IN THE SUPREME COURT OF UGANDA

AT MENGO
Coram: Odoki C.J., Tsekooko, Karokora, Mulenga, and Katurebe
JJ.S.C.
CIVIL APPEAL NO.9 OF 2005
BETWEEN

1. GENERAL PARTS (U) LTD.

2. HARUNA SEMAKULA :::::::::::::::::::::::::::::::::::APPELLANTS

AND
NON-PERFORMING ASSETS RECOVERY TRUST :::: RESPONDENT
[Appeal from the judgment of the Court of Appeal (Okello, Mpagi-

Bahigeine & Byamugisha JJ.A) in Civil Appeal No.49/04 dated 19 th

August 2005]
E
JUDGMENT OF MULENGA JSC.

This appeal originates from a suit instituted in the Non-Performing

Assets Recovery Tribunal, hereinafter referred to as “the Tribunal”, by
the above-named respondent. The respondent sued as an assignee of a
non performing asset in form of a debt of shs.2, 288,821,473/- that the

1st appellant above-named owed to Uganda Commercial Bank,

hereinafter referred to as “UCB”. It claimed that the debt was secured by,
inter alia, equitable mortgages over the appellants’ plots of land
hereinafter collectively referred to as “the mortgaged property”, and
moved the Tribunal to grant orders against the appellants as
mortgagees, (a) to foreclose their right to redeem; and (b) to sell the
mortgaged property to realize the debt. The Tribunal granted the orders.

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The appellants’ appeal to the court of Appeal was dismissed. Hence this
second appeal.

The following background facts are not in dispute. In the late 1980’s the

1st appellant maintained a bank account with UCB on which it had

overdraft facilities secured by a floating debenture over its assets. In
1991 it agreed with UCB to convert part of the outstanding balance on
the overdraft into a short-term loan and to reschedule its repayment on
condition that it provided, as further security, a legal mortgage of the
mortgaged property. Only some of the property belong to the 1st
appellant, but most of the land belongs to the 2nd appellant, who is
Managing Director of the 1st appellant. The title certificates of the

mortgaged property were accordingly surrendered to UCB. The 1 st

appellant and UCB executed a mortgage instrument, which was then
registered in the land registry and entered on the titles as a legal
mortgage. Subsequently, however, in a litigation that started earlier, to
which I will refer presently, this Court observed that the mortgage was
not enforceable as a legal mortgage.

I should mention at this stage that prior to the application that is the
subject of this appeal, two unsuccessful attempts to recover the debt led
to two distinct litigations, which feature in this appeal so prominently, that
I have to briefly describe them first. The first attempt was initiated by

UCB on 21st July 1992, when, upon the 1 st appellant’s default, it

appointed a Receiver/Manager, to take possession of the 1 st appellant’s

assets and recover there from, and if necessary from the sale of the
mortgaged property, all the outstanding debt. The appellants, however,

2
prevented the Receiver/Manager from taking possession. That prompted

UCB to sue the 1st appellant in High Court Civil Suit No. 386 of 1993, for
a declaration that the Receiver/Manager was properly appointed and
should execute the mandate to recover the debt by the sale of the
assets and the mortgaged property. Later, after being assigned the debt
as “a non-performing asset” the respondent joined in the suit as co-
plaintiff. In the ensuing appeals, however, it was the sole respondent.
The suit was ultimately concluded in Civil Appeal No.5 of 1999, in which

this Court held, on 2nd March 2000, that the appointment of the
Receiver/Manager was improper because it did not conform to the terms
of the debenture. In the same judgment (as modified on review in a

ruling dated 18th October 2000), this Court observed that the mortgage
instrument was not proved to have been validly executed. Thus the first
attempt to recover the debt failed.

After the judgment of this Court, the respondent made a second attempt
when, through agents, it advertised the mortgaged property for sale.
That precipitated High Court Civil Suit No.1470 of 2000 whereby the
appellants sued the Trust Administrator, an employee of the respondent,
jointly with the two sale agents. The appellants claimed that the attempt

to sell the mortgaged property was illegal and in bad faith. On 28 th

October 2000, Okumu-Wengi J. entered judgment for the appellants
holding that as the sale was not authorized by a legal mortgage, the

instruction of the 1st defendant to the co-defendants to sell the property

was improper. The Trust Administrator appealed to the Court of Appeal in

Civil Appeal No. 29 of 2003, but withdrew it five years later, on 18 th May

3
2005. The second attempt thus came to naught. Meanwhile, the

respondent had initiated the third attempt on 25 th February 2003 when it

applied to the Tribunal for foreclosure. The Tribunal heard the application

and as I have already stated, granted it on 12 th February 2004.

The appellants appealed to the Court of Appeal against the Tribunal’s

decision, in Civil Appeal No.49/04. For a considerable time, both Civil
Appeal No.49/04 (the subject matter of this appeal) and Civil Appeal
No.29/03 (the Trust Administrator’s appeal) were pending together in the

Court of Appeal, until 18th May 2005 when the latter was withdrawn. The

former was dismissed three months later on 19 th August. During all the
time the two appeals were pending in the same court, neither the court
nor any party to either appeal sought to relate the two appeals either for
consolidation or for stay of one pending disposal of the other. Be that as
it may, the main contention in this appeal is the concurrent holding by the
Tribunal and the Court of Appeal that the respondent is entitled to an
order of foreclosure. The appellants ask this Court to reverse that
holding.

