Wakilii

Alpha2 Business Company Limited v Diamond Trust Bank Limited 2 Ors (MISCELLANEOUS CIVIL APPLICATION No. 0071 OF 2016)

High Court · [2016] UGHCCD 121 · 2016 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction to restrain mortgagee's sale of securities
Decision
Application dismissed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Court dismissed the application for temporary injunction restraining mortgagee's sale of securities. Held that Regulation 13(1) of The Mortgage Regulations requiring 30% deposit applies only where sale is adjourned, not to interlocutory injunction applications. The real controversy was not statutory non-compliance but whether securities should be sold by private treaty or public auction. The application was an abuse of process designed to buy more time. Sale of mortgaged property cannot constitute irreparable loss as it is a contractual arrangement expressly provided in the mortgage.

Outcome

Application dismissed

Facts

Alpha2 Business Company Limited borrowed money from Diamond Trust Bank Limited secured by mortgages over four plots in Arua Town. When the bank proceeded to sell the mortgaged properties through public auction after default, the applicant obtained an interim injunction restraining the sale. The applicant then applied for a temporary injunction arguing the bank had proceeded prematurely without complying with statutory notice requirements. The bank responded that all proper notices had been served, and that the applicant had acknowledged the debt and was merely seeking more time to find private buyers for the properties. The bank argued the applicant should deposit 30% of the forced sale value under Regulation 13(1) of The Mortgage Regulations. The properties advertised for sale were valued at over UGX 8 billion, though the applicant contended sale of one property valued at UGX 3 billion would be sufficient to discharge the debt.

Issues

  1. Whether the applicant has established a prima facie case with probability of success warranting the grant of an interlocutory injunction.
  2. Whether Regulation 13(1) of The Mortgage Regulations 2012 requiring deposit of 30% of forced sale value applies to applications for interlocutory injunctions.
  3. Whether the applicant would suffer irreparable damage if the temporary injunction does not issue.

Orders

  • Application for temporary injunction dismissed.
  • Costs awarded to the respondents.

Rules and key headnotes

Mortgage — Sale by Mortgagee — Interlocutory Injunction — Deposit Requirement under Regulation 13(1)
Regulation 13(1) of The Mortgage Regulations 2012 requiring a mortgagor to deposit 30% of the forced sale value applies only to situations where the court adjourns a sale by mortgagee to another date, which presupposes the right to foreclose is not in dispute, and does not apply as an additional requirement in applications for interlocutory injunctions to restrain mortgagee sales.
Interlocutory Injunction — Prima Facie Case — Abuse of Process
An application for interlocutory injunction is an abuse of process where its real purpose is not to preserve the status quo pending determination of disputed legal rights, but to buy time for the applicant to negotiate private sale of mortgaged property rather than submit to public auction by the mortgagee, which is a matter for negotiation with the mortgagee and not court intervention.
Mortgage — Sale by Mortgagee — Irreparable Damage
The sale of mortgaged property pledged as security for a loan cannot constitute irreparable damage warranting an interlocutory injunction because such sale is the contractual arrangement or intention of the parties and is expressly provided for in the loan agreement or mortgage.

Legislation cited (1)

Cases cited (7)

  • Geilla v Cassman Brown Co Ltd [1973] EA 358
  • GAPCO Uganda Limited v Kaweesa and Another (High Court Miscellaneous Application No. 259 of 2013)
  • Godfrey Sekitoleko and 4 Others v Seezi Peter Mutabazi and 2 Others (Court of Appeal Civil Appeal No. 65 of 2011)
  • Miao Huaxian v Crane Bank Limited and Another (High Court Miscellaneous Application No. 935 of 2015)
  • Nakayaga v FINA Bank and Another (High Court Miscellaneous Application No. 471 of 2014)
  • City Council of Kampala v Donozio Musisi Sekyaya (Court of Appeal Civil Application No. 3 of 2000)
  • Kakooza Abdullah v Stanbic Bank Uganda Limited (High Court Miscellaneous Application No. 614 of 2012)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Alpha2 Business Company Limited v Diamond Trust Bank Limited 2 Ors (MISCELLANEOUS CIVIL APPLICATION No. 0071 OF 2016) [2016] UGHCCD 121 (8 December 2016)
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.