1.
Title
by registration:
Section
54 of the R.T.A provides; No instrument until
registered in a manner herein provided shall be effectual to pass any estate or
interest in any land under the operation of this Act, or to render such land
liable to any mortgage. But upon such registration, the estate or interest
comprised shall pass... or be liable to the ....conditions set forth in the
instrument or by this Act...
Section 92 (2) is to the effect that
upon registration of the transfer of the estate, all powers, privileges,
thereto shall pass to the transferee and the latter shall there by become the
proprietor.
It follows from the foregoing that in
the Torrens system title does not pass by execution of the documents only but
by the execution and registration thereof.
Case
Law
LumuVs
Lindo Musoke
(Title does not pass until a transfer
is affected)
The plaintiff, a registered proprietor
of land, sold it to the defendant, who paid part of the consideration. The
plaintiff duly executed the documents of transfer, but on presentment for
registration, it was found that the land was burdened with a caveat lodged by a
third-party, and so it could not be registered. The defendant nevertheless,
proceeded to collect rent from the tenants, contrary to the agreement that
vested such rights in the plaintiff until registration of the transfer
documents. The plaintiff thus sued for trespass and asked for an injunction to
restrain the defendant.
It was held that according to sec 51
(now Sec 54) R.T.A, there had been no registration of the transfer documents of
title and therefore the land still belonged to the plaintiff. That the
agreement did not transfer any interest to the defendant. It merely gave him a
contractual right entitling him to bring an action for damages or specific
performance. The defendant’s acts therefore amounted to trespass.
According to Mugambwa (supra), the learned judge erred in finding trespass since
the primary requirement of trespass to land is that the plaintiff should be in
actual possession of the land at the time of the defendant’s action, and as the
plaintiff had simply rented the premises, he was not in possession. However, a
contrary judgment was arrived at inMoya
drift farm Vs Theuri which shall be examined below under indefeasibility of
title.
ZimbeVsKimanza
One piece of land was sold to two
persons. The later purchaser had his title registered. The lower court had
found for the respondentcontending that although his title was not registered,
it prevailed over that of the appellant. This respondent had lodged his
agreement for registration but had been unsuccessful because it bore the wrong
certificate number. The appellant’s had the right number and had successfully
been registered.
Per
AINLEYJ,
“…. The appellant can only be ousted
from the land if it be shown that he
obtainedregistration by fraud, his own, not the seller’s. The onus of
proving this fraud lies on the respondent, and it is a heavy one ...In fact the
respondent was not the owner of the land when the appellant registered
hisstatutory transfer. No man can become the owner of land until a statutory
transfer of the land to him has been registered.
A
stringent application of the element of title by registration can be seen in;
Busulwa
Vs Texas
One
Ssebugulu deposited title deeds affecting the suit land with the present
respondents, as security for a loan made by the respondent to his company. The
respondents, unaware of any transactions between the appellant and Ssebugulu
had a caveat registered as they had a right to do so. Meanwhile, the applicant,
a native, had just completed a purchase of the suit land from Ssebugulu and was
still seeking a completion of the transfer to him. On discovery of the caveat
he sought to have it removed.
Held:
The position in law is very clear. I very much regret that it cannot assist the
applicant. No dealing with Mailo land can pass any interest until such dealing
is registered. The applicant, from circumstances beyond his own control, has
not registered his interest and I therefore cannot assist him.
Considering the rigid requirements of
registration, what then isthe effect ofunregistered instruments?
In
Souza figuerido Vs Moorings Hotel
The respondent, a registered
proprietor of land, entered a contract to lease the suit properties to the
applicants, for a period in excess of three years. The lease was not registered
contrary to the law. The appellants entered onto the land and left before the
expiry of three years. Whenhe sued for rent arrears, the appellants maintained
that since the lease had notbeen registered. It was void and they were not
bound to pay the arrears.
It
was heIdthat there was nothing in the Act,
whichrendered such instrumentsineffectual as contracts betweenparties. There is
nothing to show that an unregistered document purporting to be a lease for more
than three years is void…... It can operate
as a contract inter parties and can
confer on intending lessee a right of specific performance and to the
intending lessor aregistrable lease. On the facts of the case it was therefore
held that appellants were boundunder contract to pay the rent arrears.
Reference was made to the learned authors of KERR on Principles ofAustralians Land Titles.
“… an instrument in statutory form,
until registration operates as a contract interparties… the mere execution of a
registrable instrument transfers no
interest in the landbut merely gives a right in personum …”
Can it however be said that the instrument creates
an “equitable interest/lease?”
Sir Kenneth O’Connor denied this fact,
on Grounds that the R.T.A, creates no interest whether legal or equitable
through an unregistered instrument.
However, in Katarikawe Vs Katwiremu, it was maintainedthat in
suchcircumstances. The purchaser acquires an equitable interest in the landenforceable
against the vendor.
In the Australian case of Chan Vs CresdonProperties, itwas held
that it is not the instrument which creates such equitable interest, but rather
the contract itself. Reference was made to ISAACS
j in Barry Vs Heider;
“…denying effect to an Instrument
until registration does not touch whatever rights arc behind it and parties
have a right to have such interest registered. That right, according to the
accepted rules of equity is an estate or interest in land.”
From the foregoing, it is maintained that
antecedent agreement will be effective in accordance with the principle of
equity to bring into existence an equitable interest or estate in land. It
should further be noted that at common law, once an unintendedlesseeenters into
possession under unregistered lease. A tenancy at will is created and they are
bound to pay rent if it falls due.
2.
Indefeasibility
of Title
According to Mugambwa (supra), it
means that once a proprietor of an estate or interest in land, the government
guarantees that his/ her title cannot be divested or attacked by rival claims
to the land except as prescribed under the RTA. According to Professor WALLAN,
“The Torrens system in Australia”, though the term indefeasibility of title is
not referred to in the R.T.A, its meaning and scope can be obtained from mosaic
of sections and these include; sec 59 (Certificate to be conclusive evidence of
title, sec 64 Estate of registered proprietor is paramount) ,sec 181 which
protects a bonafide purchaser for value who obtained the land from one who was
registered through fraud or error, from ejectment or action for damages, and
sec 176, which, except for a few exceptions, protects the registered proprietor
against any action for ejectment or damages. Thus, production of the
certificate of titleby one in his or her name is deemed an absolute bar against
any legal action subject to a few exceptions in the R.T.A.
The whole purpose of the
indefeasibility principle was designed to protect title of the registered
proprietor from unregistered interests and to save persons dealing with
registered land the trouble of going behind the register book to investigate
the validity of title and possible rival claims to the land.
Case
Law
Karim
Vs Chief Registrar of Titles
The applicant sought to restrain the
registrar of titles from interfering with her quiet possession of land, as the
registered proprietor thereof, she had received a letter from the respondent
asking her to return the land title as she had been erroneously registered as
proprietor. That following the recovery of the original file affecting the suit
land, some caveats which forbade any transfers of title without notice to the
caveator had been discovered.
It
was held that the applicant had acquired good
title and she should be spared the quiet enjoyment, having got the title
bonafide and for good consideration. Further that the registrar should remove
the caveats she had placed on the applicant’s title unilaterally without
giving her the chance to be heard.
DavidAcarVs
Alfred Acar
The respondent applied for a lease of
land under the R.T.A. The appellant who claimed an interest complained to the
parish chief but did not lodge a caveat. The land was surveyed and a
certificate granted to the respondent. The appellant refused to vacate the
land.
