Wakilii

DFCU Bank v The Chief Registrar of Titles (Civil Suit No. 350 of 2007)

High Court · [2014] UGCOMMC 76 · 2014 Judgment for Plaintiff — Mortgage Reinstated AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Case stated by agreement under Registration of Titles Act s.174 and Civil Procedure Rules O.32 r.1(1)(c) for the court's opinion on specific legal questions
Decision
Judgment entered for plaintiff — mortgage ordered to be reinstated on title; plaintiff to bear own costs due to errors that precipitated the litigation

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Where a mortgaged property is sold to recover debt and the sale is subsequently set aside on public policy grounds, the mortgagee's legal mortgage must be reinstated on the title unless it has been discharged. The mortgagor's name being restored on the title merely affords an opportunity to redeem the property by paying the outstanding debt. To dismiss the claim while the debt remains unpaid would amount to unjust enrichment. The Registrar of Titles was directed to reinstate the mortgage instrument as an encumbrance on the title.

Outcome

Judgment entered for plaintiff — mortgage ordered to be reinstated on title; plaintiff to bear own costs due to errors that precipitated the litigation

Facts

Gold Trust Bank (predecessor to DFCU Bank) advanced a loan of UGX 80,000,000 to Nagongera Millers and Farmers Ltd, secured by a mortgage over land registered in the name of Victor Paul Kobel, a director and shareholder who executed a guarantee. The company defaulted and the bank exercised its power of sale. William Kasozi, a Bank of Uganda employee, was the successful bidder. The mortgage encumbrance was removed and Kasozi was registered as proprietor. Kobel challenged the sale, and the court set aside the sale as contrary to public policy, cancelled the transfer, and restored Kobel's name on the title, but made no pronouncement on reinstatement of the mortgage. Kasozi then sued the bank for breach of contract and obtained judgment. The bank's appeal was dismissed. The debt remained unpaid. The parties agreed to state a case for the court's opinion on whether the mortgage should be reinstated.

Issues

  1. Whether the legal mortgage dated 8 May 1996 executed in favour of the plaintiff in respect of Block 244 Plot 1769 at Kisugu should in the interests of justice be registered or reinstated on the title.
  2. Whether alternatively the caveat lodged on 8 May 2001 as Instrument No. 224814 should be registered on Block 244 Plot 1769 as an encumbrance to protect the plaintiff's interests.
  3. Whether costs of the suit should be provided for.

Orders

  • The Registrar of Titles is directed to reinstate the mortgage instrument as an encumbrance on the title.
  • The Registrar is to give notice to the mortgagor to deliver the guarantor's duplicate certificate of title to enable reinstatement of the mortgage.
  • The Registrar shall handover the owner's certificate of title to the plaintiff as soon as the reinstatement has been effected.
  • The plaintiff shall bear its own costs.

Rules and key headnotes

Mortgages — Effect of Sale Set Aside — Reinstatement of Mortgage
Where a sale of mortgaged property is set aside by court order and the mortgagor's name is restored on the title, the property remains subject to the mortgage unless it has been discharged, and the mortgagor must redeem the property by paying the outstanding debt or the property may be sold again in satisfaction of the mortgage debt.
Unjust Enrichment — Mortgage Debt Unpaid After Sale Set Aside
To dismiss a mortgagee's claim when the mortgagor and guarantor still owe money would amount to unjust enrichment, as they would benefit from the restoration of their property without discharging the debt secured by the mortgage.
Registration of Titles — Caveats — Mortgagee's Right to Lodge Caveat
A mortgagee retaining an equitable registrable interest in land has a right to lodge a caveat under the Registration of Titles Act s.139 directing the Registry not to record changes in ownership or dealings that would affect the mortgagee's interest, and the Registrar ought not to refuse registration of such a caveat.
Costs — Plaintiff's Own Errors Leading to Litigation
Where circumstances leading to litigation arose as a result of the plaintiff's errors, the court may exercise its discretion under Civil Procedure Act s.27(1) to order the plaintiff to bear its own costs notwithstanding success on the merits.

Legislation cited (4)

Cases cited (4)

  • Cooperative Bank Ltd (in Liquidation) v Christopher Kisembo and Another (Civil Suit No. 398 of 2002)
  • Nyangire Karumu and 2 Others v DFCU Leasing Co Ltd and 3 Others (Civil Suits Nos. 106, 105 and 788 of 2007)
  • Kantilal Devraj Shah v Principal Registrar of Titles [1964] EA 303
  • Francis Butagira v Deborah Namukasa [1992-1993] HCB 98

Full judgment

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

DFCU Bank v The Chief Registrar of Titles (Civil Suit No. 350 of 2007) [2014] UGCommC 76 (13 June 2014)
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.