Wakilii

Centenary Rural Development Bank Limited v Kwesiga (HCT-05-CV-CA 59 of 2022)

High Court · [2025] UGHC 69 · 2025 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from Chief Magistrates Court of Ibanda in a miscellaneous cause concerning mortgage enforcement
Decision
Appeal allowed and ruling of the Chief Magistrates Court set aside, permitting the bank to proceed with enforcement of the mortgage

Observed later treatment

No later-treatment classification is recorded for this judgment.

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AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The High Court allowed the appeal, holding that the mortgage transaction between the bank and borrower created an informal equitable mortgage based on an unregistered kibanja interest in land, not an informal mortgage on customary land. The trial magistrate erred in law by mischaracterising the nature of the mortgage and wrongly applying the mandatory mediation requirement under section 6(2) of the Mortgage Act, which applies only to customary land mortgages. The appellant bank was entitled to enforce the mortgage according to the parties' contractual agreement providing for sale by private treaty or public auction.

Outcome

Appeal allowed and ruling of the Chief Magistrates Court set aside, permitting the bank to proceed with enforcement of the mortgage

Facts

The appellant bank advanced a loan of UGX 25,000,000 to the respondent on 20 November 2020, secured by a kibanja mortgage agreement over unregistered land at Kyaruhanga II, Ibanda District. The borrower fell ill in June 2021 and defaulted on monthly payments. The bank issued demand notices in July 2021, rejected the borrower's request for extension, and advertised the property for sale in the Daily Monitor. The borrower filed a miscellaneous cause in the Chief Magistrates Court seeking to halt the sale and review the mortgage. The trial magistrate halted the sale, holding that the bank used the wrong procedure because the mortgage was an informal mortgage on customary land requiring mediation and court order under section 6(2) of the Mortgage Act. The bank appealed.

Issues

  1. Whether there are grounds for halting the sale of the mortgaged property
  2. Whether there are grounds for reviewing the mortgage
  3. Whether the trial Magistrate erred in striking out the appellant's affidavit in reply for lack of authority of the deponent
  4. Whether the trial Magistrate erred in holding that the respondent's application by way of miscellaneous cause was not defective
  5. Whether the trial Magistrate erred in holding that there was an equitable mortgage on customary land
  6. Whether the trial Magistrate erred in holding that the appellant used the wrong procedure to realise its money and should have sought mediation and court order first

Orders

  • Appeal allowed.
  • Ground one succeeds.
  • Ground two fails.
  • Ground three succeeds.
  • Ground four succeeds.
  • The ruling, orders and awards of the trial court are set aside.

Rules and key headnotes

Land & Property — Mortgages — Classification of Mortgages — Informal Equitable Mortgage Based on Unregistered Interest in Land — Kibanja Mortgage
An informal mortgage as defined in section 1 of the Mortgage Act has two subsets: a mortgage on unregistered customary land, and an equitable mortgage. A mortgage of a kibanja interest held by a lawful occupant under section 29 of the Land Act creates an informal equitable mortgage based on an unregistered interest in land, not an informal mortgage on customary land.
Land & Property — Customary Land Tenure — Definition — Kibanja Interest Distinguished
Customary land tenure is defined in section 3(1) of the Land Act as land applicable to a specific area and class of persons, governed by rules generally accepted as binding by that class, subject to local customary regulation, and providing for communal ownership. A kibanja interest does not fulfill this definition and is not customary land but rather an interest of a lawful occupant under section 29 of the Land Act.
Banking & Finance — Mortgage Enforcement — Informal Equitable Mortgage — Mediation Requirement Inapplicable
The mandatory mediation and court order requirement under section 6(2) of the Mortgage Act applies only to mortgages on customary land. Where parties create an informal equitable mortgage based on an unregistered kibanja interest, the mortgagee may enforce the mortgage according to the contractual terms agreed by the parties, without first resorting to mediation.
Civil Procedure — Affidavit Evidence — Authority of Deponent — Legal Manager Litigation
A legal manager litigation of a bank who clearly introduces himself in that capacity in an affidavit is a principal officer knowledgeable of the facts and has authority to swear an affidavit in reply under Order 29 Rule 1 of the Civil Procedure Rules. Where there is doubt as to the deponent's authority, the proper procedure is to cross-examine the deponent under Order 19 Rule 2, not to strike out the affidavit.
Civil Procedure — Appeals — Time Limits — Computation — Time for Preparing Record Excluded
Under section 79(2) of the Civil Procedure Act, time taken in preparing the lower court record is deducted from the computation of the 30 days within which an appeal must be filed. Where an appellant requests certified proceedings and receives them, the period between the request and receipt is excluded from the computation of the appeal period.

Legislation cited (22)

Cases cited (2)

  • Fr. Narsensio Begumisa and 3 Ors v Eric Kibebaga (Supreme Court Civil Appeal No. 17 of 2002)
  • Masinde Mike Collins v Finance Trust Bank and Others (Civil Suit No. 0756 of 2017)

Full judgment

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

Centenary Rural Development Bank Limited v Kwesiga (HCT-05-CV-CA 59 of 2022) [2025] UGHC 69 (20 February 2025)
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.