It
was held on appeal that, anyone claiming an
interest in land being surveyed with a view to bring it under the operation of
the R.T.A, must lodge a caveat. The complaint to the village chief did not
absolve him from the law, and as he had done nothing within the Iaw to stop it,
the certificate granted to the responded was conclusive evidence that the
person named therein, was the registered proprietor. ‘ .
LWANGA Vs REGISTRAR OF TITLES
After
the deceased’s death, k fraudulently caused the deceased’s land to be
transferred into his name. He later sold the land to S an innocent purchaser
for value, who registered as proprietor. K was convicted of fraud and the suit
property was ordered to be transferred into the applicant’s names which the
registrar refused to do hence this suit. It
was held that S was a bonafide purchaser and as he was registered. His
title was indefeasible not withstanding K’s fraud. It was noted that though a
paradox, registration obtained by fraud is sufficient to pass title to a
bonafide purchaser.
EXCEPTIONS TO THE
INDEFEASIBILITY TITLE RULE
- Fraud
This is
by far the most important exception to the indefea1ibility of tile. Section 64(1) of the RTA is to the effect
that the title of the registered proprietor is paramount except for fraud.
Fraud is not defined in the act, but it’s meaning may be attained by a study of
case law.
In Assets Company Ltd VS
Mere Roihi, (New Zealand case)
Lindley
held that fraud in the Torrens System meant actual fraud as opposed to constructive
fraud. In Waimiha Sawmilling Co VAs
Waione Timber Company (1926) AC IO6 fraud was described as,
“...If the designed object of a transfer be to
cheat a man of known existing right that is fraudulent.
The fraud
must be that of the person whose title is sought to be impeached but not that
the persons from whom he obtained title. Thus in Kampala Bottlers Vs DOMANICO, the trial judges had found fraud on
part of the appellant on grounds that; someone, in the lands office and the
chairman of the town clerk had failed to notice the error in the appellant’s
title. WAMBUZI CJ expressed these sentiments on appeal;
“...With
respect, these verges on constructive fraud…... it was not shown that the
appellant was guilty of any fraud or that he knew of it…”
In hotel International VS The Admin general of
Robert caveman
It was
found that as there was no caveat by the respondent on the register, the
appellants could not be accused of fraud in respect to the respondent’s
registered interest. Similarly in
Shah VS Modern Sweet Mart
(1956-57), the
purchaser of land, fully aware of the defendants’ unregistered 7-year lease on
it, proceeded to register as the proprietor. In a suit for vacant possession,
the defendants pleaded notice and fraud ‘It was held that section 146 RTA
strictly forbade the application of equitable principles and that the plaintiff
was not bound by the defendants’ lease……
However,
inKatarikawe Vs Katwiremu, Ssenkandi J
said that although mere knowledge of unregistered interests cannot be imputed
as fraud coupled with a wrongful intention to defeat such claims would suffice
as fraud. Thus in this case the plaintiff purchased land from the first
defendant but there was no transfer effected in his favour. The plaintiff never
the less took possession and effected many improvements on the said land. Mean
while the first defendant transferred the land to the second defendant, who was
his brother in law. It was found that as the plaintiff had openly carried out
improvements on the land and the fact that the two defendants were closely
related were sufficient grounds to prove connivance by the defendants to
defraud the plaintiff. That the second defendant’s title had therefore been
obtained through fraud.
InLusweswe VS Kasule AND Caulibally
The
plaintiff was the original registered proprietor of adjacent piece’s of land, A
and B. On A, he had a house and had constructed a drive way through land B to
the house on land A. In the 1970s, he was arrested. His property including the
certificate of title were looted. When he applied for replacements, he
discovered that title to land B’ had been registered in the second defendant’s
name, who alleged he had bought it from the first defendant. The plaintiff
sought to have the title struck out on grounds of fraud It was found that the
circumstantial evidence pointed strongly to the fact that the second defendant
was involved in the fraud. first because there were no records of the purported
instruments of transfer from the plaintiff to the first defendant and from the
latter to the second defendant. Secondly, there was evidence of a search by the
defendant of the register book to discover who owned the house on plot A, a
drive way to which passed through plot B. Moreover he had proceeded to occupy
the house on plot A, yet he knew he had no right to do so.
In Jandu VS Kirpal, SINGH j was of the view that the
ingredients of fraud were three fold;
Proved
knowledge, the existence of some unregistered interest, and knowingly and
wrongfully defeating that interest. On burden of proof, Oder CJ in Alibhai VS Kariasaid that although the
standard may not be as heavy to require proof beyond reasonable doubt,
something more than a mere balance of probability is required.
Other Exceptions (within
the Act)
- Encumbrances notified
on the folium. The register book is like a mirror. What you see is there and what
you do not see is not there.
- The title of a
registered proprietor is not indefeasible as against that of another
registered proprietor claiming the same land. Sec 64 RTA is to the
effect that the registered proprietor may hold the land subject to
encumbrances notified on the folium but free from all other encumbrances,
except the estate of a person claiming the same land under a prior
registered certificate of title. This may have been occasioned through a
mistake at the registry. In such a case the rules as to priority of
registered interests will apply.
- Land included in the
certificate by mistake. ‘This is included in section 64(1) RTA. See
Black locks Vs JB developments (
under bonafide purchaser for value below)
- Sec 64(2) of the R.T.A is to the effect that
title of a registered proprietor may also be subject to public rights of
way and casements.
- Adverse possession, under the same
section, may affect a registered proprietors rights. According to the
Limitation Act, if an owner does not eject an intruder for 12 years, he/he
loses title to such intruders. Accordin to the Kenyan case of KiseeMaweu Vs KIU ranching &
Co-operative Society (1982) the period of adverse ownership starts
running from the time the squatters begin to live on the land, and not
from the time the proprietor is registered as the owner. Thus the court
found for the appellants who had lived on the land since 1933.
Per PLATT J, On the
proprietor’s title in relation to that of the adverse posesser.
“ However
absolute and indefeasible the title is, it is lost forever”
- An interest of a tenant on land which is
neither adverse nor registered is also protected thus; in Uganda Post and Telecommunications Vs
Lutaaya, it was held that the respondent’s registered leasehold was
subject to appellant’s title acquired by possession with the consent of
the landlord prior to the leasehold.
- There are also some overriding statutory
exceptions on the indefeasibility such as the access to Roads Act, which
empowers a land owner without access to a road to apply for a court order
for a right of way over the registered proprietor’s land.
THE LAND ACT protects a tenant by occupancy by providing that such
tenants deemed to be the tenant of the registered proprietor. The Act further
subjects the right of the land owner to environmental laws such as The Forest
Act.
- Judicial powers can also limit the
indefeasibility of title. In Fraser
VS Walker; the Privy Council maintained that the Torrens system in no
way limited the power of court to act on a claim in personum against a
registered proprietor founded in law or in equity. .
Other exceptions include; leases, licenses, and
other authority granted by the minister, unpaid rates, taxes, and charges. The
registrar’s powers under the land Act to correct errors and supply omissions in
register book is yet another exception to the absolute title.
PROTECTION BY CAVEAT.
Caveats
are provided for in PART VII of the R.T.A.
A caveat
acts as a statutory injunction to the registrar to prevent registration of any
dealings which might affect the interest or subject of the caveat. In Kazzora VS Rukuba it was pointed
out that in Uganda, a pending suit affecting land does not bar continuation of
dealings with such land. That therefore the best way to protect one’s interest
would best be achieved through a caveat or an injunction.
In Katarikawe VS Katwiremu; it was said by
SSENKANDI J that taking possession of deeds is insufficient to protect an
unregistered interest, unless a caveat is lodged thereafter. According to Namususi VS Ntabazi (1988), to lodge a
caveat one must have a caveatable interest.
