Bugaywa v Kiriri Cotton Company Ltd and 3 Others (Civil Suit 25 of 2018) [2024] UGHC 500 (20 May 2024)

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT MPIGI

CIVIL SUIT NO. 25 OF 2018

BUGAYWA CAROLINE........ ............................. PLIANTIFF

VERSUS

1. KIRIRI COTTON COMPANY LTD

2. KIRIRI FARMS (U) LIMITED

. DEFENDANTS

3. RAJANAKANT PATEL

4. COMMISSIONER FOR LAND RESGISTRATION-

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BEFORE: HIS LORDSHIP HON. JUSTICE OYUKO ANTHONY OJOK

Judgment

The plaintiff's claim in the instant suit against the defendants is for; a declaration that the 1^st defendant fraudulently transferred the suit land to the $2^{nd}$ defendant; an order for cancellation of the certificate of title in the name of Kiriri Farms (U) 15 Ltd issued on the $7^th$ day of September, 2017 vide instrument No. 00032630; an order of eviction against the $2^nd$ defendant, a permanent injunction to be issued against the defendants, their agents, assignees, transferees and any other persons working under their instructions, from transferring, assigning and or in any other way dealing with the suit land, general damages and costs of the suit. 20

It is the plaintiff's case that she has at all material times since the 17^th day of February, 2017 and 10^th March, 2017 been the registered proprietor of the suit land comprised in Gomba Block 299 Plots 101 and 102 at Nswanjere, measuring 6 acres and 199 acres respectively. That she purchased the land having conducted her due diligence and confirmed that the land was registered in the names of the vendors and there were no encumbrances.

That, on $7/09/2017$ , the 1^st defendant with the assistance of the 4^th defendant illegally and without her consent registered a lease of 99 years over the suit land in the name of the $1$ ^st defendant. Hence the instant suit.

The defendants on the other hand denied the allegations of fraud and illegality and 30 interalia contended that the 1^st defendant sold out its interests to the 2^nd defendant, whereof it held a distinct leasehold interest on the suit land the comprised in Gomba Mailo Register Volume 181 Folio 19 now Block 299 Plots 101 and 102 a

Nswanjere with a one Ibulaimu Galukande Omwaziza as its landlord. That upon obtaining the leasehold certificates, the 1^st defendant was registered on 13^th August 1934 with the lease running for 99 years effective 20^th March, 1933 until the expulsion of the people of Asian Extraction from Uganda.

That the 1^st defendant by virtue of its repossession of the suit property in 1992 it $\mathsf{S}$ commenced actual possession of the suit land as a lessee until 1997 when Thomas Ivamulemye Katto surfaced claiming for ground rent as the land lord being the successor in title of the suit land. That Thomas Iyamulemye failed to re-enter the suit land when the Registrar of Titles reinstated the 1st defendant under instrument No. 312945 dated 20/12/2000.

Further, that the 1^st defendant in 2001 or there about entered into negotiations with Thomas Ivamulemye Katto who had financial constraints out of which the former lease was surrendered and fresh lease agreements were executed in respect of the suit land but were not registered until 07/09/2017.

In 2009, the $1^{st}$ defendant the sold to the $2^{nd}$ defendant upon payment of full 15 consideration its entire interests in the suit land and prepared the necessary instruments and caused the registration of the lease agreements and leasehold agreements were issued in that regard.

That the plaintiff had constructive notice of the 1^st defendant's exclusive possession of the land by admission of the actual knowledge of the then ongoing case between $20$ the $1^st$ and $3^rd$ defendants against the Administrators of the estate of Thomas Iyamulemye Katto. That the plaintiff acted wickedly when she knew and could have known that the 1^st defendant's lease executed by Thomas Lyamulemye Katto had not been registered by the date of her purchase and registration of her proprietorship. 25

Representation:

Mr. Geoffrey Kavuma appeared for the plaintiff, Mr. Arinaitwe George for the 1^st defendant, while Mr. Mathias Ssekatawa represented the $2^{nd}$ and $3^{rd}$ defendants, and Mr. Godwin Atusasire appeared for the 4^th defendant. Only the plaintiff and the $2^nd$ and $3^rd$ defendants filed written submissions.