Counsel on both sides submitted written arguments under r.93 of the

Rules of this Court. In their submissions, Messrs Byenkya, Kihika & Co.
Advocates, acting for the respondent, raised a preliminary issue
concerning the contents of the record of appeal. They contend that the
inclusion of parts of the record contravenes r.82 of the Rules and that
those parts ought to be expunged or disregarded. I am constrained to
comment first on the timing of raising the issue. In my opinion, it ought to
have been taken out prior to the hearing of the appeal. This is implicit in
r.82, which prescribes in sub-rules (1) & (2) the content of the record of
appeal; and provides in sub-rule (3), for the Court of Appeal to make
directions on inclusion or exclusion of any document. Sub-rule (3) of r.82
reads –

4
 “A judge or a registrar of the Court of Appeal may, on the
application
of any party, or of their own motion, direct which documents
or parts
of documents should be included or excluded from the
record; and an
application for the direction may be made informally.”
Clearly, the primary purpose of this sub-rule is to provide a mechanism
for ensuring that the record contains only what is permissible and
necessary for determination of the appeal. The appellant may, in case of
doubt, seek guidance by way of directions under the sub-rule. Equally, a
respondent served with the record of appeal that includes any document
whose inclusion he/she objects to, may similarly seek directions under
the same sub-rule, for exclusion of that document. Adherence to that
procedure ensures that this Court proceeds to hear an appeal based on
a record that is devoid of or unclogged by irrelevant and/or immaterial
documents. In their submission the respondent’s counsel appear to
lament that the objection was raised at the late stage because the
parties resorted to written submissions. In my view, however, irrespective
of whether the appeal is to be argued orally or in writing, where the issue
is not settled under r.82 as aforesaid, it is more appropriate to raise it
separately rather than along with the substantive issues of the appeal.
Be that as it may, the objection is sufficiently substantial to warrant my
consideration before turning to the grounds of appeal.

The documents to which the respondent’s counsel objects are in four

batches –
1. an assortment of correspondence and legal opinions, mainly on
Civil Appeal No.29/03, exchanged among H.E. the President, the
Solicitor General, Minister of State for Finance (General Duties),

5
 the President’s PPS, the 1 st appellant and the NPART’s Trust
Administrator;
2. the record of proceedings and orders in Civil Appeal No.29/03;

3. a bundle of purported releases of mortgages/caveats dated 27 th

May 2005;
4. copies of law reports and judgments in cases listed as further
authorities.
None of those documents were part of the record of the Tribunal in the
original proceedings, and none was formally adduced as additional
evidence in the Court of Appeal. The first batch was forwarded under
cover of a letter to the Registrar of the Court of Appeal on 4. 5.05 in
which Messrs Kuguminkiriza & Co., Advocates for the appellants stated:
“We hereby forward a set of correspondence and an opinion from the
Solicitor General in respect of the above appeal which we intend to rely
upon during hearing of the appeal. They should not be construed as
forming part of the record of proceedings”. It is surprising, however that
despite that intimation, the same advocates included the ‘set’ in the
record of this appeal. The second and fourth batches were apparently
introduced in the Court of Appeal record among the authorities. The
same advocates informally forwarded the third batch to the Court of
Appeal after the hearing of Civil Appeal No.49/04 and judgment was
reserved. I am unable to deduce from the reply to the objection, any
reasonable justification for the inclusion of the documents. The equivocal
excuse that the documents were included because counsel relied on
Civil Appeal No. 29/03, as an authority or because it was necessary to
inform the Court of Appeal that “Civil Appeal No.49/04 had been
overtaken by events in Civil Appeal No.29/03” is too naïve to warrant
much discussion. It suffices to say two things. First, citing a decided

6
case, as an authority, does not entail producing the record of
proceedings in that case, let alone third-party opinions and
correspondence about it. Secondly it is an elementary principle that an
appellate court acts only on material that was properly before the trial
court unless for good cause the appellate court gives leave to any party
to adduce additional evidence on appeal. I find that all the documents
objected to, which run into 300 pages, constituting about one third of the
record of appeal, were included in the record of appeal in total disregard
of that principle and of r.82 of this Court’s Rules. I am constrained to
reiterate what I said in General Industries (U) Ltd. vs. NPART, C. A.
No.25/98, that –
“it is improper for a party to seek to attempt to influence the
decision of
an appellate court with evidence which was neither properly
adduced
and admitted during proceedings in the lower court nor
received by
order of that appeal court”.
If the objection had been timely, I would not have hesitated to expunge
the impugned documents and order that a fresh record of appeal be filed
and the appellants be condemned in the thrown away costs. But all I can
do now is to disregard the said documents, save any on which the Court
of Appeal relied in arriving at its decision.

The appeal was on ten grounds but in the written submissions grounds 1
and 10 were abandoned. Ground 8 lacks substance. In it, the appellants
complain that in the lead judgment, Okello J.A. stated that “UCB
appointed Receivers and Managers under the mortgage deed to sell the
(mortgaged) properties” whereas the appointment was under a
debenture. I agree that the statement was inaccurate, but it was not in

7
anyway relied upon in, or otherwise material to the decisions of the
court. I need say no more on it. Grounds 6 and 9 were consolidated, and
the rest of the grounds were argued separately, but in a sequence that I
don’t find expedient to follow. I will instead consider the grounds in the
following order of the issues that arise from them; namely whether –
 the institution of the suit occasioned a miscarriage of justice,
(ground 2);
 the suit was time-barred, (ground 4);
 the subject matter was res judicata, or the respondent was
precluded from suing by reason of the Trust Administrator’s
appeal, (grounds 3, 6 and 9);
 there were shortfalls in respect of the powers of attorney, (ground
5);
 the respondent released or waived its rights over the mortgaged
property (ground 7).

Ground 2 reads as follows –

“2. The learned Justices … of Appeal erred in law and fact
when they
held that the wrong procedure of bringing the action
adopted by
the applicant did not occasion a miscarriage of justice…”
The respondent instituted the suit in the Tribunal by Notice of Motion.
The appellants contended, both in the Tribunal and in the Court of
Appeal that the suit ought to have been instituted by Originating
Summons pursuant to O. 34 r.3A of the Civil Procedure Rules (CPR).
The Court of Appeal held that it was erroneous to institute the suit by
Notice of Motion, but that the error was not fatal, as it did not occasion
miscarriage of justice. In the lead judgment of the Court of Appeal,

8
Okello J.A. said –
“The Tribunal stated that Originating Summons is best suited
for cases
where the contention between the parties do not involve disputed
complex facts. I agree. Where the judge is of opinion that the
dispute..
cannot best be disposed of on Originating Summons, he may either
adjourn it into court for taking oral evidence or refer the parties to a
suit in the ordinary course, but certainly not by Notice of Motion.

In the instant case, my view is that the respondent erred in bringing

the
proceedings by a Notice of Motion. The imposing question
then is, did
that error … prejudice the appellants or occasion a
miscarriage of
justice?…”
After recalling the courts’ duty to administer justice without undue regard
to technicalities, the learned Justice of Appeal concluded –
“The Tribunal implied that it acted under section 14(3) of the
NPART
Act to modify O.34 r.3A to hold that the procedure adopted by the
respondent was proper in order to secure substantive justice.

