Shelter Afrique v Akright Projects Ltd & 3 Ors (Miscellaneous Application No. 249 of 2012) [2016] UGCommC 79 (5 September 2016)

Key Facts

Issues

• The court evaluated whether the attachment and sale should be nullified, given the unresolved reserve price issue and the lack of proper valuation report on record. The judge ordered a new valuation and set conditions for the sale's potential rescission, including returning the paid amount and bearing the respondents' costs.
• The court considered allegations of collusion and complicity between the bailiffs and the judgment debtor, including whether the bailiffs ignored the applicant's instructions and if the sale was part of a fraudulent scheme to defraud the applicant. The applicant argued shared contacts and potential hidden relationships indicated collusion, while the respondents denied any such connection.
• The court addressed whether the sale of the mortgaged properties was conducted at a price below the agreed reserve price as per the Knight Frank valuation report and whether the bailiffs proceeded with the sale in defiance of the applicant's explicit instructions to consult with them before concluding the transaction.

Holdings

• The court ordered the sale to be set aside with conditions: a new valuation by Knight Frank, the reserve price based on that valuation, refund of the paid amount to the purchaser within two months, and the applicant bearing all respondents' costs.
• The court found that the applicant failed to provide sufficient evidence that the sale was conducted below the agreed reserve price or in defiance of the applicant's instructions. The reserve price's exact amount could not be determined due to missing documentation.
• The court determined there was no evidence of collusion or complicity between the bailiffs and the judgment debtor. The applicant's allegations regarding connections between the 2nd respondent and the 1st respondent were not substantiated.

Remedies

• The 2nd respondent shall be reimbursed the UGX 117,000,000/= paid into the escrow account within 2 months from the date of the ruling.
• The court orders that another valuation of the properties be conducted by Knight Frank or any other firm agreeable to the applicant and the 1st respondent, at the expense of the applicant. A copy of the valuation report shall also be filed on court record.
• The reserve price for the sale shall be determined as the price stated in the valuation report resulting from the newly mandated valuation process.
• The applicant shall bear the costs incurred by all respondents in this application.

Legal Principles

• The court acknowledged that bailiffs act as representatives of the judgment creditor and are duty-bound to adhere to their instructions. Despite the applicant's allegations of defiance, the bailiffs' compliance with the 14th March 2012 letter (allowing the UGX 1.9 billion offer) was not disproven.
• The court addressed whether the sale was void due to bounced cheques. It found that the 2nd respondent had deposited UGX 117,000,000 into the escrow account, with supporting RTGS and bank records, confirming valid consideration. The applicant's claim of no consideration was dismissed due to insufficient evidence.
• The court allowed a preliminary objection to expunge Judy Rugasira Kyanda's affidavit, ruling that the respondents' right to cross-examine—a fundamental aspect of natural justice—was violated. This exclusion affected the applicant's ability to prove their case regarding the valuation report.
• The court emphasized that the applicant bore the burden of proving the sale violated the reserve price and the Consent Order. However, due to missing valuation reports and lack of cross-examined evidence, the applicant could not satisfy this burden, leading to dismissal of their claims.

Precedent Name

• Masaka Tea Estates Ltd Vs Samalia Tea Estate Limited
• Bobcat of Regina Limited Vs Bruce Schapansky Auctioneers
• Kipoi Tonny Nsubuga Vs R. Wetaka
• McManus Vs Fortescue
• Francis Micah Vs Nuwa Walakira

Cited Statute

• Civil Procedure Rules
• Judicature Act
• Civil Procedure Act

Judge Name

Passage Text

• It is my finding that the applicant did not prove any collusion on the part of the respondents.
• In view of the above, this preliminary objection is allowed and the affidavit in rejoinder of Judy Rugasira Kyanda is hereby struck off the record.
• I find that the applicant has failed in adducing evidence to indicate that the sale was conducted below the reserve price.