Wakilii

Willis International Engineering and Contractors Ltd & Anor v DFCU Bank (Miscellaneous Application No. 1000 of 2015)

High Court · [2016] UGCOMMC 51 · 2016 Application Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction to restrain bank from exercising statutory power of sale over mortgaged properties pending determination of main suit
Decision
Conditional temporary injunction granted restraining sale of Plot 7346 subject to payment of 30% security deposit within 30 days. Injunction lapses if deposit not made. Plot 7347 to be released to applicants free of encumbrances.

Observed later treatment

Treatment recorded in citing cases followed in 2 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.

Good law Followed in 2 cases and applied in 0 cases, with no adverse treatment recorded. Citations rising — 14 citing cases on record, 9 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

Court granted a conditional temporary injunction restraining the respondent bank from exercising its power of sale over Block 265 Plot 7346 at Bunamwaya, subject to the applicant depositing 30% of the outstanding amount or forced sale value (whichever is higher) within 30 days as required by regulation 13 of the Mortgage Regulations 2012. Court ordered the release of Block 265 Plot 7347 to the applicants free of encumbrances after the respondent conceded the mortgage on that plot was erroneously registered.

Outcome

Conditional temporary injunction granted restraining sale of Plot 7346 subject to payment of 30% security deposit within 30 days. Injunction lapses if deposit not made. Plot 7347 to be released to applicants free of encumbrances.

Facts

The first applicant obtained loan facilities totalling UGX 493,449,366 from the respondent bank between June and November 2014, secured by a mortgage over land comprised in Block 265 Plot 7346 at Bunamwaya registered in the second applicant's name, with the second applicant providing a personal guarantee. The facilities included a contract finance facility of UGX 220,000,000, a performance bond facility of UGX 73,449,366, and a medium-term loan facility of UGX 200,000,000. The Registrar of Titles erroneously registered a mortgage on Block 265 Plot 7347 instead of Plot 7346. The applicants failed to service the loan facilities as agreed and requested loan restructuring, which the respondent refused. The respondent declared one of the loans a non-performing asset and on 17 November 2015 served the applicants with a notice of sale of the property. The applicants filed the main suit challenging the legality of the sale and seeking declaratory orders and a permanent injunction. They also filed this application seeking a temporary injunction restraining the sale pending final determination. The respondent conceded the mortgage on Plot 7347 was erroneous but maintained it had a valid mortgage over Plot 7346 securing an outstanding debt of UGX 416,764,552.

Issues

  1. Whether the applicants have established a prima facie case with a possibility of success against the respondent bank's exercise of its power of sale over mortgaged property.
  2. Whether the applicants would suffer irreparable injury if a temporary injunction is not granted to restrain the sale of the mortgaged property.
  3. Whether the balance of convenience favours granting a temporary injunction to restrain the sale.
  4. Whether a mortgagor seeking to stop the sale of mortgaged property must comply with regulation 13 of the Mortgage Regulations 2012 requiring payment of 30% of the forced sale value or outstanding amount as a security deposit.
  5. Whether the mortgage registered over Block 265 Plot 7347 at Bunamwaya was erroneous and whether the respondent should release that title to the applicants.

Orders

  • A conditional temporary injunction restraining the respondent and/or its agents, servants, assignees and anyone acting under its authority from exercising the respondent's statutory power of sale or any other remedy in respect of land comprised in Block 265 Plot 7346 at Bunamwaya pending determination of the suit.
  • The applicant shall deposit with the respondent 30% of the outstanding amount or forced sale value of Plot 7346 at Bunamwaya whichever is higher pending determination of the suit within 30 days from the date of this order. The 30% shall not take into account any charges relating to the controversial performance bond facility of Uganda shillings 73,449,366.
  • Should the applicant fail to deposit the said 30% within the period stipulated the injunction shall lapse and the respondent shall be at liberty to exercise its statutory power of sale under the Mortgage Act 2009.
  • If the first applicant wishes to redeem the suit property, it shall pay 50% of the outstanding amount and continue servicing the loan.
  • Kyadondo Block 265 Plot 7347 shall be released by the respondent to the applicant free of encumbrances.
  • The costs of this application shall be borne by the applicant.

