Babigumira and Another v Global Trust Bank (In Liquidation) and 2 Others (Civil Appeal 14 of 2020)

Supreme Court · [2023] UGSC 37 · 2023 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Second appeal from the Court of Appeal, which had upheld a High Court dismissal of a suit challenging the sale of mortgaged property

Decision

Appeal dismissed; Court of Appeal judgment upholding the validity of the mortgage sale affirmed

The full judgment

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Holding

The Supreme Court dismissed the second appeal. It held that the mortgage deed was validly executed: although the bank manager's signature bore no name, the company stamp and seal and the signatory's stated capacity satisfied the purpose of section 148 of the Registration of Titles Act. Personal service of the recall/default notice, though not by post as the deed required, was not fatal because the appellant acknowledged receipt. As both the deed and credit facility expressly gave the mortgagee power to sell by public auction without recourse to court, sale without foreclosure was lawful under section 10 of the Mortgage Act (Cap 229). Hearing the appeal on oral submissions did not breach the right to be heard.

Facts

The first appellant, registered proprietor of land at Kungu (Kyadondo Block 194 plot 45), gave the second appellant a power of attorney to use the land as security for a loan from the first respondent bank. In September 2009 the bank advanced a credit facility, and a mortgage deed was executed and registered in the bank's favour, retaining 2% as a commitment fee. The borrower defaulted, and the loan was recalled in July 2010 with an outstanding balance of about UGX 106 million. After the borrower failed to clear the arrears, the bank exercised its contractual power of sale and sold the property by public auction to the second respondent for UGX 140,000,000 in 2011, who was then registered as proprietor. The appellants sued to cancel the transfer, alleging the sale was fraudulent, that no notice of default was served by post as the deed required, that the property was undervalued, and that the mortgage deed was invalidly executed. The High Court and Court of Appeal dismissed their claims.

Issues

Whether the first appellate court properly re-evaluated the evidence on record, including whether the appellants were advanced the full agreed sum, had commenced repayment, and were served with notice of default.
Whether the mortgage deed was validly executed where the corporate mortgagee's manager signed without his name being affixed, as required by section 148 of the Registration of Titles Act.
Whether the appellants were duly served with a notice of default in the manner prescribed by the mortgage deed.
Whether a mortgagee could realise the security by sale to a purchaser without first foreclosing the mortgagor's right of redemption.
Whether the Court of Appeal's refusal to allow the appellants to file written submissions denied them the right to a fair hearing under Article 28 of the Constitution.

Orders

Appeal dismissed on all grounds.
Judgment of the Court of Appeal upheld.
Costs of the appeal awarded to the respondents.

Key headnotes

Mortgages — Execution of mortgage deed — Section 148 Registration of Titles Act — Corporate signatory

A mortgage deed executed on behalf of a corporate mortgagee by its manager whose signature bears no name is validly executed where it is accompanied by the company's stamp and seal and an indication of the capacity in which the signature was made, because this satisfies the purpose of section 148 of the Registration of Titles Act, namely to make clear that the signatory had capacity to sign.

Mortgages — Notice of default — Mode of service prescribed by deed

Where a mortgage deed requires service of a notice of default by post but the mortgagee instead serves it personally, the irregularity is not fatal to the realisation of the mortgage where the mortgagor actually received and acknowledged the notice.

Mortgages — Realisation of security — Power of sale without foreclosure

Under section 10 of the Mortgage Act (Cap 229), where a mortgage expressly empowers the mortgagee to sell without applying to court, the mortgagee may realise the security by public auction without first foreclosing the mortgagor's right of redemption.

Loan agreements — Commitment fee — Whether retention amounts to breach

Retention by a lender of a percentage of the facility as a commitment fee expressly provided for in the credit facility agreement does not amount to a breach or relieve the borrower of the obligation to repay; the borrower remains in default on failing to service the advanced loan.

Fair hearing — Article 28 — Discretion to direct written submissions

Whether parties file written submissions is a matter within the court's discretion; determining an appeal on oral submissions and the evidence on record does not deny a party the right to be heard under Article 28 of the Constitution.

Appellate procedure — Duty of first appellate court to re-evaluate evidence

A first appellate court discharges its duty to re-evaluate the evidence where it reviews the record and reaches its own findings; a second appellate court will not interfere where that duty has been properly performed.

Legislation cited (13)

Registration of Titles Act s.148
Registration of Titles Act s.147
Registration of Titles Act s.132
Registration of Titles Act s.154(1)
Registration of Titles Act s.156
Mortgage Act Cap 229 s.3
Mortgage Act Cap 229 s.8(1)
Mortgage Act Cap 229 s.9
Mortgage Act Cap 229 s.10(1)
Mortgage Act 2009
Constitution of Uganda Article 28
Judicature (Supreme Court Rules) Directions SI 13-11 Rule 30(1)
Court of Appeal Rules rule 98(1)

Cases cited (5)

Henry Kifamunte v Uganda (Criminal Appeal No. 10 of 1997)
Fredrick Zaabwe v Orient Bank Ltd & 5 Others (Civil Appeal No. 4 of 2006)
General Parts (U) Ltd v Non-Performing Assets Recovery Trust (Civil Appeal No. 5 of 1999)
Makula International Ltd v Cardinal Emmanuel Nsubuga & Another [1982] HCB 11
John Magezi Vs. Andrew Babigumira SC.MA No. of 2021

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.