Preliminary objection by the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants:

Counsel for the $2^{nd}$ and $3^{rd}$ defendants cited the case of Tororo Cement Co. Ltd v. Frokina International Ltd, S. C. C. A No. 02 of 2001, where it was held that; the purpose of a scheduling conference is to sort out issues of agreement and disagreement by the parties, so that those that are not disputed need not be litigated over. And submitted that from the 1^st, 2^nd and 3^rd defendants' Written Statement of Defence, the defendants informed court that they would plead estoppel and

equitable doctrine of Notice as a preliminary objection and seek the plaintiff's suit to be dismissed for being unmaintainable in law and equity.

Counsel went on to submit that from the joint Scheduling Memorandum, it is inferred that there is no need to litigate over the issues since there are glaring admissions therein that determine conclusively and answer all the issues framed in the instant case.

Further, that the failure by the plaintiff to reply to the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants' Written Statement of defence as required by law under Order 8 Rule 18 of the Civil Procedure Rules was an implied admission of the material facts as set out by the said defendants in their Written statement of defence supported by the agreed facts

in the joint scheduling Memorandum.

Counsel added that owing to the above, the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants are therefore entitled to a judgment on admission against the plaintiff in regard to their lease hold interests and there is no need for further proof as there are no triable issues

anymore. (See: Kampala District Land Board and Another v. National Housing and 15 Construction Co. Ltd, S. C. C. A No. 02 of 2004 and Sections 22 and 28 of the Evidence Act).

Counsel prayed that judgment on admission be entered on admission since the admissions by the plaintiff were unequivocal, plain, clear and unambiguous.

The plaintiff did not file a response to the preliminary objection. I will however go 20 ahead and resolve the same as here under.

The case of Mukisa Biscuits Manufacturing Co. Ltd v. West End Distributors Ltd (1969) E. A 696, laid down the position on what constitutes a preliminary objection as follows;

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"A preliminary objection consists of an error on the face of the pleadings which rise by clear implication out of the pleadings and which, if argued as a preliminary objection may dispose of the suit."

Thus, the preliminary objection as raised for the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants must amount to points of law which, if successfully established, may dispose of the plaintiff's case.

It was submitted for the $2^{nd}$ and $3^{rd}$ defendants that the plaintiff in this case did not reply to the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants Written Statement of Defence as such it was an implied admission to the facts therein. Secondly, that the facts were also admitted in the joint scheduling memorandum.

Order 8 Rule 18 (1) of the Civil Procedure Rules provides that:

"A plaintiff shall be entitled to file a reply within fifteen days after the defence or the last of the defences has been delivered to him or her, unless the time is extended"

Order13 rule 6 of the Civil Procedure Rules provides that; $\mathsf{S}$

Any party may at any stage of a suit, where an admission of facts has been made, either on the pleadings or otherwise, apply to the court for such judgment or order as upon the admission he or she may be entitled to, without waiting for the determination of any other questions between the parties; and the court may upon the application make such orders, or give such judgment, as the court may think

just."

a. Failure to reply to the 1^st, 2^nd and 3^rd defendants' Written statement of defence

In the case of Ssande Godfrey v. Kanyije James and 2 others, Civil Suit No. 375 of 2016, where a similar preliminary objection was raised, the court stated that;

> "With much respect to Counsel for the 1^st and 2^nd Defendants, I see nothing in the provision making failure to reply to a written statement of defence, a point of law".

