Wakilii

DMK Capital v Tezitta & 3 Others (Miscellaneous Cause 54 of 2022)

High Court · [2023] UGCOMMC 248 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for vacant possession of mortgaged property under Section 26 of the Mortgage Act
Decision
Application for vacant possession dismissed; related suit to proceed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the application for vacant possession of mortgaged property. While the applicant proved the existence of a mortgage and default, the extent of liability was contentious due to a discrepancy between the amount claimed in the default notice (UGX 368,000,000) and the amount now claimed (UGX 647,334,000). The court held that where the 1st and 2nd respondents had filed a related suit challenging the mortgage, it was in the interests of justice that all contentions be settled before granting vacant possession.

Outcome

Application for vacant possession dismissed; related suit to proceed

Facts

DMK Capital advanced facilities totalling UGX 304,035,000 to the respondents secured by a mortgage on freehold property. The 1st and 2nd respondents executed a third party mortgage to secure a loan advanced to the 3rd and 4th respondents. Upon default, the applicant issued a default notice claiming UGX 368,000,000, followed by a notice of sale. The 1st and 2nd respondents denied receiving any money and filed a suit challenging the validity of the mortgage. They argued the mortgage deed was not properly attested, that compound interest was charged illegally, and that they signed as sureties, not borrowers. The applicant sought vacant possession to effect sale, claiming the respondents blocked valuers and potential buyers from accessing the property.

Issues

  1. Whether the application ought to have been filed by way of plaint or originating summons rather than by miscellaneous application.
  2. Whether the affidavit in support contravened Order 19 Rule 3 of the Civil Procedure Rules by including information from other sources.
  3. Whether the applicant fulfilled the requirements under Section 26 of the Mortgage Act to exercise the power of sale.
  4. Whether the third party mortgage was validly executed.
  5. Whether the court should grant vacant possession where the extent of liability is contentious and a related suit is pending.

Orders

  • Application dismissed.
  • No order as to costs.

Rules and key headnotes

Civil Procedure — Originating Process — Mortgage Applications — Whether Order 37 Rule 1 is Mandatory or Directory
The word 'may' in Order 37 Rule 1 of the Civil Procedure Rules, which provides that a mortgagee may take out an originating summons for relief, is directory and not mandatory. A mortgagee is not precluded from seeking relief by way of miscellaneous application.
Civil Procedure — Affidavit Evidence — Order 19 Rule 3 — Knowledge versus Belief
An affidavit sworn by a company's managing director containing facts within his knowledge by virtue of his position does not contravene Order 19 Rule 3 of the Civil Procedure Rules. Even where an affidavit contains information from undisclosed sources, this is not sufficient ground for nullifying the entire affidavit.
Banking & Finance — Third Party Mortgages — Nature and Effect — Liability of Third Party Mortgagor
A third party mortgage creates a secondary obligation in the form of a guarantee. The mortgagor makes a contractual promise to ensure that a borrower fulfils obligations and does not impose a personal or primary obligation to pay. It is a limited recourse guarantee so that the liability of the mortgagor is limited to the amount which can be realised upon disposal of the security.
Land & Property — Mortgages — Execution of Mortgage Deeds — Attestation Requirements under Registration of Titles Act
Under Section 147(1)(a)(iii) of the Registration of Titles Act, a mortgage deed signed by any party and attested by one witness, who may be an advocate, is held to be duly executed. The name of the attesting advocate need not be included on the deed for it to be valid.
Banking & Finance — Mortgages — Power of Sale — Requirements under Section 26 of the Mortgage Act — Discrepancy in Amount Claimed
Where a mortgagee seeks to exercise the power of sale under Section 26 of the Mortgage Act, the extent of liability must be clear and consistent. A discrepancy between the amount claimed in a default notice and the amount subsequently claimed without supporting statements of account renders the application for vacant possession premature, particularly where the mortgagor has filed a suit challenging the mortgage.

Legislation cited (13)

Cases cited (6)

  • Stanbic Bank v Anjani Natvorlal Rajoni and Another (HCMC No. 87 of 2021)
  • Sitenda Sebalu and Another v Sam K. Njuba and Another (Supreme Court Election Petition No. 26 of 2007)
  • Bakaruba Peter Mukasa v Nambooze Betty Bakireke (SCEP Appeal No. 4 of 2009)
  • Rtd. Col. Dr. Kizza Besigye v Yoweri Kaguta Museveni and Electoral Commission (Supreme Court Presidential Election Petition No. 1 of 2006)
  • Kasaala Growers Cooperative Society v Takooza Jonathan and Another (SCCA No. 19 of 2010)
  • Guma v Bank of Africa (U) Limited and 2 Others (Civil Suit No. 13 of 2008)

Full judgment

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

DMK Capital v Tezitta & 3 Others (Miscellaneous Cause 54 of 2022) [2023] UGCommC 248 (28 August 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.