Wakilii

Cairo Bank Uganda v James Ventures (U) Ltd, Byaruhanga James & Ndagire Durucansi Milly (Originating Summons 5 of 2023)

High Court · [2023] UGCOMMC 130 · 2023 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Originating summons by mortgagee bank seeking foreclosure, sale of mortgaged property, and vacant possession following borrower default
Decision
Mortgagee bank granted right to foreclose and sell mortgaged property by public auction and entitled to vacant possession pending completion of foreclosure

Observed later treatment

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Holding

The High Court held that a mortgagee bank is entitled to foreclose and sell mortgaged property by public auction where the mortgagor defaults on loan obligations and fails to remedy the default after proper notice under sections 19 and 20(e) of the Mortgage Act. The court further held that the mortgagee is entitled to vacant possession of the mortgaged property pending completion of foreclosure proceedings under section 24 of the Mortgage Act, but is not entitled to sell by private treaty without the mortgagor's consent, as section 28(1) requires sale by public auction.

Outcome

Mortgagee bank granted right to foreclose and sell mortgaged property by public auction and entitled to vacant possession pending completion of foreclosure

Facts

On 14 September 2021, James Ventures (U) Ltd obtained a loan facility of UGX 200,000,000 from Cairo Bank Uganda, secured by a mortgage over land registered in the names of the company's directors, Byaruhanga James and Ndagire Durucansi Milly, who also acted as guarantors. On 24 May 2022, the borrower obtained an additional facility of UGX 200,000,000 at 22% per annum, secured by the same property. Shortly after disbursement of the additional facility, the borrowers defaulted. The bank served a Notice of Default on 20 September 2022 and a Notice of Sale on 29 November 2022. The property was advertised for sale by public auction on 10 January 2023, but the sale was frustrated when the second and third respondents denied access to valuers and potential buyers. The second respondent was alleged to be armed and threatened harm to anyone attempting to access the property. On 5 April 2023, the bank served notice of intention to take possession. As of 11 April 2023, the respondents' indebtedness stood at UGX 182,810,219, with UGX 137,291,233 in arrears. The respondents did not file any affidavit in reply.

Issues

  1. Whether the Plaintiff (mortgagee) is entitled to foreclose and sell the mortgaged property to recover all sums of money due in respect of the principal debt, interest, and other incidental charges.
  2. Whether the mortgagee/Plaintiff is entitled to sell the property by private treaty under the circumstances.
  3. Whether the Plaintiff is entitled to an order of vacant possession of the mortgaged property comprised in Kyadondo Block 214 Plot 1385 situated at Kisasi pending completion of the foreclosure process.

Orders

  • The Plaintiff (mortgagee) is entitled to foreclose and sell the mortgaged property comprised in Kyadondo Block 214 Plot 1385 situated at Kisasi by public auction to recover all sums of money due in respect of the principal debt, interest, and other incidental charges.
  • The Plaintiff is entitled to vacant possession of the mortgaged property and developments comprised in Kyadondo Block 214 Plot 1385 situated at Kisasi pending completion of the foreclosure process.
  • The Plaintiff is granted the costs of this suit.
  • Application allowed.

Rules and key headnotes

Banking & Finance — Mortgage Foreclosure — Right to Foreclose and Sell — Default and Notice Requirements
Under sections 19 and 20(e) of the Mortgage Act, where a mortgagor defaults on loan obligations and fails to remedy the default within forty-five working days of service of a notice of default, the mortgagee has the right to foreclose and sell the mortgaged property.
Banking & Finance — Mortgage Sale — Method of Sale — Public Auction Requirement
Under section 28(1) of the Mortgage Act and Regulation 8 of the Mortgage Regulations, sale of mortgaged property must be by public auction unless the mortgagor consents to a sale by private treaty. Public auction is the preferred method of sale under the law.
Banking & Finance — Mortgage Foreclosure — Vacant Possession — Mortgagee's Right to Possession
Under section 24 of the Mortgage Act, a mortgagee may, after serving notice of not less than five working days, enter into possession of the mortgaged land. Where the court finds that a mortgagee is entitled to sell mortgaged property, it follows that the mortgagee is also entitled to vacant possession of the mortgaged premises pending completion of foreclosure.
Evidence — Affidavit Evidence — Uncontroverted Facts — Presumption of Acceptance
Where facts are sworn to in an affidavit and are not denied or rebutted by the opposite party, the presumption is that such facts are accepted.

Legislation cited (11)

Cases cited (3)

  • Samwiri Mussa v Rose Achen (1974) HCB 297
  • Ayisa Nassuna and Another v Commissioner Land Registration (Miscellaneous Cause No. 7 of 2020)
  • Barclays Bank of Uganda v Musimami and Another (Originating Summons No. 6 of 2011)

Full judgment

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

Cairo Bank Uganda v James Ventures (U) Ltd, Byaruhanga James & Ndagire Durucansi Milly (Originating Summons 5 of 2023) [2023] UGCommC 130 (30 January 2023)
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.