Wakilii

Diamond Trust Bank (U) Ltd v Semakula & Anor (Originating Summons 1 of 2019)

High Court · [2019] UGCOMMC 26 · 2019 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance application by originating summons for vacant possession of mortgaged property following loan default
Decision
Defendants ordered to hand over vacant possession of the mortgaged properties to the Plaintiff

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A bank that advanced credit facilities totalling UGX 2,000,000,000 secured by mortgage is entitled to vacant possession where the borrower defaulted, the bank served the requisite notices under the Mortgage Act 2009 sections 19 and 26, and the defendants failed to respond or remedy the default. The mortgagee's compliance with statutory notice requirements under the Mortgage Act entitles it to enforce the security.

Outcome

Defendants ordered to hand over vacant possession of the mortgaged properties to the Plaintiff

Facts

The Defendants were customers of the Plaintiff bank and obtained credit facilities totalling UGX 2,000,000,000 on 20 June 2016. The facility comprised UGX 1,500,000,000 and UGX 500,000,000, repayable within 48 months. The loan was secured by mortgage over Kyadondo Block 267 Plot 274 and Kyadondo Block 267 Plot 431 at Lweza Mengo. The first Defendant signed the mortgage and both the first Defendant and his spouse signed personal guarantees. On 14 March 2017 the first Defendant acknowledged the indebtedness and sought a grace period. When the Defendants failed to service the loan, the Plaintiff served a Notice of Default dated 10 April 2018 pursuant to sections 19(2), 19(3) and 19(4) of the Mortgage Act 2009. Receiving no response, the Plaintiff served a Notice of Sale of Mortgaged Property dated 20 June 2018 pursuant to section 26 of the Mortgage Act 2009. The Defendants took no steps to remedy the default. The Plaintiff sought vacant possession to enable it to sell the properties and recover the outstanding debt.

Issues

  1. Whether the plaintiff/mortgagee is entitled to vacant possession of properties comprised in Kyadondo Block 267 Plot 274 and Kyadondo Block 267 Plot 431 at Lweza Mengo.

Orders

  • The Defendants are ordered to hand over to the Plaintiff vacant possession of the property comprised in Kyadondo Block 267 Plot 274 and Kyadondo Block 267 Plot 431 at Lweza Mengo.
  • The Defendants are to pay the costs of the suit.

Rules and key headnotes

Mortgage Enforcement — Statutory Notice Requirements
A mortgagee who has served the requisite notices under sections 19(2), 19(3), 19(4) and 26 of the Mortgage Act 2009 and received no response from the mortgagor is entitled to enforce the mortgage and obtain vacant possession of the mortgaged property.
Originating Summons — Failure to File Reply
Where a defendant who has been served with an originating summons and appears in court on an adjourned date but subsequently fails to file a reply or appear at the substantive hearing, the court may proceed ex parte on the plaintiff's application and grant relief on the evidence before it.
Mortgage — Security Performance — Right to Vacant Possession
Where a borrower has defaulted on a loan secured by mortgage and the mortgagee has complied with the statutory notice requirements, the mortgage must perform its role as security by enabling the mortgagee to recover what is due, including through obtaining vacant possession for purposes of sale.

Legislation cited (4)

Full judgment

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

Diamond Trust Bank (U) Ltd v Semakula & Anor (Originating Summons 1 of 2019) [2019] UGCommC 26 (27 August 2019)
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.