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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT DIVISION)
HCT -
00 - CC- CS - 442 - 2003
HARJIT SINGH MANGAT
.................................................... PLAINTIFF
VERSUS
1. CHRISTINE LILLIAN NAKITTO ..............................1ST DEFENDANT
2. RAJ TREON .........................................................2ND DEFENDANT
3. ATTORNEY GENERAL ...............................................THIRD PARTY
BEFORE: HON. JUSTICE GEOFFREY
KIRYABWIRE
JUDGMENT
The brief facts of this case are as follows. The plaintiff’s claim
is against the 1st and 2nd defendants jointly and
severally for the recoveries of monies paid in respect of a transaction for the
sale of land situated at Plot
40 Prince Charles Drive; Kololo Kampala (herein
after called “the land”). The plaintiff claims that the
1st and 2nd defendants had no legal title to sale in the
first place.
The case for the plaintiff is that sometime in 1998 the
plaintiff bought from the 1st defendant the said suit land through
the 2nd defendant who was the Lawyer of the 1st defendant.
The 1st defendant at the time living outside the country, effected
the sale by way of a power of attorney issued to one Rebecca Nabunya Kalule.
The plaintiff allegedly paid the sum of US $ 280,000 for the suit land. The
plaintiff then obtained a leasehold title for the land
in his names and
proceeded to develop it. Shortly after the plaintiff started to develop the suit
land, Makerere University intervened
and claimed that the plaintiff was
illegally developing the suit land for which they had a valid freehold title.
Makerere University
then sued the plaintiff in High court civil suit no. 485 of
2000 for trespass and in the process obtained an injunction against the
continued development of the suit land. This case resulted into a consent
judgment in favour of Makerere University though the plaintiff
was then allowed
by the University to obtain a fresh lease from Makerere University at a new cost
and continue with his developments.
The first and second
defendants on the other hand admit that there was a sale of the suit land but at
the sum of Ug.Shs.175,000,000/= and not
US $ 280,000. The 1st
defendant pleads that she had good title which she sold to the plaintiff. She
further pleads that the consent judgment entered between
Makerere University and
the plaintiff was voluntary and not obtained on its merits and therefore she
cannot be held to be liable
for its consequences which she in any event, viewed
as remote. However the defendants applied to have the Uganda Land Commission
added as a third party to indemnify them should this case go against them. The
Attorney General appeared to represent the Uganda
Land Commission. The Attorney
General generally denied any form of liability as alleged by the
defendants.
The following were the legal issues agreed for trial;
1. Whether the consideration was US $ 280,000 or Ug.Shs.175,000,000/=.
2. Whether there is a cause of action against the second defendant and whether he was privy to the agreement of sale?
3. Whether the 1st defendant had legal title capable of transfer to the plaintiff?
4. Whether the defendants are liable for the loss to the plaintiff?
Mr James Mukasa Ssebugenyi appeared for the
plaintiff, Mr Ebert Byenkya appeared for the first and second defendant and Mr
Vincent
Kasujja appeared for the Attorney General representing the Uganda Land
Commission the third party. It is important to note that
it was reported to
Court that during the course of the trial the second defendant passed away in
India.
Issue No. 1: Whether the consideration was US $ 280,000 or Ug.Shs.175,000,000/=?
The case
for the plaintiff is that he paid US 280,000 for the land. According to the
evidence of PWI Mr Singh Mangat this is evidenced
by several documents
namely;
- Exhibit P20 (1) a letter dated 17th March 1998 from the law firm of the second defendant to Trust Bank Ltd requesting a transfer of Shs.85,000,0000/= to their account which letter has an endorsement from the bank that the said money would be transferred on the 20th March 1998.
- Exhibit P20 (2) a ledger statement from the plaintiff’s bank account that on the
• 24th February 1998 $ 123,000 was transferred to Crane Forex Bureau • 10th March 1998 another $ 56,000 was transferred to Crane Forex Bureau.
Both at the direction of the second defendant then,
- Exhibit P 20 (3) a hand written account of how the payments to the second defendant were made showing that a deposit of $ 28,000 (being 10% of the land cost of $ 280,000) leaving a balance of $ 252,000. it further shows that Shs 85,0000,0000/= was paid and converted at the exchange rate of 1160 to yield $ 73,275.862, plus $ 123,000 and finally $ 56,000 to make a total paid of $ 252,275.862.
