Barclays Bank Uganda Ltd v Fairland University and Others (Originating Summons No. 3 of 2014)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
A legal mortgagee under a validly registered mortgage created before the Mortgage Act 2009 is entitled to foreclosure, sale, and possession under the Registration of Titles Act ss.116 and 118 where the mortgagor defaults. A subsequent claimant alleging equitable interest must establish that interest with clear evidence; a vague acknowledgment letter without property particulars or completed transaction is insufficient. The court held that originating summons is appropriate procedure for a mortgagee to enforce its rights under Order 37 Rule 4.
Outcome
Application granted with costs; mortgagee entitled to foreclosure, sale, and possession; caveat to be cancelled
Facts
In January 2008, Ateker Logistics Ltd obtained an asset finance lease facility of UGX 789,552,000 from Barclays Bank Uganda Ltd, secured by a mortgage over land comprised in LRV 354 Folio 3 Butembe, Busoga, created by Ateker Ejalu, the registered proprietor and company director. In May 2008, the facility was increased to UGX 840,500,000 secured by a further charge over the same property. Both mortgages were registered in 2008. The company defaulted on repayment obligations despite repeated demands. The bank recalled the facility and commenced recovery proceedings. The 1st Defendant, Fairland University, lodged a caveat on the property, claiming it had purchased the land from Ateker Ejalu in August 2007 for UGX 1,200,000,000. The 1st Defendant produced a letter dated 11 August 2007 acknowledging receipt of UGX 50,000,000 as deposit for an estate at Masese, Jinja, but the letter did not specify the property description and the transaction was never completed. The bank claimed it had no notice of any prior sale and that the land remained registered in Ateker Ejalu's name with no encumbrances except the mortgages.
Issues
- Whether the Plaintiff, as legal mortgagee of the property comprised in LRV 354 Folio 3 Butembe, is entitled to foreclose and sell the mortgage property to recover monies due from the 5th Defendant.
- Whether the Plaintiff is entitled to an eviction order against the 1st Defendant to obtain vacant possession of the premises.
- Whether the 1st Defendant's caveat registered on the mortgaged property should be cancelled by the Registrar of Titles to enable the Plaintiff exercise its rights as mortgagee.
Orders
- Application allowed.
- Plaintiff entitled to foreclose and sell the mortgaged property to recover outstanding balance.
- Plaintiff entitled to an eviction order against the 1st Defendant.
- Commissioner for Land Registration to cancel the 1st Defendant's caveat.
- Costs awarded to the Plaintiff.
Rules and key headnotes
Legislation cited (6)
Cases cited (4)
- Jeane Frances Nakamya Vs DFCU Bank LTD
- Housing Finance Bank and Another v Edward Musisi (Supreme Court Civil Appeal No. 22 of 2010)
- Mayanja Bosco v Kasiyaum Lios Okumu and Another (High Court Civil Suit No. 5 of 2008)
- Four Maids Vs Dudley Marshal (1957) CL 317
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.