Wakilii

Barclays Bank of (U) Limited v Katende (Civil Appeal 22 of 1993)

Supreme Court · [1994] UGSC 38 · 1994 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from a High Court order granting a temporary injunction restraining a mortgagee from exercising its power of sale.
Decision
Appeal allowed; the High Court's temporary injunction and orders set aside, leaving the Bank free to exercise its power of sale.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Supreme Court allowed the Bank's appeal and set aside a temporary injunction restraining it from selling mortgaged property. Where the mortgage agreement and section 9 of the Mortgage Decree No. 17 of 1974 expressly empower the mortgagee to sell by public auction without applying to court, the mortgagee may do so once demand has been made and the mortgagor or principal debtor has defaulted. A principle of natural justice cannot override an express legislative provision, so the contractually agreed sale without recourse to court is lawful. The mortgagor therefore showed no prima facie case with a probability of success and no irreparable injury, and the conditions in Giella v Cassman Brown for a temporary injunction were not met.

Outcome

Appeal allowed; the High Court's temporary injunction and orders set aside, leaving the Bank free to exercise its power of sale.

Facts

The respondent guaranteed a debt owed to the appellant Bank by Bearing Machinery Equipment Ltd and, as security, mortgaged his own property. The mortgage agreement provided that on demand and default the Bank could sell the property by public auction without notice to or concurrence of the mortgagor and without recourse to the court. Bearing Machinery defaulted in payment, and the Bank looked to the respondent as guarantor; the sum guaranteed was substantial and largely outstanding. The respondent, claiming he had been unaware of the default and had not been served with a demand notice, discovered his property advertised for sale and began paying monthly instalments, repaying only a small portion. He sued the Bank seeking a declaration that the proposed sale was illegal, an injunction restraining the sale, and leave to pay the debt by instalments. The trial judge granted a temporary injunction, reasoning that sale without recourse to court ousted the court's jurisdiction and offended natural justice. The Bank appealed.

Issues

  1. Whether a mortgagee with an express contractual and statutory power of sale may sell the mortgaged property by public auction without recourse to court.
  2. Whether such a power of sale without recourse to court violates the principle of natural justice.
  3. Whether the mortgagor established the conditions for the grant of a temporary injunction restraining the sale.

Orders

  • Appeal allowed.
  • Orders of the High Court set aside.
  • Costs of the appeal and of the application in the High Court awarded to the appellant Bank.

Rules and key headnotes

Mortgages — Mortgagee's Power of Sale — Sale by Public Auction Without Recourse to Court
Where the mortgage instrument and section 9 of the Mortgage Decree No. 17 of 1974 expressly empower the mortgagee to sell without applying to court, the mortgagee may sell the mortgaged property by public auction once demand has been made and the mortgagor or principal debtor has made default in payment.
Mortgages — Equity of Redemption — Confined to Repayment Where Power of Sale Exists
Where the mortgagee holds a power of sale exercisable without a court-ordered foreclosure, the mortgagor's right to redeem is confined to repayment of the loan and the mortgagee need not apply to court for foreclosure under section 7 of the Mortgage Decree No. 17 of 1974.
Natural Justice — Subordinate to Express Statutory Provision
A principle of natural justice cannot override an express legislative provision; a sale without recourse to court that is agreed by the parties and sanctioned by statute does not violate natural justice merely because the court's jurisdiction is not invoked.
Temporary Injunctions — Conditions in Giella v Cassman Brown
Where a mortgagor has contractually agreed to a power of sale by public auction without recourse to court, he establishes neither a prima facie case with a probability of success nor irreparable injury, and a temporary injunction restraining the sale will not be granted.

Legislation cited (3)

Cases cited (1)

  • Giella v Cassman Brown & Co Ltd [1973] EA 358

Full judgment

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

Barclays Bank of (U) Limited v Katende (Civil Appeal 22 of 1993) [1994] UGSC 38 (11 February 1994)
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.