I agree. S.14(3) of the NPART Act gives that power to the Tribunal.
The
facts of this case show that the appellants were not prejudiced by
the
respondent’s error when it adopted the wrong procedure. The

9
appellants do not dispute their indebtedness to the respondent, a
debt
the respondent seeks to recover. From these circumstances of the
case,
substantive justice demands that the respondent be allowed to
recover
from the appellants the debt owing.”

Counsel for the appellants contend that the respondent’s suit ought to
have been struck out because it was irregularly instituted. Allowing it to
proceed was prejudicial to the appellants because they were thereby
compelled to defend an incompetent suit. Furthermore because the suit
involved complex issues of facts and law, proceeding summarily on
affidavit evidence only, prejudiced the appellants who were thereby
deprived of the benefit of full trial of all issues. Counsel also contend that
S.14 (3) of NPART Act, did not vest in the Tribunal unlimited discretion to
modify the CPR to the extent of applying a wrong procedure as a right
one. On the other hand, while disagreeing with, but without cross-
appealing against, the Court of Appeal holding that proceeding by Notice
of Motion was erroneous, counsel for the respondent supported that
court’s holding that the Tribunal had discretionary power to modify O.34
r.3A of the CPR, and had rightly exercised it in the interest of substantive
justice.

Before addressing the core holding that is subject of this ground of

appeal, I find it imperative to make observations on two related holdings,
concerning O.34 r.3A and s.14 (3) of the NPART Act. O.34 r.3A of CPR
provides inter alia, that a legal or equitable mortgagee or mortgagor and
any person entitled to property that is subject to a legal or equitable

10
mortgage or charge –
“may take out as of course an Originating Summons
returnable before
a judge in chambers, for such relief of the nature or kind
following as
may be by the summons specified, and as the circumstances
of the case
may require;”
The rule lists the applicable reliefs, which include sale, foreclosure,
delivery of possession by the mortgagor and redemption. The import of
the provision is to permit any of the classified persons seeking any of the
listed reliefs, to institute a suit by originating summons instead of any
other mode of instituting a suit. It is trite that in civil matters the only
modes of instituting suits are by plaint, originating summons and petition.
A Notice of Motion is not an alternative mode of instituting any type of
suit. Surprisingly, both in the Tribunal and in the Court of Appeal, counsel
for the respondent sought to justify the resort to Notice of Motion under
O.48 r.1 of the CPR in the instant case on the mistaken ground that the
Mortgage Act, which provides for the right to apply for foreclosure, does
not specify the form of exercising that right. That Act, however, is not
concerned with rules of procedure. Proceedings arising from it are
governed by the CPR and what was applicable in this case was O.34
r.3A not O.48 r.1. In my view, therefore, the Court of Appeal rightly held
that the institution of the suit by Notice of Motion was erroneous.

With due respect, however, I do not agree with its holding that s.14 (3) of
NPART Act vests power in the Tribunal to modify provisions of O.34 r.3A
or of any other rule of the CPR. The section reads –
“The Tribunal shall, in the exercise of its jurisdiction under
this Act,
have all powers of the High Court, and for that purpose, the
Civil

11
 Procedure Rules applicable to civil actions before the High
Court
shall, with necessary modifications, apply to the
proceedings before
the Tribunal.”
Essentially, this provision vests in the Tribunal the powers of the High
Court and enjoins it to apply provisions of the CPR in its proceedings. To
my understanding, the qualification that the CPR ‘shall apply (to the
Tribunal’s proceedings) with necessary modifications’ is to permit the
Tribunal to apply the provisions in the CPR with modifications
necessitated by peculiarities of trial by the Tribunal. In applying the rules
they should be read as if they were written for proceedings in the
Tribunal. The provision is not a general license to the Tribunal to alter
any of the rules at its discretion. For example in regard to O.34 r.3A, it is
necessary to modify the expression ‘returnable before a judge in
chambers’ to read ‘returnable before the Tribunal’. In my view, nothing
concerning the exercise of the Tribunal’s jurisdiction in handling the
instant suit necessitated modification of the mode of instituting the suit.
With due respect, the view that the Tribunal had power to modify O.34
r.3A of the CPR is, to that extent, erroneous.

I now turn to the appellants’ contention that the institution of the suit
occasioned miscarriage of justice. If the appellants had taken out a
preliminary objection that the suit by Notice of Motion was irregular, they
would undoubtedly have been entitled to an order striking it out.
However, to make such order after trial, albeit on affidavit evidence only,
or subsequently on appeal, would amount to having undue regard to
technicalities to the prejudice of substantive justice. In his lead judgment,
Okello JA correctly observed that the respondent seeks to recover a debt
that is owed and that was not disputed throughout the diverse and
protracted litigation. I should add that despite the wrong procedure, the
appellants could have moved the court to have a full trial or to examine
deponents of affidavits as witnesses, to ensure trial of all issues. They
chose not to do so. In my opinion they were not prejudiced and no
miscarriage of justice was occasioned. In the circumstances I think it
was appropriate to invoke the principle preserved in Article 126(2)(e) of
the Constitution that substantive justice should not be unduly impeded
by technicalities. Ground 2 must fail.

Ground 4 reads –
“The learned Justices of … Appeal erred in law and fact when

12
they
held that the debt claim had not been proved to be time
barred.”
The appellants’ contention on this ground is in the alternative, namely
that either as a claim in contract for a debt, or as a foreclosure action,
the suit was time barred as it was filed, in the former alternative more
than six years, and in the latter alternative more than twelve years, after
the cause of action accrued. With due respect, I find it unnecessary to
discuss the farfetched arguments on the first alternative because clearly
this is a foreclosure action. It is also clear from the provisions of sections
5 and 18(4) of the Limitation Act, that the limitation period for such cause

of action is twelve years. The suit was filed on 25 th February 2003, but
neither party was clear on the date when the limitation period started to
run. In support of their stance that the suit was time barred, counsel for
the appellants, who insist that the suit was a claim in contract, relied on a
general assertion that the default in repayment started in or prior to
1990.

