Lwanga v Mubiru and 3 Others (Civil Appeal 18 of 2022): A Legal Analysis and the Significance of Bonafide Purchasers

The case of Lwanga v Mubiru and Others (Civil Appeal 18 of 2022) [2024] UGSC 7, by the Ugandan Supreme Court, holds notable significance in the realm of Uganda's land transactions. It reaffirms the doctrine of bonafide purchaser for value without notice. As it is trite law, a person who relies on the defense of bonafide purchaser for value without notice under section 181 of the RTA Cap 230 has the burden to prove that he or she acted in good faith.

The Coram, comprising Mwondha, Tibatemwa-Ekirikibinza, Tuhaise, Musoke, Musota,

JJ.SC presided over the matter, with Counsel Bernard Mutyaba & Alex Kamukama representing the appellant, and Counsel Kigenyi Emmanuel representing the respondent. The decision was reached on February 23, 2024.

Justice Mwonda JSC gave the lead judgement which was concurred by Justice Lilian Titbatemwa-Ekirikubinza

Case Background. The dispute revolved around land block 396, plot 37 at Bweya Kajjansi Busiro, initially owned by Leonard Kizito and later bequeathed to the respondents by Emanuel Mubiru, the father of the respondents who were minors at the time. Upon reaching maturity, the respondents attempted to register the land but discovered that Kizito had registered it in 1990 and subsequently transferred it to the appellant. The respondents lodged a caveat against the registration. Primary Issue. The primary contention in the case was whether the appellant was a bona fide purchaser for value without notice of any defects in the title to the property. Decision All justices concurred with the Court of Appeal's ruling in favor of the appellant, dismissing the suit with costs. Who is a Bonafide Purchaser Without Notice? Mwondah, JSC., at page 15 had this to say

I have to state that the principle of bonafide purchaser for value without notice is a general defence in any transaction of sale or purchase of any property particularly land. The definition of bonafide purchaser for value without notice is “that buyer who has paid a stated price for the property without knowledge of existing or prior claims or prior equitable interest”.  Bonafide is a Latin word meaning good faith, without fraud, sincere, genuine. See (Black's Law Dictionary 9th Edn Page 199)

A bonafide purchaser is a buyer who buys without constructive or actual notice of any defects or in firmities against the seller’’s title. See (page 1355 Black's Law Dictionary 9th Edn.

It is trite law that a person who relies on the defence of bonaflde purchaser for value without notice under section 181 of Registration of Titles Act has the burden to prove he or she acted in good faith.

The purchaser must have given due consideration and purchased the land without notice of the fraud. Such notice cover both actual and constructive notice of fraud. In the case of Jones v. Smith [1841] I Hare 43 the Chancery Court held: “a purchaser has constructive notice of fraud if he had actual notice, that there was some incumberance and a proper inquiry would have revealed what it was (but if) it abstained either deliberately, carelessly from making those inquiries which a prudent purchaser would have made... then the defence cannot be available to him or her” See Yakobo M. N Senkungu & Others v. Cresencio Mukasa Civil Appeal No 17 of 2014.

The learned Justice reaffirmed the law in regards the importance of due diligence in land transactions holding that as stated by counsel for the respondents

"Lands are not vegetables which are bought from unknown sellers. Lands are very valuable properties and buyers are expected to make thorough investigations not only on land but also of the owner before the purchase.” See Vivo Energy (U) Ltd v. Lydia Kisitu SCCA No 07 of 2015 at Page 1 0 which cited with approval Sir John Bagaire v. Arnest Matovu CA No 07 of 1996)

In relation to the facts The appellant testified that when he was handed the Tansfer form and the title he saw that, it was not in the sellers names to Leonard Kizito to handle the transactions as the Administrator of the Estate. This was registered land which ought to have prompted him not to be satisfied by just Letters of Administration.

It is a principle of the Law of Agents that, “A person who performs an act through another is equivalent to the performance of the act of a principal himself . . . In this all the acts of the agent are considered as those performed by the principal. In the instant case it was the appellant financing the transaction and there is overwhelming evidence that DW1 was his agent, needless to say that there was no dispute about DW1 (Banalya) being the agent of the appellant. So obviously the appellant was the principal. There is no evidence on record showing that the appellant denied that he never authorized DW 1 or DW2 actions. There was no evidence that he distanced himself tiom their actions. So the learned Justices of the Court of Appeal cannot be faulted. But most importantly the appel lant had both actual and constructive notice as already pointed out in this judgment. Collusion to commit fraud The court held that It is trite law that in order for someone to collude with Someone, it is not necessary to have a meeting and agree, but the actions show. The principle of common intention is in spot to the facts of this case and hence applicable. S. 20 of the Penal Code Act. In the case of Simbwa v Uganda, SCCR Appeal No. 23 of 2012, it was held; “In order to have the doctrine of common intention, it must be shown that the accused was seen with the actual perpetrator of the crime with a common intention to pursue a specific unlawful purpose, which led to the commission of the offence. .. unlawful common intention does not imply a pre-arranged plan. Common intention may be inferred from the presence of the accused person, their actions and the omission of any of them to disassociate himself from the assault.”

