Wakilii

Nakato v Housing Finance Bank Limited and Another (Civil Appeal 687 of 2021)

High Court · [2022] UGCOMMC 130 · 2022 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from Registrar's order granting temporary injunction on condition of 30% deposit
Decision
Appeal dismissed; Registrar's order requiring 30% deposit upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the appeal, holding that Regulation 13(6) of the Mortgage Regulations 2012 confers discretion on the court to determine whether a spouse of a mortgagor must pay the 30% security deposit when seeking to stop a sale. The court must undertake an individualised assessment based on evidence of undue hardship. The appellant failed to provide sufficient evidence of her financial circumstances, income, assets, or liabilities to justify waiving the condition. Illiteracy, having ten children, and occupancy alone do not demonstrate inability to pay or undue hardship.

Outcome

Appeal dismissed; Registrar's order requiring 30% deposit upheld

Facts

The appellant is the wife of the 2nd respondent who mortgaged their matrimonial home at Munyonyo to the 1st respondent bank in August 2013 as security for a home improvement loan of UGX 375,000,000. When the 2nd respondent defaulted, the bank issued demand and default notices. The 2nd respondent filed suit in August 2018 challenging the notices; that suit was dismissed. The appellant then filed suit in October 2021 seeking a declaration that the mortgage was unlawful and the foreclosure process improper. She simultaneously applied for a temporary injunction to stop the sale. The Registrar granted the injunction on 30 November 2021 on condition that the appellant deposit 30% of the amount claimed by the bank by 30 December 2021. The appellant appealed that condition.

Issues

  1. Whether the learned Registrar erred in law and fact when he imposed a condition requiring the appellant to pay 30% of the sum claimed by the respondent within 30 days as part of the order granting a temporary injunction restraining the respondent from selling the mortgaged property.

Orders

  • Appeal dismissed.
  • Costs awarded to the 1st respondent.

Rules and key headnotes

Civil Procedure — Temporary Injunctions — Discretion of Court — Grounds for Appellate Interference
An appellate court will not interfere with the exercise of discretion by a lower court unless satisfied that the court misdirected itself in some matter and as a result came to a wrong decision, or unless it is manifest from the case as a whole that the court was clearly wrong in the exercise of discretion and injustice resulted.
Banking & Finance — Mortgages — Mortgage Regulations — Requirement to Deposit 30% Security
Regulation 13(1) of the Mortgage Regulations 2012 enacts the principle 'pay now, argue later' and is designed to restrict the ability of the mortgagor to use litigation to vexatiously delay the realisation of money due to the mortgagee. It requires a mortgagor seeking to adjourn or stop a sale to deposit 30% of the forced sale value or outstanding amount as security.
Family Law — Matrimonial Home — Spouse's Application to Stop Sale — Discretion under Regulation 13(6)
Where an application to stop the sale of mortgaged property is made by the spouse of a mortgagor under Regulation 13(6) of the Mortgage Regulations 2012, the court has discretion to determine whether that spouse shall pay the 30% security deposit. The court may waive the requirement where eviction from the matrimonial home would occasion the applicant undue hardship.
Family Law — Matrimonial Home — Undue Hardship — Factors for Consideration
When determining whether eviction from a matrimonial home will cause undue hardship justifying waiver of the 30% deposit requirement, the court will consider factors including the nature of the transaction, the size of the family, the period of occupation, the availability of alternative accommodation, unique qualities of the home, safety or health issues, and whether loss of accommodation will substantially affect the family's viability as a cohesive unit.
Family Law — Matrimonial Home — Undue Hardship — Burden of Proof and Evidence Required
The burden rests on the applicant spouse to provide evidence of income, assets, and liabilities to demonstrate that payment of the 30% deposit would cause undue hardship. The court must undertake an individualised assessment based on current circumstances showing that eviction would cause significant difficulty, expense, or disruption beyond that to which every mortgagor in default is necessarily subjected. Undue hardship cannot be inferred from illiteracy, having children whose circumstances are undisclosed, and a mere averment that the property is the only house available.
Land & Property — Mortgages — Statutory Requirements Override Traditional Considerations
Applications for temporary injunctions involving mortgaged property must be dealt with in conformity with the statutory provisions for mortgages under the Mortgage Act 2009 and the Mortgage Regulations 2012. The statutory requirements override traditional considerations for the grant of a temporary injunction.

Legislation cited (5)

Cases cited (17)

  • Kiyimba Kaggwa v Haji AN Katende [1885] HCB 43
  • Robert Kavuma v M/s Hotel International (Supreme Court Civil Appeal No. 8 of 1990)
  • National Insurance Corporation v Mugenyi and Company Advocates [1987] HCB 28
  • Wasswa J Hannington and Another v Ochola Maria Onyango and Three Others [1992-93] HCB 103
  • Devji v Jinabhai (1934) 1 EACA 89
  • Mbogo and Another v Shah [1968] EA 93
  • HK Shah and Another v Osman Allu (1974) 14 EACA 45
  • Patel v R Gottifried (1963) 20 EACA 81
  • Haji Nadin Matovu v Ben Kiwanuka (Supreme Court Civil Application No. 12 of 1991)
  • Sheikh Jama v Dubat Farah [1959] 1 EA 789
  • Hussein Janmohamed and Sons v Twentsche Overseas Trading Co Ltd [1967] 1 EA 287
  • Banco Arabe Espanol v Bank of Uganda (Supreme Court Civil Appeal No. 8 of 1998)
  • Thomas James Arthur v Nyeri Electricity Undertaking [1961] 1 EA 492
  • Willis International Engineering and Contractors Ltd and Another v DFCU Bank (High Court Miscellaneous Application No. 1000 of 2015)
  • Miao Huaxian v Crane Bank Limited and Another (High Court Miscellaneous Application No. 935 of 2015)
  • Ganafa Peter Kisawuzi v DFCU Bank Ltd (Court of Appeal Civil Application No. 64 of 2016)
  • Nakayaga v FINA Bank and Another (High Court Miscellaneous Application No. 471 of 2014)

Full judgment

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Nakato v Housing Finance Bank Limited and Another (Civil Appeal 687 of 2021) [2022] UGCommC 130 (5 April 2022)
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.