Wakilii

Encot Micro-Finance Limited v Kyaterekera (Civil Miscellaneous Appeal 8 of 2023)

High Court · [2024] UGHC 926 · 2024 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from ruling of Assistant Registrar granting temporary injunction in mortgage sale dispute
Decision
Appeal dismissed with temporary injunction order left undisturbed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the appeal lacked merit because the sale of the mortgaged property had occurred before both the filing of the suit and the grant of the temporary injunction. The court found the Registrar's order had been overtaken by events and had no practical relevance since it neither stopped the sale nor prohibited the mortgagee from taking possession. The Appellant sat on its rights under the Mortgage Act and the mortgage terms by failing to evict the mortgagor and take possession after the sale, and could not attribute subsequent events to the Respondent's suit or the Registrar's order.

Outcome

Appeal dismissed with temporary injunction order left undisturbed

Facts

The Respondent obtained a loan of UGX 40,000,000/= from the Appellant at 30% per annum interest, mortgaging his land as security. The Respondent defaulted. The Appellant issued default notices and advertised the property for sale in March 2022. On 13 June 2023, the property was sold by private treaty at UGX 60,000,000/= with a down payment of UGX 18,000,000/=. On 30 June 2023, the Respondent filed Civil Suit No. 22 of 2023 challenging the sale and seeking a temporary injunction. On 13 September 2023, the Assistant Registrar granted the injunction on condition that the Respondent deposit UGX 2,000,000/= as a top-up to the alleged UGX 16,000,000/= already paid, totalling 30% of the outstanding amount under Regulation 13(1) of the Mortgage Regulations 2012. The Appellant appealed, arguing that the Respondent had not in fact paid UGX 16,000,000/= and that the 30% security deposit should be calculated on the outstanding balance at the time of filing suit, not on prior loan repayments.

Issues

  1. Whether the learned Assistant Registrar erred in holding that the Respondent had paid UGX 16,000,000/= in fulfilment of the mandatory security deposit requirement under Regulation 13(1) of the Mortgage Regulations 2012.
  2. Whether the learned Assistant Registrar erred in ordering the Respondent to deposit only UGX 2,000,000/= as a top-up payment for the security deposit requirement under Regulation 13(1) of the Mortgage Regulations 2012.
  3. Whether the learned Assistant Registrar erred in holding that the Respondent had satisfied the grounds for grant of a temporary injunction involving mortgaged property.
  4. Whether the appeal was overtaken by events given that the mortgaged property had already been sold by the time the temporary injunction was granted.

Orders

  • Appeal dismissed.
  • No order as to costs.

Rules and key headnotes

Land & Property — Mortgages — Security Deposit Requirement — Mootness Where Sale Conducted Before Injunction
Where a mortgagee has already sold mortgaged property by private treaty before a mortgagor files suit and obtains an order for temporary injunction, the order requiring payment of 30% security deposit under Regulation 13(1) of the Mortgage Regulations 2012 is moot and has no practical relevance, as it neither stops the sale nor prohibits the mortgagee from exercising rights to take possession.
Land & Property — Mortgages — Mortgagee's Rights — Duty to Take Possession Before Sale
A mortgagee must secure possession of mortgaged property before conducting a sale under the Mortgage Act and Regulations. Where a mortgagee conducts a sale but fails to take possession and subsequently seeks to attribute loss to a mortgagor's suit filed after the sale, the mortgagee is deemed to have sat on its rights under the Mortgage Act, the Mortgage Regulations, and the mortgage terms.
Civil Procedure — Appeals — Interlocutory Orders — Right of Appeal Against Registrar's Order
A person aggrieved by any order of a registrar may appeal from that order to the High Court under Order 50 rule 8 of the Civil Procedure Rules. An appeal against an interlocutory order of a registrar is not incompetent or premature merely because it is brought before final determination of the main suit.
Land & Property — Mortgages — Regulation 13(1) Mortgage Regulations 2012 — Interpretation of 30% Security Deposit Requirement
Regulation 13(1) of the Mortgage Regulations 2012 imposes a precondition for adjournment of a mortgage sale that the mortgagor pay a security deposit of 30% of either the forced sale value of the mortgaged property or the outstanding amount. The 30% security deposit is charged on the amount that the lender considers to be the outstanding balance at the time the borrower files suit or seeks an injunction, not on amounts already paid under loan obligations prior to institution of suit.

Legislation cited (12)

Cases cited (4)

  • Selle & Anor v Associated Motor Boat Co. Ltd & Ors [1968] EA 123
  • Ferdsult Engineering Services Ltd & Anor v Attorney General & Absa Bank (U) (Constitutional Petition No. 18 of 2021)
  • Sanyu Lwanga Musoke v Sam Galiwango [1997] V KALR 47
  • Charles Harry Twagira v Uganda (Supreme Court Criminal Appeal No. 27 of 2003)

Full judgment

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

Encot Micro-Finance Limited v Kyaterekera (Civil Miscellaneous Appeal 8 of 2023) [2024] UGHC 926 (13 September 2024)
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.