Municipal District of
Concord, Vs Coles,acaveatable interest is defined as a claim of a proprietary or quasi
proprietary nature of interest in a particular piece of land. Examples of
caveats include; claims under wills, leases, mortgages etc.
Boyes VS Gathure; Court rejected a caveat
because it did not properly identify the interest claimed as prescribed by the
relevant statutory provisions.
Mutual Benefits Vs Patel a caveat prohibiting all
dealings in land was held to go beyond what was necessary to protect a
leasehold interest.
In Desouza V Talbot, the appellant entered
into a sublease agreement with the respondents, and on entering into
possession, he expended some money on repairing house. He then lodged a caveat
purporting to be an equitable mortgagee in the sublease agreement. It was held
however that the agreement referred only to a sublease and did not refer to the
appellant as an equitable mortgagee hence his caveat as a mortgagee was un
founded.
A caveat may be lodged by
not only the private party but by the registrar as well, on behalf of
government or a disable person. Section l7O (a)
It must
be noted that lodging a caveat does not serve to prove title but rather
maintains the status quo, until the ultimate title ids determined. lt follows
from the foregoing that the duration of a caveat envisaged by the Act is only
for a limited period.
In Olojo V Rajah, where a caveat was for
twenty years, court observed that a caveat was only meant to be a temporary
measure and was not intended to give an everlasting protection in the sense
that the caveator should be hulled sleeping over his caveated interest
perpetually.
Unfortunately
the Act does not stipulate a time limit within which a caveat should expire. It
merely provides that it shall lapse automatically; when withdrawn by the
caveator, and where the proprietor applies for its removal and the caveator
does not commence legal proceedings or apply for extension of the caveat within
sixty days of notification of such application.
Section140 (1) of the Act empowers courts
at any time revoke caveat at the instance or the caveatee where the caveator
fails to show reasonable cause why the caveat should not be removed.
Wrongful
lodgment of a caveat may occasion loss the owner and court may order
compensation to such owner by any person who enters a caveat without reasonable
cause.
LEASES
Section 3 (5)of the land Act provides for the mode of creation of a lease. It
may be created by contract i.e. parties mutually agree to creation of a lease
and agree to terms of the lease. Lease may be created also by operation of the
law. This is where the law provides for the holding of such form of tenure by a
prescribed class of people.
For example section. 40(3) of the land Act provides
that Non citizens can only be granted leases for 99 years.
The Act further provides
that the terms and conditions of the lease may be regulated by the law to the
exclusion of any contractual agreement reached between the parties.
The RTA presumes a number
of conditions and covenants between the Lessee and Lessor, though not
specifically agreed upon between the parties.
For example it is presumed
that the Lessee will pay rent reserved by the lease to the times mentioned in
the lease and it is implied that the Lessor may, with or without surveyors or
workers once in every year at a reasonable time of the day enter upon the leased
property and view the state of repair of the property.
See Sec. 101 of RTA to Sec. 105 Provides a number of implied covenants
between Lessor and Lessee. A lease Binds parties to it as well as successors in
title of the parties.
A leasehold tenure is defined as a form of tenure whereby one person called a
Lessor grants to another (Lessee) a right to exclusive possession of land for
usually but not necessarily a period defined directly or indirectly by
reference to a specific date of commencement and a specific date of ending.
The lease is granted,
usually but not necessarily in capital sum known as premium or for both rent
and a premium. And it may be in return for services or may be free for any
required services.
CLASSIFICATION OF LEASES
Leases may be classified
into fixed term and periodic leases.
A fixed term lease is one whose duration is fixed by the parties at commencement of the
lease i.e. It may be a lease for 12 years, 49 years, 100 years etc. such that
upon the expiry of the agreed period, the lease comes to an end.
A periodic lease is one which continuously renews from one term to another e.g. it may
run on a weekly basis, monthly basis or a yearly basis depending on the
Agreement between the parties.
A periodical lease
terminates by proper notice being served by either party as was stated in the
case of Prudential Assurance company Ltd
V London Residuary (1992) 3 All ER 504.
The further classification
of Leases which may not fall under the above mentioned bracket is: A tenancy At
will and a tenancy at Sufferance.
A tenancy at Will was defined in the case of Bweya
Steel Works Ltd V National Insurance Corporation (1985) HCB 58 to mean a
person who enters into possession of the Landlord’s premises as a tenant
without specification of the terms of the tenancy e.g. where x, the owner of
Nabukeera Plaza allows Y to occupy his premises without the specification of
the terms upon which Y is holding the premises. Y becomes a tenant at will and
this means that he is in occupation of the premises at the mercy of x who can terminate the tenancy without giving
Notice to Y.
However should a tenant at
will begin payment of rent on a regular basis e.g. if he pays rent on a monthly
or yearly basis the tenancy becomes a periodic tenancy.
A tenancy at sufferance was defined in the case of Hassan V Mukiibi (1978) HCB 162 where it was stated that a tenancy
at sufferance is implied where a former tenant remains in possession of the
rented premises after the expiry of the period fixed by the owner.
Just like a tenancy at will,
a tenancy at sufferance can be terminated at any time without Notice.
ESSENTIALS OF A LEASE
The common law position
somehow differs in so far as the essential features of a lease are concerned as
opposed to the statutory position. The common law position require 2 essential
features i.e. Certainty of duration and exclusive possession whereas the land
Act cap 227 provides that the lease may not be for a defined period and as such
the only essential feature under the Land Act is exclusive possession.
Exclusive possession connotes non interference from anybody including the land lord. While a
lessee enjoys a right to exclusive possession of a land, a lesser enjoys only a
reversionary interest.
A leaseholder cannot deny
the landlord a right to obtain a mortgage on the same piece of land. The
leaseholder can be paid off and a mortgage can be created or a mortgage can be
created subject to the expiration of the leasehold interest. The leaseholder
can be paid off if the landlord attaches the property, on execution, the
property can be sold off and the Lessee can be paid off while the bank becomes
the new landlord.
There is no law that
obliges a landlord to renew the lease, he can refuse to renew it and no cause
of action can accrue.
RIGHT TO EXCLUSIVE POSSESSION
Section 3(5) of the Land Act defines a Leaseholdtenure as a form of tenure under
which the landlord grants or is deemed to have granted a tenant or lessee
exclusive possession of land.
This is the most essential
feature of a lease and this is what distinguishes a License from a lease.
A grant of exclusive
possession is the right to enjoy the rented premises to the exclusion of anyone
else; the landlord inclusive. Where the landlord interferes either directly or
indirectly, with the enjoyment of the land or rented premises, then no lease
can be talked about because of the violation of the right to exclusive
possession which is mandatory under a leasehold tenure.
To establish whether or not
an occupier enjoys the right to exclusive possession depends on the intention
of the parties. Hence circumstances of a particular case come into play.
The intention of the
parties can objectively be determined from the terms of the agreement between
the parties and the surrounding circumstances.
An express statement purporting
to grant the right to exclusive possession is neither necessary nor conclusive
of the occupier’s legal state. The extent of control over land retained by the
landlord determines whether the occupier has exclusive possession or not.
In the case of Desai V Cooper (1950) KLR 32 it was
stated that if the landlord retains general control over the rented premises it
is strongly believed that there is an interference with the right to exclusive
possession and to that extent the occupier is a mere licensee as opposed to
being a lessee.
In the case of City Council of Kampala V Mukiibi (1967) EA
368 the plaintiff leased certain premises to the defendant without a right
to Sub let without their consent. The defendant allowed same hair dressers to
use the premises paying a daily fee. The plaintiff sought to terminate the
lease on ground that the defendant parted with possession and therefore
breached the tenancy agreement.
