SAMPLE QUESTION :
“Although mere knowledge / notice of an unregistered interest cannot be imputed as fraud, where knowledge/ notice was accompanied by wrongful intention to defeat such interests, it would amount to fraud”. –Justice Sekandi
Analyze the above statement with the aid of statutory provisions and case law.
According to Mugambwa, 2002, p.149, a system of conveyance in Uganda by virtue of the Registration of titles ordinance Cap. 102 of 1923 was introduced and this derived its origin from the Torrens system. This was a system initiated by Sir Robert Torrens, an Australian born held responsible for its emergence and development in the 1950s, it normally involved registration of titles and conveyance of land and was for that matter made up of two essential features that held it distinct from other systems of conveyance that is to say; Title by registration and Indefeasibility of Tile.
This essay will restrict its discussion in line with the latter feature. The Registration of titles Act confers upon a registered proprietor indefeasibility of title and this is provided for in section 59 of the registration titles act which calls for conclusive evidence of ownership of person named in the certificate of title.
The principle of indefeasibility is not absolute and is therefore subject to a number of exceptions, this essay will for that matter restrict its discussion on the exception of fraud. Mugambwa, 2002, p.159 avers that Fraud is the most important and common exception to the principle of indefeasibility of title. The principle of fraud is not accorded a definition under the registration of titles act cap 230, however Justice Sekandi in the case of John Katarikawe v. William Katwiremu & Onezieforo Bakampata laid down a definition as adopted from a similar Kenyan statute which defines fraud as “shall on the party of the person obtaining registration include a proved knowledge of the existence of an unregistered interest on the part of some other person, whose interest he knowingly and wrongfully defeats by such legislation”. This essentially means that fraud is actual fraud or some act of dishonesty. In the case of Sejjaka Nalima v. Rebecca Musoke, Justice Odoki as then he was averred that where there are series of subsequent transfers, for the title of the registered proprietor’s title to be impeached, the fraudulent nature of the earlier transactions must be known to him/her and in cases of unregistered interests, he must have acted have possessed wrongful intention to defeat such interests. This essay will therefore analyze the above assertion with the aid of statutory authorities.
In addressing the principle of Fraud, it is pertinent to first appreciate the principle of Bonafide purchase. The first question or issue normally addressed by court in most fraud cases is whether the purchaser acquired the subject property in good faith (bonafide-purchaser) and for one to qualify under this, they have to establish through a plea that they had no knowledge accompanied with wrongful intention of depriving the aggrieved party of his or her property through a registration of the title and this and more is discussed in depth herein. The term bonafide purchaser is not defined anywhere in the Registration of titles Act, however in the case of Ali Abdul Kader Salebhai Assabwalla v. Khadija Bring Gafoor & others, court considered the term “Bona fide” in relation to S.8 of the English Trade Marks Act, 1938 which expressly provided that no registration of a trade mark shall interfere with any bonafide use by a person of his own name or of the nature of his place of business, or of the name, or the name of the place of the business, or any of his predecessor in business. Despite the registration of titles Act’s failure to attach a definition to the term “bonafide purchaser”, it attempts to secure his protection as enshrined in section 136 of the Registration of titles act, this is expressly supported by court in the case of Lusweswe v. G. W. Kasule and another where court noted that the effect of this section is that once a registered proprietor has purchased the property in good faith his title cannot be impeached on account of the Fraud of the previous registered proprietor. A bonafide purchaser therefore obtains a good title even though he purchases from a proprietor who previously obtained by fraud. Before a purchaser seeks protection from the registration of titles Act, he must act in good faith and if he is guilty of fraud or sharp practice, he will cease to be innocent and therefore lose protection.
In determining a bonafide purchaser without notice, Odoki JA in the case of Sejjaka Nalima v. Rebecca Musoke averred that the onus of establishing the plea of a bonafide purchaser lies on the person who sets it up and it normally a heavy one whereas the burden of proving a the case lies on the plaintiff. The learned justice further alluded that the plea made by the purchaser is a single one and is not sufficiently made out by proving purchase for value and leaving it to the plaintiff to prove notice if he can. An illustration is seen in that case where court held that appellant was unsuccessful in establishing that he was infact a bonafide purchaser for value without notice and therefore couldn’t claim protection from the act since it was proved by the plaintiff that the purchaser had used a forged cheque in the name of his son and the fact that the fraudulent notice acquired by his lawyers was imputed on him for this matter. In relation to this Oder JSC stated that although the standard of proof for fraud may not be as heavy as to require proof beyond reasonable doubt, something more than a mere balance of probabilities is required.
