Fraud

• The RTA does not define fraud.

• Cases have gone ahead to give meaning and
scope of fraud.
• In Fredrick J.K Zaabwe v Orient Bank Ltd Civil
Appeal No. 4 of 2006 Fraud was defined to
mean:
 Cont’d
• “ Intentional perversion of the truth for
purposes of inducing another in reliance upon
to part with some valuable thing belonging
to him or to surrender a legal right.”
• “A false representation of a matter of fact
whether by word or by conduct, by false or
misleading allegations or by concealments of
that which deceives and is intended to
deceive another.”
 Cont’d
• “ Anything calculated to deceive, whether by
a single act or culmination or suppression of
truth or suggestion of what is false.”
 Cont’d
• In Assets Company Ltd v Mere Roihi Ltd
[ 1926] AC 101 this is what the privy council
had to say:
“ If the designed object of a transfer be to
cheat a man of a known existing right, that
is fraudulent and so also fraud may be
established by a deliberate and dishonest
trick causing an interest not to be registered
and thus keeping the register clear.”
Particulars/Elements/Ingredients of Fraud

1. Dishonesty
• In the case of Katarikawe v Katwiremu court
held that fraud though not defined covers
dishonest dealings in land.

2. Intention to Cheat
Fredrick Zaabwe v Orient Bank Ltd
 3. Participation
• Musisi v Grindlays Bank Ltd CS No. 869 of
1981
• Court held that a person registered through
fraud is one who becomes a registered
proprietor through a fraudulent act by him or
with full knowledge of the fraud.
 Cont’d
• Kampala Bottlers Ltd v Damaniko CA
No.22/92
Wambuzi CJ said that ‘the transferee must be
guilty of some fraudulent act or must have
known of such act by somebody else and
taken advantage of such act.’
 Cont’d
• In Assets Co. Ltd V. Mere Roihi & others
(supra) Lord Lindley said, “A fraud by persons
from whom he claims does not affect him
unless knowledge of it is brought home to him
or his agents.
 Proof of Fraud
• Fraud is a serious allegation and must be
specifically pleaded and proved in accordance
with the Civil Procedure Rules.
• Kazzora v Rukuba CA No. 13 of 1992
Party relying on fraud must specifically plead
it and that particulars of the alleged fraud
must be stated on the face of the pleading
 Standard of Proof
• Standard of Proof is more than a mere
balance of probability .
• Alibhai and Another v Karia and Another CA
No. 52 of 1995
• Sepiya Kyamusimire v Justus Bikamucumika
CS 294/92 Fraud must be strictly proved. It
must be proved that defendant dealt
dishonestly with the land.
 Actual Notice
• This is direct notice by either evidence
brought to the attention of the purchaser or
through conducting a search.
• Daniel Sempa Mbabali v Kidza [ 1985] HCB 46
• Osma Matovu v Bagema CACA No. 7/1996
 Constructive notice
• This is knowledge a purchaser would have
acquired if he or she had taken reasonable
steps to investigate title e.g if at the time of
the purchase of the land, a third party was in
possession of the land, the purchaser is
deemed to have constructive notice of
whatever claim the person in possession
might have over the land.
UPTC V AKM Lutaaya SCCA No.36/1995
• In the above case Justice Mulenga stated that
in equity a purchaser of a legal estate is bound
by any prior equitable interest over the land of
which he or she had notice prior to purchase.
 Assets Co. Ltd V. Mere Roihi & others