The court found that
although the defendant allowed hair dressers to use the premises subject to
payment of a daily fee, he did not give them exclusive possession of the
premises,
Sir UdoUdoma CJ observed that a point of great importance which supports the case for
the defendant is that he never at any time parted with possession of the
premises, he was always in change of the Key, it was his Practice to always
open the premises and admit or let in the hair dressers. At the end of the
business in the evening after collection of his dues he used to lock the
premises and retain the keys. It is clear from evidence that the hair dressers
could only make use of and occupy the premises with permission of the lessee.
In other words the hairdressers could not use the premises in the absence of
the lessee. Hence there was no right to exclusive possession for the hair
dressers. They were not lessees not sub-lessees.
CERTAINITY OF DURATION
At common law a lease must
be for a defined duration i.e. Having a specified date of commencement and
agreed upon date of ending.
However section 3(5)(c) of the land act
provides that a lease is usually but not necessarily for a period defined
directly or indirectly by reference to a specific date of commencement and a
specific date of ending. As such per this provision a lease may be created even
if for a non defined duration.
In the case of Lace V Chantler (1944) 1 All ER 305 the
plaintiff, during the 2nd World war Sub-let a house to the defendant
for the duration of the War. It was held that the lease was void for
uncertainty of duration because at the time the purported lease agreement took
effect, it was not certain for what period it will be in effect.
A number of cases have been
decided in such a way that they attempt to relax the rule that a lease must be
for certain duration.
In the case of Ansalt v Arnold (1888) 2 ALL ER 147
The respondent grated the
appellant a right to occupy his premises rent free for an indefinite period.
The agreement was subject to the provision that the respondent will terminate
the arrangement if they require the land for redevelopment by giving a 3 Months
notice. The notice had to be accompanied by a certificate from a reputable
developer stating that the respondents were ready to develop the land.
The court of Appeal held that the circumstance under which it was granted
could be clearly determined and ascertained i.e. by giving a 3 Months notice of
the termination and notification of the developer.
This case can be
distinguished by the case of PRUDENTIAL
COMPANY LTD V UGANDA RESIDUARY where the classical common law rule of
certainty of duration of a lease was emphasized that a lease must be of a
certain or ascertainable time i.e. the exact time the lease must take effect
must be clearly stated.
N.B The statutory position in Uganda is very clear that a lease may be for a
defined or a non defined time.
As such certainty of
duration is not one of the essential requirements for the validity of a lease.
LICENSES
A license is a permission given by the
occupier of land which allows licensee to do an act which would otherwise be a
trespass e.g. a lodge in a house or permission to till one’s land. For instance
where x has 5 Acres of unutilized land, he authorizes Y to use the same for the
growth of maize, the relationship between x and Y is that of a licensor and a
licensee. No interest is created but a user right
The major difference
between a license and a lease is that whereas a lease creates a right to
exclusive possession, a license does not. The licensee is only given permission
to utilize the premises but may be utilized together with the landlord. For
example the permission to the pleasure boats, one has permission to take a boat
ride in association with others, while not enjoying it to the exclusion of
others.
TYPES OF LICENSES
There are four types of
licence: Bare licence; licence coupled with an interest, a contractual licence
and a licence protected by estoppel.
- Bare licence
A bare licence is a licence
granted without valuable consideration. It is the simplest form of licence. For
example, an invitation of a friend to come over to your house for dinner is a
bare licence.
Because a bare licence is
without consideration, it may be withdrawn at any time by the licensor even in
the middle of the dinner. An action of trespass would lie against a licensee if
he/she remains on the land after the licence is revoked.
- Licence coupled with
an interest.
A licence coupled with an
interest is a licence to enter upon a licensor’s land for the specific purpose
of taking something that forms part of the land or is upon the land.
Such a licence is
irrevocable whilst the grant remains in existence and may be assigned, provided
it is disposed of with the interest to which it is annexed. Where a licence
involves a right to enter and take something that forms part of the land or of
the soil for example minerals, gravel, timber or clay, the grant is a profit prendrei.e. the right to enter
another’s land to take something off the land, such as gravel, sand, things
that grow on the land such as timber and grass.
It also entails the right
to catch fish or hunt wild animals on the land. A profit prendre constitutes an interest in land and it binds
subsequent purchasers of the land to which it applies. This principle was
fortified in the case ofSettlement Fund
Trees V Nurani (1970) EA 562
In contrast, a licence to
take away goods on the licensor’s land does not constitute an interest in land.
The licensee has a right in the chattel which is on the land, and a licence to
enter the land to take away the chattel.
- Contractual licence.
A contractual licence is a
licence granted for a valuable consideration. At common law, a contractual
licence, like any other contract does not bind third parties and its burden
does not run with the land. A contractual licence may be revoked, though, if
revoked in breach of the contract, the licensor would be held liable in
damages. At common law, a contractual licence does not bind third parties even
if they bought the land with notice of the licence. This principle was
illustrated in the case of King V Devid
Allen & Sons billposting ltd (1916)2 AC 54
- Licence protected by
estoppel
A licensor may be estopped
from revoking a licence in certain circumstances. Where Ouma a land owner, by his conduct leads Teki to believe that he would obtain an interest in land, and on
the basis of this belief Teki alters his position to his detriment, equity may
arise in Teki’s favour.
The court may force Ouma to
adhere to his representation by making such order as is appropriate to satisfy the
equity. On the basis of this principle, court may order that a licence that is
revocable at its inception has become irrevocable because of the parties
conduct.
In the case of Inwards V Baker (1965)1 All ER 446 the
plaintiff wanted to buy land on which to build his house, but he could not
afford to buy land. Encouraged by his father, the plaintiff constructed a house
on father’s land and for several years, while his father was alive, he lived in
that house. The father in his will bequeathed the subject land to his widow.
The plaintiff instituted
these proceedings for possession. It was
held that the plaintiff’s father allowed an expectation to be created in
the plaintiff’s mind that the house he built was to be his home, at least for
his life. In light of that equity, the father could not have revoked the
licence nor could his successor in title.
TERMINATION OF A LEASE
- EXPIRY
A lease for a fixed period
of time can expire upon the lapse of the agreed period e.g. if it is a lease
for 45 years, upon he lapse of the 45 years the lease automatically
extinguishes.
- NOTICE
For a fixed term
lease,there may be a provision for termination of the lease upon giving notice
and such provisions must be complied with. The notice must be given by the
lesser himself or his recognized agent and it must be sent to the proper
address.
In Lenon V Ladoem, the property belonged to the wife and the zealous
husband gave notice of termination to the lessee. The lessee contested and the Court held that the notice was
illegitimate since the husband had no authority to give notice on behalf of his
wife.
In Balhir V Peneser [1972]EA 94, a lawyer gave notice on behalf of his client
to vacate and deliver possession of the front portion of the estate. The tenant
contended that this was not a termination due to uncertainty.
Court held that a liberal interpretation must be given to the notice so that even
if it is inaccurate, effect is given to it as if it were clear to the
recipient.
- FORFEITURE
Forfeiture is a situation
where the landlord is entitled to re-enter the ranted premises and put an end
to the lease, where there has been breach by the tenant of conditions of the
lease even if the lease does not contain an express clause for forfeiture.
However before the landlord
re-enters the land, he must make a formal demand unless if the leasehold
agreement provides to the contrary. It has to be reasonable notice and it will
largely depend on circumstances of the case. E.g. parties may agree on the type
and mode of notice.
