Wakilii

Savers International (U) Ltd v DFCU Bank Ltd & Anor (Misc. Aplic.No. 283 of 2002)

High Court · [2002] UGHC 124 · 2002 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Miscellaneous application arising from main suit for injunction restraining mortgage sale
Decision
Suit struck out with costs to the defendants

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court struck out the suit under Order 7 rule 11(a) and (e) of the Civil Procedure Rules, holding that the plaint disclosed no cause of action. A court will not grant an injunction restraining a mortgagee from exercising its statutory power of sale solely on the ground that there is a dispute as to the amount due under a mortgage. Where the debt is admitted in full, no payment has been made, and no further agreement to reschedule exists, there is no right of redemption and no basis for injunctive relief. The allegation of breach of fiduciary duty was not properly pleaded and had no foundation in law.

Outcome

Suit struck out with costs to the defendants

Facts

In 2000, the plaintiff obtained a loan of UGX 200 million from the defendant bank, secured by a legal mortgage over properties in Kampala and Mukono. The plaintiff defaulted on the loan. Attempts to sell the mortgaged properties were unsuccessful. The plaintiff surrendered three motor vehicles and pledged a credit due from the Ministry of Defence, but the defendant set conditions including direct payment and tax credits from Revenue, which were not realized. No payment from the Ministry of Defence was received by June 2002. The plaintiff filed suit alleging that the bank's recovery actions caused great loss in asset value and breached a fiduciary duty to accept the plaintiff's proposals for rescheduling the debt. The court had granted an interim order staying the bank's pressure, which lapsed on 28 May 2002.

Issues

  1. Whether the plaint disclosed a cause of action.
  2. Whether an interlocutory injunction should be granted to restrain the bank from exercising its statutory power of sale under a mortgage where the debt is not disputed.
  3. Whether the bank owed the plaintiff a fiduciary duty to accept the plaintiff's proposals for debt rescheduling.

Orders

  • Suit struck out under Order 7 rule 11(a) and (e) of the Civil Procedure Rules.
  • Costs awarded to the defendants.

Rules and key headnotes

Mortgages — Statutory Power of Sale — Injunctions Restraining Exercise
A court should not grant an injunction restraining a mortgagee from exercising its statutory power of sale solely on the ground that there is a dispute as to the amount due under a mortgage.
Mortgages — Right of Redemption — Prerequisites
Where the debt is admitted in full and no payment has been made, and in the absence of a further agreement to reschedule the debt, there is no right of redemption or equity of redemption, as repayment is a statutory precondition.
Banker-Customer Relationship — Fiduciary Duty — Mortgage Contracts
A banker's duty to a customer arises out of contract. An allegation of breach of fiduciary duty by a bank in refusing to accept proposals for debt rescheduling, without proper particulars pleaded, discloses no cause of action.
Striking Out — Plaint Disclosing No Cause of Action
A suit for an injunction to thwart the statutory recovery of a loan by a bank, where the debt is admitted and no payment has been made, discloses no cause of action and may be struck out under Order 7 rule 11(a) and (e) of the Civil Procedure Rules.
Pleadings — Particulars of Breach of Trust Required
Where breach of trust is alleged, particulars of the breach must be pleaded as required by Order 6 rule 2 of the Civil Procedure Rules. A general allegation of breach of fiduciary duty without particulars is insufficient.

Legislation cited (3)

Cases cited (3)

  • Bharmal Kanji Shah & Anor v Shah Depar Deuji (1965) EA 91
  • JL Lavuna & others v Civil Servants Housing Co Ltd & Anor (Civil Application No. NAI 14/95)
  • Barclays Bank of Uganda Ltd v Livingistone Katende Luutu (Court of Appeal No. 22 of 1993)

Full judgment

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

Savers International (U) Ltd v DFCU Bank Ltd & Anor (Misc. Aplic.No. 283 of 2002) [2002] UGHC 124 (5 June 2002)
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.