The Tribunal and the Court of Appeal differed in their conclusions on the
issue. The Tribunal held that there was no limitation period in respect of
application for foreclosure. The Court of Appeal rightly in my view,
overruled that holding and decided the issue on the principle that the
burden to establish a fact lies on the party that alleges it and the
appellants had not discharged the burden. In the lead judgment, Okello
JA said –
“In the instant case, it is the appellants who alleged that the
respondent’s application was time barred. They therefore
bore the
burden to establish that fact by showing the date when

13
the cause of
action accrued and when the application was filed. This was
not done.
There is no evidence, oral or by affidavit, showing when the
cause of
action for foreclosure accrued to the respondent. It is only
this that
would show (that) when the respondent filed this application
…twelve
years period had already elapsed…
In the circumstances, the appellants did not discharge the
burden to
show that the cause of action before the Tribunal was time
barred.”

In my view, there is sufficient evidence on record, which shows that the

suit was not time barred. I therefore need not decide conclusively
whether the burden lay on the respondent to prove that its cause of
action was subsisting and not extinguished by lapse of time, or on the
appellants to prove that the suit was time barred. It is apparent that the
equitable mortgages in respect of which the respondent applied for
foreclosure were created in August 1991 when the appellants
surrendered to the respondent the title certificates as additional security.
I deduce this from the entries on the title certificates annexed to the
respondent’s application as well as from the lead judgment of this Court
in Civil Appeal No.5/99 annexed to the Affidavit in Reply. The said
judgment also makes it clear that the additional security was provided
pursuant to an agreement to restructure the debt and reschedule its
repayment. Any prior default must have been compromised by the
reschedule. It follows that the cause of action arising out of those
mortgages must have accrued after the mortgages were created in
August 1991 and not before, as submitted by the appellants’ counsel.

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Furthermore, in the same judgment it is stated –
“The appellant continued to fail to service the loan. On 21.7.92
UCB
in exercise of its power under the debenture deed, appointed
Messrs
Key Agencies & Auctioneers, in writing, to be Receiver/Manager of
the
assets and property of the appellant. On the same day, by separate
letter, UCB instructed the same firm to take possession of,
and sell by
public auction, the appellant’s diverse assets charged under
the
debenture, and if the proceeds of sale did not liquidate the
debt, to
similarly sell the mortgaged land.”
This tends to show that the cause of action accrued in or about July
1992. In the circumstances I find, not only that the Court of Appeal did
not err to hold that the suit was not proved to be time barred, but also
that on a balance of probabilities, it was shown that when the suit was

filed on 25th February 2003, the limitation period of 12 years had not
expired. Ground 4 ought to fail.

I now turn to grounds 3, 6 and 9, which read as follows –

“3. The learned Justices of … Appeal erred in law and fact
when they
held that the debt claim was not res judicata having
been found so
by the High Court in H.C.C.S. 1470/2000 which judgment
was never
challenged having withdrawn Court of Appeal C.S.
29/2004…
….
6. The learned Justices of … Appeal erred in law and fact
when they

15
 held that the principle in S.6 of the Civil Procedure Act had
not been
brought to the attention of the Tribunal.
….
9. The learned Justices of … Appeal erred in law and fact
when they
held that NPART did not claim under its employee in Civil
Appeal
No.29/2003. ”
The three grounds revolve on provisions of sections 6 and 7 of the Civil
Procedure Act. Section 6 prohibits a court from trying a suit in which the
matter in issue is also directly and substantially in issue in a previously
instituted suit that is pending in a competent court between the same
parties. Section 7 similarly prohibits a court from trying a suit in which the
matter directly and substantially in issue was also directly and
substantially in issue between the same parties, in a former suit that was
heard and finally decided by a competent court, i.e. a matter that was
adjudicated upon (res judicata). I find it expedient to combine the three
grounds because they are all premised on the appellants’ contention that
the respondent’s suit in the Tribunal, which culminated in this appeal,
and the appellants’ suit in the High Court, which culminated in the Trust
Administrator’s appeal that was ultimately withdrawn, were concerned
with the same subject matter. With due respect to the learned counsel
for the appellants, however, that contention is misconceived. While it is
correct to say that both suits indirectly relate to the indebtedness of the

1st appellant to the respondent, the substantial issues for determination

in the two suits were different. As I pointed out earlier in this judgment, in
High Court Civil Suit No.1470/2000 the direct and substantial issue that
the court had to determine was whether the Trust Administrator and the
co-defendants were legally empowered to sell the mortgaged property.

16
The High Court held that in absence of a valid legal mortgage or a court
order of sale the defendants were not authorized to sell the property. On
the other hand, the substantial issue for determination by the Tribunal
was whether the respondent, as an equitable mortgagee of the
mortgaged property, was entitled to the relief of foreclosure. That issue
was not directly or at all, for determination by the High Court in C.S.
No.1470/2000. When it was raised and tried in the respondent’s suit in
the Tribunal therefore, it was neither pending for determination in a
previously instituted suit nor was it res judicata. Furthermore, the two
suits were not between the same parties. The respondent was not a
party to the High Court suit, and contrary to submissions by the
appellants’ counsel, it did not claim under the Trust Administrator, or
litigate on basis of the same title as the said Trust Administrator.

Much as no reference is made in the three grounds of appeal to the first

suit, which culminated in Supreme Court Civil Appeal No.5/99, in the
written submissions counsel for the appellants sought to rely on an
opinion expressed by Okumu Wengi J., in his judgment in C.S.
No.1470/00, that the respondent’s claim became res judicata upon the
decision of the Supreme Court in that appeal. Although the judgment of
Okumu Wengi J., remains intact, the appeal against it having been
withdrawn, I have no hesitation in discounting that opinion because, with
due respect to the learned judge, it was misguided. The direct and
substantial issue decided by the Supreme Court in that appeal was that
the appointment of the Receiver/Manager by the respondent was invalid
as it did not comply with the debenture under which it was made. In an
obiter dictum the Court also held that the mortgage document between

the respondent and the 1st appellant was not proved to have been

17
validly executed by the registered proprietors/mortgagors. In their
separate judgments, the learned Justices of the Supreme Court went out
of their way to clarify that the Court’s decision did not relate to the

indebtedness of the 1st appellant to the respondent. They also variously

recognized the respondent’s entitlement to equitable mortgage. For
these reasons, I would hold that grounds 3, 6 and 9 ought to fail.

