Wakilii

Nalule Ramulah v Equity Bank (U) Limited and Others (Civil Suit No. 150 of 2020)

High Court · [2025] UGCOMMC 241 · 2025 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaratory orders, damages, and injunction arising from allegedly illegal sale of mortgaged property
Decision
Sale of mortgaged property declared illegal and void ab initio; permanent injunction granted restraining dealings with the property; bank retains right to recover debt through proper procedure

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The court held that the plaintiff defaulted on her loan obligations. However, the mortgagee bank illegally sold the mortgaged property because the default notice failed to state the date of service, making it impossible to calculate the statutory 45-day grace period under Mortgage Act s.19(2). Consequently, the sale to the second defendant was void ab initio. A permanent injunction was granted restraining dealings with the property. The bank remains entitled to recover the debt through proper legal process. General damages of UGX 25,000,000 awarded.

Outcome

Sale of mortgaged property declared illegal and void ab initio; permanent injunction granted restraining dealings with the property; bank retains right to recover debt through proper procedure

Facts

In September 2018, the plaintiff obtained a UGX 30,000,000 loan from the defendant bank secured by a mortgage on her property at Busiro Block 263, Plot 1157 in Senge, Wakiso District. The loan was repayable in 18 equal installments at 24% interest per annum. The plaintiff serviced the loan until she fell ill and was hospitalized in June 2019, causing four months of non-payment. The bank issued a demand notice on 11 June 2019, a default notice on 2 August 2019, and advertised and sold the property to the second defendant on 15 November 2019. The plaintiff discovered an alien credit of UGX 35,000,000 in her loan account and learned her property had been sold. She claimed the property was valued at UGX 56,000,000 in 2017 but sold for UGX 30,000,000 when it had appreciated to approximately UGX 120,000,000. The bank claimed the plaintiff defaulted and that proper statutory notices were given before exercising the power of sale under the Mortgage Act.

Issues

  1. Whether the Plaintiff was in default of her loan obligations to the 1st Defendant?
  2. Whether the 1st Defendant illegally and fraudulently sold the suit property to the 2nd Defendant?
  3. Whether the 3rd Defendant duly executed his obligations under the law when he sold the suit property to the 2nd Defendant?
  4. Whether the transfer of the suit property in the name of the 2nd Defendant was valid?
  5. What remedies are available to the parties?

Orders

  • The Plaintiff was in default in her loan repayment obligation to the 1st Defendant.
  • The 1st Defendant's process of exercising its right of sale in the mortgaged property in Busiro Block 263, Plot 1175 situated in Senge Wakiso District was improper and illegal.
  • The subsequent actions of sale of the mortgaged property in Busiro Block 263, Plot 1175 by the 1st Defendant to the 2nd Defendant, if at all, are illegal and void ab initio.
  • A permanent Injunction is issued against the 1st Defendant, 2nd Defendant, and all their agents or third parties from dealing with the mortgaged property in Busiro Block 263, Plot 1175 situated at Senge Wakiso District in the course of the exercise of the 1st Defendant's right of sale emanating from the impugned default notice dated 2nd August 2019.
  • The 1st Defendant is still entitled to recover the defaulted loan amount from the Plaintiff through all legal recourse at its disposal.
  • The Plaintiff is awarded UGX 25,000,000 as General damages.
  • The Plaintiff is awarded 70% of the costs of the suit against the 1st Defendant.

