Wakilii

Omuron v Uganda National Farmers Association & Anor (HCT-04-CV-CS-003-2002)

High Court · [2009] UGHCCD 4 · 2009 Preliminary Objection Upheld — Second Defendant Struck Off AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit — preliminary objection on whether plaint discloses cause of action against second defendant mortgagee bank
Decision
Second defendant struck off from the plaint; matter to proceed against first defendant only

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Court held that where a registered mortgage expressly empowers the mortgagee to sell without recourse to court upon default, and the mortgagor defaults in repayment, the mortgagee is entitled to exercise its statutory right of sale. A plaint that does not allege fraud or illegality in the mortgage or its registration, and that admits the plaintiff executed the mortgage and defaulted in repayment, discloses no cause of action against the mortgagee. The bank's contractual right to enforce its security is unaffected by the mortgagor's claims regarding third-party failures or natural calamities not referenced in the mortgage agreement.

Outcome

Second defendant struck off from the plaint; matter to proceed against first defendant only

Facts

The plaintiff obtained a loan of UGX 75 million from the second defendant bank, secured by registered legal mortgages over his properties. The loan arrangement was facilitated through a memorandum of understanding between the bank and the first defendant UNFA, under which the plaintiff acted as a Business Agent to disburse farming inputs to UNFA members. The plaintiff repaid UGX 23 million but defaulted on the remaining UGX 36 million balance. UNFA paid off its guarantee to the bank and was discharged. The plaintiff attributed his inability to repay to farmers' failure to pay him and to the El Niño rains phenomenon which devastated agricultural produce. The bank sought to sell the mortgaged properties by public auction in accordance with the express power of sale contained in the registered mortgage deed. The plaintiff sued both defendants seeking declarations that he was not indebted to them and that any claim on his properties was unlawful, and a permanent injunction restraining them from dealing with his properties.

Issues

  1. Whether the plaint disclosed a cause of action against the second defendant bank.
  2. Whether a mortgagee may exercise its statutory right to sell mortgaged property where it was party to an arrangement frustrated by natural calamity.

Orders

  • Preliminary point of law allowed.
  • Second defendant struck off from the plaint.
  • Second defendant to have costs.

Rules and key headnotes

Civil Procedure — Preliminary Objections — Striking Out Pleadings — Test for Cause of Action
A plaint discloses a cause of action if it shows that the plaintiff enjoyed a right, that the right has been violated, and that the defendant is liable for that violation.
Banking & Finance — Mortgages — Power of Sale — Exercise Without Recourse to Court
Where a registered mortgage expressly gives the mortgagee power to sell without recourse to court in case of default, and the mortgagor defaults in repayment of the secured sum, the mortgagee may exercise its statutory right of sale by public auction without obtaining leave of court.
Land & Property — Mortgages — Enforcement of Security — Absence of Fraud or Illegality
Where a mortgage is duly registered and there is no allegation of fraud or illegality in the registration or execution of the mortgage, a mortgagee's statutory right to sell upon default cannot be impeached.
Contract Law — Performance — Frustration by External Events — Effect on Third-Party Security Rights
A mortgagee's contractual right to enforce security upon default is not affected by the mortgagor's claims regarding third-party failures or natural calamities, where such intervening circumstances are not mentioned in the mortgage agreement and no alternative course of action for such events was agreed upon between the mortgagee and mortgagor.
Civil Procedure — Striking Out Pleadings — Rejection of Plaint — Where No Cause of Action Against Particular Defendant
Under Order 7 rule 11(a) of the Civil Procedure Rules, a plaint shall be rejected if it does not disclose a cause of action, and a defendant may be struck off from the plaint where the pleadings fail to establish any basis for that defendant's liability.

Legislation cited (5)

Cases cited (3)

  • Katikiro of Buganda v Attorney General of Uganda [1958] EA 765
  • Auto Garage & Others v Motokov (No. 3) [1971] EA 514
  • Barclays Bank (U) Ltd v Livingstone Katende Luutu (Court of Appeal Civil Appeal No. 22 of 1992)

Full judgment

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

Omuron Vs Uganda National Farmers Association & Anor (HCT-04-CV-CS-003-2002) [2009] UGHCCD 4 (19 March 2009)
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.