The substantive part of ground 5 reads thus –

“5. The learned Justices of … Appeal erred in law and fact
when they
failed to address the legal shortfalls in respect of the
Powers of
Attorney …”
According to the written submissions by the appellants’ counsel, the
‘legal shortfalls in respect of the powers of attorney’, which the
appellants complain were not addressed by the Justices of Appeal are
that –

(a) there were no registered powers of attorney granted to the 1 st

appellant to validate creation of an equitable mortgage;

(b) the unregistered powers of attorney granted to the 1 st appellant

were
not for securing the existing indebtedness, but a fresh
borrowing.

Since the 2nd appellant produced copies of the powers of attorney as

annexure to his supplementary affidavit in reply, I take it that the first
so-called shortfall is that they were not registered, and the second is that
they were not intended for use in creating security for the overdraft.

18
However, the bottom line of the submissions by the appellants’ counsel
on this ground is the contention that no equitable mortgage by deposit of

title certificates was created over the land owned by the 2 nd appellant.
Doing my best to understand the lengthy but, with due respect, not so
clear submissions, I would summarize the thrust of the argument in
support of the contention as follows –
 An equitable mortgage of land by deposit of title certificate is
created only where the deposit is made by the registered
proprietor or by a donee of powers of attorney to create a security
for a specified purpose.

 In the instant case the 2nd appellant’s title certificates were neither
deposited by the registered proprietor nor by a donee of powers of
attorney granted for the purpose of securing the overdraft of 1989-
1990.

 The deposit of the said certificates by the 1 st appellant or its

Managing Director or other servant could not create an equitable
mortgage to secure the overdraft because it was not supported by
duly registered powers of attorney for that purpose.

 The powers of attorney, which the 2nd appellant granted to the 1st

appellant on 12th July 1991 authorised the latter to mortgage the

land for the purpose of securing a fresh loan, but not for securing
the existing overdraft that was already secured by a debenture.

Counsel relied on the 2nd appellant’s averment that he was not the
borrower to support his submission that the title certificates were not
deposited by the registered proprietor. In support of the assertion that

the powers of attorney granted to the 1 st appellant were only for

19
securing a fresh loan, counsel relied on the following stipulation in the
text of the power of attorney, namely –
“… the powers herein granted shall be irrevocable before the
repayment in full of any moneys borrowed under
powers so granted”.
Counsel’s contention is that no money was borrowed under the powers

granted on 12th July 1991, and consequently the intended security was
aborted.

In the Court of Appeal, the so-called shortfall of the powers of attorney

was neither raised as a ground of appeal, nor did it feature among the

framed issues. However, in the written submissions on the 5 th issue:

“whether there was an equitable mortgage interparte”, counsel submitted
that the Tribunal erred in holding that any equitable mortgage was
created without proof of valid powers of attorney to “validate” the
mortgage. There, the criticism stressed was that there was no power of
attorney granted for purpose of securing the existing overdraft. In the
lead judgment, Okello J.A. dealt with the issue summarily and answered
it in the affirmative. He said –
“The next are issues No. 4 and 5. I have already dealt with
these issues
when dealing with issues Nos. 1 and 2. Suffice to state that
the cause of
action before the Tribunal was not resjudicata. The issue
raised in the
application was the existence of an equitable mortgage
between the
parties. This issue had not earlier been decided by any

20
competent court
between the parties. There was an equitable mortgage between the
parties created by the appellant’s deposit of the certificates of title
with
respondent.”
The learned Justice of Appeal did not discuss if a power of attorney was
a requirement to “validate” the equitable mortgage, let alone if the power
of attorney granted was in respect of the overdraft. In my opinion,
however, if he had, he would still have held that “there was an equitable
mortgage interparte”. I will elaborate briefly.

Section 129 of the Registration of Titles Act provides for the creation of
an equitable mortgage by deposit of a title certificate thus –
“(1) Notwithstanding anything in this Act, an equitable
mortgage of
land may be made by deposit by the registered
proprietor of his or
her certificate of title with intent to create a security
thereon
whether accompanied or not by a note or memorandum
of deposit
subject to the provisions hereinafter contained.”
(Emphasis added)

Haruna Semakula, the 2nd appellant, is both the registered proprietor of

the land in question and the Managing Director of the 1 st appellant

through whom it transacted the business with UCB. Despite counsel’s
speculative submission that the title certificates may have been delivered

to UCB on behalf of the 1st appellant by any of its officials, I deduce from

21
circumstantial evidence that the 2nd appellant was the person who

deposited the title certificates as security for the 1 st appellant’s loan from
UCB. Although in his affidavit in reply he averred that he was not the
borrower, he did not in anyway suggest that someone else against his
will or without his knowledge deposited the certificates. The fact is also
confirmed in the decisions of this Court in Civil Appeal No.5 of 1999 and
Miscellaneous Application No. 8 of 2000, in which it was found that he,
together with UCB officials, had signed the mortgage document albeit
that this Court held that the exhibited mortgage document did not appear
to have been properly executed. Contrary to what counsel seems to

imply in the written submissions, the 2 nd appellant cannot in law be

permitted to claim that he deposited the certificates as Managing
Director but not as the registered proprietor. Nor does it matter that he
was not the borrower. Clearly, for purposes of section 129 of the
Registration of Titles Act, Haruna Semakula, the registered proprietor
deposited the title certificates in question with intent to create security

thereon in respect of the 1st appellant’s loan from UCB.

