Letshego Uganda Limited v Kulayige (Originating Summons No. 5 of 2020)

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

Court held that a mortgagee who has complied with statutory notice requirements under the Mortgage Act is entitled to an order of sale of mortgaged property to recover outstanding debt. Court further held that consent to sale by private treaty expressed in the mortgage deed at the time of execution is retrospective and therefore invalid under Regulation 10(3) of the Mortgage Regulations—sale must proceed by public auction absent fresh written consent from the mortgagor after default.

Outcome

Judgment entered for Plaintiff with order for sale of mortgaged property by public auction and vacant possession granted

Facts

The Defendant obtained two loan facilities totalling UGX 160,000,000 from the Plaintiff bank, secured by a registered mortgage over land comprised in Block 327 Plot 243, Nakitoloko. The facilities were repayable within three months at 2.15% monthly interest. The Defendant defaulted on payment. The Plaintiff issued notices of default (18 April 2019) and notices of sale (15 July 2019), both of which the Defendant acknowledged but ignored. After advertising the property for sale on 22 August 2019, the Defendant blocked the Plaintiff's agents from accessing the property. On 21 October 2019, the Defendant requested more time until 26 October 2019 to settle the debt, to which the Plaintiff agreed. The Defendant failed to pay and continued denying access, leading the Plaintiff to bring this originating summons. The outstanding balance as at 22 October 2019 was UGX 158,026,000. The Defendant was personally served with the originating summons on 9 September 2020 but filed no response. The matter proceeded ex parte.

Issues

1. Whether the Plaintiff is entitled to foreclose and sell the mortgaged property of the mortgagor to recover all the sum of money due in respect of the principal debt, interest and other incidental charges?
2. Whether the Plaintiff is entitled to sell the said mortgaged property by private treaty or public auction to recover the entire sum due to it together with costs and expenses related thereto?
3. Whether the Plaintiff is entitled to costs of this suit?

Orders

• The Plaintiff is permitted to exercise their power of sale over the mortgaged property comprised in Block 327 Plot 243 situate at Nakitoloko, Busiro, Ssabagabo, Wakiso District so as to recover the outstanding sum of UGX 158,026,000/=.
• The Plaintiff is granted an order of vacant possession of the suit land in order to execute the sale in accordance with the law.
• The sale shall be by public auction in accordance with the provisions of the Mortgage Act and the Regulations.
• The outstanding sum shall attract interest at the rate of 25.8% per annum from 22nd October 2019 till full recovery of the principal sum.
• Costs of the suit awarded to the Plaintiff against the Defendant.

Rules and key headnotes

Legislation cited (13)

• Mortgage Act No. 8 of 2009 s.3(1)
• Mortgage Act No. 8 of 2009 s.3(4)
• Mortgage Act No. 8 of 2009 s.19
• Mortgage Act No. 8 of 2009 s.20(e)
• Mortgage Act No. 8 of 2009 s.26
• Mortgage Act No. 8 of 2009 s.27(1)
• Mortgage Act No. 8 of 2009 s.28(1)(d)
• Mortgage Regulations S.I No. 2 of 2012 r.8(1)
• Mortgage Regulations S.I No. 2 of 2012 r.9
• Mortgage Regulations S.I No. 2 of 2012 r.10
• Civil Procedure Act s.27
• Civil Procedure Rules Order 37 Rule 4
• Civil Procedure Rules Order 9 Rule 10

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