- Exhibit P 23 a bank credit note for the $ 56,000 transferred above.
- Exhibit P 24 a bank credit note for the $ 123,000 transferred above.
The deposit of 10% of $ 28,000 appears not to have
been documented like the rest of the payments. That not withstanding counsel for
the plaintiff argues that the defendants did not adduce any evidence to
contradict this testimony of the plaintiff.
Counsel for the plaintiff however
does not dispute the existence of Exhibit P 2 the agreement of sale which
reflects another figure
of Shs.175,000,000/=. He dismisses this as a tactful
drafting of the second defendant not to show the whole picture of what was in
reality paid to him.
For the first defendant it is submitted that she is
the wife of a former President of Uganda who at the time of trial was living in
Zambia and so was unable to come to Court. Testimony showed her to be Mrs. Miria
Obote. The whole transaction of sale was conducted
through an attorney of the
first defendant Ms Rebecca Kalule who also did not come to court to give
evidence as she could not be
traced.
That notwithstanding the case for
first and indeed the second defendants is that the agreement of sale Exhibit P 2
is clear the sale
was done for Shs 175,000,000/= and there is nothing in the
agreement to show how the figure of $ 280,000 comes about. Counsel for
the
defendants first starts by attacking admissibility of the evidence of the
plaintiff. Counsel for the defendants referred me to
Ss. 91 and 92 of the
Evidence Act (cap 6 revised laws of Ugandan 2000) for the proposition of law
that once an contract has been
reduced into writing no oral evidence can be
given regarding the terms of that contract because they are all written. Counsel
for
the defendants also referred me to S. 114 of the same Act stating that the
plaintiff is estopped from leading evidence “...to the effect that the
real consideration...was...$ 280,000 and not the amount of (Shs) 175,000,000/=
indicated in the sale
agreement.” This is especially so in respect of
the first defendant who lived abroad who if the said misstatement did occur it
was hidden from
her.
As to the role of the second defendant, counsel for
the second defendant submits that the second defendant acted as advocate and
agent
for the plaintiff in order to procure the whole deal. Indeed counsel for
the defendants further argues that the fact that the plaintiff
testified that
whole transaction was done between him and the second defendant without the
presence of the first defendant or her
attorney bears this out. Counsel for the
defendants questions the evidential contradiction by the plaintiff in the figure
paid and
submits
“...why? What was the plaintiff’s intention in all this? Was the intention to corruptly benefit his lawyer friend, the second defendant? Was the hidden consideration some extra benefit for getting him a good “deal” at the expense of the 1st defendant? Only the plaintiff knows...”
I must say I was taken a back
by this submission of possible collusion between the plaintiff and the second
defendant coming from
counsel for the second defendant himself. It certainly
would not help the case of the second defendant.
Counsel for the
defendants then takes a second alternative approach to dealing with the evidence
of the plaintiff by submitting that
if it is true that $ 280,000 was actually
paid instead of Shs 175,000,000/= then the contract is void for being against
public policy
having been designed to defraud tax revenue to Government. He
submitted that the plaintiff admitted under oath that the second defendant
had
told him that he would pay less tax revenue if the figure of Shs.175,000,000/=
was reflected in the agreement instead of $ 280,000
which on conversion into
Uganda shillings would yield a higher figure. He referred to the plaintiff as a
self confessed tax evader.
Counsel for the defendants referred me to the text
in Cheshire and Fifoot’s Law of Contract 8th edition at P 331
where it is written
“... There is a clear infringement of the doctrine of public policy if it is apparent, either directly from the terms of the contract or indirectly from other circumstances, that the design of one or both of the parties is to defraud the revenue whether national or local. In Miller v Karlinski for instance...it was held that the contract was illegal since it constituted a fraud on revenue. No action lay to recover even arrears of salary for in such a case the illegal stipulation is not severable from the lawful agreement to pay the salary.”