According to John T. Mugambwa in his book, Principles of Land law, the exception of fraud is a very serious allegation which must for that matter be pleaded in accordance with the civil procedure rules; Order VI Rule 2 and the particulars of the fraud must be given and proved strictly by the person alleging it.As already noted earlier, the element of fraud shall arise where a fraudulent nature of the subsequent transactions are brought to the attention of the purchaser although mere knowledge wouldn’t constitute to fraud for this matter. This is noted in the case of Assets Co. Ltd v. Mere Roihi & others where Lord Lindly clearly stated that in order to invalidate the title of a registered proprietor for value; the fraud must be brought to him or his agents. The mere fact that he might have found out fraud if he had been more vigilant and had made further inquiries which he omitted to make does not itself prove fraud on his part. However, if the purchaser abstains from making inquiries out of fear of learning the truth, court held that fraud may be properly be ascribed to him. This is properly illustrated in the case of Sejjaka Nalima v. Rebecca Musoke where the appellant asked the tenant, Mr. Ochitti in what capacity he was occupying the house when the purported landlord, Sendaula was with him. Court noted that in the view that Sendaula had obtained the title to the land by Fraud, it was possible that Sendaula and Ochitti didn’t know each other. It should also be noted that the appellant in this case didn’t ask Ochitti who was his landlord as just went on to investigate the land at the Land office due to fear of knowing the truth. Furthermore, a registered proprietor (purchaser) is for that matter not bound by unregistered interests even he had notice of such claims and a good illustration on this is one seen in the case of RM Hosking properties ltd v. Barnes where a landowner leased (unregistered) his premises to X for two years with an option to renew. He then resold the premises to Y before the expiration of X’s lease. The issue was whether Y’s registration was out of fraud and Walters J noted that despite Y’s knowledge of the unregistered lease, they were not guilty of fraud and therefore found no evidence to actual dishonesty and to hold that “mere notice” of an unregistered interest amounted to fraud would stultify the notice provision. In addition to this, Court in the case of John Katarikawe v. William Katwiremu & Oneziroro Bakampata stated that if a purchaser, despite knowledge of the occupation of the land under a contract of sale, proceeds with a transfer of the title in his name in order to defraud the occupier, this would be evidence for fraud.
Court furthermore noted that S.61 (now S.136 of the RTA) of the Registration of titles act is clear that once a person is registered as a proprietor of land, his title is indefeasible except for fraud. This is expressly noted under Section 136 of the Registration of titles Act which is to the effect that except in the case of fraud, a registered proprietor is not bound by unregistered interests even if she had notice of such claims. A case in point in regard to this is one of Kristofa Zimbe v. Tokana Kamanza where two men tried to buy the same piece of land. Both paid for it but the seller died eventually. The respondent got his home made agreement first and in fact lodged it with the registrar but was not registered because it bore the wrong Final Certificate number. The appellant got his agreement ten months later; it bore the correct financial certificate number and with a commendable promptitude, his was registered. The question was whether the appellant’s registration was obtained through fraud, court held that it wasn’t since the appellant went to the registrar and found nothing to indicate that the respondent was the owner of the land when the appellant registered his statutory transfer. The appellant was therefore entitled to rely on what the register revealed.
Still under fraud, it is important address the principle of Notice. Mugambwa, 2002, p.76 says that notice of unregistered interests is not fraud and a purchaser of a legal estate is bound by any equitable interests over the land of which he or she had notice prior to purchase. Mugambwa identifies two types of notices that is to say; Actual Notice and Constructive Notice. Other books have recognized Imputed Notice as a type too. Actual Notice is a situation where the buyer of an estate has actual notice of a prior interest at the time when he or she made the purchase or at any time before the purchase was completed in other words the purchaser is aware of the existence of an equitable interest. Constructive Notice on the other hand, as defined by Salden J in Williamson v. Brown as knowledge the purchaser would have acquired if he or she had taken reasonable steps to investigate and inquire as to the existence of some right or title in conflict which he is about to purchase. Bakibinga, 2006, p.34 defines Constructive Notice as that which is imputed on the buyer through the actual or constructive notice or his or agents. It is for that matter established in agency law that notice to an agent is notice to the principal. This is seen through the maxim “non facit per alium facit perse” which literally means that he who acts through others acts through himself. A case that establishes this is one of Sejjaka Nalima v. Rebecca Musoke where the principle was that notice acquired by the advocate employed by the proprietor is imputed upon the proprietor. Court here noted that 1where a purchaser employs an agent, such as an advocate, to act on his behalf the notice he receives, actual or constructive, is imputed on the purchaser.
In conclusion, no action for ejectment or other action for recovery of land shall lie against a registered proprietor under registration of titles Act unless in an instance where Fraud was exercised by the purchaser in bringing the land under the act (section 176), this would therefore act as a remedy for a party whose interest ( unregistered or not) has been defeated through fraud and this shall be effective only where the purchaser acquired the property in bad faith (bonafide purchaser for value with notice).
Bibliography:
John Tamukedde Mugambwa, Principles of Land Law in Uganda, Kampala: Fountain Publishers, 2006
John Tamukedde Mugambwa, Source book of Uganda’s Land law, Kampala: Fountain Publishers, 2002
David J. Bakibinga, Equity and Trusts in Uganda, Kampala: Professional Books Publishers, 2007
References:
Registration of Titles Act Cap. 230
Land Act Cap 227
By:
Abdallah Sekibembe
sabdallahkhan.ak@gmail.com
The writer is a student of Law at Uganda Christian University School of Law.
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