Wakilii

KCB Bank Uganda Limited v Tusingwire (Originating Summons 28 of 2023)

High Court · [2024] UGCOMMC 158 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Originating summons for foreclosure and sale of mortgaged property following default
Decision
Foreclosure and sale granted; defendant ordered to deliver vacant possession and bear additional costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division granted foreclosure and sale of mortgaged property comprised in Kyadondo Block 121 Plot 925 where the defendant mortgagor defaulted on a loan of UGX 100,000,000, was served with three notices of default in the prescribed form, failed to rectify the default within 45 working days as required by the Mortgage Act, and did not enter appearance in the foreclosure proceedings. The court held that the bank had complied with all statutory requirements under sections 19, 20, and 26 of the Mortgage Act and was entitled to take possession and sell the property to redeem the mortgage.

Outcome

Foreclosure and sale granted; defendant ordered to deliver vacant possession and bear additional costs

Facts

On 4 October 2022, the defendant approached the plaintiff bank for a loan facility of UGX 100,000,000, which was granted and secured by a legal mortgage over property comprised in Kyadondo Block 121 Plot 925 at Kansangati, Nangabo Cell, Wakiso District. The loan facility agreement was entered on 13 September 2022 and the mortgage was perfected and registered on 3 October 2022. The defendant breached the mortgage terms by defaulting on payment. The plaintiff served a first notice of default on 16 December 2022, a second notice on 6 January 2023, and a third notice on 27 March 2023, all of which were acknowledged by the defendant but ignored. The defendant continued to default beyond the statutory 45-day rectification period. The plaintiff communicated its intention to enter possession but the defendant denied access. The plaintiff filed the originating summons on 4 March 2024. When the matter came up for hearing on 26 March 2024, the defendant was absent despite service, and the court granted an order to proceed ex parte.

Issues

  1. Whether the Plaintiff is entitled to foreclosure and sell the mortgaged property to recover all sums due in respect of principal debt, interest, and other incidental charges?
  2. Whether the Defendant should be ordered to give vacant possession of the mortgaged property for the Plaintiff to sell upon foreclosure?
  3. Whether the Defendant is liable to meet additional costs upon an order for foreclosure and sale of the mortgaged property?
  4. Whether the Plaintiff should be granted costs of the suit?

Orders

  • The Plaintiff is entitled to foreclosure and sell the mortgaged property to recover all sums due in respect of principal debt, interest, and other incidental charges.
  • The Defendant shall give vacant possession of the mortgaged property to the Plaintiff to sell upon foreclosure.
  • The Defendant is liable to meet additional costs in the course of foreclosure and sale of the mortgaged property.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Mortgage Law — Foreclosure — Statutory Requirements for Foreclosure and Sale
A mortgagee is entitled to foreclosure and sale of mortgaged property under sections 19, 20, and 26 of the Mortgage Act where the mortgagor defaults on payment obligations, the mortgagee serves a notice of default in the prescribed form under section 19(3) requiring rectification within 45 working days, and the mortgagor remains in default after expiry of that period.
Banking Law — Mortgage Enforcement — Notice of Default Requirements
Under section 19(1) and (2) of the Mortgage Act, where money secured by a mortgage is payable on demand, a demand in writing creates a default, and the mortgagee may serve notice of default requiring rectification within 45 working days before exercising the power of sale under section 26.
Civil Procedure — Originating Summons — Appropriate Procedure for Mortgage Foreclosure
Under Order 37 Rule 4 of the Civil Procedure Rules, a mortgagee may take out an originating summons before a judge in chambers for relief including foreclosure, sale, or delivery of possession. The remedy of foreclosure can only be granted where a suit has been commenced by originating summons and clear evidence of compliance with statutory provisions is adduced to the court's satisfaction.
Civil Procedure — Ex Parte Proceedings — Entitlement to Proceed Where Defendant Does Not Enter Appearance
Where a defendant has been served with an originating summons and made aware of the proceedings but adamantly and voluntarily absents himself from proceedings and refuses to enter appearance, the court may proceed ex parte under Order 9 Rule 20(1) and the defendant puts himself out of locus standi to contest the plaintiff's claim.
Contract Law — Performance of Contract — Liability for Costs Under Mortgage Deed
Where a mortgage deed provides that the mortgagor shall meet all costs, charges, and expenses incurred by the mortgagee in relation to enforcement or as a result of breach of terms, the mortgagor is contractually liable to meet additional costs incurred in the course of foreclosure and sale under section 33(1) of the Contracts Act, and the court will not interfere with performance of the contract except for illegality or irregularity.

Legislation cited (17)

Cases cited (12)

  • Guarantee Trust Bank v Dokwals Uganda & Anor (High Court Civil Suit No. 1 of 2021)
  • Kulsumbai Gulamhussein Jaffer Ramji v Abdulhussein Jaffer Mohamed Rahim [1957] E.A. 699
  • Monica Kwesiga v Commercial Bank of Africa (High Court Miscellaneous Application No. 1197 of 2021)
  • Stanbic Bank Uganda Limited v Munwe Enterprises Limited & Anor (High Court Civil Suit No. 1 of 2022)
  • Lewis v Green [1905] 2 Ch. 340
  • Attorney-General of River State v Gregory Obi Ude (1993) 2 NWLR (Pt. 278) 638
  • Miller v Minister of Pensions [1947] 2 All ER 372
  • Letshego Uganda Limited v Felix Kulayigye (Originating Summons No. 5 of 2020)
  • Housing Finance Bank Limited v Seninde Margaret (Originating Summons No. 7 of 2021)
  • Ecumenical Church Loan Fund Uganda Limited v Ways KM Uganda Limited (Originating Summons No. 11 of 2014)
  • Wood v Capita Insurance Services Ltd [2017] 4 All ER 615
  • Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873

Full judgment

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

KCB Bank Uganda Limited v Tusingwire (Originating Summons 28 of 2023) [2024] UGCommC 158 (12 April 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.