For example a clause in a leasehold agreement may provide that a lease may be
forfeited if the rent is in arrears for specified period i.e. Default for 6
months the lesser has a right to re-enter the premises.
The landlord may re-enter
the premises either peacefully or by getting a court order for possession. It
is not advisable to re-enter dwelling premises without proceeding to Court.
Section 25 of the Judicature Act provides for relief from re-entry or forfeiture
for nonpayment of rent. It provides that where a Lessor is proceeding by action
or otherwise to enforce a right of re-entry or forfeiture for nonpayment of
rent, the Lessee may apply to court for relief.
Read Dec. 25 of the Judicature Act.
- SURRENDER
This is where before the
expiration of the lease, the lessee surrenders his lease to the landlord who,
if accepts the surrender, the lease merges with reversion and it is
extinguished. For example if x is the owner of mailo land at Kibuli, creates a
leasehold interest in favour of Y, if Y writes to x showing an intention to
give up the leasehold interest and x accepts, the leasehold interest is merged
with x ‘s reversion.
Surrender may be by express
agreement, operation of the law or statutory provision. A lease is surrendered
by operation of the law if a lesser grants and the lessee accepts a fresh lease
commencing before the current lease expires. A lease is also surrendered by
operation of the law where the tenant abandons the premises and the lessee
re-enters.
Read Sec. 108 of RTA.
- MERGER
Merger occurs where the
tenant, in addition to holding his leasehold interest acquire a reversionary
interest as well e.g. where x, the registered proprietor of Mailo land at
Kibuli leases his land to Y for a period of 45 years.
Before the Lapse of Y’s
Lease, X agrees to sell his reversionary interest to Y. in this case, Y’s
leasehold interest is terminated by the merger.
NB: For a merger to be effective, the lease and the reversion must be vested
in the same person in the same right.
MORTGAGE
A mortgage was described as
a conveyance of land or an assignment of chattels as security for the payment
of a debt or a discharge of some other obligation for which it is given, as was
described in the case of SANTTLEY V
WILDE (1899) 2 Ch. 479
A mortgage may further be defined as a conveyance of a legal or an equitable interest
in property with a provision for redemption. Redemption means getting back
property given as security
A mortgage in simple terms
is a transaction whereby an interest in land is given as security for the
repayment of a loan. The borrower is referred to as mortgager whereas the
lender is referred to as the mortgagee e.g. where x, in a dire need of money
gives the land title to the bank as security for repayment of the loan, in this
case, x is the mortgager and equity bank is the mortgagee.
The deposit of the title
deed by x is not a transfer for repayment of the loan it is just security for
repayment of the loan and upon discharge of the loan, x is entitled to redeem
his property.
A MORTGAGE DEED NOT TO CREATE A TRANSFER OF AN INTEREST IN LAND.
Section 116 of RTA Cap. 230 expressly provides that a mortgage created under
the Act takes effect as a security but not as transfer of the mortgaged
property.
It provides that a mortgage
created under this Act when registered as herein before provided, has effect as
a security but shall not operate as a transfer of the land thereby mortgaged
and in case default is made in payment of the principle sum and interest
secured or any part thereof or in the performance or observance of any covenant
expressed in the mortgage or implied in the mortgage and the default is
continued for one month or for any such other period as expressly fixed, the
mortgagee or his or her transferees may serve on the mortgager or his
transferees a notice in writing to pay the money owing on the mortgage or
perform and observe the covenant as the case may be.
MORTGAGE IS NOT DEFAULT IN LAND BUT SECURITY FOR REPAYMENT OF LOAN.
Where there is default in
repayment or breach, notice must be given to the mortgager. Also default must
have continued for one month.
In the case of RE FOREST TRUSTEES EXECUTERS AND AGENCY CO.
LTD V ANSON (1953) K.L.R 246
Herring C.J described the
effect of a mortgage that a mortgage transfers on the creditor merely a group
of powers to secure the money lent. The debtor or mortgager remains the owner
of the land subject to fulfillment of his or her obligation under the mortgage
agreement. I.e. mortgage does not transfer land but confers security to
guarantee the monies lent.
Although a mortgage created
under the RTA does not transfer ownership of the land to the mortgagee it
creates a distinct interest in the mortgaged land and whoever deals with the
land does so subject to the mortgage as an exception to the principle of
indefeasibility of title.
CREATION OF MORTGAGES
Sec. 115 of RTA empowers the proprietor of land registered under it to create a
mortgage by signing a mortgage instrument in the prescribed form in the 11th
schedule to the Act.
Upon registration of the
instrument, the land becomes liable as security in the manner set forth in the
instrument.
The mortgage is protected
by the RTA and whoever deals with the land does so, subject to the mortgage.
This is an exception to the principle of indefeasibility of title.
CREATION OF A LEGAL MORTGAGE
A mortgage is defined under
section 1 of the Mortgage Act to
mean any mortgage, a charge, a debenture, loan agreement or other encumbrance,
legal or equitable which is registered under the Act.
Creation of a legal
mortgage is provide for under s. 115 of
the RTA which provides that the proprietor of any land under the operation
of the RTA may mortgage the land by signing a mortgage deed in the form in the
11th schedule to the Act. Upon
registration of the instrument, a legal mortgage is created
When the registered
proprietor does deposit his certificate of title with intention to create
security, accompanied by a memorandum in writing, if he goes ahead to register
the instrument, it becomes a legal mortgage.
A legal mortgage is
protected by the RTA which provides that whoever deals with the land subject to
a mortgage, he takes it subject to that mortgage as an exception to the
principle of indefeasibility of title.
This is provided under Sec. 176 (9) of RTA which provides that
the registered proprietor is protected against ejectment except for a number of
cases inter alia the case of a mortgagee as against the mortgager in default.
In equity it is not only
the legal mortgage that is considered but an equitable mortgage is also
protected under equitable intervention
CREATION OF AN EQUITABLE
MORTGAGE
In equity a contract to
create a mortgage was treated as a promise by the debtor to execute a legal
mortgage when called upon to do so since equity regards as done that which
ought to be done. Such an agreement creates an equitable mortgage.
For example under the
doctrine of equity, a deposit of title deed by way of security; whether or not
accompanied by a memorandum was regarded as an agreement to execute a legal
mortgage and carried as an equitable mortgage.
Sec. 129 of the RTA provides the mode of creation of an equitable mortgage by providing
that an equitable mortgage on the land may be made by deposit by the registered
proprietor of his or her certificate of title with intent to create security
thereon, whether accompanied or not by a note or a memorandum of deposit.
An equitable mortgage just
like a legal mortgage creates an interest in land.
An equitable mortgage is
registered by causing a caveat to be entered in accordance with section 139 of RTA.
QN: Can a mortgage be created over land which is owned under customary
tenure?
Section 8 (2) of the land Act provides that a holder of a customary certificate
of ownership of land has a right to mortgage his land.
However section1 (6) of the Mortgage Act in its
illustrative definition of a mortgage talks of a mortgage in land registered
under the RTA and the question to be answered
is whether a holder of a mortgage in respect to customary land goes
without any remedies.
The holder of such a
mortgage cannot claim remedies provided under the Mortgage Act and the RTA. He
can seek recourse to common law principles coupled with equitable intervention.
In the case of MatambulireV.Y.Kimera (1975) HCB 150 it
involved mortgage of a Kibanja and the High court held that where the mortgaged
land was not registered under the RTA, the applicable law was common law and
doctrines of equity.
REMEDIES OF A MORTGAGEE
A mortgagee has a number of
remedies where there is breach of the covenants under the mortgage Agreement.
