Wakilii

Eco Bank Uganda Limited v Kakooza (HCT - 00 - LD - OS - 0014 -2-15)

High Court · [2016] UGHCLD 3 · 2016 Foreclosure Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Originating summons by mortgagee for foreclosure and sale of mortgaged property under Order 37 Rules 4 and 8 CPR, heard ex parte
Decision
Foreclosure granted with 30-day redemption period; mortgagee authorised to sell by public auction if property not redeemed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a legal mortgagee who has served proper notice of default under the Mortgage Act s.19 and allowed the statutory rectification period to expire is entitled to foreclose and sell the mortgaged property. The mortgagor's failure to respond to the originating summons amounts to admission of the debt under Order 8 Rule 3 CPR. The mortgagee was granted 30 days' redemption period from the date of judgment, after which sale by public auction was authorised.

Outcome

Foreclosure granted with 30-day redemption period; mortgagee authorised to sell by public auction if property not redeemed

Facts

On 4 August 2014, Eco Bank Uganda Limited granted Kakooza Musa Trading Co. Ltd loans totalling UGX 1,748,000,000 for import purposes, secured by a legal mortgage executed on 28 July 2014 over property comprised in Kyadondo Block 185 Plot 527 at Namugongo registered in the defendant's name. The defendant defaulted on repayment obligations. On 20 January 2015, the plaintiff served a Notice of Default under Mortgage Act s.19 demanding payment of UGX 1,732,411,026.13 within 45 working days (expiry 25 March 2015). The defendant failed to pay and did not respond to the notice. The plaintiff filed an originating summons under Order 37 Rules 4 and 8 CPR seeking foreclosure and sale. The defendant did not file any response or appear at the hearing, which proceeded ex parte after proper service was proved.

Issues

  1. Whether the Applicant as legal mortgagee is entitled to foreclosure and sale of the mortgaged property comprised in Kyadondo Block 185 Plot 527 at Namugongo to recover amounts due.
  2. Whether the Applicant is entitled to sell the mortgaged property by private treaty or public auction.
  3. Whether the Applicant is entitled to vacant possession of the mortgaged property and to evict the Respondent.

Orders

  • The Applicant, as legal mortgagee, is entitled to foreclose and sell the mortgaged property comprised in Kyadondo Block 185 Plot 527 at Namugongo to realise its security.
  • The Applicant is entitled to take vacant possession of the mortgaged land for purposes of selling the property.
  • The Defendant/Mortgagor has 30 days from the date of judgment to redeem the mortgaged property by paying the outstanding debt of UGX 1,732,411,026.13.
  • After 30 days, the mortgagor's right to redeem shall be extinguished.
  • The Mortgagee shall sell the mortgaged property by public auction after giving 30 days' notice of sale in New Vision and Daily Monitor specifying date and venue.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Mortgage Law — Foreclosure — Legal Mortgagee's Right to Foreclose and Sell
A legal mortgagee who has served a notice of default under s.19 of the Mortgage Act 2009 and allowed the statutory rectification period to expire is entitled to exercise the power of sale under s.26 of the Mortgage Act and to foreclose and sell the mortgaged property to realise its security.
Originating Summons — Order 37 CPR — Procedure for Mortgage Enforcement
Order 37 Rule 4 of the Civil Procedure Rules provides a procedure by originating summons for mortgagees to seek relief including foreclosure and delivery of possession, serving the purpose of enabling the court to settle simple and straightforward mortgage cases without lengthy proceedings under ordinary plaints.
Pleadings — Failure to Deny — Effect of Non-Response
Under Order 8 Rule 3 of the Civil Procedure Rules, every allegation of fact in the plaint, if not denied specifically or by necessary implication, shall be taken to be admitted, and a defendant's failure to respond to an originating summons or file any affidavit in rebuttal amounts to admission of the debt claimed.
Mortgage Law — Notice of Default — Statutory Requirements
Under s.117 of the Registration of Titles Act and s.19 of the Mortgage Act 2009, where money secured by a mortgage is made payable on demand, a demand in writing creates a default in payment and the mortgagee may serve a notice in writing specifying the default and requiring rectification within the statutory period.
Mortgage Law — Redemption Period — Court's Discretion
Although the practice allows a defaulting mortgagor six months for redemption from the date of default, the court retains discretion to set a different redemption period; where 13 months had already elapsed from default, the court may allow 30 days from the date of judgment as the final redemption period.

Legislation cited (7)

Cases cited (3)

  • Samwiri Massa v Rose Achen (1978) HCB 297
  • Barclay's Bank of Uganda Limited v Makaka Fred Mugerwa & Anor (H.C. Originating Summons No. 004 of 2015)
  • Mayanja Bosco v Kasikukuru Lois Okum & Anor (H.C. Originating Summons No. 005 of 2008)

Full judgment

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

Eco Bank Uganda Limited v Kakooza (HCT - 00 - LD - OS - 0014 -2-15) [2016] UGHCLD 3 (22 April 2016)
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.