Post Bank Uganda Limited v Gumisiriza Stella (Civil Suit 1 of 2024)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
Held that a legal mortgagee who has complied with statutory notice requirements under the Mortgage Act is entitled to exercise the power of sale by public auction to recover outstanding loan amounts. The mortgagee is entitled to an eviction order against a defaulting mortgagor who refuses to vacate mortgaged property and obstructs access by prospective buyers, provided fresh notice demanding possession is first issued. No costs awarded in an undefended mortgage foreclosure suit.
Outcome
Plaintiff granted power of sale by public auction and eviction order against defendant mortgagor upon failure to comply with fresh notice of vacant possession
Facts
The plaintiff bank advanced an agriculture loan of UGX 20,000,000 to the defendant on 24 October 2019, secured by a legal mortgage registered on land comprised in FRV MBR 447 Folio 6 Plot 95 Block 26 at Kanoni Cell, Ntungamo District. The loan was repayable within 24 months through quarterly instalments. The defendant defaulted and requested a grace period in May 2020, which the plaintiff granted, extending the repayment period to 30 months and reducing instalments to 9 quarterly payments of UGX 3,073,720. The defendant continued to default. The plaintiff served a demand notice on 31 December 2021, a notice of default on 18 January 2022, and a notice of sale on 28 March 2022. The defendant refused to vacate the mortgaged property, threatened prospective buyers, and denied them access. The outstanding debt stood at UGX 18,050,770 plus additional costs. The defendant was served with originating summons but did not enter appearance or file a reply despite substituted service by newspaper publication. The court allowed the plaintiff to proceed ex parte.
Issues
- Whether the plaintiff mortgagee is entitled to foreclose and sell the mortgaged property to recover monies due in respect of principal, interest, costs and charges arising from the defendant's loan.
- Whether the mortgagee is entitled to sell the mortgaged property by public auction or by treaty.
- Whether the plaintiff mortgagee is entitled to vacant possession of the mortgaged property and to evict the defendant and her agents.
- Whether the plaintiff mortgagee should be granted costs for the suit.
Orders
- The plaintiff mortgagee is permitted to exercise their power of sale over the mortgaged property being land comprised in FRV MBR 447 Folio 6 Plot 95 Block 26 at Kanoni Cell, Ntungamo District, to recover the outstanding sum of UGX 18,050,770 and any incidental expenses.
- The mortgagee shall issue a fresh notice on the mortgagor demanding possession of the mortgaged land from the mortgagor.
- The plaintiff mortgagee is granted an eviction order against the defendant mortgagor, effective once the mortgagor fails to comply with the notice of vacant possession.
- Any sale of the mortgaged property shall be by public auction in accordance with provisions of the Mortgage Act Cap 239 and Rules thereunder.
- No order as to costs is made.
Rules and key headnotes
Legislation cited (9)
Full judgment
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