It is my considered view that failure to reply to the Written Statement of defence in the instant case does not amount to an admission as would have been the case if the statement of claim had not been responded to. Even, though the plaintiff has a right to reply to the defence as provided for under Order 8 Rule 18 (1) of the Civil Procedure Rules, it is not mandatory to do so.

b. Admissions in the joint scheduling Memorandum

- Under Order 13 rule 6 of the Civil Procedure Rules, where an admission of facts $15$ has been made, either on the pleadings or otherwise, a party to such a suit may apply to the court for judgment or order as he/she may be entitled to upon that admission, without waiting for the determination of any other question between the parties; and the court may grant such judgment or order, as it may think just. - It is trite that a judgment on admission is not a matter of right but rather one of 30 discretion of the court. The admission may be express or may arise by implication from non-traverse of a material fact in the statement of claim. The admission must therefore be unambiguous, clear, unequivocal and positive. (See: John Peter Nazareth v. Barclays Bank International Ltd, [1976] EA 39). Where an alleged admission is not clear and specific, it may not be appropriate to take recourse 35

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under the legal provision. (See: Future Stars Investment (U) Ltd v. Nasuru Yusuf, HCCS No. 0012 of 2017).

As such, the judge's discretion to grant judgment on admission of facts under the law is to be exercised only in plain cases where the admissions of fact are so clear and unequivocal that they amount to an admission of liability entitling the plaintiff $\overline{5}$ to judgment. (See: Cassam v. Sachania [1982] KLR 191). The discretion of the court should not be exercised to deny the valuable right of a defendant to contest the claim. (See: Industrial and Commercial Development Corporation v. Daber Enterprises Ltd, [2000] 1 EA 75 and Continental Butchery Ltd v. Ndhiwa [1989] KLR 573 (from the Court of Appeal of Kenya). $10$

In the instant case, the plaintiff made allegations of fraud and illegality which in my view were not clearly admitted to in the joint scheduling Memorandum. The joint scheduling memorandum as signed by the parties is ambiguous in nature in regard to the claims of the defendants, there is no clear elaboration as to how their interests were obtained save for mention that they had leasehold titles in the suit property. The admissions in this case cannot be said to be so clear and unequivocal to entitle the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants to a judgment on admission.

In the case of John W. Katende and another v. Uganda Communications Commission, Miscellaneous Application No. 99 of 2022, it was held that;

"I do not believe that the Applicants' genuine view is that by this application and proceeding, the Respondent is expected to prove whether fraud or misrepresentation has been established against the 4^th and 6^th defendants and that the Court should determine that question at this stage. Clearly, to my mind, once fraud is specifically pleaded, as it was in the main suit, the burden upon the plaintiff to prove the same lies within the domain of trial of the suit and not that of pre-trial filing. In other words, it must be only after evidence has been produced and tested during crossexamination that the Court can reach a finding as to whether fraud as alleged in the pleadings has been proved or not. I am therefore in total agreement with the Respondent's Counsel that this application seeks to preempt and dispose of the main suit against the Applicants, based on matters of fact that are pending full hearing of the suit. For that reason, I would agree that the application is misconceived."

In line with the above decision, I am unable to enter a judgment on admission in the instant case since there are triable issues for this court to determine, in the 35 circumstances, the preliminary objection as raised for the 1st, 2nd and 3rd defendants is hereby overruled. I will now proceed with the merits of the main suit.

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Issues for determination:

- a. Whether the plaintiff being a reversioner has a cause of action against the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants without her reversionary interest in the suit land injured? - b. Whether the plaintiff is a bonafide purchaser for value without notice of the 1^st defendant's lease. - c. What are the remedies available to the parties?

Submissions:

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Issue 1: Counsel for the plaintiff submitted that the 1^st defendant illegally created leases of a 99 year period in 2017 vide HQT 1327 Folios 19 and 20 after she had $10$ been registered as the proprietor of mailo reversionary interests on Gomba Block 299 Plots 101 and 102 land at Nswanjere. And she had not entered into any lease agreement with the 1^st defendant in regard to the above said leases. That it was the evidence of all the witnesses that there existed leases on Gomba Block 299 Plots 101 & 102 land at Nswanjere since 1927 and 1934 for 99 years, yet there was no 15 evidence led in that regard even from the 4^th defendant that the leases had been surrendered.

That the 1^st defendant rapidly illegally transferred the leases to the $2^{nd}$ defendant shortly after the leases had been created and this was to establish a bonafide purchaser advantage well aware of the fraud. That DW1 Patel Toshak was a director of the 1^st defendant when the two lease agreements were executed on 29^th March, 2001 between the 1^st defendant and Thomas I Katto.

