MASAKA – High Court sitting in Masaka city has ordered Enterprise Uganda Limited – EUL to make full payment for the disputed Muslim land in Ssembabule district before securing full ownership.
The judgment stems from an application filed by EUL against Uganda Muslim Supreme Council – UMSC in relation to a botched land transaction.
According to the court documents, in 2017, EUL entered into agreement with UMSC to transfer its proprietary interest in two square miles of land in Sembabule at Ugx 900m through a land exchange deed under, which UMSC identified land with a fully developed structure comprising Kibuga Block 10 Plots 962, 963 & 965 at Nakulabye as the appropriate property for the exchange.
Enterprise was to undertake the transfer of the said property to the name of UMSC upon purchasing the mortgaged property from NC Bank at Ugx 900m. Immediately upon execution of the land exchange/ transfer deed, UMSC was to deliver the duplicate Certificate of Title for the rented/leased land together with signed transfers, passport photos, and identification documents to Enterprise to facilitate the transfer of the Nakulabye Property into the names of UMSC.
However, it became apparent that the duplicate Certificate of Title for the land was in the hands of a 3rd party who declined to release it to UMSC. Consequently, UMSC opted to be paid cash. As a result, Enterprise paid Ugx280m with an understanding that UMSC would secure a duplicate Certificate of Title for the land from the 3rd party and lodged a caveat on the land on August 22, 2019.
However, Enterprise claimed that on June 24, 2022, they learned that UMSC had sold the same land to Arthur Kayanja, who was yet to transfer it into his name. As a result, Enterprise petitioned court to protect and enforce its interests on the land. In its defence, UMSC argued that Enterprise purported to acquire a sublease in the property from its caretakers without powers binding it legally.
UMSC also noted that it had extended an opportunity to Enterprise to acquire the suit land through a property exchange agreement but it later learned that the firm had misrepresented itself as having an equitable interest in the Nakulabye property, which wasn’t true, and hence repudiated the contract.
“The Plaintiff’s Managing Director PW1, Albert Muganga testified that he believed himself to be the equitable owner of Kibuga Block 10 Plots 962,963 and 964 because he had an offer letter from NC Bank to purchase them, he later testified that he did not have any equitable interest in them,” reads the defence.
UMSC also argued that an offer letter to purchase a parcel of land does not confer any equitable interest in the land itself, arguing that Muganga clearly knew this elementary principle very well but sought to take advantage of the naivety of the defendant’s officials who were only lucky to escape his deceit.
Defendant cited Section 16 of the Contracts Act, 2010, which provides that where consent to an agreement is caused by coercion, undue influence, fraud, or misrepresentation, the contract is voidable at the option of the party whose consent was obtained by misrepresentation.
“The Plaintiff misrepresented ownership of Kibuga Block 10 Plots 962, 963, and 965 so as to induce the Defendant’s officials to enter into the Land Exchange Agreement with it. The Exchange Agreement was therefore voidable at the option of Defendant,” read UMSC’s defence.
The UMSC Secretary General Hajj Ramadhan Mugalu admitted having received Ugx280 from the applicant but insisted that it was rent fees for the 9 years, the firm had used the land. UMSC prayed for dismissal of the Plaintiff’s case and brought a counterclaim for eviction, a permanent injunction restraining the Respondent from further trespassing on the suit land among other relief.
Now in her judgment delivered on December 24, 2022, Justice Victoria Nakintu Nkwanga Katamba noted that UMSC forfeited its ownership of the land when it accepted a deposit of Ugx280m in 2017.
“The cash payments have not only been brought to the attention of this court but have also been duly acknowledged by the Defendant’s (UMSC) official, defendant witness 1, Ramathan Mugalu. This is sufficient proof that, but for the afterthought, Defendant intended to part with its interest in the suit land in favour of Plaintiff,” ruled the Judge.
She relied on a court of appeal judgment in the case of Issaka Ssemakula and Flavia Katende Vs William Setimba 2013 to rule that in the sale of immovable property, upon payment of the deposit, the property passes to the purchaser who acquires equitable interest and becomes the lawful purchaser when he has paid the deposit.
She, therefore, ordered the company to pay the remaining contractual sum of Ugx680m within six months at an interest of 24 per cent starting in 2017. It is after the payment and filing of the proof of payment before the court that the company shall get full rights over the land. She also ordered UMSC to transfer the suit land into the name of Enterprise upon full payment of the remaining contractual sum and interest.
Justice Victoria Nakintu did not order any costs since both parties appeared to have won in one way or another.
“This court finds that both parties have partially succeeded and that each party occasioned the other a measure of injury and thus it is unable to award damages and costs,” reads the judgment.
Enterprise Uganda had prayed for a refund of Ugx 280m and damages of Ugx1b while UMSC had prayed for damages amounting to over Ugx13b.