At P 339 counsel goes on to quote
further the text
“Neither party can recover what he has given to another under an illegal contract if in order to substantiate his claim he is driven to disclose the illegality. The maxim in pari delicto patior est conditio defendentis applies and the defendant may keep what he has been given...the result is that gains and losses remain where they have occurred or fallen...”
I was then referred to the cases of
Napier Vs National Business Agency Ltd [1951] All ER 264
and
Berg Vs Sadler and Moore [1937] KB 158
for basically
the same proposition.
Counsel for the defendants then raises a third
argument that he who comes in equity to recover in action for money had and
received
must come with clean hands and this the plaintiff has not. He goes on
to submit
“... He also knowingly stated an incorrect consideration to allow his lawyer and friend the 2nd defendant to make a hefty commission...in a criminal court we would describe the plaintiff’s actions for what they truly were. Abetting an offence. The offence of embezzlement. This at the expense of an elderly lady, helpless in exile...”
Counsel concludes that as a result of this he should be turned away from court
as not deserving.
I have addressed myself to the evidence before court
and the submissions of both counsels on this issue. It would appear that there
is no dispute that an agreement Exhibit P 2 was signed in relation to this suit
land for the sum of Shs.175,000,000/=. However what
is contentious is that it is
alleged by the plaintiff, that in reality a sum of $ 280,000/= was paid and that
the written agreement
was for tax purposes (i.e. to attract lower tax on the
conveyance). In this regard the court was deprived of the opportunity to hear
the side of the second defendant who draw up the agreement as throughout the
trial he was reported to be sick and then he eventually
passed away. It is not
clear if he would have agreed to this allegation however para 6 to the written
statement of defence of the
second defendant reads
“6. In further answer to para 6, the 2nd defendant denies the alleged purchase price of 280,000$ (sic) alleged by the plaintiff. The defendant shall rely on the sale agreement, which shows that the total consideration was agreed at Shs.175,000,000/=...”
At least the record shows
that the second defendant denies the $ 280,000 so the onus is on the plaintiff
to prove it. How now has
the plaintiff chosen to prove the $ 280,000? He has
done this first through exhibits P 20 (1) (2) and (3); P 23 and P 24. However
it
is only exhibit P 20 (1) a letter from the law firm of the second defendant
which directly refers to the suit land. The rest are
just statements of account
which, save for the testimony of the plaintiff, objectively could be for
anything. Exhibit P 20 (1) however
specifically refers to the hand over of the
title to the bank (I believe of the Plaintiff) with a clear demand for
Shs.85,000,000/=.
The bank then endorses on the same letter that it has received
the title and that the money would be available to the law firm the
next day.
Reference to payment of Shs.85,000,000/= lends credence to the sale
agreement’s figure of Shs.175,000,000/=. At least
the evidence clearly
shows that up to this stage the whole transaction is in Uganda shillings and not
United States Dollars. Secondly
he also relies on the testimony of Mr. Sushil
Dudeja PW 2 a foreign exchange dealer at Crane Forex bureau from where the
dollars
were remitted from. However Mr. Dudeja was unable to show that all the
money remitted went to the defendants and provided a list
of persons unknown to
court who were also paid out of the said monies.
That being the case I am
persuaded by the arguments of counsel for the defendants that where a contract
is reduced into writing then
under Ss 91 and 92 of the Evidence Act no oral
evidence as to its terms should be accepted. I am further persuaded by the
argument
of estoppel under S 114 of the Evidence Act with respect to this
transaction in that how can the plaintiff sign an agreement as to
one figure
when he claims to have paid another? It is the role of the commercial Court to
give sanctity to legally binding agreements
made by parties and to enforce them
in order to ensure the smooth flow of commerce and trade.
Before I leave
this issue let me address the argument in relation to the maxim in pari
delicto. I believe that Counsel for the defendant has covered the general
principal of law. However the position of law compared to what was
stated by
Counsel for the defendants is much wider. The position as stated by the learned
author Dr. Nelson Enonchong in his book ILLEGAL TRANSACTIONS
published by LLP 1998 presents a more holistic picture. In chapter 16 of his
book and para 16-1 the learned author writes
“...where the
plaintiff was in a sense and there was no illegality on his part, recovery was
allowed because although the defendant
was guilty of illegality, the plaintiff
was not in delictum. They are other cases where both parties were guilty of the
illegality,
but their respective guilt was not at par of the one with the other.