Counsel argued that the $1^{st}$ and $2^{nd}$ defendants are not distinct by virtue of the fact that the 3^rd defendant was a secretary to the 1^st defendant and also a director to the 2^nd defendant. That DW1 also confirmed that the 3^rd defendant was his cousin. Further, that a sale agreement was executed on the 14^th April, 2009 for the sale of LRV 138 Folio 1 and LRV 66 Folio 21, that these were distinct from the 2017 leases. And the 1^st defendant at the time was transferring titles of the older 1927 and 1934 leases with a few years left on them to the $2^{nd}$ defendant. That the $3^{rd}$ defendant is the chain that links the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants in the fraud perpetuated in the 2017 leases. That the illegal creation of the 2017 leases of 99 years has deprived the plaintiff of the use of her suit properties.

Counsel for the $2^{nd}$ and $3^{rd}$ defendants on the other hand submitted that on $29^{th}$ March, 2001 when the lease agreement was executed, the registered proprietor was Thomas I Katto having been registered on 20/2/2001 and 20/3/2001 under an identical instrument No. KLA 223325 although that proprietorship had changed to John Katto, Emmanuel Katto, Patrick Katto and George Katto jointly as Administrators of the Estate of the Late Thomas I Katto vide Instrument No. KLA 00011341 entered on the 10/11/2016 and 11/11/2016. That the same Administrators transferred the suit property to the plaintiff on 17^th February, 2017 and 10^th March, 2017 and she is the current registered proprietor hence a reversioner. That it is an admitted fact that Thomas I Katto under paragraph 3 of the joint scheduling memorandum leased the suit land to the 1^st defendant.

Further, that the distinct former leasehold interests held under LRV 66 Folio 21 & LRV 138 Folio 1, effective 1^st November, 1926 and 20^th March, 1933 for a period of 99 years respectively for the 1^st defendant in the suit land, were terminated and/or determined surrendered by operation of law to the lessor then Thomas I Katto following the execution of the fresh lease agreements between the 1st defendant and Thomas I Katto on 29^th March, 2001 for a term of 99 years effective $1/02/2001$ . That it was on the basis of these lease agreements that the 4^th defendant issued leasehold certificates of title vide LRV HQT 1327 Folio 19 under instrument No. KLA 00015753 dated 7/9/2017 and LRV HQT 1327 Folio 20 under instrument No. KLA 00015754 dated 7/9/2017 for plots 101 and 102 respectively. Counsel to support this submission quoted John Tumukunde Mugambwa in his book, "Principles of Land Law", Fountain Publishers, 2006

reprint at pages 112 -113 in which he quoted the Supreme Court holding in the case of Stephen Kalani v. Satwant Kaur, SCCA No. 22 of 1995, where it was stated $20$ that;

> "...a lease is surrendered by operation of law if the lessor grants, and the lessee accepts a fresh lease commencing before the current lease expires... there is no time limitation within which to register surrender of a lease. However, as between the lessee and the lessor, surrender of the lease is effective even if it is not entered in the register book."

Further, that it was the testimony of DW1 and DW2 that Thomas I Katto had financial difficulties hence wanted money and it was upon that need that he renewed the 1st defendant's lease interest in the suit land. That this was corroborated by a bankruptcy Petition No. 13 of 2002 which also means that at 30 the time of Thomas I Katto's demise he had no property. That it was the testimony of PW3 that there had been unregistered leases on the suit land as such the plaintiff obtained her title subject to the existing unregistered lease interests. Counsel cited the case of John Kafeero Sentongo & Another v. Shell (U) Ltd, HCCS No. 32 of 1993, where it was held that; 35

> "Where a plaintiff purchases land which is occupied by another under an unregistered lease which was binding on his predecessor as a contract

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"inter parties", it is trite law that he himself obtains title subject to the terms of that contract."

