Wakilii

Moses Jim Jjagwe v Standard Chartered Bank (U) Ltd (HCT-00-CC-CS 375 of 2004)

High Court · [2007] UGCOMMC 57 · 2007 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for damages arising from alleged negligent exercise of mortgagee's power of sale
Decision
Judgment entered for plaintiff with damages and partial costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

A mortgagee exercising its power of sale must take reasonable steps to obtain the best price reasonably obtainable. Where a bank's lawyers sold mortgaged property at Shs.120m by private treaty after accepting but failing to accommodate a Shs.180m offer that was ready for disbursement, and without subjecting the property to further competitive bidding, the sale was conducted in breach of the duty owed in equity. The mortgagor is entitled to general damages reflecting the loss caused by the hurried and inadequately diligent sale.

Outcome

Judgment entered for plaintiff with damages and partial costs

Facts

The plaintiff was a director in M/S JMK Investments Limited and operated an account with the defendant bank. His company received loan advances totalling Shs.110m guaranteed by the plaintiff. He defaulted and the security was advertised for sale. The plaintiff arranged for a buyer, Robert Tibagwa, to purchase the property for Shs.180m. Tibagwa's lawyer, Fred Muwema, made a formal offer which the defendant accepted subject to completion within two weeks by end of May 2004. DFCU Bank committed to provide bridging finance of Shs.100m and on 31 May 2004 Tibagwa's lawyer delivered a cheque for Shs.17m to cover the difference between DFCU's loan and the total debt of Shs.117m. Despite these arrangements and constant communication with the defendant's lawyers, the defendant sold the property to Ronald Membe for Shs.120m at close of business on 31 May 2004. The plaintiff was in prison at the time in connection with an unrelated debt to one Kiyimba Sentongo. Out of the sale proceeds, the defendant paid Shs.29.8m to Sentongo's lawyers and remitted Shs.5,094,387 to the plaintiff.

Issues

  1. Whether the plaintiff suffered any loss as a result of the sale.
  2. Whether the plaintiff is entitled to the remedies sought.

Orders

  • Plaintiff awarded general damages in the sum of Shs.15,000,000.
  • Interest awarded at 25% per annum from date of judgment until payment in full.
  • Plaintiff awarded half the taxed costs of the suit.
  • No order for nullifying, restraining and/or stopping the sale of the suit property.

Rules and key headnotes

Mortgages — Mortgagee's Power of Sale — Duty to Obtain Best Price
A mortgagee exercising its power of sale must act in good faith for the purpose of obtaining repayment and must take all reasonable steps to obtain the best price reasonably obtainable on the sale of the mortgaged property.
Mortgagee's Sale — Burden of Proof — Reasonable Care
The burden is on the mortgagee to show that it had taken all reasonable steps to obtain the best price reasonably obtainable on the sale of mortgaged property. The duty to obtain the best price is a duty owed in equity.
Agency — Acts of Lawyers — Liability of Principal
Where a bank's lawyers act as agents in the sale of mortgaged property, the bank is bound by their actions. He who does something through another does it himself.
Mortgagee's Sale — Private Treaty — Competitive Bidding
Where a mortgagee sells mortgaged property by private treaty without sufficient competitive bidding, and rejects a substantially higher offer from a reputable source without obtaining a second opinion or subjecting the property to further bids, the mortgagee has failed to exercise reasonable care to realize the asset to the best advantage of itself and the mortgagor.
Mortgagee's Sale — Accommodation of Borrower's Views
Lenders should take precautions by obtaining a decent second opinion and trying to accommodate the borrower's views on sale so far as is reasonably practicable in order to guard against subsequent challenges to the sale.
General Damages — Breach by Mortgagee — Assessment
General damages for negligent exercise of a mortgagee's power of sale are assessed to put the mortgagor in the same position as he would have been in if the mortgagee had taken all reasonable steps to obtain the best price for the property, taking into account the mortgagor's default and the mortgagee's right to sell.

Cases cited (3)

  • National Bank of Commerce Ltd and 2 others (HCCS No. 0496 of 2003)
  • Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971] 2 All ER 633
  • Malayan Banking Bhd v Hwang Rose and others [1997] 3 LRC 224

Full judgment

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

Moses Jim Jjagwe v Standard Chartered Bank (U) Ltd (HCT-00-CC-CS 375 of 2004) [2007] UGCommC 57 (31 May 2007)
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.