Wakilii

Standard Chartered Bank v Grand Hotel (U) Limited (Civil Suit 81 of 1993)

High Court · [1996] UGHC 94 · 1996 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application by originating summons under Order 34 rules 3A and 7 of the Civil Procedure Rules and section 2 of the Mortgage Decree (No. 17 of 1974) for determination of entitlement to foreclosure and sale of mortgaged property
Decision
Application for foreclosure and sale dismissed due to defective demand letter

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court dismissed the plaintiff's application for foreclosure and sale of mortgaged property. Although the court held that the suit was not time-barred (the Limitation Act ceased to apply while the property was under Government control following forced appropriation) and the originating summons procedure was proper, the suit failed because the letter of demand dated 15 March 1991 specifying the sums due was unsigned and therefore defective, providing insufficient evidence of the amounts claimed.

Outcome

Application for foreclosure and sale dismissed due to defective demand letter

Facts

In 1965, the defendant company deposited two certificates of title (LVR 217 Folio 25 Plot 4 and LVR 218 Folio 1 Plot 6) with the plaintiff bank as security for loan facilities paid in pounds sterling. The memorandum accompanying the deposit required payment and discharge of all monies and liabilities on demand. In 1972, the mortgaged properties were forcibly appropriated and taken over by Government and transferred to the Departed Asians Properties Custodian Board under the Assets of Departed Asians Decree 1973. The properties were returned to the defendant company in 1991 under the Expropriated Properties Act 1982. On 8 March 1991, the defendant's lawyers demanded release of the title deeds. The plaintiff's lawyers responded on 15 March 1991 with a purported letter of demand for payment of the outstanding account. When the defendant failed to pay, the plaintiff brought this suit by originating summons seeking foreclosure and sale.

Issues

  1. Whether the action is time barred under the Limitation Act
  2. Whether the originating summons as filed is the correct procedure
  3. Whether the plaintiff as Mortgagee of lands comprised in LVR 217 Folio 25 Plot No. 4 and LVR 218 Folio 1 Plot 6 is entitled to foreclosure and sale of the mortgaged property
  4. Whether the letter of demand dated 15.3.1991 is defective for lack of signature

Orders

  • Suit dismissed with costs to the defendant company
  • Held that the procedure followed in filing the originating summons was correct
  • Held that the suit was not time barred
  • Held that the removal of the caveat on land comprised in LRV 218 Folio 1 Plot No. 6 Speke Road was improper or illegal
  • Held that the letter of demand dated 15.3.1991 was defective since it was not signed

Rules and key headnotes

Originating Summons — Foreclosure Applications — Proper Procedure
An originating summons for foreclosure and sale that complies with Order 34 rules 3A and 7 of the Civil Procedure Rules and section 2 of the Mortgage Decree 1974 is proper procedure, provided it specifies the relief sought in the format prescribed in the general form of originating summons.
Mortgage — Equitable Mortgagee — Remedies — Foreclosure and Sale
The primary remedy of an equitable mortgagee is foreclosure, the effect of which is to convey the mortgaged property free of any right to redeem and put an end to other remedies. One of the remedies of an equitable mortgagee under the doctrine of equity is sale by order of court.
Mortgage — Demand for Payment — Evidence Requirements — Signed Letter Required
A letter or copy thereof is only properly so described when it is signed; otherwise it could be merely a draft letter which cannot be relied on as sufficient evidence. An unsigned letter of demand cannot provide sufficient evidence in support of specified sums of money due for payment in a foreclosure application.
Limitation Act — Computation of Time — Government Appropriation of Mortgaged Property
Where mortgaged property is forcibly appropriated and taken over by Government, the Limitation Act ceases to apply to the mortgage transaction during the period the property is out of the control or management of the debtor, as there is no way the mortgagee could enforce their right during such period.
Expropriated Properties Act — Definition of Former Owner — Appropriated Property
Where properties are returned to a company under the Expropriated Properties Act 1982, it follows that those properties must have been appropriated by Government, otherwise they would not qualify for return under that Act. The definition of 'Former Owner' in section 17 of the Act includes any person who was expelled or forced to flee from Uganda during the Military Regime or was in any way disposed of property or business.
Caveat — Removal During Government Control — Legality
Where mortgaged property has been forcibly taken over by Government and is under Government control, it is not legally possible to remove a caveat on the property.

Legislation cited (8)

Cases cited (4)

  • Sheikh Mohamed Bashir v United Africa Company (Kenya) Ltd [1959] E.A 864
  • Barclays Bank (U) Ltd v John Milton Northcorte and another [1976] H.C.B 34
  • Barclays Bank D.C.O. v Gulu Millers Ltd [1959] E.A. 540
  • Castelino v Rodrigue [1972] E.A 223

Full judgment

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Standard Chartered Bank v Grand Hotel (U) Limited (Civil Suit 81 of 1993) [1996] UGHC 94 (19 April 1996)
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.