Ali Ssenyonga v Letshego Uganda Limited and Another (Civil Suit No. 24 of 2020)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
The court found that although the plaintiff breached the loan agreement and the interest rates imposed were lawful, the sale of the mortgaged property by the first defendant to the second defendant was unlawful and irregular. The sale relied on an expired valuation report in contravention of the Mortgage Regulations 2012 which require a valuation not older than six months. The defendants also failed to serve default notices and notice of intended sale on the sureties as required by the Mortgage Act. The transfer to the second defendant violated ministerial directives halting land transfers during the COVID-19 lockdown. The court cancelled the sale agreements and the second defendant's entry on the certificate of title.
Outcome
Sale agreements cancelled and second defendant's entry on certificate of title cancelled
Facts
The plaintiff obtained a loan of UGX 40,000,000 from the first defendant and mortgaged two properties as security, including FRV MSK 105 Folio 11 owned by Hajji Issa Ssenyonga. The plaintiff claimed he serviced the loan but the first defendant sold one mortgaged property alleging default. On 28 May 2019, the plaintiff requested a two-month grace period to clear outstanding loan money. The property was valued on 31 July 2019 at UGX 23,000,000 forced sale value. The first defendant sold the property to the second defendant on 10 February 2020. The second defendant was registered on the title during the COVID-19 lockdown period when the Minister of Lands had issued directives halting land transfers. The sureties, including the registered owner Hajji Issa Ssenyonga, were not served with default notices or notice of intended sale.
Issues
- Whether the Plaintiff breached the loan agreement?
- Whether the interest imposed on the loan facility was harsh and unconscionable?
- Whether the sale of the mortgaged property for land comprised in FRV MSK 105 Folio 11 Buddu Block 360 Plot 120, situate at Kaboyo by the 1st Defendant to the 2nd Defendant was lawful?
- Whether the entry of the name of the 2nd Defendant into the certificate of title of the sold mortgaged property was lawful?
- What remedies are available to the parties?
Orders
- The Defendants' agreements of sale of Hajji Isa Ssenyonga's land comprised in FRV MSK 105 Folio 11 Plot 120 are cancelled.
- The entry of the 2nd Defendant onto the certificate of title to FRV MSK 105 Folio 11 Plot 120 at Kaboyo is hereby cancelled.
- Each party will bear its own costs of the suit.
- Judgment is largely entered for the Plaintiffs and against the Defendants.
Rules and key headnotes
Legislation cited (8)
- Evidence Act Cap. 8 s.101(1)
- Evidence Act Cap. 8 s.55
- Mortgage Act Cap. 239 s.26(1)
- Mortgage Act Cap. 239 s.25(3)(c)
- Mortgage Regulations 2012 Regulation 11(1)
- Mortgage Regulations 2012 Regulation 12
- Money Lenders Act Cap. 273 s.12
- Tier 4 Microfinance and Money Lenders Act 18 of 2016 s.86(1)(c)
Cases cited (4)
- George William Kakoma v Attorney General [2010] HCB 1
- Sebuliba v Cooperative Bank Ltd [1982] HCB 130
- Oketha v Attorney General (Civil Suit No. 69 of 2004)
- Fredrick J.K Zaabwe v Orient Bank Ltd and Others (SCCA No. 4 of 2006)
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.