In this class of case, a claim by the party who is less blameworthy
will not be
defeated by the illegality defence. This exception developed largely because the
defence of illegality was originally
based on the maxim in pari delicto patior
est conditio defendentis (where the parties are equally guilty the position of
the defendant
is the stronger), from which it followed that where “the
delictum is not at par...the [in pari delicto] maxim does not apply [quote from
Kearley v Thomson (1890) 24 QBD 724, 746
per Fry LJ]”
It would
appear to me that the first test to deal with in establishing whether parties
are in pari delicto is whether the parties
are at par with respect to their
guilt. The learned author then goes on to give more perspective to the test and
that is
“There are certain recognised circumstances when a
party, although particeps criminis, will be considered not to be in pari
delicto
and will be allowed to recover. These include cases where the illegality
involved was the contravention of a statue designed
to protect a class of
persons of which the plaintiff is a member, or where there has been oppression,
duress, undue influence or
fraud on the part of the defendant, or where there
was a mistake of fact on the part of the plaintiff.”
This
creates a set of exceptions to the general rule. The second group of tests then
to be considered is whether the parties though
guilty would fall within the
named exceptions. Applying the above tests to this case would be difficult
considering the one-sidedness
of the evidence given. It cannot be said that the
parties were therefore in pari delicto.
Lastly I find as I have stated
before the submissions on this point in relation to the second defendant by his
retained counsel as
unfortunate. Without calling evidence on the matter (indeed
that would not have been possible because of the illness and subsequent
death of
the second defendant) counsel submitted on a possible collusion between the
plaintiff and his client the second defendant!
This surely would not have made
matters look good for his client!
In answer finally to the first issue I
find that the consideration was Shs.175,000,000/= and not $ 280,000.
Issue No. 2: Whether there is a cause of action against the second defendant and whether he was privy to the agreement of sale?
It is the case for the
plaintiff that there is a case for money had and received against the second
defendant. Counsel for the plaintiff
submitted
“...it is in issue as to how much money was received by the 1st defendant from the 2nd defendant and in so far as the 1st defendant only accepts receipt of Shs.175,000,000/=the case is properly brought against the 2nd defendant on the money had and received.”
Secondly counsel for the plaintiff says
the second defendant is privy to the agreement as he negotiated everything in
the absence
of the first defendant. Lastly that it is the 2nd
defendant who can resolve all the questions and disputes in this
suit.
The submissions for the first defendant only concede that the
second defendant acted as counsel for both parties i.e. the first defendant
and
the plaintiff.
For the second defendant it is merely submitted that the suit
against the Second Defendant Mr. Treon has abated under order 21 rule
1 because
he died. He then argued that it is for court then to determine whether the suit
continues to survive against the first
defendant only or not.
Court was
notified after it had finished the hearing in respect of the plaintiff and the
third party and the defence had notified
court that it would not call any
witnesses. It is clear to my mind that given the nature of claims in this case
the suit must now
abate the second defendant, where he is concerned but will
continue to survive the first defendant as the principal behind the sale
of the
land.
Issue No. 3: Whether the 1st defendant had legal title capable of transfer to the plaintiff?
This
issue in many ways is the crux of the dispute and revolves around the land title
Exhibit P1. The case for the plaintiff is that
on the 16th March 1998
the said leasehold title was transferred from the first defendant’s names
into the plaintiff’s names. There
appears to be no contest as to that. The
second defendant then sold the land to the plaintiff who started to develop it.
Later in
2000 the plaintiff was told that the land actually belonged to Makerere
University which held a freehold title over the land. Makerere
made it clear
that it had not issued any leasehold under the freehold title to either the
first defendant or the plaintiff. This
was notified to the second defendant as
the party’s lawyers. The plaintiff attempted to defend the lease against
Makerere University
in Civil Suit No 485 of 2000 but then later decided to
settle the case out of court. A consent judgment was entered in favour of
Makerere University. The plaintiff then obtained a fresh lease from Makerere
University on paying a premium of Shs.80,000,000/=.
