Wakilii

Muduwa v Waniala (HCT-04-CV-CS-0038-2009) 2017 UGHCLD 44 (2017-02-14)

High Court · [2017] UGHCLD 44 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaration of fraudulent mortgage and permanent injunction
Decision
Plaintiff's claim succeeded against both defendants. Fraudulent mortgage and sale declared illegal. Property to be returned to plaintiff free of encumbrance with damages and costs.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a mortgage created without the registered proprietor's authorization amounts to fraud and is illegal, even where a power of attorney was granted for borrowing purposes only. Where the plaintiff executed a power of attorney authorizing the defendant to borrow money on her behalf and handed over her certificate of title to facilitate the process, but never authorized mortgage execution or received any funds, the subsequent mortgage and sale of her property by the defendants was fraudulent and unlawful. The plaintiff succeeded in obtaining declarations that the mortgage was fraudulent and illegal, removal of the caveat and mortgage, and damages for lost income.

Outcome

Plaintiff's claim succeeded against both defendants. Fraudulent mortgage and sale declared illegal. Property to be returned to plaintiff free of encumbrance with damages and costs.

Facts

The plaintiff was the registered proprietor of land comprised in LRV 2133 Folio 19 Block 2 Plot 77 at Nakaloke-Mbale. On 17 June 1995, she executed a power of attorney in favour of the 1st defendant authorizing him to borrow money on her behalf and handed over her certificate of title to facilitate the process. The plaintiff never received any money from the defendants. On 28 August 1997, a mortgage deed was purportedly executed over her property. In 2000, the 2nd defendant lodged a caveat to protect its equitable interest in the suit property. In 2009, the 2nd defendant registered the mortgage dated 28 August 1997 on the plaintiff's title. The 2nd defendant subsequently sold the suit property through its agents to one Galiwango Zubair. The plaintiff never authorized the execution of the mortgage or the sale. The 1st defendant did not file a defence or attend court. The 2nd defendant filed a written statement of defence but did not offer any evidence.

Issues

  1. Whether the plaintiff created a mortgage over the suit property in favour of the 2nd Defendant.
  2. Whether the sale of the suit property by the 2nd Defendant was lawful.
  3. Remedies/Reliefs available to parties.

Orders

  • Judgment entered for the Plaintiff against both defendants.
  • Declaration granted that the mortgages created in favour of the second Defendant on the land comprised in LRV 2133 Folio 19 Block 2 Plot 77 Nakaloke Mbale amounted to fraud.
  • Declaration granted that the purported mortgage deed executed on 28th August 1997 is illegal and/or ineffectual.
  • Declaration granted that the sale of the suit property by the 2nd Defendant was unlawful.
  • Order for removal of the caveat lodged by the 2nd Defendant on the Certificate of Title of the suit property.
  • Order for removal of the mortgage lodged by the 2nd Defendant on the Certificate of Title of the suit property.
  • Order that the 2nd Defendant delivers to the plaintiff the Certificate of Title of the suit property devoid of any encumbrance.
  • Permanent injunction restraining the defendants, their agents, servants and/or persons deriving title or authority from them from interfering with, auctioning, selling, managing, taking possession or dealing with the suit property.
  • Plaintiff awarded UGX 32,000,000 in lost income from date of suit to date of judgment.
  • Plaintiff awarded UGX 1,000,000 as punitive damages.
  • Plaintiff awarded UGX 1,000,000 as general damages for pain and suffering.
  • Interest at court rate on damages awarded from date of judgment to payment in full.
  • Taxed costs of the suit awarded to the Plaintiff against the defendants.

Rules and key headnotes

Fraudulent Mortgage — Unauthorized Execution — Power of Attorney Limited to Borrowing
A mortgage created without the authorization of the registered proprietor amounts to fraud and is illegal, even where a power of attorney was granted for limited purposes such as borrowing money.
Power of Attorney — Scope of Authority — Exceeding Mandate
Where a power of attorney authorizes an agent to borrow money on behalf of the principal but does not authorize mortgage execution, any mortgage executed by the agent exceeds the scope of authority and is invalid.
Sale of Mortgaged Property — Fraudulent Mortgage — Unlawful Disposition
The sale of property pursuant to a fraudulent and illegal mortgage is itself unlawful and of no legal effect.
Burden of Proof — Civil Matters — Failure to Adduce Evidence
In civil matters, the burden of proof lies on the party who asserts a fact. Where a defendant files a written statement of defence but fails to adduce any evidence in support, the plaintiff's evidence may be accepted if it proves the claim on a balance of probability.
Ex Parte Hearing — Order 16 Rule 4 — Consideration of Evidence
Where a defendant fails to appear to defend a matter, the court may proceed under Order 16 rule 4 of the Civil Procedure Rules to consider the evidence on record and determine the suit immediately.

Legislation cited (5)

Full judgment

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Muduwa v Waniala (HCT-04-CV-CS-0038-2009) 2017 UGHCLD 44 (2017-02-14)
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.