Wakilii

Nile Bank Limited v Tramsways Trading Co. Ltd (Civil Suit No. 1447 of 1999) (Civil Suit No. 1447 of 1999)

High Court · [2000] UGHC 26 · 2000 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance suit by Originating Summons for enforcement of equitable mortgage and foreclosure
Decision
Judgment entered for plaintiff with order for payment within 30 days, failing which foreclosure and sale of mortgaged property

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendant breached the covenant to pay under an equitable mortgage created by deposit of title and lodgment of caveat. The amount due was Shs.51,626,095 comprising principal and accumulated interest. Under Mortgage Decree s.7, the mortgagee was entitled to foreclosure and sale. Court ordered payment within 30 days, failing which the mortgagor would be foreclosed and the property sold.

Outcome

Judgment entered for plaintiff with order for payment within 30 days, failing which foreclosure and sale of mortgaged property

Facts

In 1988 the plaintiff bank advanced a short-term overdraft facility to the defendant upon the defendant presenting property comprised in Namirembe Block 8 Plot 473 as security. The registered proprietor, Godfrey Jacob Kawere Nkago, executed a Power of Attorney dated 9 August 1997 in favour of the defendant and Michael Kawalya permitting them to borrow upon the security of the land. The mortgage was registered on 21 April 1989 by lodging a caveat on the property, creating an equitable mortgage. The debit balance as at 1 January 1999 was Shs.37,630,600. Accumulated interest between 1 July 1997 and 26 October 1999 was Shs.13,995,495, making a total of Shs.51,626,095. Despite several demand letters, the defendant failed to settle the debt. The plaintiff brought suit by Originating Summons. Service was effected by substituted service in the New Vision Newspaper. The defendant did not appear and the matter proceeded ex parte.

Issues

  1. Whether the Defendant/Respondent is in breach of the covenant to pay under the equitable mortgage.
  2. Whether any amount is due and owing to the mortgagee under the equitable mortgage.
  3. Whether the Plaintiff/Applicant is entitled to realise and enforce security under the mortgage by foreclosure and/or sale so as to recover the principal loan amount together with accumulated interest.

Orders

  • The Defendant/Respondent shall pay all the principal loan plus interest amounting to Shs.51,626,095 within 30 days of this order but not later than 30 August 2000.
  • If the Defendant/Respondent fails to pay, then the Defendant/Respondent (mortgagor) shall be foreclosed of his right to redeem the mortgaged property comprised in Namirembe Block 8 Plot 473 forthwith and the land shall be offered for sale consequent upon the order of foreclosure in accordance with the Provisions of Section 8 of the Mortgage Decree of 1974.
  • The Respondent/Defendant shall pay the costs of this suit.

Rules and key headnotes

Equitable Mortgage — Creation by Deposit of Title and Caveat
An equitable mortgage is created when a borrower deposits a certificate of title as security for a loan and the lender lodges a caveat on the property to protect its interest.
Mortgage — Power of Attorney — Authority to Borrow on Security of Land
Where a registered proprietor executes a Power of Attorney expressly authorising the attorney to borrow upon the security of the land, the attorney has authority to create a valid mortgage over that land.
Breach of Covenant to Pay — Mortgage Agreement
A mortgagor who fails to repay the principal loan and accumulated interest despite demands is in breach of the covenant to pay under the mortgage agreement.
Foreclosure — Remedies under Mortgage Decree s.7
Under Mortgage Decree s.7, where a mortgagor breaches the covenant to pay, the mortgagee may apply to court for foreclosure of the mortgagor's right to redeem the mortgaged land, and the court may fix a period not exceeding six months for payment, failing which the court shall order foreclosure and subsequent sale of the property.
Mortgage — Cumulative Remedies — Right to Sue and Right to Sell
A mortgagee may exercise the right to sue for payment and the right to realise the security by foreclosure and sale cumulatively under the Mortgage Decree.

Legislation cited (7)

Full judgment

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Nile Bank Limited v Tramsways Trading Co. Ltd (Civil Suit No. 1447 of 1999) (Civil Suit No. 1447 of 1999) [2000] UGHC 26 (12 July 2000)
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.