Counsel added that the lease agreements were eventually registered in 2017 and leasehold certificates of title were issued to the 1^st defendant who later transferred her lease interests to the $2^nd$ defendant. That the plaintiff's witnesses in this case $\mathsf{S}$ failed to prove to court that there had been any fraud or illegality on the part of the defendants and that PW1's evidence should be expunsed for lack of evidential value since his evidence was that he visited the land register, information that is a preserve of the Commissioner Land Registration.

- It was further submitted for the $2^nd$ and $3^rd$ defendants that the plaintiff did not $10$ prove to court that her reversionary rights had been injured and no such damage was pleaded. That the plaintiff only attacked the registration of the lease agreements in 2017 which was merely a formality for purposes of bringing the leased land under the operation of the Registration of Titles Act. - Issue 2: Counsel for the plaintiff submitted that the plaintiff is the holder of the 15 certificates of title to the suit property described as Gomba Block 299 Plots 101 & 102 land at Nswanjere. That she was registered on both titles long before the defendants created the 2017 leases. As such the illegal 2017 leases do not reflect on the plaintiff's titles. - Counsel for the $2^nd$ and $3^rd$ defendants on the other hand submitted that during the 20 cross examination of PW2, PW3, and PW4 court was informed that the suit land had always been in full utilization by the 1^st defendant which corroborated the evidence of the defendants' witnesses. That the plaintiff did not tender in court a sale agreement as proof of purchase. And that the principle of bonafide purchaser has an exception, to the effect that the plaintiff being a successor in title of the 25 - Mailo interest to which former mailo interest holders were originally bound by

the equities and thus the plaintiff cannot become a bona fide purchaser but instead a malafide. Counsel relied on the case of Nabanoba Desiranta & Another v. Kaviwa Joseph & Another, H. C. C. S No. 496 of 2005, which quoted the case of Uganda Posts & Telecommunications Corporation v. Abraham Katumba (1997) IV KALR 103 30 where it was held that; - "as the law stands a person who purchases an estate which he knows to be in occupation of another person other than the vendor is not a bonafide

purchaser without notice."

35 Counsel concluded that the plaintiff was not alive to the duty of a purchaser to physically visit the land and inquire from the occupants and take into consideration that the land had visible physical developments, structures, trees,

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plantations and various agricultural activities and well fenced. That the plaintiff in this case would have found out that the suit land was being used by the 1st defendant and not the vendors.

Issue 3: counsel for the plaintiff prayed for cancellation of the 2017 leases on account of fraud by the defendants; an eviction order of the 2^nd defendant, and $\mathsf{S}$ general damages to a tune of UGX 350,000,000/ $=$ .

Counsel for the 2^nd and 3^rd defendants on the other hand submitted that the plaintiff is not entitled to any of the remedies prayed for and the suit should be dismissed with costs to the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants.

Analysis of court: 10

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It is trite that in civil matters the burden of proof is on the party who wishes court to believe in the existence of any facts, unless it is provided for by law that the proof of that fact shall lie on any particular person. (See: Section 106 of the Evidence Act).

15 In the instant case it is therefore the plaintiff's duty to prove her claim as against the defendants that their two leases were illegally and fraudulently obtained on a balance of probabilities. (See: Sections 101, 102 and 103 of the Evidence Act).

In regard to issue one; it was submitted for the plaintiff that the 1^st defendant and subsequently the $2^{nd}$ defendant illegally obtained their leases on the suit land while the plaintiff had purchased the same free from any encumbrances.

I have carefully considered the evidence on record, the exhibits tendered in court and the submissions of both parties and the authorities cited therein and resolve as here under.

The plaintiff adduced her evidence through four witnesses. It was the evidence of George Katto, PW2 that he was aware of the two leases on the suit land and before $25$ the sale of the suit land to the plaintiff; she was informed about the said leases. She was also taken to the land physically for inspection however, they did not bother to find out who was utilizing the suit land.

PW2 further told court in cross examination that Thomas I Katto became the registered proprietor of the suit land in 2001. That the leases of the 1^st and 2^nd 30 defendants were still running at the time he testified in court and are to expire in the year 2100. That they were left with 77 years to expire at the time. That the defendants had no claim in the mailo interest where the plaintiff is the registered proprietor.

