The Court of Appeal affirms that while illegality can override pleadings, it must still be pleaded or supported by evidence if it involves mixed questions of law and fact
- Waboga David
- Jun 13
- 4 min read
Introduction
This case arose from a dispute concerning the alleged wrongful sale of mortgaged property by a financial institution, Stanbic Bank Uganda Limited, to a third-party purchaser, Julius Baale. The appellant, Total Seeta Service Station, challenged the legality of the mortgage and the lawfulness of the sale on grounds including invalidity of documentation, procedural irregularities, and alleged fraud.
The Court of Appeal was to determine whether these grounds had merit and whether the trial court had properly evaluated the evidence.
Background
Total Seeta Service Station filed a suit in the High Court challenging the sale of its mortgaged property by Stanbic Bank to Julius Baale. The trial court dismissed the suit, prompting the appeal.
On appeal, two main grounds were raised:
That the learned trial Judge erred in law and fact when he dismissed submissions that the mortgage was invalid;
That the trial Judge failed to properly evaluate the evidence, resulting in an erroneous decision.
Ground 1: Alleged Invalidity of the Mortgage
Appellant’s Arguments:
The appellant contended that the mortgage was invalid due to non-compliance with Sections 132, 147, and 148 of the Registration of Titles Act (RTA).
It was argued that the bank manager’s signature was not in Latin script, the signatory’s name and capacity (Fred Mbabazi) were not disclosed, and no company seal was affixed.
Citing precedents of Fredrick J.K. Zaabwe v Orient Bank Ltd and Makula International v Cardinal Nsubuga for the principle that courts must not enforce an illegality once brought to their attention.
Respondents’ Arguments
Both respondents submitted that the validity of the mortgage was never pleaded or raised as an issue in the joint scheduling memorandum before the High Court.
The 1st respondent argued that to consider this unpleaded issue on appeal would breach the right to a fair hearing under Article 28(1) of the Constitution.
The 2nd respondent added that, in any event, the manner of execution did not go to the substance of the document, and the deed was valid.
Court’s Analysis and Decision
The Court held that parties are bound by their pleadings, and the issue of the mortgage’s validity was never pleaded or agreed as an issue during trial.
Citing Fa Min v Belex Tours and Tanganyika Farmers Association Ltd v Unyamwezi Development Corporation, the Court emphasised that courts should not entertain new issues on appeal unless full justice can be assured.
The appellate court emphasized that the validity of the mortgage was a mixed issue of law and fact, requiring evidence which had not been adduced.
Ground 1 was struck out for raising an unpleaded issue and lacking evidentiary foundation.
Ground 2: Alleged Failure to Properly Evaluate the Evidence
Appellant’s Arguments
The appellant accused the trial court of failing to conduct an exhaustive re-evaluation of the evidence, particularly regarding:
Whether the sale was in good faith,
Whether the statutory notices under Sections 116 and 117 RTA were issued,
The adequacy of the purchase price,
Alleged fraudulent conduct by the bank and auctioneer.
It was further argued that the sale contradicted the auctioneer’s testimony and was executed without notice to the mortgagor, tenants in occupation, or independent valuation.
Citing Moses Jim Jjagwe v Standard Chartered Bank and Cuckmere Brick Co. v Mutual Finance, on the duty of mortgagees to act in good faith and obtain market value.
Respondents’ Arguments:
Both respondents challenged the formulation of Ground 2 as vague, overly broad, and non-compliant with Rule 86(1) of the Judicature (Court of Appeal Rules) Directions, which requires specificity and conciseness in appellate pleadings.
They cited Agatha Kalanzi v Milly Katongole, Arim Felix Clive v Stanbic Bank, and Celtel Uganda Ltd v Karungi Susan to argue that such general grounds must be struck out.
Court’s Analysis and Decision
The Court found Ground 2 to be imprecise, lacking in clarity, and offending Rule 86(1).
Like in Celtel Uganda Ltd v Karungi Susan, the ground merely alleged a failure to evaluate evidence without identifying the specific evidence wrongly considered or ignored.
The Court reiterated that appellate grounds must be framed to enable respondents to know the exact complaint and to prepare their response.
Ground 2 was struck out as being vague and procedurally defective.
Conclusion
The Court of Appeal dismissed the appeal in its entirety, with costs awarded to the respondents. The appellate court emphasized adherence to pleading principles, procedural propriety, and the right to a fair hearing, which restricts appellate courts from addressing unpleaded and unsubstantiated issues.
Key Takeaways
Parties are strictly bound by their pleadings, and courts cannot adjudicate on issues that were not raised or agreed upon at trial.
While illegality can override pleadings, it must still be pleaded or supported by evidence if it involves mixed questions of law and fact.
Grounds must be specific and detailed in line with Rule 86(1); generalised complaints are inadmissible.
Even when a party alleges illegality or fraud, it must not be determined without allowing the affected party to respond.
The court reiterated that a mortgagee must act in good faith, serve proper notices, and obtain fair value, though in this case those issues were not substantively considered due to pleading defects.
Read the full case below
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