Wakilii

Namukasa-Nsamba v Letshego Uganda Limited (Miscellaneous Application No. 590 of 2018)

High Court · [2019] UGCOMMC 227 · 2019 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction arising from pending civil suit for breach of loan facility agreement and wrongful advertisement of mortgaged property
Decision
Temporary injunction issued restraining disposal of mortgaged properties pending main suit

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court granted a temporary injunction restraining the mortgagee bank from disposing of mortgaged property pending the main suit. The court held that the respondent failed to serve the statutory notice of sale required under section 26(2) of the Mortgage Act, rendering the sale process flawed. The applicant raised serious questions requiring trial, and the balance of convenience favoured preserving the status quo. The requirement for a 30% security deposit under Mortgage Regulations did not apply where the sale process was fundamentally non-compliant with statutory requirements.

Outcome

Temporary injunction issued restraining disposal of mortgaged properties pending main suit

Facts

The applicant borrowed twenty-five million shillings from the respondent bank and pledged two properties in Busiro Block 203 Plot 557 at Nkowe and Busiro Block 204 Plot 1523 at Kakiri as security. The applicant defaulted on loan repayments. The respondent issued a default notice on 15 November 2017 and proceeded to advertise the property for sale by painting the words 'BANK PROPERTY FOR SALE' on the property. The applicant challenged the respondent's actions, alleging mismanagement of the loan facility, improper debits, and failure to serve statutory notices of default and sale as required by the Mortgage Act. The applicant filed Civil Suit No. 621 of 2018 seeking declarations of breach and a permanent injunction, and this application for a temporary injunction pending determination of that suit.

Issues

  1. Whether the applicant established a prima facie case with a probability of success.
  2. Whether the applicant would suffer irreparable damage that cannot be adequately compensated by damages.
  3. Whether the balance of convenience favoured granting the temporary injunction.
  4. Whether the respondent complied with statutory notice requirements under the Mortgage Act.
  5. Whether Regulation 13(4) of the Mortgage Regulations requiring a 30% security deposit applied to this application.

Orders

  • Temporary injunction granted restraining the respondent, its servants, agents, assignees, partners or other entity claiming under the respondent from disposing of the properties comprised in Busiro Block 203 Plot 557 land at Nkowe and Busiro Block 204 Plot 1523 land at Kakiri Wakiso District pending the hearing and determination of Civil Suit No. 621 of 2018.
  • Costs of the application to abide the outcome of the main suit.

Rules and key headnotes

Mortgage — Power of Sale — Statutory Notices — Compliance with Mortgage Act s.26(2)
A mortgagee seeking to exercise the power of sale over mortgaged property must serve on the mortgagor the statutory notice of sale required under section 26(2) of the Mortgage Act; failure to serve such notice renders the sale process flawed and the impending sale null and void.
Temporary Injunction — Prima Facie Case — Test for Grant
To establish a prima facie case for the grant of a temporary injunction, the applicant need not show a high probability of success, but must show an arguable case which merits judicial consideration and that the claim is not frivolous or vexatious and raises serious questions to be tried.
Temporary Injunction — Security Deposit — Mortgage Regulations Regulation 13(4) — Applicability
Where the process of sale of mortgaged property has been flawed by non-compliance with statutory notice requirements under the Mortgage Act, it is improper to require the mortgagor applicant to make the 30% security deposit required by Regulation 13(4) of the Mortgage Regulations as a condition for grant of an injunction.
Temporary Injunction — Balance of Convenience — Disposal of Mortgaged Property
On an application for a temporary injunction to restrain sale of mortgaged property, the balance of convenience favours the mortgagor applicant if the applicant stands to suffer greater inconvenience than the mortgagee respondent would suffer should the suit property be disposed of before resolution of the main suit.

Legislation cited (14)

Cases cited (6)

  • Kiyimba Kaggwa v Katende [1985] HCB 23
  • American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504
  • Legal Brains Trust v Attorney General (Miscellaneous Application No. 638 of 2014)
  • Jover Byarugaba v AH Muhoozi & Kashaija Robert John (Miscellaneous Application No. 215 of 2014)
  • Victoria Construction Works Ltd v Uganda National Roads Authority (Miscellaneous Application No. 601 of 2010)
  • Nassali v Stanbic Bank Ltd (Miscellaneous Application No. 335 of 2014)

Full judgment

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

Namukasa-Nsamba v Letshego Uganda Limited (Miscellaneous Application No. 590 of 2018) [2019] UGCommC 227 (4 March 2019)
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.