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Standard Chartered Bank Uganda Limited v Lawoko (Miscellaneous Cause 8 of 2023)

High Court · [2024] UGCOMMC 79 · 2024 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application by mortgagee bank under Mortgage Act s.24 seeking order for vacant possession and eviction
Decision
Vacant possession and eviction order granted in favour of the mortgagee bank; bank may exercise all rights in the mortgaged property in accordance with law

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a mortgagee is entitled to possession of mortgaged property once the borrower defaults on loan obligations and requisite statutory notices have been issued and ignored. A borrower experiencing difficulties performing contractual obligations must engage the lender for renegotiation rather than unilaterally making irregular payments. The COVID-19 pandemic does not automatically excuse contractual obligations; each case must be considered on its unique merits. The court validated an affidavit in reply filed four days late in the interests of substantive justice under Article 126(2)(e) of the Constitution.

Outcome

Vacant possession and eviction order granted in favour of the mortgagee bank; bank may exercise all rights in the mortgaged property in accordance with law

Facts

In August 2015, Standard Chartered Bank advanced a USD 150,000 loan to the respondent secured by a legal mortgage over condominium property in Kampala. The borrower was to repay in equal monthly instalments of USD 1,713 from August 2015 until September 2028. The respondent's repayment became inconsistent. The bank issued a notice of default dated 23 February 2021 demanding payment of USD 116,574 within 45 days; the respondent did not comply. A second notice of default dated 10 June 2022 demanded USD 102,989; the respondent still did not comply. On 7 December 2022, the bank issued a notice to take possession claiming an outstanding balance of USD 97,816; the respondent ignored this notice and denied the bank's agents access to the property for valuation and inspection. Between December 2022 and June 2023, the respondent made irregular payments totalling USD 15,537 but continued to deny access. The respondent attributed his default to financial constraints arising from the COVID-19 pandemic.

Issues

  1. Whether the affidavit in reply was properly before the Court
  2. Whether the applicant was entitled to an order for vacant possession and eviction

Orders

  • An order for vacant possession and, in default thereof, eviction doth issue against the respondent in favour of the applicant in respect of the property comprised in KCCA 15 Folio 19 Block A Unit No. 3 Condominium Plan 0109, Plot 13 Peninsula Close, Nakawa Division, Kampala.
  • The applicant may exercise any of its rights in the property comprised in KCCA 15 Folio 19 Block A Unit No. 3 Condominium Plan 0109, Plot 13 Peninsula Close, Nakawa Division, Kampala in accordance with the law.
  • Costs of this application are awarded to the applicant.

Rules and key headnotes

Civil Procedure — Affidavits — Late Filing — Validation by Court
A reply affidavit must be filed within 15 days from the date of service of the application. Where a reply affidavit is filed outside the prescribed time, the party ought to seek leave of court to validate the late filing. The court retains discretion to reject or excuse late filing and may validate late filing in the interests of substantive justice under Article 126(2)(e) of the Constitution.
Banking & Finance — Loan Default — Events of Default — Notice Requirements
Where a facility agreement defines events of default to include failure to pay any amount on the date indicated in a written demand, and the borrower fails to comply with notices of default, the security for the loan becomes immediately enforceable and the bank may exercise the rights of an unpaid mortgagee under the law.
Contract Law — Performance — Modification of Terms — Unilateral Variation
A party who finds that performance of contractual obligations has become cumbersome must reach out to the contractual counterpart to negotiate a modification of the terms. A party may not unilaterally relieve itself of contractual obligations or modify them without the counterpart's consent. To allow such unilateral action would defeat the legal implications and purpose of the contract.
Contract Law — Force Majeure and Frustration — COVID-19 Pandemic — Burden of Proof
The COVID-19 pandemic does not automatically excuse contractual obligations. When considering the impact of the COVID-19 pandemic on contractual obligations, each case must be considered on its unique merits. A party relying on the pandemic to justify default must adduce specific evidence of how the pandemic affected their particular source of income.
Banking & Finance — Mortgage Enforcement — Right to Possession — Recourse to Security
The very essence of pledging property as security is to hand it over to the bank in the event of default so that the bank can secure its money by managing the property, collecting rent, leasing the property, or through sale. Once mortgage obligations are breached and requisite notices are issued, the mortgagee is entitled to enter into possession of the mortgaged property.

Legislation cited (6)

Cases cited (8)

  • Ayisa Nassuna and Another v Commissioner Land Registration (Miscellaneous Cause No. 7 of 2020)
  • Stop and See (U) Ltd v Tropical Africa Bank (HCMA No. 333 of 2010)
  • The Ramgarhia Sikh Society and 2 Others v The Ramgarhia Sikh Education Society Ltd and 8 Others (HCMA No. 325 of 2015)
  • Jackson Kabikire Mubangizi v Housing Finance Bank (HCMA No. 961 of 2020)
  • Fenghua Limited v Modena MN Group Construction (U) Limited and Others (HCCS No. 735 of 2022)
  • Steel Rolling Mills Ltd and 2 Others v Standard Chartered Bank (U) Ltd (HCMA No. 829 of 2015)
  • Herbert Kabunga Traders v Stanbic Bank (U) Ltd (HCMA No. 159 of 2012)
  • Uganda Development Bank Ltd v Ringa Enterprises Co. Ltd and Another (HCMA No. 12 of 2015)

Full judgment

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

Standard Chartered Bank Uganda Limited v Lawoko (Miscellaneous Cause 8 of 2023) [2024] UGCommC 79 (31 January 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.