Wakilii

Finance Trust Bank Limited v Sophie Mawanda Nabbosa and 2 Others (Civil Suit No. 48 of 2022)

High Court · [2025] UGHC 1095 · 2025 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of unpaid loan balance following sale of mortgaged property
Decision
Suit dismissed with no order as to costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that while the plaint disclosed a cause of action for recovery of a loan, the plaintiff bank failed to prove the defendants' liability for the claimed balance of UGX 93,403,200/=. The plaintiff did not produce the complete mortgage facility agreement showing the interest rate and penalties, and failed to demonstrate compliance with statutory requirements for mortgagee sale, including proper advertisement in a newspaper of wide circulation at least 30 days before auction. The court found the plaintiff breached its duty of care to obtain the best price for the mortgaged property. The suit was dismissed with each party bearing its own costs.

Outcome

Suit dismissed with no order as to costs

Facts

On 12 June 2019, the 1st defendant obtained a loan of UGX 144,000,000/= from the plaintiff bank, secured by mortgage over property in Gayaza Masaka and personal guarantees from the 2nd and 3rd defendants. The 1st defendant defaulted on repayment. The plaintiff issued a statutory notice on 29 August 2019 and subsequently sold the mortgaged property for UGX 120,000,000/=. After deducting UGX 17,583,125/= for foreclosure costs and applying UGX 102,416,875/= to the outstanding loan, the plaintiff claimed a balance of UGX 93,403,200/= remained due. The defendants contended that the property had been valued at a forced sale value of UGX 200,000,000/= in 2019, and that the plaintiff breached its duty of care by selling below that value and failing to follow proper statutory procedures.

Issues

  1. Whether the Plaint discloses a cause of action against the defendants.
  2. Whether the defendants are indebted to the Plaintiff in the sum of UGX 93,403,200/= or at all.
  3. What remedies are available to the parties.

Orders

  • The suit is dismissed.
  • Each party will bear its costs of the suit.

Rules and key headnotes

Banking & Finance — Mortgage Lending — Burden of Proof — Incomplete Facility Agreement
Where a mortgagee bank claims recovery of an outstanding loan balance alleged to have accumulated through interest and penalties, but fails to produce the complete mortgage facility agreement showing the contractual interest rate and penalty provisions, the court cannot verify the correctness of the claim and the mortgagee fails to discharge its burden of proof.
Land & Property — Mortgagee Sale — Duty of Care — Best Price
Under section 27(1) of the Mortgage Act Cap. 239, a mortgagee exercising the power of sale owes a duty of care to the mortgagor to take all reasonable steps to obtain the best price as prescribed in the regulations. A mortgagee who breaches this duty is not entitled to compensation or indemnity from the mortgagor or sureties under section 27(2).
Land & Property — Mortgagee Sale — Statutory Requirements — Advertisement
Section 28(2) of the Mortgage Act Cap. 239 and Regulation 8 of the Mortgage Regulations, 2012 require that in a public auction of mortgaged property, the mortgagee must ensure the intended sale is publicly advertised in colour in a newspaper of wide circulation, with the auction date being no earlier than 30 days from the date of the first advertisement. Failure to adduce evidence of compliance with this requirement undermines the mortgagee's claim that it obtained the best price.
Banking & Finance — Mortgagee Sale — Foreclosure Costs — Accountability
Under section 31(1)(c) of the Mortgage Act Cap. 239, a mortgagee may apply part of the proceeds of sale to payment of costs and other reasonable expenses properly incurred and incidental to the sale. Where the mortgagee fails to account for expenses claimed to have been applied towards foreclosure costs, the propriety of such application remains in doubt.
Civil Procedure — Cause of Action — Disclosure in Plaint
To determine whether a plaint discloses a cause of action under Order 7 rule 11(a) of the Civil Procedure Rules, the court must look only at the plaint and its annexures. A cause of action is disclosed where the plaint demonstrates that the plaintiff enjoyed a right, that right was infringed, and the defendant is liable.

Legislation cited (6)

Cases cited (3)

  • Auto Garage v Motokov [1971] EA 514
  • Kapeke Coffee Works Ltd v N Part (Court of Appeal Civil Appeal No. 03 of 2000)
  • Jeane Frances Nakamya v DFCU Bank Ltd and Another (Court of Appeal Civil Appeal No. 105 of 2013)

Full judgment

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

Finance Trust Bank Limited v Sophie Mawanda Nabbosa and 2 Others (Civil Suit No. 48 of 2022) [2025] UGHC 1095 (3 October 2025)
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.