Wakilii

Guaranty Trust Bank (U) Ltd v Ankole Riverline Hotel Ltd (Civil Appeal No. HCT-12-LD-CA-0028 of 2014)

High Court · [2016] UGHCCD 6 · 2016 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from decision of Assistant Registrar declining to order deposit of 30% of forced sale value of mortgaged property
Decision
Matter remitted with directions for respondent to deposit security; main suit to continue

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that under Regulation 13(1) of the Mortgage Regulations 2012, when a court exercises its discretion to adjourn a mortgaged property sale, the mortgagor must deposit 30% of the forced sale value as security. The word 'may' in the regulation refers to the court's discretion whether to adjourn the sale, not to the requirement of payment of security once the sale is adjourned. The appeal was allowed and the respondent was ordered to deposit UGX 325,800,000 within 30 days.

Outcome

Matter remitted with directions for respondent to deposit security; main suit to continue

Facts

The appellant bank granted facilities totalling UGX 900,000,000 to the respondent company. As security, the respondent's Managing Director executed a legal mortgage over property comprised in Leasehold Register Volume 2682 Folio 5, Plot 89-91 Kabale Road, Mbarara. The respondent defaulted, and as of 28 January 2014 the outstanding balance was UGX 837,840,470. The bank advertised the mortgaged property for sale due on 17 April 2014. The respondent filed Miscellaneous Application No. 032 of 2014 seeking an interim injunction to stop the sale. On 14 April 2014, the Assistant Registrar granted an interim injunction stopping the sale but declined to order the respondent to deposit 30% of the forced sale value as required by Regulation 13 of the Mortgage Regulations 2012. The bank appealed this decision.

Issues

  1. Whether the appeal was filed within time.
  2. Whether the trial Registrar erred in declining to order the respondent to deposit 30% of the forced sale value of the mortgaged property as required by Regulation 13(1) of the Mortgage Regulations 2012.
  3. Whether the requirement to deposit 30% security under Regulation 13(1) is mandatory or discretionary.

Orders

  • Appeal allowed.
  • The learned Registrar's decision of 14th April 2014 declining to order deposit of security is set aside.
  • The respondent shall deposit in court the sum of UGX 325,800,000 being 30% of the forced sale value of the property comprised in Leasehold Register Volume 2682 Folio 5, Plot 89-91 Kabale Road, Mbarara.
  • The said amount shall be deposited within 30 days of this order.
  • Costs of this application shall be in the main suit.

Rules and key headnotes

Mortgage Regulations — Security Deposit — Interpretation of Regulation 13(1)
Under Regulation 13(1) of the Mortgage Regulations 2012, the word 'may' refers to the court's discretion whether or not to adjourn a mortgaged property sale, not to the requirement of payment of security deposit. When a court exercises its discretion by adjourning the sale, the mortgagor is required to pay 30% of the forced sale value or outstanding amount as security.
Time Limits — Computation — Public Holidays
Under Order 51 rules 2 and 3 of the Civil Procedure Rules, Sundays and public holidays are excluded in the computation of limited time within which certain acts should be done. Where the time for doing any act expires on a Sunday or other day on which the offices are closed, the act shall be held to be duly done if done on the day on which the offices next open.
Mortgage Enforcement — Purpose of Security Deposit
The requirement for a mortgagor to furnish security equivalent to at least 30% of the outstanding amount for purposes of stopping a mortgaged property sale indicates the seriousness of the applicant in proving the case and provides an equitable remedy to the mortgagee bank for purposes of security in case an order stopping the sale is issued pending final disposal of the suit.

Legislation cited (7)

Cases cited (1)

  • Haji Edirisa Kasule and Another v Housing Finance Bank Ltd and 2 Others (Miscellaneous Application No. 667 of 2013)

Full judgment

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

Guaranty Trust Bank (U) Ltd Vs Ankole Riverline Hotel Ltd (Civil Appeal No. HCT-12-LD-CA-0028 of 2014) [2016] UGHCCD 6 (11 January 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.