Wakilii

Housing finance Bank Ltd v Mayanja T A Mat Hotel and Leisure Centre (Originating Summons No. 6 of 2021)

High Court · [2022] UGCOMMC 75 · 2022 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Originating summons for foreclosure, eviction, and sale of mortgaged property under Order 37 Rules 4 and 8 of the Civil Procedure Rules and sections 20(d), 26, 27 and 28 of the Mortgage Act 2009
Decision
Judgment entered for the Plaintiff. Defendant foreclosed of right to redeem. Eviction ordered. Sale of mortgaged properties authorized.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A mortgagee may exercise remedies of foreclosure, eviction, and sale where a mortgagor defaults on loan repayment obligations. Under the Mortgage Act 2009, a mortgage operates as security only and does not transfer any interest in land to the mortgagee, but upon default the mortgagee acquires powers including entering possession and selling the mortgaged land. Failure to file a defence raises a presumption of constructive admission of the claim. Where a mortgagor fails to pay outstanding monies after service of requisite notices, the court will order foreclosure of the right to redeem, grant eviction, permit free access for valuation, and authorize sale of the mortgaged property.

Outcome

Judgment entered for the Plaintiff. Defendant foreclosed of right to redeem. Eviction ordered. Sale of mortgaged properties authorized.

Facts

The Defendant applied for and was granted a loan facility of UGX 236,000,000 by the Plaintiff on 9 September 2013, payable over 10 years at 20.5% per annum variable interest. The loan was secured by a mortgage deed executed on 23 September 2013 over land comprised in Block 261 Plots 939 and 942 at Lukuli-Kyaddondo, registered in the Defendant's name. The Defendant also executed a deed of assignment agreeing to bank all business proceeds in a designated account. The Plaintiff advanced the loan as agreed. The Defendant defaulted in repayment and failed to clear the indebtedness despite service of all required notices. As of 16 September 2021, the total outstanding amount including interest and charges stood at UGX 258,953,301. The Defendant was served with court process through publication in the Monitor newspaper on 1 April 2022 but failed to file a reply. The court directed the Plaintiff to proceed ex parte.

Issues

  1. Whether the Defendant/Mortgagor having failed to pay the Plaintiff's/Mortgagee's outstanding monies in the sums of UGX 258,953,301 should be foreclosed of his right to redeem the mortgaged properties?
  2. Whether the Plaintiff/Mortgagee should evict the Defendant from the mortgaged properties?
  3. Whether the Defendant should give free access to the Plaintiff/Mortgagee to enter, inspect and revalue the mortgaged properties?
  4. Whether the Plaintiff/Mortgagee should be permitted to sell the mortgaged properties upon foreclosure in accordance with the law?
  5. Whether the Plaintiff/Mortgagee should be granted costs of this suit?

Orders

  • The Defendant shall give free access to the Plaintiff to enter, inspect, and revalue the mortgaged property.
  • Eviction order granted against the Defendant from the mortgaged property.
  • The Plaintiff is permitted to sell the mortgaged property.
  • Costs of this suit are granted to the Plaintiff.

Rules and key headnotes

Mortgage Remedies — Foreclosure — Default in Loan Repayment
Where a mortgagor defaults in payment of loan obligations and fails to comply with notices served under section 19 of the Mortgage Act 2009, the mortgagee is entitled to exercise the remedy of foreclosure to terminate the mortgagor's right to redeem the mortgaged property.
Mortgage Law — Nature of Mortgage — Security Interest
Under section 8(1) of the Mortgage Act 2009, a mortgage operates as a security only and does not transfer any interest or right in the land from the mortgagor to the mortgagee, but the mortgagee has all powers and remedies in case of default by the mortgagor subject to the Act.
Mortgage Remedies — Mortgagee's Right to Enter Possession
Where a mortgagor is in default and does not comply with the notice served under section 19 of the Mortgage Act, the mortgagee may under section 20(d) enter into possession of the mortgaged land and is entitled to an order for eviction of the mortgagor.
Mortgage Remedies — Sale of Mortgaged Property
A mortgagee has the right to sell mortgaged land under section 20(e) of the Mortgage Act where the mortgagor is in default and does not comply with the notice served under section 19 of the Act.
Default Judgment — Failure to File Defence — Constructive Admission
Failure to file a defence raises a presumption or constructive admission of the claim made in the plaint and the plaintiff's story must be accepted as the truth.

Legislation cited (15)

Cases cited (3)

  • Housing Finance Bank Limited v Seninde Margret & Anor (Originating Summons No. 7 of 2021)
  • United Building Services Limited v Yofesi Muita t/a Quickset Builders and Co. (HCCS No. 154 of 2005)
  • Uganda Development Bank v Mugongo Construction Co. Ltd (1981) HCB 35

Full judgment

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

Housing finance Bank Ltd v Mayanja T A Mat Hotel and Leisure Centre (Originating Summons No. 6 of 2021) [2022] UGCommC 75 (30 August 2022)
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.