These remedies are
cumulative. This means that the mortgagee is free to persue of the remedies or
all of them. These remedies include;
- Mortgagee can sue for breach of covenant
- Mortgagee can take possession of the mortgaged land
- Mortgagee can sale otherwise than by foreclosure
- The mortgagee can appoint a receiver
ACTION FOR BREACH OF COVENANT
The RTA implies certain
covenants against the mortgager in every mortgage made under the Act (RTA)
These
covenants include;
(a) Payment of the mortgage
debt
(b) Maintenance of the mortgage
property
Where there is breach of
those covenants, the mortgagee can bring an action for breach of contract and
this is regulated by the law of contract.
Where an action for breach
of personal covenant is successful against the mortgager, the mortgagee may
enforce the judgment against the mortgager’s assets even though they are not
part of the mortgage.
APPOINTMENT OF A RECEIVER
Section 3 of the Mortgage Act provides that a mortgagee can appoint a receiver
to enable him reduce or clear the mortgage debt. This applies where the
mortgaged land has some income that can be obtained from it.
A receiver is appointed to
receive income out of the mortgaged land and is under an obligation to use the
proceeds from the land to clear the mortgage debt.
A receiver may still be
under an obligation to manage the land by for example making the necessary
repairs or improving the land where he is directed in writing by the mortgagee
with the consent of the mortgager or with the approval of court.
The receiver may be
appointed upon court order where a mortgagee specifically applies to court for
the appointment. There are instances where the mortgagee may appoint a receiver
without recourse to court if the mortgage agreement expressly reserves the
power to do so to the mortgagee.
In the
case of Grindleys bank ltd V Edward Boaz
SCCA No. 23 of 1992 it was stressed that the power to appoint a receiver
does not a rise unless the mortgager is in default for a period of at least one
month and fails to pay following a written demand notice. In Sec. 116 of the
Registration of Titles Act makes it mandatory for the service of a one month
notice to the mortgager and the case ofEpainetoMubiru
V Uganda credit and savings bank (1978) HCB 109 it was clearly stated that
the demand notice must be served personally to the mortgager.
NB: Here the mortgage debt is payable on demand, the
written demand for payment is equivalent to the statutory notice.
Primarily
a receiver is employed for the security of the mortgagee. He or she directly
receives proceeds from the land instead of the mortgager. After payment of
taxes and other on goings relating to the mortgaged land, the Receiver would
pay the balance to the mortgagee.
From the
legal point of view, the main advantage of the mortgagee appointing a receiver
is that although he does the appointment of the receiver to protect his or her
interest, the receiver acts as an agent of the mortgager, irrespective of any
agreement to the contrary.
The
effect of this is that the mortgagee is not liable to the mortgager or
secondary mortgagees for the receiver’s negligence or willful misconduct. This
makes the appointment of a receiver mere advantageous as opposed to entering
into possession. The only drawback is that the receiver has to be paid a
commission for his/her work out of the income from the mortgaged property.
NB. The receiver’s remuneration has priority over any
other payment due from the income collected.
POWER OF SALE
This is
the most important and common remedy for realization of security under the
mortgage agreement.
The right
to sell may be exercises without recourse to court where such right is
expressly reserved in the mortgage agreement. If the right is not provided for
under the agreement, the sale must be conducted with sanction of court as
provided under sec.
10 of the Mortgage
Act.
The
Mortgage Act provides that if a mortgage agreement allows the mortgagee to sell
land without reference to court, the sale must be conducted by Public Auction unless
the mortgager and subsequent mortgagees, if any consent to sell by private
treaty.
The power
of sale a rises if the mortgager defaults in payment of the mortgage debt or
part of it for a continuous period of one month or such other period as may be stipulated
in the mortgage agreement and the mortgager fails to pay after a written demand
notice being served on him.
Where
there is a provision in the mortgage agreement that the loan is payable on
demand, the power of sale arises once the demand is made and the mortgager
fails to pay.
In the
case of Barclays bank Ltd V KatendaLuttu
SC 22 of 1993 the mortgage agreement
provided that the debt is payable on demand and that in case of default, the
mortgagee has the right to sell the land without court order. He defaulted in
payment of the debt. The court further held that if the mortgagee has the power
to sell without court order, the court has no power to order some other remedy
or postpone the sale. The only way the mortgager could redeem his land is to pay
the loan.
The
mortgager’s right to redeem his land is confined to repayment of the loan and
if the mortgagee has the power to sell without the court ordering foreclosure,
nothing can stop the sale.
SALE BY FORECLOSURE
Where the
mortgage agreement does not power the mortgagee to sell without recourse to
court, the mortgagee must seek a court order before he goes on with the sale of
the mortgage property.
Sec. 8 of
the mortgage act provides that a mortgagee may apply to court to foreclose the
mortgager’s right to redeem anytime after breach of the covenant to pay.
Unless
the debt is payable on demand, an application for foreclosure cannot be
entertained UNLESS The mortgager has defaulted to pay for at least one month
and a written demand notice has been served on him (Section 116 RTA)
In the
case of SAJJABI V KLAMALA and ANOR
(1952) 22 EACA 71 it was stated that when the application is made, the
court will assess the amount due and fix a date which must not exceed a period
of 6 months from the date of default, within which payment is to be made. If
the mortgager fails to pay within the prescribed time, the court must order the
mortgager not to redeem the mortgaged property and therefore the mortgager’s
right to redeem is foreclosed and the mortgagee granted the right to sell the
property. Upon grant of a foreclosure order the sale must be conducted in
accordance with the provisions of the mortgage Act. Sec. 9 of the mortgagee Act provides that the sale must be by
Public auction unless the mortgage at the date of the foreclosure agree to a
sale by a private treaty and the court approves the terms of the sale.
NB: The sale must not take place until the expiry of at
the 30 days from the date of the foreclosure order as provided under Sec. 9 (2) of the Mortgage Act.
NB: Where a foreclosure order has been made and the 30
days have lapsed the mortgager loses the right to redeem their property unless
if the mortgagee voluntarily agrees.
Sec. 9(3)
of the Mortgage Act requires the mortgagee to give reasonable notice not less
than 30 days, to the mortgager prior to the sale. The notice must specify the
date and place of sale to the mortgager and all subsequent mortgagees.
The
object of this appears to give interested parties a chance to attend, observe
and participate in the bidding and to seek an injunction against the sale in
case any thing has been done in an improper way.
Failure
to notify the mortgager or subsequent mortgagees does not render the sale void.
DUTIES OF THE SELLER
The
mortgagee is given the power of sale to realize his or her security in the
event of default. So once the power of sale has accrued, the mortgagee is
entitled to use it for his or her benefit at the time of his choice.
A number
of cases have provided that in the exercise of this power the mortgagee does
not act as a trustee of the mortgager. As such the mortgagee is entitled to
look out for his or her interest and where his interests conflict with of those
of the mortgager, his interests will take priority.
In the
case of Cuckmere brick co. ltd v mutual
finance co. ltd (1971)Ch. 949 the mortgage property was allegedly sold
below the market value at a badly attended auction. In an action for damages
against the mortgagee, counsel for the mortgager submitted that the sale in the
circumstances undervalued the mortgager’s property. Justice salmon stated that the mortgagee has no duty to speculate
as to the most appropriate time to sell. That it does not matter that by
waiting, a higher price could be obtained. The mortgagee has the right to
realize his security by turning it into money when he likes.
THE REMENDIES OF EQUITABLE MORTGAGEES
The
remedies available to an equitable mortgagee may as well be similar to these
available to a legal mortgagee.