Counsel for the plaintiff
submitted that
“The liability of the defendants to the plaintiff arises not on the process of how the 1st defendant obtained her lease title but on the failed transaction of Sale of Land. The plaintiff is entitled to refund of his monies as because the defendants had no lawful title to transfer and as such has not obtained what he bargained for from the defendants.”
Counsel for the defendants on the
other hand contends that the first defendant had legal title as shown in Exhibit
P1. Counsel submitted
that
“It (the land title) was never
cancelled by the Registrar of titles. Nor was it cancelled pursuant to an order
of court following
adjudication on the respective merits of the leasehold title
held by Mr Singh vis a vis the freehold owner, Makerere University...that
the
plaintiff voluntarily and without the involving the first defendant in any way,
decided to surrender the lease transferred from
the 1st defendant to
makerere University....he voluntarily entered into a consent agreement with
Makerere University....This agreement was
entered without leading any evidence
or presenting any legal argument. It did not therefore constitute adjudication
on the merits
of the makerere University claim. It was merely an amicable
settlement recorded in court and its effects bind only the parties’
thereto i.e. Makerere University and Harjit Singh...”
Counsel
for the defendants wondered why the plaintiff did not in HCCS 485 of 2000 rely
on the defences he raised in that case like
“... limitation of time, laches, absence of fraud or illegality acquiescence and so forth...”
rather than act in
fear and haste to negotiate a settlement. Counsel for the defendant goes on to
argue that this court can not try
issues which should have been more properly
tried in the other case as Makerere University is not party to this
suit.
On this issue counsel for the third party (Mr Kasujja for the
Attorney General) also submitted as to the alleged liability of The
Uganda Land
Commission.
He started by contesting the third party notice issued on the
third party as incompetent under order 1 rule 14 as not being accompanied
with
an affidavit. Secondly he further faults the third party notice dated
27th November 2003 as contrary to order 6 rules 2 and 6 because it
claims an indemnity of Shs.243,100 and Shs.2,500,000/= as special damages
particulars of which are not given nor which are not mentioned anywhere in the
first defendant’s statement of defence. Thirdly
Counsel for the Attorney
General submitted that if there was any liability then it would not go to his
client the Uganda Land Commission
but rather the Kampala District Land Board
which has its own separate legal existence. I directed that the trial proceed
and that
I shall address these preliminary issues in respect of the third party
in the judgment.
Two witnesses were called by the third party namely Mr.
Ahamed Kabuye TP1 the Acting Board Secretary Kampala District Land Board (part
of Kampala City Council) and Mr. Robert Nyombi TP2 a Registrar of Titles in the
Ministry of Lands. Mr. Kabuye testified that the
Kampala Land Board received and
processed the application of the first defendant for the suit land. She first
got the lease in 1985
for 5 years then applied for it to be extended for 7 years
in 1997 (which was retrospectively given from 1995). Mr. Kabuye testified
when
they first dealt with the land, they were not aware of a subsisting title to the
same land and they only got to know of it afterwards
when they came across
correspondence on the matter from the Registrar of Titles on the 24th
March 2001. Mr. Nyombi TP2 testified that the Kampala Land Board of KCC and not
his department granted the lease. He further testified
that the grant was made
in error because there was a freehold title. He was of the view that Kampala
City Council and the first Defendant
should have exercised due diligence to
confirm that the land was available for leasing. Mr. Nyombi testified that
because of the
way the lease was granted it was therefore null and void ab
initio. He was therefore of the view that the grant could not transfer
any third
party rights. Mr Nyombi further testified that the lawyer on record for the
conveyance was the Second defendant’s
law firm Treon & Singh.
I
have perused the submissions of all three counsels and reviewed the evidence on
record. Counsels for the plaintiff and third party
submit that the first
defendant did not have legal title cable of being transferred to the plaintiff.
Counsel for the defendants
says there was a legal title capable of transfer to
the plaintiff and that is what happened had it not been for the consent judgment
in HCCS 485 of 2000. Counsel for the defendant argues that as a consent judgment
it was not binding on his client.
Counsel for the defendant says the
consent Judgment cannot bind his client as she was not a party to it and was not
adjudication on
the merits. That on the face of it is true. However this case in
substance covers the same dispute albeit from a different angle.