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PW3 being the plaintiff told court that she bought the suit land at UGX $350,000,000/$ = though no sale agreement was attached to her pleadings nor one brought to court when she was giving her evidence. In the case of Edward Gatsinzi & Mukasanga Ritah v. Lwanga Steven, Civil Suit No 690 of 2004; it was held that; where sale of land is involved, the purchase cannot be by mere presumption, there must be actual purchase with a written memorandum duly signed by the parties, and the failure to prove the same would render the said claim baseless. PW2 and PW3 claimed that a search was conducted before the purchase was effected but no search report was adduced in evidence.

PW3 also told court that she conducted an opening of the boundaries of the suit 10 land opened however had no report to that effect was adduced in evidence. She denied being aware of the leases however, stated that she did visit the land physically and found thereon structures that did not belong to the vendors. PW3 further stated that the two pieces of land she purchased measured one, 5 acres and another 155 acres which is contrary to what is on record as the land measuring 6 15 acres and 166 acres respectively. The plaintiff admitted that the LC1 told them that the land had been leased to the 1^st defendant before her purchase.

It is my finding from the evidence of all the witnesses that the suit land had always been known to have had the two leases effected in favour of the 1st defendant by the former registered proprietor Thomas I Katto and subsequently transferred to 20 the 2^nd defendant. That lease agreements had been executed in 2001 and consequently, registered in 2017. There was no proof of fraud or any illegal and dishonest dealings advanced by the plaintiff or her witnesses. It is not in dispute that the plaintiff has mailo interest in the land which is not being threatened by the defendants who have leasehold interest in the same. The plaintiff did not prove

- 25 to the satisfaction of this court her interest as a reversioner was injured by the two leases currently held by the $2^{nd}$ defendant. - I accordingly resolve issue 1 in the negative. - In regard to issue two, the plaintiff was unable to prove to this court that she was a bonafide purchase for value without notice. The plaintiff herself admitted that 30 she found structures upon physically visiting the suit land that did not belong to the vendors from whom she purchased the land. The plaintiff was unable to furnish this court with a sale agreement or even a search report to show that she indeed carried out any due diligence before allegedly purchasing the suit land. - In the case of Hajji Abdu Nasser Katende v. Vithalidas Haridas & Co. Ltd. C. A. C. A 35 No. 84 of 2003, it was held that:

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"It suffices to describe a bonafide purchaser as a person who honestly intends to purchase the property offered for sale and does not intend to acquire it wrongly. For a purchaser to successfully rely on the bonafide doctrine as was held in the case of Hannington Njuki v. William Nyanzi, H. C. C. S No. 434 of 1996 must prove that:

- $(1)$ He holds a certificate of title. - $(2)$ He purchased the property in good faith. - He had no knowledge of the fraud. $(3)$ - $(4)$ The vendors had apparent title. - $(5)$ He purchased without notice of any fraud. - $(6)$ He was not party to fraud.

A bonafide purchaser of a legal estate for value without notice has absolute. unqualified and answerable defence against the claims of any prior equitable owner. The burden to establish or prove the plea lies on a person who sets it up. It is a single plea and is not sufficiently mad out by proving purchase for value and leaving it to the opposite party to prove notice if he $can$ "

The plaintiff has not proved to the satisfaction of this court that she is a bonafide purchaser for value without notice. PW2 one of the vendors told court that the plaintiff was informed about the leases before purchase because they as the administrators of the estate of the late Thomas I Katto had been aware of these two leases.

Issue two is hereby resolved in the negative.

In regard to the remedies available to the parties; I find that the plaintiff was unable to discharge her legal burden of proving her case as against the defendants on a $25$ balance of probabilities. The plaintiff is therefore not entitled to the remedies prayed for. Judgment is hereby entered in favour of the defendants. This suit is hereby dismissed with costs to the $1^{st}$ , $2^{nd}$ and $3^{rd}$ defendants.

I so order.

Right of appeal explained. 30

OYUKO ANTHONY OJOK

JUDGE

20/05/2024

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