Furthermore I am not persuaded that the deposit was with intent to

secure repayment of a fresh loan that did not materialize and not the

overdraft. Although the 2nd appellant’s allegation to that effect in his

supplementary affidavit in reply was not countered by way of rejoinder in
any affidavit, the it is belied by the finding of this Court in Civil Appeal
No.5/99 in the following passage of my judgment which was the lead
judgment –
“In or around 1990 the appellant (General Parts (U) Ltd)
obtained over-

22
 draft facility from UCB. As security for the facility the
appellant
executed a debenture creating a floating charge over its property in
favour of UCB. Subsequently, because the appellant had difficulties
in
servicing the overdraft it made proposals to the bank, which would
lessen its burden. The proposals which centered on restructuring
the
indebtedness into two components of what were called short-term
and
long-term loans were discussed at a meeting between UCB’s Board
of
Directors and the appellant’s Managing Director… accompanied by
its
lawyer. Later UCB wrote to the appellant intimating that the Board
had approved the proposal subject to terms and conditions
specified in
the letter. After an exchange of correspondence to refine the
agreed
structure and the new repayment schedule, the appellant accepted
the
terms and conditions in writing. One of those was that the
appellant
was to provide additional security in form of a mortgage of
diverse plots
of land. The mortgage of the plots of land, some of which belonged
to
the appellant and others to its Managing Director, was made and
signed

23
on 12-8-91. Although the appellant had requested for further
funding,
this did not feature in what the bank approved in writing, which
became
in essence, the restructuring and rescheduling agreement.”
(Emphasis
is added)
This obviously shows the purpose of the mortgage to be additional
security for the overdraft that was restructured into loans, and not for

unapproved further funding. The powers of attorney, which the 2 nd

appellant granted in respect of each plot of land, were to enable the 1 st

appellant to execute that mortgage. The only rational way to construe
the stipulation that those powers would be irrevocable before payment of
moneys borrowed there under must be in the context of the agreement
to restructure the overdraft into two loans and reschedule the repayment
thereof. The restructured loan in that context is deemed to have been
“borrowed” under those powers. The fact that after realizing that the

request for further funding was rejected, the 2 nd appellant did not
attempt to withdraw or revoke the powers he had granted, fortifies me in
that view. It also gives me the impression that the claim that the powers
were granted in respect of a fresh loan is an afterthought designed to
avoid liability.

I would summarise my conclusions as follows. First, I am satisfied that

the 2nd appellant deposited with UCB the title certificates in respect of
his plots of land in question with intent to create security thereon.
Secondly I am also satisfied that the security was for repayment of the

24
1st appellant’s restructured loan. Thirdly, although it was intended to
create a legal mortgage, failure to properly execute the necessary
instrument rendered the status of the security an equitable mortgage by
virtue of s.129 of the Registration of Titles Act. Fourthly, the powers of

attorney granted to the 1st appellant were to empower it to execute

necessary instruments but were not components for creation or
validation of the equitable mortgage. Lastly, it is apparent from the
copies of the title certificates annexed to the respondent’s notice of
motion, that after the decision of this Court in Civil Appeal No.5/99, in
2000, the respondent lodged a caveat on the titles in question obviously
on strength of the equitable mortgages. Accordingly I would uphold the

finding that equitable mortgages binding on the 2 nd appellant were

created on his plots of land in question. The alleged so-called “shortfalls”
of powers of attorney were not substantiated. Ground 5 also ought to
fail.

Ground 7 reads -
“ The learned Justices of …Appeal erred in law and fact
when they
held without evidence that ‘the respondent has never
voluntarily
released or waived its said equitable right of action over
these
properties’ between the parties yet there was an order of
Court in
Civil Appeal 029/2003 approved by the Respondent
therein for the
release by Court of the certificates of title for the suit
properties.”

25
This ground of appeal rests on the summation that the respondent
released or waived its rights over the mortgaged property when,
following the withdrawal of the Trust Administrator’s appeal (Civil Appeal
29/03), the Court of Appeal ordered that the title certificates, which had
been exhibited in court, be returned to the appellants. That summation is
in turn drawn from the proceedings in that appeal, which I have held
were not properly adduced as evidence before the Court of Appeal. That
would have been sufficient reason for me to hold that the ground ought
to fail. However, in the interest of clarity, I am constrained to say more,
showing other reasons why the ground must fail.
Until this second appeal, the appellants did not raise the plea that the
respondent had released or waived its equitable rights over the
mortgaged property. If they desired to rely on such plea the onus lay on
them to prove it. They neither alleged nor adduced any evidence at the
trial or additional evidence in the Court of Appeal to discharge that onus.
Accordingly, whether the respondent released or waived its said rights
was not an issue at the trial. Even at the pre-hearing conference before

the Registrar of the Court of Appeal held on 15 th July 2005, it was not
included among the six issues that the parties framed and agreed upon
for determination by the Court of Appeal. The closest to it was whether
the Tribunal had erred in deciding the respondent’s application before
the disposal of the Trust Administrator’s appeal. Under that issue, the
appellants canvassed the point that the respondent having permitted the
title certificates to be exhibited in the Trust Administrator’s case, and
thereby parted with possession, they ipso facto could not exercise the
right to foreclose. The complaint in ground 7 is against the court’s
holding on that point. It is useful to put the holding in proper context. In
the lead judgment, Okello J.A. posed the question “whether by tendering
a document in court as evidence a party thereby surrenders or releases
to the court or the other party proprietary rights over the document?”
After reviewing authorities cited by counsel on the issue, the learned

26
Justice of Appeal concluded –
“It seems clear to me …that to release or waive a right of
action or
interest in property, legal or equitable, requires an
express or implied
agreement of the person entitled to that right. Where the
agreement is
express, it has to be under seal or supported by valuable
consideration.
An implied agreement, if acted upon by the other party, would
operate
on the principle of estoppel.
In the instant case, there is no evidence showing either an
express or
implied agreement by the respondent to release or waive its
right of
action under the equitable mortgage between the parties.
There is also
no evidence of any consideration for an express agreement,
if any, nor
evidence of an agreement by conduct of the respondent.
Mere permit-
ting the certificates of title of the suit properties to be
exhibited in court
as evidence did not extinguish the respondent’s equitable
right of
action. This was neither an express nor implied agreement
of the
respondent to release or waive the right.” (Emphasis is
added)
I agree that the fact of permitting the use of the certificates of title, as
court exhibits in the Trust Administrator’s case, cannot be construed as
evidence of release or waiver of the respondent’s rights over the
certificates, let alone the mortgaged property. The learned Justice of
Appeal went on to add –

27
 “In my view, even the order of the court returning the
certificates of
title to the suit properties to the appellants when CA 29
of 2003 was
withdrawn did not affect the respondent’s right. The reasons
are firstly
that the respondent was not a party to that appeal. Secondly, that
was
not a voluntary action of the respondent.”
Despite my earlier finding that the record of proceedings in the Trust
Administrator’s appeal ought to be disregarded, I am constrained to
observe, in view of this holding, that the learned Justice of Appeal could
have added that the order made in Civil Appeal No.29 of 2003, for the
“return” of the title certificates to the appellants, had no legal basis. It
was not made in consequence of a judicial investigation and adjudication
on who was entitled to possession of the certificates. When the appeal
was withdrawn, the status quo ante ought to have been restored. Since
in the judgment from which the appeal had arisen the High Court had not
adjudicated on the matter, the certificates ought to have been returned to
the party that produced them as exhibits. Counsel did not advance any
ground for the request that the certificates be given to the opposite party;
nor did the court give any reason for its order that the certificates be
returned to the appellants. I am not persuaded by counsel for the
appellants’ strenuous argument that the respondent consented to the
order through its legal officer in whose presence the order was made.
That order was obviously made in error and cannot be basis for an
inference that the respondent released or waived its right to foreclose
the equitable mortgages.