Counsel for the
defendant argues that this court cannot try this case because another interested
party Makerere University has not
been joined. With the greatest of respect I
must disagree with this line of argument. There is a “Land triangle”
involved
here between the plaintiff, the first defendant and Makerere
University. The “triangle” as between the plaintiff and
Makerere
University has been resolved by a consent judgment. Such consents are provided
for in order 22 rule6 of the Civil Procedure
Rules. Section 67(2) of the Civil
Procedure Act (Cap 71 Laws of Uganda 2000) provides that no appeal will lie from
the consent of
parties. A consent judgment between parties does present a
resolution of the dispute as between them and should not be seen in the
same
light as default judgment. In the renowned treatise Odgers’ Pleadings
and Practice in Civil Actions (Edited by Giles F Harwood) Universal Law
Publishing 2000 at P 251 it is written
“The possibility of settling the action is probably in the minds of the parties at all stages of the proceedings, but assumes special prominence after discovery, when each party has a clearer picture of the strength or weakness of his case...an action is often settled by agreement before or at the trial..”
Such settlements in law are referred to as
a compromise and Odgers’ (supra) at P 326 goes on to write
“in all cases it should be appreciated that a compromise at trial involves two elements: (i) it is a contract whereby new rights or immunities are created between the parties in substitution for and in consideration of the abandonment of, the former claims or contentions of either or both of them; (ii) it will ordinarily be necessary for the court to take some action agreed upon by the parties e.g. to give judgment, make an order of discontinuance or stay etc...”
It appears to me that HCCS No 485 of 2000
was settled by the parties after the discovery of the existence of a freehold
title in favour
of Makerere University. It also appears to me that in order to
complete the “triangle” the plaintiff brought this suit
against the
defendants who still appeared to deny the absence of legal title. I do not think
that in light of the consent judgment
it was necessary to add Makerere
University as a party and in any event that would be contrary to the finality
and non multiplicity
principles enunciated in S 33 of the Judicature Act (Cap 13
Laws of Uganda 2000).
Now as between the plaintiff and the defendants the
evidence on record suggests that the first defendant did not have legal title
capable of transfer to the plaintiff. I agree with the testimony of Mr Nyombi
that The Kampala District Land Board should have established
and verified the
actual status of the land before leasing it to the first plaintiff. The Kampala
District Land Board has the technical
and profession competence to do this. How
it failed to do so defeats any objective thought on the matter. I accordingly
find that
the first defendant did not have legal title capable of transfer to
the Plaintiff.
Before I leave this issue there were the two preliminary
objections raised by the Attorney General. In my view the first one was very
technical and could have been cured by amendment. However the second one was
valid but required testimony. In respect to the second
objection I agree with
counsel for the Attorney General and find that The Uganda Land Commission is not
liable to indemnity the defendants
in the event of proof of loss by
them.
Issue No. 4: Whether the defendants are liable for the loss to the plaintiff?
The plaintiff has
prayed for a refund of the money he paid the first defendant. As found in answer
to the first issue the first defendant
by agreement received the sum of
Shs.175,000,000/= for the sale of the suit land. However since that sale was not
valid she is ordered
to refund the said Shs.175,000,000/= as money had and
received for a contract whose consideration had totally failed for want of
title.
The plaintiff in the plaint also prayed for special damages
being
“15...
(b) Legal fees and title processing charges
Shs.2,473,000/=.
(c) Legal fees to Sebalu & Lule Advocates
Shs.2,500,00/= ...”
During the trial these amounts were not
specifically proved to court and appear to have been abandoned. I however see
from the document
filled by the plaintiff, though not relied upon at trial, that
item (b) may have had something to do with rectifying the lease with
Makerere
University which to they had to do any way so as to mitigate their loss. I
therefore decline to grant special damages for
the reasons given
above.
The plaintiff also claims commercial interest on the money to be
refunded at commercial bank rate from date of filling of the suit.
Given the
many people involved in this failed land transaction some of whom have passed
away I grant interest at court rate from
the date of filling this suit.
I
award costs of the suit to the plaintiff.
That is my
Judgment
Justice Geoffrey Kiryabwire.
Dated:
18/05/06
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