Luyimbazi v Uganda Commercial Bank (Civil Appeal No.50 of 2004)

Court of Appeal · [2019] UGCA 3 · 2019 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

First appeal from a High Court (Commercial Division) judgment dismissing a suit challenging a mortgage and sale of mortgaged property

Decision

Appeal dismissed with costs; High Court dismissal of the suit upheld

The full judgment

Read the complete, verbatim text of this judgment.

Cited — treatment unverified cited in 3 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Court of Appeal dismissed the appeal, holding that the appellant mortgagor had in fact received the requisite demand notice notifying him of the borrower's default, the receipt of which prompted him to seek a meeting with the bank. The court held that the validity of the sale and the issues of advertisement and valuation were never pleaded or in issue at trial, so the appellant could not raise a new case on appeal. On fraud and bad faith, the court reaffirmed that fraud must be proved strictly, beyond the ordinary civil balance of probabilities, and that the appellant had failed to prove any of the nine pleaded particulars. The appeal was dismissed with costs.

Facts

Princess Victoria Nabaloga and Prince Captain Jjuko Walugembe, a director of J.W. Victoria Agro Industries Limited, asked the appellant to assist with a land title to secure a loan from the respondent bank. The appellant deposited his land title to Block 262, Plot 444, Mobutu Road, Makindye with the respondent. A mortgage was executed over the property and the respondent extended a UGX 5,000,000 overdraft to the company. The company defaulted despite repeated demands. The bank issued a demand notice addressed to the borrower, a copy of which reached the appellant, who was also the LCII Chairman of the area, and a separate seven-day notice to settle the loan before sale. Upon receiving the notices the appellant met the bank's officials but did not settle the debt. The respondent sold the mortgaged property in April 1999. The appellant sued, alleging improper execution of the mortgage, lack of demand, invalid sale, and fraud or bad faith. The High Court dismissed the suit with costs.

Issues

Whether there was a valid demand on the appellant (mortgagor) to pay the overdraft and whether such demand was necessary in the circumstances.
Whether the appellant received notices prior to the eviction of his tenants and the sale of the suit property.
Whether the suit property was validly sold, including whether it was properly advertised and valued before sale.
Whether there was fraud or bad faith on the part of the respondent in exercising its power of sale.

Orders

Appeal dismissed with costs.

Key headnotes

Mortgages — Demand Notice to Mortgagor — Sufficiency of Notice Received

A mortgagor is entitled to receive a notice of demand notifying him of the borrower's default, but where the evidence shows the mortgagor in fact received the requisite notice he cannot maintain that no demand was made, even if the notice reached him incidentally.

Appeals — Departure from Pleadings — New Case on Appeal

An appellant cannot raise on appeal grounds or issues that were neither pleaded nor canvassed at trial; such grounds are incompetent and will be dismissed.

Standard of Proof — Fraud — Heavier Than Balance of Probabilities

Fraud must be proved strictly, the burden being heavier than the balance of probabilities ordinarily applied in civil matters, and particulars of fraud must be pleaded and proven.

Mortgagee's Power of Sale — Duty to Act in Good Faith

A mortgagee exercising its power of sale must act in good faith and sell at a reasonable price, but an allegation of bad faith in the conduct of the sale must be specifically pleaded and proved.

Legislation cited (7)

Registration of Titles Act s.116
Registration of Titles Act s.202
Mortgage Act Cap. 229 s.7
Mortgage Act Cap. 229 s.10
Civil Procedure Rules Order 6 rule 3
Civil Procedure Rules Order 6 rule 7
Rules of the Court of Appeal Rule 30(1)

Cases cited (5)

Uganda Credit and Savings v Eriyazali Senkuba [1966] EA 50
Yosia Sajabi v Musa Umar Amreliwalla (1956) 23 EACA 71
Cooperative Bank Limited (in Liquidation) v Shell Kasese Services Ltd (HCCS No. 140 of 2005)
Kampala Bottlers Ltd v Damanico (U) Ltd (Civil Appeal No. 22 of 1992)
Fr. Narcensio Bemugisa & Ors v Eric Tibebaaga (Civil Appeal No. 17 of 2002)

Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.