In the circumstances, I find no justification whatsoever to fault the Court

28
of Appeal for holding that the respondent did not release or waive its
rights over the mortgaged property. Ground 7 ought to fail.

In the result I find no merit in the appeal. I would dismiss it with costs
to the respondent here, in the Court of Appeal and in the Tribunal.

DATED at Mengo this 14th day of March 2006.

J.N. Mulenga
Justice of the Supreme Court.

29
 THE REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA
AT MENGO

(CORAM: ODOKI, CJ, TSEKOOKO, KAROKORA, MULENGA AND

KATUREEBE, JJ.SC.
CIVIL APPEAL NO. 9 OF 2005
BETWEEN
1. GENERAL PARTS (U) LTD}
2. HARUNA SEMAKULA} ::::::::::::::::::::::::::: APPELLANTS

AND
NON-PERFORMING ASSETS TRUST} ::::::::: RESPONDENT

{Appeal from the judgment of the Court of Appeal at Kampala

(Okello, Mpagi-Bahigeine and Byamugisha JJ.A) dated 19 th August
2005 in Civil Appeal No. 49 of 2004)

JUDGMENT OF ODOKI, CJ

I have had the benefit of reading in draft the judgment of my learned

brother, Mulenga JSC, and I agree with him that this appeal should be
dismissed.

As the other members of the Court also agree, this appeal is dismissed
with costs here and the Courts below.

Dated at Mengo this 14th day of March 2006

B J Odoki
CHIEF JUSTICE
THE REPUBLIC OF UGANDA

30
IN THE SUPREME COURT OF UGANDA
AT MENGO
[CORAM: ODOKI, CJ.,TSEKOOKO, KAROKORA, MULENGA AND
KATUREEBE.JJ.S.C.]
CIVIL APPEAL No.9 OF 2005
BETWEEN

1. GENERAL PARTS (U) LTD ]

…………………………………
APPELLANTS
2. HAJI HARUNA SEMAKULA ]

AND
NON - PERFORMING ASSETS RECOVERY TRUST … RESPONDENT

[An Appeal from the judgment of the Court of Appeal at Kampala

(Okello, Mpagi-Bahigeine and Byamugisha, JJ.A) dated 19 th
August, 2005 in Civil Appeal No.49 of 2004]

JUDGMENT OF TSEKOOKO, JSC

I have had the advantage of reading in draft the judgment prepared by

my learned brother, Mulenga, JSC and I agree with his reasoning and
his conclusions that this appeal should be dismissed. I also agree with
the orders which he has proposed.

I wish to make brief comments on three matters. The first is adherence

to the Chief Justice's Practice Direction No.2 of 2005. The parties filed
written arguments under rule 93 of the Rules of this Court. Mr.
Kugumikiriza of Kugumikiriza & Co. Advocates, represents the
appellants. Both in his original written arguments in support of the appeal
and in the rejoinder to the response to his arguments by Mr.E. Byenkya,
counsel for the respondent, Mr. Kugumikiriza breached the guidelines

31
set out in Practice Direction on Presentation of Both Oral And
Written Submissions And Arguments in the Supreme Court issued

by His Lordship the Chief Justice on 13 th April, 2005. (Practice Direction

No.2 of 2005). Instead of the ten pages in respect of arguments in
support of the appeal and three pages in rejoinder, learned counsel filed
14 pages and 10 pages respectively without leave of court as required
by the Practice Direction.
There are sound reasons why the Practice Direction set these limits.
One of such reasons is to enable counsel to focus on material issues
which are in dispute and required resolution by the Court.
The other reason, among others, is to minimise repetitive arguments.
The second comment is on ground two of this appeal.
The complaint by the appellants is that the Court of Appeal erred when it
held that wrong procedure by which the respondent instituted foreclosure
proceedings, did not occasion a miscarriage of justice.
The appellants counsel argued that since the Court of Appeal found that
the Trust erred in instituting the foreclosure proceedings by notice of
motion instead of by originating summons under 0.34 Rule 3A of CP
Rules, the Court should have allowed the appeal, instead of upholding
the decision of the NPART Tribunal on the basis that the decision did not
occasion a miscarriage of justice. The respondent's counsel supported
the reasoning and conclusions of the Court of Appeal.

Ordinarily a mortgagor or a mortgagee would enforce his or her rights

through court by a procedure known as originating summons as
prescribed by Order 34 Rule 3A of the CP Rules, which rule reads as
follows: -
"Any mortgagee or mortgagor, whether legal or
equitable or any person entitled to or having property

32
 subject to legal or equitable charge, or any person
having the right to foreclose or redeem any mortgage,
whether legal or equitable, may take out as of course an
originating summons returnable before a
judge……………………… for such relief of the nature or
kind following as may be by the summons specified and
as the circumstances of the case may require that is to
say Sale, foreclosure………………"

The Tribunal's opinion was that because of the use of the words "may
take out as of course," in the rule, it was not mandatory for the
respondent to institute foreclosure proceedings by use of originating
summons and, therefore, the respondent was justified in instituting the
foreclose proceedings by notice of motion. The Tribunal held further
that what was important under the Non Performing Assets Recovery
Trust Statute (NPART Statute) which created the Tribunal, was for the
Tribunal to observe the rules of natural justice. Th answer to this matter
lies on which view one takes of two sections of the statute which
complement each other and are relevant on this matter.
The civil jurisdiction of NPART Tribunal is governed by section 16 of the
NPART ACT. In so far as relevant, S.16 (3) states: -
"The tribunal shall, in the exercise of its jurisdiction
under this statute have all the powers of the High
Court and for that purpose, the Civil Procedure Rules
applicable to civil action before the High Court shall,
with necessary modifications, apply to civil
proceedings before the tribunal"