The only
difference is that the equitable mortgagee can only realise his remedies upon a
court order. And the remedies available are discretionary.
In the
case ofBaclay’s bank co. ltd v North
cote and anorcs 1467 of 1974 (unreported)Senkandi J. observed that while
sec. 138 of the RTA provides for creation of equitable mortgagees by deposit of
title deeds as security, neither the RTA nor the Mortgage Act make provision
for the remedies available to an equitable mortgagee. Accordingly his honor
felt compelled to look elsewhere for such remedies.
The issue
has been covered in the case of Barclays
bank v Gulu millers ltd (1959) EA 540 where it was held that it would
appear that the difference between an equitable mortgage and a legal mortgage
as regards mortgagees is that whereas a legal mortgagee may realize his security
under the mortgager by exercising most of the statutory powers conferred upon
him without recourse to the courts, an equitable mortgagee must of necessity
apply to the court for exercise of any of these powers.
Justice Sekandi further stated that the appropriate procedure to
follow for an equitable mortgagee seeking to realize his security was in the
first instance to sue the mortgager and obtain an order for an account of the
outstanding mortgage debt, then he should seek a declaration that he is entitled
to a charge on the land comprised in the certificate of title referred to in
the memorandum of deposit to secure the amount outstanding, the interests and
costs. Thereafter the declaration should be followed by an application that the
mortgagee may realize his security by pursuing any or all the remedies provided
for in the mortgage act.
The law
protects a mortgager through providing him with right of redemption.
EQUITY’S PROTECTION OF THE
MOTGAGOR
Equity’s
protection of the mortgager is summed up in the maxim, once a mortgage always a mortgage. The test for a mortgage is
substance and not form. This means that whether a transaction is a mortgage or
some other transaction, it is a question of substance and not form. As such if
parties enter into a contract of sale of land but which is in essence mortgage
equity will regard it as a mortgage and all the consequence of a mortgage will
follow.
NO DAYS ON THE EQUITY OF REDEMPTION
This
means that the court will not permit any attempt by the mortgagee to exclude
the mortgager’s right to redeem his property.
In the
case of Samuel V Jarrah timber and wood
paying corporation (1904) ac 324 it was clearly stated that:
“Once a
mortgage always a mortgage means that no contract between a mortgager and a
mortgagee made at the time of creation of a mortgage prevents the mortgager
from getting back his security. Any bargain which has that effect is invalid
and inconsistent with transaction of a mortgage”.
Equity’s
intervention is premised on the fact that mortgagers are usually in a dire need
of money who may willingly accept whatever terms creditors may impact against
them e.g. in the case ofMatambulire V
YozefuKimera CA 37 of 1972 (Unreported) the plaintiff, in desperation to go
on pilgrimage to Mecca mortgaged his land to the defendant on condition that if
the plaintiff failed to pay the loan within the specified period, the defendant
would become the absolute owner of the land. After the contractual date of
payment had expired the defendant claimed ownership of the land and rejected
the plaintiff’s subsequent attempt to redeem the same. It was held that the plaintiff was entitled to
redeem his land until his right to do so was foreclosed by a court order or the
land was disposed of in a mortgage sale.
In the
case of GA Investments property ltd v
Standard insurance Co. ltd (1964) war 264 it was stated that a clause in a
mortgage agreement that gives a mortgagee an option to purchase the mortgaged
property is a clog because it deprives the mortgager of his right to redeem.
In the
case of Samuel v Jarrah timber and wood
paying corporation it was stated that it is not a clog if the option is
granted in a separate agreement.
A clause
in a mortgage contract may provide that the mortgager shall not redeem earlier
than the agreed upon date e.g. if the money is to be paid in a period of ten
years, and the mortgager wishes to pay off the loan before the expiry of the
ten years, the question is whether such a clause is a clog on the equity of
redemption.
In the
case of Fair clogh v Swans brewery co.
ltd (1912) ac 565, the applicant/mortgager trade hotel for a period of 17
years. He a lease to the respondent should not redeem earlier than 6 weeks
before his lease had expired and that during the continuance of the mortgage
only beer brewed by the plaintiff should be sold on the premises. The
defendants brought an early redemption so that he could be released from the
restriction to sell only the plaintiff’s beer.
The issue
was whether a clause postponing redemption was a clog on the equity of
redemption. Privy Council held that the clause was a clog because the right to
redeem was illusory or valueless.
EXPROPRIATED PROPERTIES
In August 1972, president
id Amin announced an economic war which realized the expulsion Asians from
Uganda. A number of properties belonging to these Asians were expropriated from
the government and placed under the management of the departed Asians property
custodian Board.
After idi Amin’s
dictatorial regime, a number of legislations were enacted under which most of
the properties belonging to the former Asians were either returned to the
former owners or sold off.
ASIANS ECONOMIC DORMINANCE
The Asians first made
serious presence in Uganda in the aftermath of the construction of the Uganda
railway where a number of them worked as laborers. After the construction of
the railway, most of them got devoted to a life of commerce.
By the mid 1940s, the
Asians had established themselves as a dominant force in the retail trade,
cotton ginning, produce buying, transportation, and import and export trade.
All the major towns including trading centers had Asians as the dominant
trading community and real property owners.
The Africans largely dealt in
peasant farming and laboring on plantations, factories, shops owned by the
Asians and Europeans. There was no significant African presence in commerce or
industry.
Overtime, discontent grew
among the African communities and they started agitating for a more significant
share in the economy in terms of cotton ginning, coffee curing, marketing of
their agricultural produce and participation in commerce. They started
organizing strikes and trade boy cots.
The colonial government
responded to these agitations by several measures like the setting up of
corporative movements to enable Africans engage in organized production and
marketing their produce e.g. in 1949 the LINT MARKETING BOARD was set up to
handle all cotton exports and to ensure a more descent return to the farmers.
In 1950, the Uganda credit
and savings bank was setup with the object of facilitating loans to Africans in
furtherance of agriculture, commerce, building and co-operative societies.
Other measures included the
setting up of the Uganda development corporation in 1952 to facilitate the
industrial and economic development in Uganda.
A provision was further
made under the Acquisition of Ginneries
Ordinance for the government to compulsorily acquire privately owned
ginneries and sell them to the Africans.
To accelerate urban
development, a National Housing Corporation was set up in 1964 to undertake the
development, building and management of housing estates. Special programmes
were initiated especially in Kampala, Ntinda, Naguru, Kiswa, Nakawa etc
Agreements were entered
into for the sale of houses upon deferred terms of payment for a period not
exceeding 20 years or for grant of leases for such houses.
All the aforegoing measures
made tremendous contribution to the integration of Africans in the economy but
the dominance of Asians in commerce and industry still remained. It remained a
contentious political issue in the country and between Uganda and great Britain
since most of the Asians were British citizens.
In 1969 a Trade Licensing
Act was enacted with one of its objectives being to limit the operational area
of the non citizen traders. The minister was empowered from time to time by
statutory order to declare any trading centre to be an area in which a person
who is not a citizen of Uganda is prohibited from trading.
In pursuance of these
powers a number of statutory orders were made to prohibit non citizens from
trading in most rural trading centers. The Act further made it illegal for any
person who is not a citizen of Uganda to trade outside any city, municipality
or town or to trade in prohibited goods. This law put pressure on the Asian
Trading community in the city or large urban trading areas.
By 1969 there were open
political calls to Britain to take its citizens. So this explains the expulsion
of the Asians by President Idi Amin in 1972.
Thousand of properties
belonging to the Asians were expropriated by government after the expulsion.