Rules and key headnotes

Injunctions — Temporary Injunctions — Conditions for Grant — Prima Facie Case, Irreparable Injury, Balance of Convenience
For a temporary injunction to be granted, an applicant must establish: (i) a prima facie case with a possibility of success, showing there are serious questions to be tried and the action is not frivolous or vexatious; (ii) that the applicant would suffer irreparable injury if the order is not granted, meaning injury that cannot be adequately compensated in damages; and (iii) if the court is in doubt on the first two conditions, the balance of convenience must favour the applicant.
Mortgages — Statutory Power of Sale — Application for Relief — Mandatory Security Deposit — Mortgage Regulations 2012
Where a mortgagor seeks to stop or adjourn the sale of mortgaged property by a mortgagee exercising its statutory power of sale, regulation 13 of the Mortgage Regulations 2012 requires the mortgagor to pay a security deposit of 30% of the forced sale value of the mortgaged property or the outstanding amount, whichever is higher, at the time of stopping or adjourning the sale. This requirement overrides traditional considerations for granting a temporary injunction and a conditional injunction should be granted subject to payment of the prescribed deposit.
Mortgages — Application for Relief — Section 33 of Mortgage Act 2009 — Scope of Application
An application under section 33 of the Mortgage Act 2009 for relief against the exercise by a mortgagee of its statutory remedies may be made at any time after service of the requisite notices or during the exercise of any remedies. The application is not to be taken as an admission of breach, nor of the mortgagee's right to exercise the remedy, and the court may grant relief without determining whether there has been a breach or whether notices were properly served or the period for remedying breach was reasonable.
Mortgages — Erroneous Registration — Mortgage Registered on Wrong Plot — Court Order for Release
Where a mortgagee admits that a mortgage was erroneously registered on a plot of land that was never offered as security and that the registration was done in error by the Registrar of Titles, the court will order the release of that title to the registered proprietor free of encumbrances pursuant to Order 13 rule 6 of the Civil Procedure Rules, as there is no need for a temporary injunction where the mortgagee concedes the land should not be encumbered.
Mortgages — Sentimental Value of Property — Adequacy of Damages — Property Pledged as Security
Property pledged as security for a loan is valued before lending and loss of property by sale is contemplated by the parties even before the security is formalised. In such cases, a party who agrees that particular property is suitable as security cannot later plead that the property has sentimental value to resist a mortgagee's exercise of its power of sale, and an award of damages would be an adequate remedy.
Mortgages — Redemption — Security Deposit of 50% — Mortgage Regulations 2012
Where a mortgagor wishes to redeem mortgaged property and has obtained an order stopping or adjourning the sale, regulation 13(5) of the Mortgage Regulations 2012 requires the mortgagor to pay a security deposit of 50% of the outstanding amount at the time of stopping or adjourning the sale for the purpose of redemption, and to continue servicing the loan thereafter.

Legislation cited (23)

Cases cited (19)

  • Tumusiime Nasur v Magandanzi Abbey & Anor (Miscellaneous Application No. 971 of 2015)
  • Giella v Cassman Brown & Co. Ltd [1973] EA 358
  • Sekitoleko and others v Mutabazi and two others (Civil Appeal No. 65 of 2001)
  • Kiyimba Kaggwa v Katende (1985) HCB 43
  • Amos Rwamashondi v Gatrida Nalwoga and Another (Miscellaneous Application No. 774 of 2011)
  • Nasser Kiingi and another v Attorney General and others (Constitutional Application No. 29 of 2011)
  • Fredrick Zzabwe v Orient Bank and 4 others (Civil Appeal No. 4 of 2006)
  • GAPCO Uganda Limited v Kaweesa Badru and Another (Miscellaneous Application No. 259 of 2013)
  • David Luyiga v Stanbic Bank (U) Ltd (Miscellaneous Application No. 202 of 2012)
  • American Cyanamid Co. Ltd v Ethicon [1975] 1 All ER 504
  • Maithya v Housing Finance Co. of Kenya and Anor [2003] 1 EA 133
  • Herbert Kabunga Traders v Stanbic Bank (U) Ltd (Miscellaneous Application No. 159 of 2012)
  • Kisembo v Standard Chartered Bank (U) Ltd (Miscellaneous Application No. 344 of 2014)
  • Miao Huaxian v Credit Bank Ltd and Anor (Miscellaneous Application No. 935 of 2015)
  • Hajji Edirisa Kasule v Housing Finance (Miscellaneous Application No. 667 of 2013)
  • Manana Francis v Waniaye Khatuli Kenneth and 2 others (Miscellaneous Application No. 7 of 2013)
  • Wamono Shem v Equity Bank Limited and Anor (Miscellaneous Application No. 600 of 2012)
  • Ganafa Peter Kisawuzi v DFCU Bank Ltd (Civil Application No. 0064 of 2016)
  • Matex Commercial Supplies Ltd and another v Euro Bank Ltd (in liquidation) [2008] 1 EA 216

Cases citing this judgment (14)

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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Willis International Engineering and Contractors Ltd & Anor v DFCU Bank (Miscellaneous Application No. 1000 of 2015) [2016] UGCommC 51 (10 June 2016)
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.