It is quite obvious that the Civil Procedure Rules regulate the conduct of

33
civil proceedings in the Tribunal. Where it is necessary, modification to
any Civil Procedure Rule can be made by the Tribunal to suit the
necessity of any particular civil proceedings. The question which then
arises is whether modification permits a party and or the Non-Performing
Assets Recovery Trust (NPART) to institute foreclosure proceedings by a
notice of motion rather than by an originating summons. The appellants'
counsel arguments are that use of Notice of motion would not allow
opportunity to the appellant to conduct its defence properly. In effect he
contends that the procedure adopted put his client at a disadvantage.
Mr. Byenkya supported the opinion of Court of Appeal and submitted in
summary that the appellants were afforded opportunity to defend
themselves which they did. I do not agree that modification of rule 3A
should be construed to mean that a party is free to substitute a mode of
institution of a proceeding prescribed by the CP Rules. The Court of
Appeal relied on S.18 for its opinion to the effect that the mode adopted
in this case is proper.

That section relates to general conduct of disputes in the NPART

Tribunal and in so far as relevant, S.18 (1) reads as follows:
"The Tribunal shall in the exercise of its functions
under this statute be guided by the rules of natural
justice."

The Tribunal relied on this provision to hold that it should not be bogged
down by technicalities. Technicalities or no technicalities, the question
that arises then is how can section 16 (3) be read together with S.18 (1).
In my view the latter section simply stresses the necessity of affording
parties to a dispute an opportunity to present their respective
contentions. The former section indicates the rules governing the
conduct of civil disputes. So the two sections are simply
complementary to each other. At the trial level in the Tribunal, it would
have been proper in this case for the Tribunal to order the respondent to
use originating summons (or indeed a plaint) to commence the

34
proceedings. However, on the facts of these proceedings, I do not think
that the appellants suffered any injustice as argued by their counsel.
I will next comment on the compilation of the record of appeal.
I agree with the observations of my learned brother, Mulenga, JSC, in
respect of the conduct of counsel for the appellant who it would seem,
does not understand the requirements of subrule (2) Rule 82 of the
rules of this Court.
The rule very clearly enumerates the materials that should constitute the
contents of a record of appeal. The unjustifiable introduction at the
stage of lodging a second appeal in this Court of documents occupying
300 pages of material which were neither produced nor admitted at the
trial as part of the record nor as evidence, has no basis whatever. In my
opinion even the inclusion in the record of appeal of full judgments cited
in the Court of Appeal has no basis and is improper. The practice of
disregard of our rules generally and rule 82 in particular is increasingly
becoming common and, therefore, it must be curbed. Needless to say
this Court is expected to consider the opinion of the Court of Appeal on
the material presented to it for consideration and nothing else. These
materials are specifically set out in Rule 82. Court Rules of Procedure
serve an important purpose namely to ensure that ordinarily the conduct
of litigation or appeals is done in an orderly and known fashion.
Moreover I think that exclusion of extraneous and or irrelevant materials
is based on sound reasons. Such materials tend to take valuable time
of the Court by making justices spend time to peruse a lot of irrelevant
materials which are not necessary for the decision of court. I think it is
incumbent upon members of the bar to study properly our rules and
lodge appeals in conformity with the rules of this Court.

Time has come when any advocate who indulges in the exercise of not
conforming to requirements of our rules to be ordered under Rules 102

35
of the Rules to personally pay costs occasioned by the inclusion in the
record of appeal of irrelevant material. This will help in curbing the
practice by advocates in including in the record of Appeal a lot of
irrelevant materials.

I agree that the appellants must pay to the respondent its costs here, in
the Court of Appeal and in the Tribunal.

Delivered at Mengo this 14th day of March 2006

J.W.N.Tsekooko
Justice of the Supreme Court

36
 THE REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA
AT MENGO

(CORAM: ODOKI, CJ TSEKOOKO, KAROKORA, MULENGA

AND KATUREEBE, JJSC.).

CIVIL APPEAL NO. 9 OF 2005

BETWEEN

1. GENERAL PARTS (U) LTD;

2. HAJJI HARUNA SEMAKULA; ::::::::::::::::::::: APPELLANT

AND

NON-PERFORMING ASSETS
RECOVERY TRUST: :::::::::::::::::::: RESPONDENT
(Appeal from the decision of the Court of Appeal at Kampala
(Okello, Mpagi-Bahigeine and Byamugisha, JJ.A) dated 19 th August
2005, in Civil Appeal No. 49/2005).

JUDGMENT OF KAROKORA, JSC:

I have had the benefit of reading in draft the judgment prepared by my

learned brother, Mulenga, JSC, and I agree with him that the appeal
should be dismissed. I also agree with the orders he has proposed.

Dated at Mengo this 14th day of March 2006

N. KAROKORA
JUSTICE OF THE SUPREME COURT

37
 THE REPUBLIC OF UGANDA

IN THE SUPREME COURT OF UGANDA

AT MENGO

(CORAM: ODOKI, CJ TSEKOOKO, KAROKORA, MULENGA

AND KATUREEBE, JJSC.).

CIVIL APPEAL NO. 9 OF 2005

BETWEEN
3. GENERAL PARTS (U) LTD;
4. HAJJI HARUNA SEMAKULA; ::::::::::::::::::::: APPELLANT

AND

NON-PERFORMING ASSETS
RECOVERY TRUST: :::::::::::::::::::: RESPONDENT

(Appeal from the decision of the Court of Appeal at Kampala

(Okello, Mpagi-Bahigeine and Byamugisha, JJ.A) dated 19 th August
2005, in Civil Appeal No. 49/2005).

JUDGMENT OF KATUREEBE JSC:

I have had the advantage of reading in draft the judgment prepared by

my learned brother, Mulenga, JSC, and I agree with him that this appeal
should be dismissed with costs for the reasons well articulated in that
judgment. I have nothing useful to add.

Dated at Mengo this 14th day March 2006.

_________________________
B. M. Katureebe
Justice of the Supreme Court

38