Wakilii

Housing Financing Bank Limited v Silk Events Limited and Another (Civil Appeal 300 of 2021)

High Court · [2021] UGCOMMC 157 · 2021 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Assistant Registrar's order granting temporary injunction restraining sale of mortgaged property
Decision
Appeal dismissed; temporary injunction remains in place pending disposal of the main suit

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the appeal against the grant of a temporary injunction restraining sale of mortgaged property. The court held that Regulation 13(1) of the Mortgage Regulations 2012 mandatorily requires a 30% security deposit as a precondition for stopping or adjourning a mortgagee's sale, except where the application is by the spouse of a mortgagor under Regulation 13(6). The Assistant Registrar erred in not imposing this requirement, but since the injunction was already in place and the advertisement period had elapsed, setting it aside would serve no useful purpose. The appeal was dismissed with costs to abide the result of the main suit.

Outcome

Appeal dismissed; temporary injunction remains in place pending disposal of the main suit

Facts

The 1st respondent obtained a loan of UGX 348,000,000 from the appellant bank in November 2018. The 2nd respondent, a director of the 1st respondent, obtained a personal loan of UGX 500,000,000 in August 2017 for home purchase. The 1st respondent executed a corporate guarantee to secure the 2nd respondent's borrowing. As security for both loans, the 2nd respondent mortgaged his property comprised in Kyadondo Block 264 Plot 2183. Following default, the appellant advertised the mortgaged property for sale. The respondents sued seeking declarations that the credit facilities had been frustrated by Covid-19 Control Regulations banning public gatherings, and alternatively that the appellant's refusal to restructure the loans and attempt to sell the property was illegal. They sought a permanent injunction restraining disposal of the property. Pending the suit, the respondents obtained a temporary injunction from the Assistant Registrar, who declined to impose the 30% security deposit requirement under Regulation 13 of the Mortgage Regulations 2012. The appellant appealed.

Issues

  1. Whether the Assistant Registrar erred in not deciding whether the 1st respondent had locus standi to file the application.
  2. Whether the Assistant Registrar erred in disregarding the fact that the 2nd respondent had not filed an affidavit in support of the application.
  3. Whether the Assistant Registrar erred in declining to require the respondents to pay a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as a condition for the grant of the temporary injunction.
  4. Whether the Assistant Registrar erred in finding that the respondents' default occurred after promulgation of the Covid-19 Control Regulations.
  5. Whether the Assistant Registrar erred in deciding the application on the basis of the balance of convenience.
  6. Whether the Assistant Registrar erred in awarding the respondents the costs of the application.

Orders

  • Appeal dismissed.
  • Costs to abide the result of the suit.

Rules and key headnotes

Temporary Injunctions — Locus Standi — Threshold Issue
Locus standi is a threshold issue requiring early attention as a gatekeeping mechanism for any court exercising judicial power. Subject-matter and personal jurisdiction do not exist in the absence of locus standi. It is erroneous for a court to defer consideration of locus standi to the merits stage, as not only may a defendant be disadvantaged, but the decision may eventually turn out to be a nullity.
Affidavit Evidence — Joint Applications — Requirement for Separate Affidavits
Where parties appear jointly in a suit in respect of which they share a common legal interest based on the same facts of which the parties have similar personal knowledge, there is no requirement for each party to swear a separate affidavit. To require each party to do so would be a decision in utter disregard of economy of time, and testimony that is unnecessarily repetitive has little or no probative value.
Mortgage Regulations — Security Deposit Requirement — Mandatory Nature of Regulation 13(1)
Regulation 13(1) of the Mortgage Regulations 2012 mandatorily requires payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as a precondition for the court to adjourn or stop a sale by a mortgagee. The word 'may' in the provision refers to the discretion whether or not to adjourn the sale, but not to the requirement of payment of security deposit in the event of an adjourned sale. Once the court exercises its discretion by adjourning the sale, the mortgagor is mandatorily required to pay the security.
Mortgage Regulations — Statutory Override of Common Law Principles
Applications for temporary injunctions involving mortgaged property must be dealt with in conformity with the statutory provisions for mortgages under the Mortgage Act 2009 and Mortgage Regulations 2012. The statutory requirements override traditional considerations for the grant of a temporary injunction under Order 41 of the Civil Procedure Rules. Where a general statute and a specific statute relating to the same subject matter cannot be reconciled, the special or specific statute ordinarily will control.
Mortgage Regulations — 'Pay Now, Argue Later' Principle — Legislative Purpose
Regulation 13 of the Mortgage Regulations 2012 enacts the principle 'pay now, argue later.' It was enacted to restrict the ability of unscrupulous mortgagors to use litigation or the courts to vexatiously delay the realisation of money due to the mortgagee. The deposit is intended to reduce frivolous objections to sales by a mortgagee and guarantee that the mortgagee will not be unnecessarily prejudiced by the delay in payments inevitably occasioned by litigation. It discourages plaintiffs who would otherwise use a temporary injunction application as a viable but ultimately meritless litigation tactic.
Mortgage Regulations — Exceptions to Mandatory Deposit — Spouse of Mortgagor
Regulation 13(6) of the Mortgage Regulations 2012 carves out an exception to the mandatory 30% deposit requirement where the application is by the spouse of a mortgagor. In such cases, the court has discretion to determine whether the spouse shall pay the security deposit. The non obstante clause 'notwithstanding sub-regulation (1)' means that Regulation 13(6) overrides the mandatory requirement in Regulation 13(1) where the application is by the spouse of a mortgagor, allowing the court to balance the interests of the mortgagee against the spouse's right of occupancy of the matrimonial home guaranteed by section 39(1) of the Land Act.
Non Obstante Clauses — Effect and Interpretation
The expression 'notwithstanding' as a non obstante clause is used to indicate that the provision that follows is limited by or an exception to another provision. It means 'despite' something, or 'without regard to', or 'not prevented by'. A sub-section inserted notwithstanding another provision was intended to operate in deviation from the other provision. Where the latter provision confers a discretion, the implication is that the former provision in respect of which the drafter sought to exempt it does not allow for the exercise of such discretion.

