DFCU v Uganda Signs Limited and 2 Others (Originating Summons 17 of 2018)

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The court held that an equitable mortgage was validly created when the borrower deposited the certificate of title with the lender and the lender lodged a caveat to perfect its interest after a legal mortgage was declared void for improper execution. The court determined the debt due at UGX 63,706,433 as at 12 November 2008 and ordered the mortgagor to pay within two months, failing which the plaintiff may return for a foreclosure order under section 8 of the Mortgage Act.

Outcome

Debt declared due and owing; mortgagor given two months to pay, failing which plaintiff may return for foreclosure order

Facts

DFCU granted Uganda Signs Limited a lease facility of UGX 60,000,000 to purchase a digital printer, secured by deposit of a certificate of title for land at Kiwatule owned by the second defendant, a director of the first defendant. The first defendant defaulted on repayment. DFCU filed Originating Summons No. 9 of 2011 to enforce a legal mortgage, but the court declared that mortgage null and void for improper execution. DFCU then lodged a caveat on the title on 8 September 2015 to perfect an equitable mortgage. The first defendant made no payments toward discharging the loan. DFCU issued a final demand on 12 November 2008 for UGX 63,706,433 and appointed a receiver/manager on 27 January 2009. The defendants filed a preliminary objection of res judicata which was overruled in 2018, and failed to file an affidavit in reply by the court-ordered deadline of 20 January 2019.

Issues

1. Whether there is an equitable mortgage between the plaintiff and the defendants
2. What is the appropriate procedure for enforcement of the equitable mortgage?
3. What are the remedies available to the plaintiff?

Orders

• The plaintiff has satisfactorily demonstrated that the mortgagor is indebted to the plaintiff in the sum of UGX 63,706,433 as at 12/11/2008 and the said sum is declared as due and owing to the plaintiff.
• The 1st defendant who is the mortgagor is ordered to pay the said amount to the plaintiff within two (2) months from the date of delivery of this Ruling.
• In the event of default, the plaintiff shall return to this Court for the grant of an order for foreclosure.
• The plaintiff is directed to notify the 1st defendant of this order by placing the same in a newspaper with wide national circulation.
• The costs of this suit shall be paid by the 1st defendant.

Rules and key headnotes

Legislation cited (8)

• Civil Procedure Rules Order 37 rule 4
• Civil Procedure Rules Order 37 rule 8
• Civil Procedure Rules Order 37 rule 14
• Mortgage Act Cap. 229 s.8(2)
• Mortgage Act Cap. 229 s.8(3)
• Mortgage Act Cap. 229 s.9
• Registration of Titles Act Cap. 230 s.129
• Registration of Titles Act Cap. 230 s.129(3)

Cases cited (1)

• DFCU Bank Ltd v Dotways Marketing Bureau Ltd and Another (Originating Summons No. 6 of 2012)

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