Rules and key headnotes

Mortgage Law — Power of Sale — Statutory Notice Requirements — Mortgage Act s.19(2)
A mortgagee's power of sale under Mortgage Act s.26 is not absolute and is subject to strict compliance with statutory notice requirements in s.19(2), including service of a default notice requiring the mortgagor to rectify the default within 45 working days, and the notice must clearly state the date of service to enable accurate calculation of the grace period.
Mortgage Law — Default Notice — Date of Service — Calculation of Statutory Grace Period
Where a default notice fails to state the date of service, it is impossible to calculate when the 45-day statutory grace period under Mortgage Act s.19(2) begins to run, and any subsequent exercise of the power of sale based on that defective notice is speculative and void ab initio, regardless of whether the mortgagor was personally served with the notice.
Mortgage Law — Notice of Sale — Relationship to Default Notice
A notice of sale under Mortgage Act s.26 cannot substitute for or replace the default notice required under s.19(2), nor can it cure defects in the default notice, because the two notices serve different purposes and functions in the statutory scheme for mortgagee's exercise of the power of sale.
Breach of Contract — Fraud — Standard of Proof — Distinction from Illegality
An allegation of fraud must be strictly proved to a standard higher than the ordinary balance of probabilities applicable in civil cases, and acts or omissions amounting to illegality or disregard of statutory requirements do not necessarily impute fraud, as illegality and fraud can be proved separately or jointly depending on whether the illegality is intertwined with the ingredients of fraud.
Sale of Land — Illegal Sale — Makula Principle — Effect on Subsequent Dealings
Where a mortgagee's sale of mortgaged property is found to be illegal due to non-compliance with statutory requirements, the sale is void ab initio and the court cannot allow the illegality to stand, with the consequence that any title or rights obtained by a purchaser from that illegal process are equally impeached, applying the principle in Makula International Ltd v His Eminence Cardinal Nsubuga.
Mortgage Law — Mortgagee's Rights — Effect of Illegal Sale on Right to Recovery
Where a mortgagee's exercise of the power of sale is declared illegal, the mortgagee nonetheless remains entitled to recover the defaulted loan amount from the mortgagor through proper legal recourse, including a fresh exercise of the power of sale in compliance with statutory requirements, because the illegality vitiates only the defective sale process and not the underlying debt or security.
General Damages — Assessment — Contributory Default — Breach of Mortgage Contract
In assessing general damages for a mortgagee's illegal sale of mortgaged property, the court must measure the plaintiff's inconvenience against her voluntary contribution by defaulting on the loan arrangement which triggered the mortgagee's right to exercise the power of sale, and the plaintiff does not have clean hands where she is in default, warranting a reduction in the damages awarded.

Legislation cited (16)

Cases cited (24)

  • Miller v Minister of Pensions [1947] 2 All ER 372
  • Stanbic Bank Uganda Limited v Haji Yahaya Sekalega T/A Sekalega Enterprises (High Court Civil Suit No. 185 of 2009)
  • Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Sendagire Stephen & Nanyombi Gladys v DFCU Limited and 2 Others (High Court Civil Suit No. 26 of 2008)
  • Majid Akuze v Centenary Rural Development Bank (Civil Suit No. 87 of 2015)
  • Ecumenical Church Loan Fund Uganda Limited v Ways KM Uganda Limited (Civil Suit OS No. 11 of 2014)
  • Epainato Mubiru v Uganda Credit and Savings Bank [1978] HCB
  • Fredrick J.K Zaabwe v Orient Bank and Others (Supreme Court Civil Appeal No. 4 of 2006)
  • Kansiime K. Andrew v Himalaya Traders and 7 Others (High Court Civil Suit No. 132 of 2011)
  • Kampala Bottlers v Damanico (U) Ltd (Supreme Court Civil Appeal No. 22 of 1992)
  • Makula International Ltd v His Eminence Cardinal Nsubuga and Another [1982] UGSC
  • Stop and See (U) Ltd v Tropical Africa Bank (Miscellaneous Application No. 333 of 2010)
  • Housing Finance Bank Limited and Speedway Auctioneers v Speedway Auctioneers (Civil Appeal No. 22 of 2010)
  • Hadley v Baxendale (1894) 9 Exch 341
  • Kibimba Rice Ltd v Umar Salim (Supreme Court Civil Appeal No. 17 of 1992)
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Rookes v Barnard [1964] 1 UKHL
  • Uganda Revenue Authority v Wanume David Katamirike (Supreme Court Civil Appeal No. 3 of 1993)
  • Anathula Sudhakar v P. Buchi Reddy AIR 2008 SC 203
  • Ellis v Duke of Bedford (1899) 1 Ch 494
  • Harry Ssempa v Kambagambire David (High Court Civil Suit No. 408 of 2014)
  • Iyamuleme David v Attorney General (Supreme Court Civil Appeal No. 4 of 2013)
  • Candiru Alice v Amandua Festo and Another (High Court Civil Suit No. 19 of 2014)
  • Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

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Nalule Ramulah v Equity Bank (U) Limited and Others (Civil Suit No. 150 of 2020) [2025] UGCommC 241 (29 July 2025)
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.