Wakilii

Owembabazi Nasimolo v Non Performing Assets Recovery Trust [1997] UGPPDPAAT 1

Tribunal · 1997 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to strike out plaint arising from Tribunal Case No. 38 of 1996
Decision
Application to strike out plaint dismissed; main suit to proceed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a mortgagee who sells mortgaged property under a power of sale and realizes less than the debt is not barred from suing the mortgagor for the balance. The sale ascertains the value of the property and if it produces less than the debt, the mortgagee remains unpaid pro tanto and may sue on the personal covenant. Application dismissed.

Outcome

Application to strike out plaint dismissed; main suit to proceed

Facts

The applicant obtained a staff mortgage housing loan from UCB in 1989 to construct a house, secured by mortgage over two plots. She defaulted and the loan was transferred to the respondent under the Non-Performing Assets Recovery Trust Statute 1994. The respondent sold the two mortgaged properties at auction in 1996 for UGX 63,000,000 and UGX 3,700,000 respectively, leaving a balance of approximately UGX 68,677,396. The respondent then filed Tribunal Case No. 38 of 1996 to recover the balance. The applicant applied to strike out the plaint, arguing that by selling the properties the respondent had disabled itself from reconveying them and was therefore barred in law and equity from suing on the mortgage for the balance.

Issues

  1. Whether having sold the mortgaged property outside court, the respondent is barred in law and equity from bringing suit to recover the balance of the loan.

Orders

  • Application dismissed.
  • Costs to be in the cause.

Rules and key headnotes

Mortgages — Power of Sale — Right to Sue for Balance After Sale
Where a mortgagee sells mortgaged property under a power of sale and the proceeds are insufficient to discharge the debt, the mortgagee is not barred from bringing an action on the personal covenant to recover the balance of the loan.
Mortgages — Foreclosure Distinguished from Sale — Effect on Right to Sue
The principle that a mortgagee who forecloses cannot sue for a balance does not apply where the mortgagee exercises a power of sale, because the sale ascertains the value of the property and if it realizes less than the debt, the mortgagee remains unpaid and may pursue other remedies.
Striking Out Pleadings — Suit Barred by Law — Order 7 Rule 11(d)
A plaint may be struck out under Order 7 Rule 11(d) of the Civil Procedure Rules only where the suit appears from the statement in the plaint to be barred by law. There is no statutory or equitable bar to a mortgagee suing for the balance of a loan after exercising a power of sale.

Legislation cited (9)

Cases cited (8)

  • Kinnaird v Trollope (1888) 39 Ch 630
  • Singh v Bhatt (1962) EA 759
  • Gordon Grant & Co Ltd v FL Boos (1926) AC 781
  • Coast Realities Ltd v Nollan (1972) 20 DLR 96
  • Mayambala v UCB (High Court Miscellaneous Application No. 160 of 1981)
  • Lockhart V. Hardy
  • Rudge v. Richens
  • Perry V. Barker

Full judgment

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

Owembabazi Nasimolo v Non Performing Assets Recovery Trust 1997 UGPPDPAAT 1 (20 March 1997)
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.