However after Amin’s fall a number of legislations were enacted under which
most of the properties were either returned to the former owners or sold off.
According to section 2 (1) of the Assets of departed
Asians decree of 1973 which provided that every departing Asian leaving
Uganda had to declare his assets in forms PRO1 and PRO 2 specified in the schedule
to the decree.
The departing party had to
state all his assets and liabilities including these relations to any business
interest and give the minister such other particulars and information relating
to such assets and liabilities as the minister would require.
According to sec. 4(1), any
assets declared by the departing Asian who failed to prove his citizenship at
the time and in a specified manner, it automatically vested in the government
without any further authority. In other words sec, 4 automatically transferred
land to the government. This means that there was no need for government being
entered on the certificate of title before claiming ownership of such property.
All such assets vested in
the government and the decree transferred them to the Departed Asians Property Custodian Board.
The Board in this case had
the power to take over and manage assets transferred to it by virtue of sec. 13
of the decree. The Board was further obliged to discharge liabilities on the
property and it could sell or otherwise deal with such assets in the same way
as a departed Asian could.
However the Expropriated Properties Act of 1982,
following agitation internationally and nationally was enacted to provide for
the transfer of properties and businesses acquired or otherwise expropriated
during the military regime to the ministry of finance and to make provision for
the return to former owners or disposal of the same by government or to provide
for other matters connected to that property like claims for interest.
Section 19(a) of the Expropriated Properties Act 1982 defined expropriated property
to include any property or business which had vested in the government and
transferred to the departed Asians custodian board. In the same Act, the
property shall from the commencement of the Act remain vested in the government
and managed by the ministry of finance.
To note further, by virtue
of section 19(2) of the Act any
purchase, grant of or dealing of whatever kind in such property or business
were nullified.
In the case of Victoria tea estates Ltd V James Bbemba Civil Appeal 49
of 1996 it was
held that once it is proved that property was expropriated it becomes the
statutory property of government and any dealings in it are nullified.
Under this law the minister
was empowered to manage any property or business vested in government.
Section 3 of the Act provided that any former owner of property or business vested in the
government could within 90 days of commencement of the Act apply to the
minister in writing for the repossession of the property or business.
Under Section 7 of the Act the property could not be sold or otherwise
dealt with without the written consent of the minister or after 5 years from
the date of the transfer.
EXPROPRIATION UNDER THE EXPROPRIATED PROPERTIEES
ACT CAP 87
The Expropriated Properties
Act (EPA) Cap 87 makes provision for the following properties to remain vested
in government and to be managed by the ministry of finance. Section 2 of the
EPA gives a list of these properties and they include.
a)
Properties acquired by the government under the properties and Business
acquisition decree of 1975.
b)
Properties which were in any other way appropriated or taken by the
military regime, save property which had been affect by the previsions of the repealed
National Trust Decree of 1971.
REVESTING OF PROPERTY IN THE GOVERNMENT AND NULLIFICATION OF DEALINGS
The departed Asians decree
vested property of the departed Asians under the control of the departed Asians
custodian Board. However the expropriated properties Act vested the property in
the ministry of finance which was to manage it on behalf of the government.
As such sec. 2 (2) of EPA
Cap 87 provided that all purchases, transfers, grants or other dealings of
whatever kind of such properties were nullified.
The rationale for this
nullification was to ensure that all the expropriated properties remained
vested in government and to ensure that they could be dealt with under the
Expropriated Properties Act.
Such expired or terminated
leases were deemed to have continued in force and to continue until the
property had been dealt with under the expropriated properties Act.
The regulations provided
that leases were deemed to continue after the property was dealt with under the
Act for a further period of 2 years or to a period equivalent to the unexpired
period or lease at the time of expropriation, whichever was the greater period.
This nullification
interfered with a number of transactions which had been concluded by the
departed Asians property custodian Board in respect of these properties. As
such any purchases, leases on such property were nullified.
Re-entries by lessers on
expropriated leasers were also nullified and such forfeited leases reinstated
to be dealt with under the act.
The nullification was
intended to be retrospective i.e. It affected these dealings that had taken
place before the Expropriated Properties Act 1982. This principle was expounded
in the case of Victoria Tea estates Ltd
V James Bbemba and Amor civil Appeal No. 49 of 1996. The court of appeal
reconsidered the true import of sec 1(1) and 9(2) of the EPA in view of the
purported re-entry by a lesser registered on 29th may 1991 and a
certificate of repossession issued in respect of the same property on 28th
November 1981. The court held that since the government in 1973 expropriated
the suit property, it followed that the Act of 1982 applied to it and the suit
property became the statutory property of the government until the minister of
finance dealt with the property as provided for by Act No. 19 of 1982.
Any other purported dealing
with such property were null and void. The minister would deal with the
expropriated property in a number of ways e.g. he would return it to the former
owners or government if interested, would sell or dispose of the property in
any other manner.
RE-POSSESSION BY FORMER OWNERS
Section 4 of the EPA Cap. 87 authorizedformer owners of expropriated property to
apply to the minister in a prescribed form to repossess their property within
90 days of the commencement of the Act.
The minister could issue a
certificate of repossession if satisfied with the merits of the application and
the property is one in which government did not wish to participate (sec 6 EPA)
Section 7 further provides
that a certificate of repossession is sufficient authority for the chief
registration of Titles to transfer title to the former owners.
A certificate authorizing
repossession is in accordance with the 2nd schedule of thee
expropriated properties (repossession and disposal) regulations of 1983.
JOINT VENTURE BETWEEN THE GOVERNMENT AND THE FORMER OWNER
Section 5 (1) of the EPA
provides that where government is interested in property which a former owner
has applied to repossess the minister notifies the applicant of the
government’s interest, the government invites the former owner to enter into a
joint venture company. It is incorporated and the minister issues a certificate
transferring the property or business to the company in accordance with sec.
5(2) of EPA.
SALE BY THE MINISTER
The minister, under section
6 may make an order that the property be sold in the following circumstances.
1. Where the former owner
fails to apply for repossession within the prescribed time.
2. Where the minister is not
satisfied with the merits of an application
3. Where negotiations for a
joint venture fail.
4. Where a former owner fails
to physically return and reside in Uganda within a period of 120 day from the
date of repossession.
DISPOSAL IN ANY OTHER MANNER
Section 9 (1) of EPA
provides that the minister may order any other form of disposal of the
expropriated property depending on the circumstances of the property at hand
e.g. he may order that the property be subdivided into separate titles; each to
be leased to a particular person. He may revert the property to the planning
authority for re-planning and order the authority to compensate the former
owner.
In other instances the
minister may order the resale of the property to purchasers whose purchases had
been nullified.
The Expropriated Properties Act provides for compensation under certain
circumstances.
Section 10(2) provides that
where the property is returned to a former owner or transferred to a joint
venture company or retained by the government, the former owner of the company
or the government is obliged to pay for the value of any improvements of such
property to the person who effected such improvements.
Section 10 (3) further
provides that where the property has been transferred to any person for value
and it is subsequently returned to a former owner or otherwise dealt with under
the Act, the government is liable to pay compensation to such person.
The compensation payable to
such a person is the purchase price paid for the property less the income
derived or which ought to have been derived from the property on the date of
the transfer.
APPEALS
Section 11 of the EPA
provides that persons aggrieved by any decisions made by the minister under the
Act have a right to appeal to the high court against the minister’s decision
from the date of communication of the decision.
NB
Sec. 14 of the EPA provides
that a person has no right to sue the government for damages arising from any
loss, damage, waste or the deterioration of any property or business which
occurred before the coming into force of the Act.
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