Last updated on August 16th, 2024 at 09:10 am
The High Court of Uganda at Kampala (Land division) has issued a stern warning to land buyers against jumping onto ‘blind offers’ to purchase land noting that, owing to the prevalence of land grabbing in the country, the courts will not tolerate them.
The Court, presided over by Hon. Lady Justice Naluzze Aisha (pictured), in a decision delivered on 6th August 2024, further expounded on the doctrine of constructive notice in land transactions within the context of claims for bonafide purchase of value without notice of encumbrances.
The decision came in the case of Nabirye Janepher Kasudha and six others versus Kyobe Mbayita and two others, concerning the ownership and alleged fraudulent transactions of a piece of land in Kiira Town Council, Wakiso District.
The plaintiffs, Nabirye Janepher Kasudha and her co-plaintiffs, purchased a piece of land from the first defendant, Kyobe Mbayita, in 2001 for UGX 4,600,000. Despite promises to transfer the title of the land to them, the first defendant failed to do so and instead purported to sell the same piece of land to the second defendant, Raymond Abaasa, who also subsequently purported to sell the land to the third defendant, Edward Grace Mutibwa.
The Court determined that the first defendant was fraudulent in purporting to sell the same piece of land to another buyer while the second and third defendants were determined not to be bona fide purchasers for value without notice of any encumbrances on the land.
In the case of the second defendant, no title in the land could pass to him from the first defendant because none existed with him as he had already sold the land in question to the plaintiffs.
Justice Batala noted that, “the 1st defendant and plaintiffs transacted over the suit land where the 1st defendant surrendered possession to the plaintiff, he could not proceed to sell the same land to the 2nd
defendant since in equity he became a trustee for the purchaser of the land sold and the beneficial ownership passes to the purchaser, the 1st defendant could not pass title of the same land since the plaintiffs had purchased the same. It is also a fact during cross examination of DW3 that he never visited the area LC1 before purchasing the said land. He deliberately chose not to inquire about the physical status of the suit land. The same party cannot seek legal protection under the doctrine of bonafide purchaser for value without notice. Further the 3rd defendant admitted that he learnt of the existence of a uniport on the suit land and the current house but he never labored to find out the owner of the said structures before purchasing the land. These are facts that would have pushed a reasonable person to conduct further inquiries about the land before purchasing the same land. Had the 3rd defendant taken all the necessary steps to carry out the necessary due diligences as to who owned the uniport on the suit land, he would have found out that it was the plaintiffs who owned the same.”
Doctrine of Constructive Notice
Justice Batala explained the doctrine of constructive notice, defining it as one that occurs: “When a subsequent purchaser [of property] has actual knowledge of facts and circumstances that would impel a reasonably cautious person to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in the vendor or of sufficient facts to induce a reasonably prudent person to inquire into the status of the title of the property in litigation…” noting that “his or her mere refusal to believe that such defect exists or willful closing of his or her eyes to the possibility of the existence of a defect in the vendor title will not make the purchaser an innocent purchaser for value.”
The learned Judge stressed that purchasers of property cannot claim to be bona fide or innocent if they ignore obvious signs that warrant or should warrant further investigation into the status of the property they are buying.
Citing the book; Modern Law of Real Property, 16th Edition by Cheshire and Burns, at page 60, the learned Judge stated that constructive notice generally takes two formats, that is;
The notice which is implied when a purchaser omits to investigate the vendor’s title properly or to make reasonable inquires as to the deeds or facts which come to his knowledge and the notice which is imputed to a purchaser by reason of the fact that his solicitor or other legal agent has actual or implied notice of some fact.
“Constructive notice applies if a purchaser knows facts which made “it imperative to seek an explanation, because in the absence of an explanation it was obvious that the transaction was probably improper, when it is proved that such a purchaser acquired knowledge of circumstances which would put an honest and reasonable man on inquiry and yet he did not undertake the necessary inquires, such a purchaser cannot claim to have bought in good faith. The ascertainment of good faith, or lack of it, and the
determination of whether due diligence and prudence were exercised or not, are questions of fact which require evidence. The burden of proof to establish the status of a purchaser in good faith lies upon the
one who asserts it. This onus probandi cannot be discharged by mere invocation of the legal presumption of good faith [See: Obina Vs Okumu and ors CA No.042 of 2018.” Justice Batala observed.
In this case, the third defendant saw structures on the land, such as a uniport and a house, yet did not inquire about their ownership or the land’s status before purchasing it.
As already stated, he did not visit the LC 1 chairperson, as per the land sale agreement, to inquire about the status of the land.
Essentially, according to this decision, purchasers of property must take all necessary steps to verify the status of the property which includes conducting searches at land registries, visiting the property itself, and inquiring from local authorities or neighbors, etc.
“Parties who desire to purchase land should take note of all the necessary due diligence supposed to be conducted by a purchaser before entering into a land transaction. The aspect of blind offers in
purchasing land won’t be entertained by courts. Land disputes in Uganda today are on a very high toll due the increasing number of land grabbers and fraudsters.” Justice Aisha Batala said.
Consequently, the Court declared the plaintiffs the lawful owners of the suit land and directed the Commissioner of Land Registration to cancel the third defendant’s registration on the certificate of title for the land.
The plaintiffs were also awarded UGX 40,000,000 in general damages at 10% interest rate and UGX 15,000,000 in special damages plus costs of the suit – against all defendants.
Parties: Nabirye Janepher Kasudha and six others versus Kyobe Mbayita and two others Counsel: Asuman
Nyonyintono of M/S Signature Advocates (for the plaintiff), Eric Kiingi of M/s Eric-Kiingi & Co. Advocates ( for the 1st defendant), Kaasa Emmanuel of M/s Kaganzi & Co. Advocates (2nd defendant) and Joseph Luzige of M/s Luzige Lubega Kavuma & Co. Advocates (for the 3rd defendant).
