Wakilii

Kabale Institute of Health Sciences Limited v The Miscrofinance Support Centre Limited (Miscellaneous Cause 144 of 2023)

High Court · [2024] UGCOMMC 219 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application under section 33 of the Mortgage Act and Order 52 rule 1 of the Civil Procedure Rules seeking cancellation of advertised sale of mortgaged properties and permanent injunction
Decision
Advertised sale of mortgaged properties cancelled and permanent injunction granted restraining the Respondent from proceeding with the sale

Observed later treatment

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Holding

Held that service of notice of default and notice of sale by registered post was ineffective as the Respondent failed to prove compliance with section 35 of the Interpretation Act—no evidence of payment for posting or actual receipt was provided. A mortgaged property cannot be sold simultaneously by both public auction and private treaty; the mortgagee must adopt one mode, and consent to private treaty must be obtained at the time of sale, not retrospectively from the mortgage deed. The mortgaged property must be valued to ascertain current market value and forced sale value before sale, and no valuation report was provided. Application allowed; advertised sale cancelled and permanent injunction granted.

Outcome

Advertised sale of mortgaged properties cancelled and permanent injunction granted restraining the Respondent from proceeding with the sale

Facts

The Respondent extended a loan facility of UGX 2,700,000,000 to the Applicant on 17 February 2020, secured by four properties in Kabale. The Applicant defaulted on loan repayment. The Respondent allegedly issued a notice of default dated 13 December 2022 and a notice of sale dated 28 February 2023, both purportedly served by registered post. On 17 November 2023, the Respondent advertised the properties for sale by both public auction and private treaty through Armstrong Limited in the New Vision newspaper. The Applicant contended it was never served with the notices, did not consent to sale by private treaty, and that the properties were not properly valued. The Respondent produced letters addressed to Posta Uganda as evidence of service, but the notice of default letter was unsigned and neither showed proof of payment for posting or actual receipt by the Applicant.

Issues

  1. Whether the notice of default and sale was effectively served on the Applicant (Mortgagor) as required by law
  2. Whether a sale of mortgaged property can be by both public auction and private treaty
  3. Whether the mortgaged property was valued

Orders

  • The advertisement of the Applicant's properties comprised in LRV 3260 Folio 21 Plot 6A Bunigo Road Kabale Municipality, Block plot 12 Katokye Kigezi Kabale, FRV 460 Folio 21 Plot 107 & 167 Block 1 Kihumuro Katokye and LRV HQT 727 Folio 22 Plot 19 Cohen Road Kabale in the New Vision newspaper dated 17 November 2023 is cancelled.
  • A permanent injunction is issued against the Respondent and its agents from taking further action in the aforementioned advertisement.
  • Costs of the suit awarded to the Applicant.

Rules and key headnotes

Mortgage Enforcement — Service of Notice of Default — Requirements for Effective Service by Registered Post
Where service of a notice of default is effected by registered post, the mortgagee must prove compliance with section 35 of the Interpretation Act by showing that the document was properly addressed, payment was made for posting, and the letter was posted by registered post; service remains challengeable until there is proof of receipt, and the burden is on the party asserting effective service to prove it.
Mortgage Enforcement — Sale by Public Auction versus Private Treaty — Prohibition of Simultaneous Advertisement
Under section 28(1)(d) of the Mortgage Act and Regulation 8(1) of the Mortgage Regulations, a mortgaged property cannot be sold simultaneously by both public auction and private treaty; the mortgagee must adopt one mode of sale, and where the mortgagee wishes to sell by private treaty, written consent of the mortgagor must be obtained at the time of sale and cannot be retrospective consent given at the time of executing the mortgage agreement.
Mortgage Enforcement — Valuation Requirement — Mandatory Pre-Sale Valuation
Under Regulation 11(1) of the Mortgage Regulations, a mortgagee must, before selling mortgaged property, value the property to ascertain the current market value and forced sale value, and under Regulation 11(2), the valuation report must not be made more than six months before the date of sale.
Service of Documents — Purpose and Modes of Service
The general purpose of service is to make a party aware of a claim or action about to be taken against them; the primary mode of service is personal service, and other modes should only be used where it is impossible to effect personal service, particularly where the party has a well-known address and can be located.

Legislation cited (10)

Cases cited (1)

  • Letshego Uganda Limited v Felix Kulayigye (Originating Summons No. 5 of 2020)

Full judgment

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

Kabale Institute of Health Sciences Limited v The Miscrofinance Support Centre Limited (Miscellaneous Cause 144 of 2023) [2024] UGCommC 219 (12 July 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.