a legal mortgage with authority for the mortgagee therein to sell without recourse to the court.
It is therefore my judgement that the defendants were not authorised to proceed as they did to sell the plaintiff's property and I must decide for the plaintiffs against the defendants and enter judgment accordingly.
I do not order costs to be paid by the defendants who acted in the honest but mistaken belief that the NPART was authorised to sell the plaintiff’s property. The first defendant all along acted in her official capacity and the other defendants followed suit in believing that NPART was behind the instructions. I will make the following orders:
A declaration that the first defendant improperly instructed the other defendants to sell the plaintiff’s property.
The sale by the defendants of the plaintiff’s property to recover the sum of sh2,288,821,473 was not authorised by a legal mortgage.
Each party to bear its own costs.Ends
The plaintiff felt aggrieved that after he had been declared the successful party by the Supreme Court, he became subject of serious action by the defendants to recover a sum of sh2,288,821,473bn.
As a result, he filed this suit to resist these actions contending that the advertising and sale of his property were illegal and not due under the law and alleging bad faith by the NPART Administrator. He prayed for certain declarations and an injunction to freeze acts aimed at disposing of his properties.
For the defendants, it was contended that the sale advertisement was proper since the plaintiff was aware of the debt since 1993. They argued that the Supreme Court judgment did not relate to the validity or otherwise of the mortgage since in the absence of fraud, courts cannot question the validity of registered instruments. They further asserted that the Principal Judge had given judgment to NPART and since no appeal had been raised against that judgment the issue of the debt was res judicata.
I propose to deal with the issues of limitation and res judicata. I would not want to agree that what the Supreme Court decided in this respect was of no consequence. It seems clear that there was no cross appeal and once a claim fails when it is pressed in respect of one security and no cross appeal is made, the matter would become res judicata. It becomes a task to bring up the same claim using collateral securities with exception of guarantees by third parties. In my humble opinion, this claim became res judicata and perhaps that is why there was no counter claim in these proceedings or attempt to secure joinder of NPART as defendant/counter claimant.
This being the case, it is imperative to determine if the sale was authorised. The mortgages were apparently executed in 1991. It is clear that a Power of Attorney related to block 208 plot 280 Kawempe. There is added to it “and others†in ink which is not part of the copy of the power exhibited. The words “and others†are not authorised and are not specific to any property. It is not counter-signed and is alien to the original power giving it a speck of an unauthenticated addition, which is hearsay and its author unknown.
I would agree with Dr Byamugisha that this power did not authorise the making of mortgages whose authority must be found elsewhere. Such authority is, however, unlikely to be found as the mortgage was never duly executed by the mortgagor. This is clear from the exhibit.
there is no signature or sealing or attestation with the result that there was no legal mortgage between UCB and the plaintiffs.
It is important that a legal mortgage relied on to realise security without recourse to court must be duly executed by the mortgagor. As it turns out, everything that can go wrong in the due execution of a mortgage by the owners’ attorney occurred. The result is that the document was never duly signed and and no enforceable mortgage was thereby created.
It is insufficient if not irrelevant that Betty Rukyalekere was present when the mortgage was said to be duly sealed by the mortgagees who did not attest to the sealing nor duly signed it.
The people who executed the mortgage for UCB, Mr. Bagabirwa and Mr. Jagwe were not called to testify and support Rukyalekere’s statement. Her presence did not guide the due execution of the mortgage.
I would thus say that the mortgage was first of all robbed of effect by there being no power for its due execution and secondly by the ineffective execution stated above. Therefore, the defendants would not have advertised the sale of the plaintiffs property under the innocuous mortgage document that did not become a legal mortgage with authority for the mortgagee therein to sell without recourse to the court.
It is therefore my judgement that the defendants were not authorised to proceed as they did to sell the plaintiff's property and I must decide for the plaintiffs against the defendants and enter judgment accordingly.
I do not order costs to be paid by the defendants who acted in the honest but mistaken belief that the NPART was authorised to sell the plaintiff’s property. The first defendant all along acted in her official capacity and the other defendants followed suit in believing that NPART was behind the instructions. I will make the following orders:
A declaration that the first defendant improperly instructed the other defendants to sell the plaintiff’s property.
The sale by the defendants of the plaintiff’s property to recover the sum of sh2,288,821,473 was not authorised by a legal mortgage.
Each party to bear its own costs.Ends