• Lindley J stated “The mere fact that the buyer

might have found out the fraud had he been
more vigilant and had made further inquiries
which he omitted to make does not itself
prove fraud on his part. But if it be shown that
his suspicions were aroused and that he
abstained from making inquiries for fear of
learning the truth, the case is very different
and fraud maybe properly ascribed to him.”
 Cont’d
• In the case of David Ssejaka, this is what court
noted: “The appellant did not go further to ask
the tenant who his landlord was. Instead he went
to investigate the title at the land office. It is
reasonable to infer from the appellant’s conduct
that his suspicions were aroused but that he
feared to learn the truth from the tenant, by
inquiring from him who was his landlord. Had he
done so he would have definitely found out that
Ochiti’s Landlord had been Prof. Latimer Musoke.”
 Imputed notice
• This is notice drawn from use of agent.
• If you employ an advocate or agent the
knowledge that comes to the advocate is
deemed or imputed on the principal who is
the client.
David Sejjaka v Rebecca Nalima [1992] KALR
736 SCCA No.12/ 1995
• In this case the vendor used the advocates
who were aware of the alleged fraud and did
not notify the client but this knowledge was
imputed on the client.
 Notice of unregistered interest
• Under the torren system notice of
unregistered interests by itself is not fraud.
• S. 136 of the RTA provides that except in the
case of fraud, a dealer is not required to
inquire or investigate the antecedents of the
title he or she seeks to purchase or be
concerned with unregistered interests.
 Cont’d
• Mere notice of unregistered interests
according to s.136 whether actual or
constructive not withstanding any rule of law
or equity to the contrary does not impute
fraud.
• In Orinda De Souza v Kasamali Manji (1962)
EA 758 court noted:
 Cont’d
• “The Cardinal Principle of the statute is that
the register is everything and that except in
cases of actual fraud on the part of the
person dealing with the registered proprietor
has an indefeasible title against all the
world”
 Cont’d
• In David Sejjaka v Rebecca Nalima [1992]
KALR 736 SCCA No.12/ 1995 Odoki J.A agreed
that the object of section 136 RTA and indeed
the entire Act is to save persons dealing with
registered proprietors from the trouble and
expense of going behind the register in order
to satisfy themselves of its validity, and thus
simplify and expedite the process of transfer
of title..
 Cont’d
• But he argues that the section cannot be
called in aid in cases of fraud. The section
stipulates that mere knowledge of
unregistered interest cannot of itself be
imputed as fraud. In his view, where this
knowledge is supported by other
circumstances it may amount to fraud
 Cont’d
• In Robert Lusweswe v Kasule and Anor HCCS
No. 1010 of 1983 Odoki J. as he then was
stated:
“Therefore while the cardinal rule of
registration of titles under the Act is that the
register is everything, the court can go behind
the fact of registration in cases of actual fraud
on the part of the transferee.”
 Cont’d
• In Katarikawe v Katwiremu & Another CS No.
2 of 1973 Justice Ssekandi had this to say:
“ Although mere knowledge of unregistered
interests cannot be imputed as fraud, where
knowledge is accompanied a wrongful
intention to defeat such interest it would
amount to fraud.”
Manifestations/ Aspects of Fraud
1. Falsehoods of status of land
Betty Kizito v David Kizito Kanonya Civil
Appeal No.8 of 2018
HELD: Declaring that there were no
developments on land inorder to evade
payment of taxes and therefore defrauding
government of revenue constitutes fraud
 2. Consideration
• S. 92 RTA is to the effect that true
consideration must be concisely stated on the
transfer form. If not then that amounts to
fraud.
 Cont’d
• In Samuel Kizito Mubiru v Byensiba & Anor
HCCS No. 513 of 1982 the plaintiff inserted
sh.500,000 in the sales agreement as purchase
price for land when infact he had paid
sh.2,400,000.
 Cont’d
• Karokora J held that a buyer is not a bonafide
purchaser where he inserts a lesser figure on
the transfer form as consideration when he
actually paid more inorder to defraud
government of revenue. The mode of
acquisition becomes tainted with fraud and
illegality.
 Mudima Issa and anor v Elly Kayanja and
Others Civil Suit No. 0232 of 2009
• The defendants deliberately understated the
value of the suit land worth billions of shillings
to be only sh. 10 million shillings with the
intention of cheating government of the tax
revenues payable on such transaction.
• HELD: Court held that the defendants
certificate of title is void because of the fraud.
 Betty Kizito v David Kizito Kanonya Civil
Appeal No.8 of 2018
• HELD: Stating that one acquired land as a gift
when the transfer was based on exchange of
another piece of land can be equated to
inserting a lesser figure in the transfer form
than what was actually paid as consideration
for the land. Such conduct is tantamount to
concealment of the true consideration for the
transaction and amounts to fraud.
3. Multiple transfers
Failure to make inquiries
Date, Time, Instrument nos.
 Effects of Fraud
• S.77
• S.177
 Bonafide Purchaser for value
• In Samuel Kizito Mubiru v Byensiba & Anor
HCCS No. 513 of 1982 “Bonafide” was defined
to mean good faith and honesty without fraud
or collusion or participating in wrongdoing.
Elements of Bonafide Purchaser for value

• In the case Konde Mathias Zimula v

Byarugaba Moses and Grace Nampijja HCCS
NO. 66 of 2007 court stated the elements of a
bonafide purchaser for value referring to the
case of David Sejjaka v Rebecca Musoke SCCA
No.12 of 1985
 He must prove that he has a valid title