Legislation cited (12)

Cases cited (25)

  • Giella v Cassman Brown & Co Ltd [1973] EA 358
  • Ganafa Peter Kisawuzi v DFCU Bank Limited (Civil Appeal No. 64 of 2016)
  • Willis International Engineering and Contractors Ltd v DFCU Bank (Miscellaneous Application No. 1000 of 2015)
  • North Bukedi Cooperative v Housing Finance Bank Ltd (Miscellaneous Application No. 173 of 2015)
  • Proscovia Mukasa v Cooperative Bank Ltd in liquidation (Miscellaneous Application No. 799 of 2014)
  • Kiyimba Kaggwa v Katende [1985] HCB
  • American Cyanamid v Ethicon [1975] AC 396
  • Nsubuga v Mutawe [1974] EA 487
  • Whitehorn v R (1983) 152 CLR 657
  • Haji Edirisa Kasule v Housing Finance Bank Ltd (Miscellaneous Application No. 667 of 2013)
  • Guaranty Trust Bank (U) Ltd v Ankole Riverline Hotel Ltd (Civil Appeal No. 28 of 2014)
  • Paunocks Enterprises Ltd v Stanbic Bank (U) Ltd (Miscellaneous Application No. 1113 of 2014)
  • Willis International Engineering and Contractors Ltd v DFCU Bank (Miscellaneous Application No. 1000 of 2015)
  • Miao Huaxian v Crane Bank Limited (Miscellaneous Application No. 935 of 2015)
  • GS Royal Hardware and Industries Ltd v Equity Bank (U) Ltd (Miscellaneous Application No. 721 of 2015)
  • Parul Ben Barot v Victoria Finance Company Ltd (Miscellaneous Application No. 319 of 2017)
  • Alpha2 Business Company Ltd v Diamond Trust Bank Ltd (Miscellaneous Civil Application No. 71 of 2016)
  • Chaudhri Thakur Das v Chaudhri Jairaj Singh [1903] UKPC 77
  • Warburton v Loveland (1824-34) All ER Rep 589
  • Escoigne Properties Ltd v Inland Revenue Commissioners [1958] 1 All ER 406
  • River Wear Commissioners v Adamson (1877) 2 App Cas 743
  • Eastman Photographic Materials Co v Comptroller-General of Patents [1898] AC 571
  • Heydon's Case (1584) 3 Co Rep 7a
  • Nakayaga v FINA Bank (Miscellaneous Application No. 471 of 2014)
  • Whitney v Commissioner of Inland Revenue [1926] AC 37

Full judgment

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Housing Financing Bank Limited v Silk Events Limited and Another (Civil Appeal 300 of 2021) [2021] UGCommC 157 (22 April 2021)
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.