Livingstone Katende v Barclays Bank Of Uganda,Bearing Machinery Equipment (Civil Suit No 658 of 1992)

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

Held that a legal mortgage clause permitting sale by public auction without resort to court violates the principle of natural justice by condemning the mortgagor unheard and purporting to oust the court's jurisdiction. The applicant demonstrated a prima facie case by showing the mortgaged property's value far exceeded the outstanding loan and that he had commenced part payment. The subject matter being land with developments, sale would cause irreparable injury not compensable by damages. Temporary injunction granted restraining public auction pending hearing of the main suit.

Outcome

Temporary injunction granted restraining public auction of mortgaged property pending determination of main suit

Facts

The plaintiff was registered proprietor of land at Mulago Kampala comprised in Mailo Register Kibuga Block 5 Plot 601. The second defendant secured credit facilities from the first defendant using the plaintiff's certificate of title as security. The plaintiff was neither a director nor shareholder in the second defendant company and was ignorant of its operations. When the second defendant defaulted on the loan, the first defendant instructed Expro Associates to auction the property. Advertisements appeared in newspapers in September 1992. The plaintiff alleged the property valued at over 120 million shillings far exceeded the outstanding loan of 4.5 million shillings. He had already paid 35,000 shillings toward reduction of the debt and undertook to pay until the debt was extinguished. The plaintiff contended he received no prior written demand as required under the guarantee and legal mortgage. The bank produced evidence of a registered statutory notice sent to the plaintiff on 20 May 1992 and a demand note from the chief manager.

Issues

1. Whether the applicant satisfied the conditions for grant of a temporary injunction.
2. Whether a legal mortgage clause permitting sale by public auction without resort to court ousts the jurisdiction of the court.
3. Whether the applicant demonstrated a prima facie case with probability of success.
4. Whether the applicant would suffer irreparable injury not adequately compensated by damages.

Orders

• Application succeeds.
• Temporary injunction granted to restrain the first defendant, their agents Expro Associates and servants from proceeding with the sale by public auction of land at Mulago Kampala comprised in Mailo Register Kibuga Block 5 Plot 601 until hearing and final determination of the main suit.
• Costs for this application to be costs in the cause.

Rules and key headnotes

Legislation cited (4)

• Civil Procedure Rules Order 37 r.1
• Civil Procedure Rules Order 37 r.9
• Civil Procedure Rules Order 48 r.1
• Civil Procedure Act s.101

Cases cited (5)

• Sergeant v Patel (1949) EACA 63
• Jan Mohammed v Madhoni (1953) 20 EACA 40
• E.A. Industries Ltd v Truffoods Ltd [1972] EA 42
• Quella v Casman Brown Ltd [1973] EA 358
• Nsubuga v Mutawa [1974] EA 482

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