Hannington Njuki v William Nyanzi Musisi

HCCS No.438/98
Court held that for a person to rely on the
principle set out in s.181 of the RTA he or she
must prove to court that he/she holds the
certificate of title issued under the RTA in
respect of the same property.
 Cont’d
• He must have paid valuable consideration
In Wormald v Maritland (1866) L.J Ch. 69 it
was held that value must not be confused with
consideration. There are so many forms of
consideration that are not money e.g natural
love and affection.
 Cont’d
• Must have acted in good faith without notice
of fraud
Daniel Sempa Mbabali v Kidza & Others
(1985) HCB 46
• S. 181 RTA protects bonafide purchasers for
value.
Protection of unregistered interest
• The only way to protect an unregistered claim
over registered land is either to lodge a caveat
or seek a court injunction.
• In the case of Katarikawe v Katwiremu
Ssekandi J held that taking possession of the
title deeds by a purchaser is insufficient to
protect an unregistered interest unless a
caveat is lodged.
 Cont’d
• A caveat operates as a statutory injunction to
the registrar to prevent registration of any
dealings which might affect the interest, the
subject of the caveat.
 Cont’d
• Lodging a caveat serves as an interim measure
pending judicial determination of the
caveator’s claim over the land.
• A caveat may also serve as a notice to the
caveatee and the public of the nature of the
claim the caveator has over the land.
 Who can lodge a caveat
• A Registrar of Titles – s.170 (a)
• A private person – s.20, s.161, s.86, S.179
• For one to lodge a caveat one must have a
caveatable interest over the land.
• This is a claim of proprietary or quasi-
proprietary in nature
 Cont’d
• Examples of caveatable interest include:
• A claim of a grantee under a will
• A claim under a contract of sale
• Lease
• Mortgage
• Option to purchase
• A claim based on adverse possession.
 Effects of a caveat
• It maintains the status quo by preventing the
registration of any transaction affecting the
land except as expressed in the caveat or with
the consent of the person who lodged the
caveat. ( S.141 RTA)
• A caveat does not validate or prove the
caveator’s claim.
 Duration of caveat
• In the case of Olojo v Rajab CS No. 1241/86
Justice Tsekooko observed that caveat lodged
under s. 139 – 140 was meant as a temporary
measure and not to provide caveators with
everlasting protection.
• S. 140 (1) (2) – Notice of caveat to be given.,
lapse of caveat.
• Extension of caveat – S. 140 (3)
 Cont’d
• In Khadir Juma v Abdul Juma Martin CS No.
951 of 1990 an application to extend a caveat
was rejected because there was no evidence
that the proprietor was about to deal with the
land.
• S. 144 – Beneficiary’s caveat does not lapse
 Liability for wrongful lodgement of a
caveat
• S. 142
 Remedies for deprivation of land
• Under the RTA a person wrongfully deprived
of his or her land may bring an action of
ejectment.
• The remedy of ejectment is limited by the
principle of indefeasibility.
• S. 176 of the RTA protects a registered
proprietor against any action of ejectment
except in circumstances stated in the section.
 Cont’d
• The circumstances include:
• Action by a mortgagee to eject a mortgagor in
the event of default in payment of the
mortgage debt.
• A lessor may sue a lessee for ejectment in
default of payment of rent.
 Cont’d
• An action of ejectment in the two cases is
based on the breach of contract.
• An action for ejectment may also be brought
against any proprietor whose title was
acquired in any of the circumstances which fall
within one of the exceptions to the principle
of indefeasibility.
 Application for consequential orders

• S . 177 empowers High court to direct the

Registrar of Titles/ Commissioner Land
Registration to cancel any certificate of title or
instrument or any entry on the register book.
 Compensation
• S.178 of the RTA provides that a person
deprived of an estate or interest in land in
consequence of fraud, error, omission or
misdescription in the certificate of title or
entry or in bringing land under the Act may
bring an action for compensation.
 Cont’d
• The term “deprived” means irrevocable loss
or loss by a superior title
• The action for compensation may be brought
against a person responsible for the loss or
against the registrar.
• An action for compensation may also be
brought against the government under s.183
RTA
 Cont’d
• There are two types of actions that may be
brought against the government:
• Firstly, an action may be instituted where a
person suffers loss through any omissions,
mistake or misfeasance of the registrar.
• Secondly, a person who suffers loss as a result
of the registration of another as proprietor
 Cont’d
• May bring an action for damages against the
registrar if the person is barred by the Act
from suing for ejectment and where the
remedy for recovery of damages is
inapplicable.
• Under S.184 a person may seek compensation
from the government where he or she suffers
loss as a result of rectification of a certificate
 Cont’d
• of title or the bringing of land under the RTA in
consequence of inaccuracy in government
survey.
• Under section 185, a person who suffers loss
or damage arising from the exercise of the
registrars powers under Act ( S.91 Land Act)
may sue the government for compensation.