Wakilii

Post Bank Uganda Limited v Sajja (Originating Summons 3 of 2023)

High Court · [2023] UGHCLD 223 · 2023 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance originating summons for foreclosure and sale of mortgaged property
Decision
Plaintiff granted foreclosure and sale by public auction with vacant possession and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that an equitable mortgagee of unregistered land may enforce an informal mortgage between the parties under section 3(8) of the Mortgage Act even without registration under section 3(4). The mortgagee is entitled to foreclose and sell the mortgaged property to recover all sums due. A court-ordered sale must be by public auction in compliance with sections 27 and 28 of the Mortgage Act unless the mortgagor consents to private treaty. The mortgagee is entitled to vacant possession for inspection by potential buyers and may evict the mortgagor after due notice.

Outcome

Plaintiff granted foreclosure and sale by public auction with vacant possession and costs

Facts

The Plaintiff bank disbursed a loan of UGX 20,000,000 to the Defendant on 18 March 2021, repayable in 12 monthly instalments of UGX 1,949,743, secured by equitable mortgage over two plots of unregistered land with developments at Nyansimbi LC1, Birembo Sub County, Kakumiro District. The Defendant defaulted in June 2021 and requested a grace period. The Plaintiff rescheduled repayments, extending the period to 14 months with revised instalments of UGX 1,759,825. The Defendant continued to default. On 12 November 2021 the Plaintiff served a Notice of Default recalling the loan then at UGX 18,981,297. After expiry of the statutory period, the Plaintiff served a Notice of Sale and advertised the property. The Defendant refused to vacate. At the time of filing, UGX 24,676,313 was outstanding exclusive of auctioneers' fees of UGX 3,367,631. The Defendant admitted the loan but cited COVID-19 pandemic, family deaths, medical costs, and an accident damaging the building as reasons for default.

Issues

  1. Whether the Plaintiff/Mortgagee as the equitable mortgagee is entitled to foreclose and sale the mortgaged property to recover the monies due to it in respect of the principal amount, interest, costs and all other related charges arising from the defendant's loan.
  2. Whether the mortgagee is entitled to sell the mortgaged property by public auction or by private treaty.
  3. Whether the Plaintiff/Mortgagee is entitled to vacant possession of the mortgaged property and to evict the Respondent/his agents from the same.
  4. Whether the Plaintiff/Mortgagee should be granted costs for the suit.

Orders

  • The Plaintiff/Mortgagee is entitled to foreclose and sell the mortgaged property to recover the entire sum and all monies due in respect of principal amount, interest, costs and other charges.
  • The sale shall be by public auction in compliance with Sections 27 and 28 of the Mortgage Act.
  • The Plaintiff is entitled to vacant possession of the mortgaged property and to evict the defendant if he refuses to hand over the property after due notice.
  • Costs of the suit awarded to the Plaintiff/Mortgagee.

Rules and key headnotes

Mortgage Law — Equitable Mortgages — Enforcement of Informal Mortgages
An informal mortgage over unregistered land that has not been registered as required by section 3(4) of the Mortgage Act is nevertheless enforceable between the parties under section 3(8) of the Mortgage Act.
Mortgage Law — Unregistered Land — Validity as Collateral
Unregistered land may be used as collateral for a mortgage under section 3(1) of the Mortgage Act No. 8 of 2009.
Mortgage Law — Sale of Mortgaged Property — Method of Sale
Where a court orders the sale of mortgaged property, the sale must be by public auction in compliance with sections 27 and 28 of the Mortgage Act unless the mortgagor consents to sale by private treaty under section 28(1)(d) and Regulation 8(1) of the Mortgage Regulations.
Mortgage Law — Vacant Possession — Right of Mortgagee
A mortgagee entitled to foreclose is entitled to vacant possession of the mortgaged property for ease of inspection by potential buyers and may evict the mortgagor if the mortgagor refuses to hand over the property after due notice.

Legislation cited (11)

  • Civil Procedure Rules Order 37 rule 4
  • Mortgage Act No. 8 of 2009 s.3(1)
  • Mortgage Act No. 8 of 2009 s.3(4)
  • Mortgage Act No. 8 of 2009 s.3(8)
  • Mortgage Act No. 8 of 2009 s.19
  • Mortgage Act No. 8 of 2009 s.26
  • Mortgage Act No. 8 of 2009 s.27
  • Mortgage Act No. 8 of 2009 s.28
  • Mortgage Act No. 8 of 2009 s.28(1)(d)
  • Mortgage Regulations SI No. 2 of 2012 Regulation 8(1)
  • Mortgage Regulations SI No. 2 of 2012 Regulation 10

Full judgment

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

Post_Bank_Uganda_Limited_v_Sajja_(Originating_Summons_3_of_2023)_[2023]_UGHCLD_223_(31_July_2023)
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.