Wakilii

Stanbic Bank Uganda Limited v Dahable Uganda Limited & Another (Miscellaneous Application 93 of 2023)

High Court · [2024] UGCOMMC 107 · 2024 Application Granted — Foreclosure Ordered AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application by mortgagee bank for foreclosure and vacant possession of mortgaged properties following borrower default
Decision
Foreclosure granted. Respondents ordered to deliver vacant possession to the applicant bank, with sale to proceed by public auction

Observed later treatment

Cited — treatment unverified cited in 5 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 5 times with no adverse treatment recorded; not yet tested on the merits. Citations rising — 5 citing cases on record, 5 in the most recent three data years. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that where a mortgagor defaults and fails to redeem mortgaged property, the mortgagee is entitled to foreclosure and vacant possession. The Mortgage Act provides the mortgagee with the option of taking possession until default is rectified or until the power of sale is exercised. Sale must proceed by public auction unless the mortgagor consents to private treaty, to protect the mortgagor's equity by ensuring competitive bidding. Application granted. Foreclosure ordered.

Outcome

Foreclosure granted. Respondents ordered to deliver vacant possession to the applicant bank, with sale to proceed by public auction

Facts

Stanbic Bank advanced banking facilities totalling UGX 9,800,000,000 to Dahable Uganda Limited under three facility letters between May 2021 and August 2022. The facilities were guaranteed by Mohamed Omar Sheikh and secured by legal mortgages over four properties in Arua, Wakiso and Iganga Districts. Dahable Uganda Limited defaulted on its payment obligations. As at 29 August 2023 the outstanding amount was UGX 7,132,879,566, continuing to attract contractual interest. The bank issued a Notice of Default on 30 January 2023 and a Notice of Sale on 20 April 2023. On 24 July 2023 when the bank attempted to exercise its power of sale as legal mortgagee, the respondents refused to hand over vacant possession of the mortgaged properties. The bank applied for foreclosure and vacant possession. The respondents did not file an affidavit in reply or appear at the hearing.

Issues

  1. Whether the applicant bank as mortgagee was entitled to an order for foreclosure of the mortgaged properties.
  2. Whether the applicant was entitled to an order for vacant possession of the mortgaged properties.
  3. Whether sale of the foreclosed properties should proceed by public auction or private treaty.

Orders

  • The right, title and equity of redemption of the respondents to and in the mortgaged properties comprised in LRV ARM F01.101 Block 3 Plot 731, Ayivu County, Arua District; LRV WAN 5434 Folio 24 Busiro Block 401 Plot 1856 Kikusa Wakiso District; JJA411 Folio 6 Plot 84 Bunya Road Buligo South Iganga District; and LRV WAK 4887 Folio 16 Plot 285 Busiro Block 336 Lwekobaja Wakiso District is foreclosed.
  • Sale of the mortgaged properties shall be by public auction in accordance with the Mortgage Act 2009 and Mortgage Regulations 2012.
  • The respondents shall forthwith deliver to the applicant possession of the mortgaged properties or such part as is in their possession, failing which possession may be obtained by eviction.
  • Costs of the application to be incorporated in the costs of recovery of the outstanding sum.

Rules and key headnotes

Land & Property — Mortgages — Foreclosure — Effect of Foreclosure Order
Following a final order of foreclosure, the mortgagor and subsequent encumbrancers are absolutely debarred and foreclosed from all right, title and equity of redemption in the mortgaged lands. The mortgagee obtains title to the property free and clear of the interests of the respondents.
Land & Property — Mortgages — Right of Redemption — Extinguishment by Failure to Assert
The equity of redemption is the mortgagor's right to redeem the mortgaged property on paying the full amount including costs due to the mortgagee. To redeem the property, the borrower must pay the full balance due before the foreclosure sale. Where the mortgagor fails to assert the right of redemption, foreclosure may be ordered.
Land & Property — Mortgages — Power of Sale — Method of Sale — Public Auction
Where a mortgagee exercises the statutory power of sale under the Mortgage Act 2009, section 28(1)(d) provides that the sale may be by public auction unless the mortgagor consents to a sale by private treaty. Regulation 8(1) of the Mortgage Regulations 2012 requires that a mortgagee exercising a power of sale must sell the mortgaged property by public auction, subject to the Act and Regulations.
Land & Property — Mortgages — Power of Sale — Public Auction — Rationale
Sale by public auction protects the mortgagor by providing a lengthier notice period, a court supervised process, and competitive bidding that assures the mortgagor that the value of any substantial equity will be returned as surplus moneys or that the competitive bidding will fix the true value of the property and limit any deficiency judgment to a just amount.
Land & Property — Mortgages — Possession — Mortgagee's Right to Possession
The mortgagee has the option under section 25(c) and (d) of the Mortgage Act 2009 of taking possession until the default which was the cause of entry into possession has been rectified, or until the mortgagee has exercised the power of sale. The power of sale allows the mortgagee to convey the mortgaged property to a purchaser free and clear of the interest of the mortgagor and any subsequent interests.

Legislation cited (10)

Cases citing this judgment (5)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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

Stanbic Bank Uganda Limited v Dahable Uganda Limited & Another (Miscellaneous Application 93 of 2023) [2024] UGCommC 107 (18 March 2024)
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.