The evidence on record is consistent or in tandem to the doctrine as above stated. The doctrine in effects that, “when two or more persons form a common intention to act together and an offence is foreseeable outcome of that act, each of them is deemed to have committed that offence” Harmonious interpretation of the Succession Act and the Registration of Titles Act. Counsel for the appellant faulted the learned Justices of the Court of Appeal for holding that the appellant's registration on title of the suit land on the strength of Letters of Administration, the appellant could not enjoy the same protection as that of the registered administrator. Counsel argued that this contradicted S. 180 and 192 of the Succession Act which have the effect of vesting the deceased property in the Administrator upon the death of the deceased. Counsel relied on Marion Nanteza and Others v. Nasani Rwamunono, Court of Appeal Civil Appeal No 28 of 2013 unreported) where it was held that a person that had validly received Letters of Administration will still be legally empowered to deal with the deceased estate even before he or she is registered as proprietor. While Counsel for the respondent supported the Court of Appeal finding.  The court observed that S. 180 of the Succession Act provides: "The executor or administrator, as the case may be, of the deceased person is his or her legal representative for all purposes, and all the property of the deceased person vests in him or her as such." S. 192 states: "Letters of Administration entitle the administrator to all rights belonging to the intestate as effectually as if the administrator had been granted at the month after his or her death."

S. 134(1) of the Registration of Titles Act states: "Upon the receipt of an office copy of the probate of any will or of any Letters of Administration or of any order by which it appears that any person has been appointed the executor or administrator of any deceased person, the registrar shall, on an application of the executor or administrator to be registered as proprietor in respect of any land, lease, or mortgage therein described, enter in the Register Book and on the duplicate instrument, if any, when produced for any purpose, a memorandum notifying the appointment of the executor or administrator and the day of the death of the proprietor when the day can be ascertained, and upon that entry being made that executor or administrator shall become the transferee and be deemed to be the proprietor of such land, lease or mortgage, or of such part of it as then remains unadministered, and shall hold it subject to the equities upon which the deceased held it, but for the purpose of any dealings therewith the executor or administrator shall be deemed to be the absolute proprietor thereof."

The judgment highlights the need to interpret the provisions of the Succession Act and the Registration of Titles Act together, emphasizing the legislative intent. It stresses the Constitution's aim to establish laws for the administration and management of intestate deceased persons. The Succession Act aims to protect beneficiaries' interests, while S. 134 of the Registration of Titles Act outlines the procedure for succession upon death.

The evidence presented in the case revealed fraud and mismanagement by the purported legal representative, Leonard Kizito. The trial judge found Kizito's actions to be dishonest and not in the best interests of the beneficiaries. Consequently, the Court of Appeal's decision to uphold the trial judge's ruling was deemed appropriate.

Rationale: The Supreme Court's decision underscores the necessity for prior consultation before claiming the status of a bona fide purchaser. It draws upon precedent, including the case of David Ssekajja Nalima v Rebecca Musoke SCCA NO.12/1985, emphasizing that establishing such a plea requires proof not only of purchase for value but also of a lack of notice, whether actual or constructive, of fraud at the time of purchase.

Applicability in Ugandan Legal System: The ruling in Lwanga v Mubiru establishes a precedent regarding the protection of registered proprietors under Section 136 of the RTA, safeguarding against notice of trust except in cases of fraud. It offers guidance for addressing similar issues in lower courts, thereby fostering the development and consistency of Ugandan jurisprudence. Conclusion: In conclusion, the judgment in Lwanga v Mubiru reaffirms the doctrine of bonafide purchaser for value without notice, emphasizing the necessity for prior consultation and adherence to legal procedures in land transactions. It contributes to the clarity and coherence of land law in Uganda, promoting fairness and equity in property dealings.

Prepared By: Ssanyu Carlo Wagonza LLB3, Nkumba University