Wakilii

Wills International Engineers & Contractors Ltd & Anor v DFCU Bank Ltd (Civil Suit No. 802 of 2015)

High Court · [2017] UGCOMMC 87 · 2017 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaratory orders, injunction, and damages arising from wrongful mortgage registration and disputed loan balances
Decision
Plaintiff's suit succeeded. Defendant's counterclaim dismissed with no order as to costs but without prejudice to payment of remaining outstanding amounts after account reconciliation. Notice of sale revoked. Accounts to be reconciled.

Observed later treatment

Treatment recorded in citing cases applied 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 0 cases and applied in 2 cases, with no adverse treatment recorded. Citations fading — 3 citing cases on record, 3 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 the defendant wrongfully and erroneously registered mortgages on the second plaintiff's land in Bunamwaya Block 265 Plot 7347, which had been deposited for safe custody and was never offered as collateral. The second plaintiff was awarded nominal damages of UGX 20,000,000 and recovery of performance bond charges of UGX 2,948,479. The plaintiff was found not to be indebted to the defendant in the amount of UGX 416,764,552 claimed in the counterclaim. The defendant was not entitled to sell the mortgaged property in Plot 7346, and the notice of sale was revoked. The counterclaim was dismissed with no order as to costs but without prejudice to payment of remaining outstanding amounts after account reconciliation.

Outcome

Plaintiff's suit succeeded. Defendant's counterclaim dismissed with no order as to costs but without prejudice to payment of remaining outstanding amounts after account reconciliation. Notice of sale revoked. Accounts to be reconciled.

Facts

The first plaintiff, a construction company, obtained three loan facilities from the defendant bank between June and November 2014: a contract finance facility of UGX 220 million, a medium term loan of UGX 200 million, and a performance bond facility of UGX 73,449,366. The security for all facilities was land in Bunamwaya Block 265 Plot 7346, owned by the second plaintiff (the company's managing director), who also provided a personal guarantee. The second plaintiff had also deposited title for Plot 7347 with the bank for safe custody but never offered it as collateral. The defendant erroneously registered mortgages on both Plot 7346 (as agreed) and Plot 7347 (in error). The performance bond was issued late on 3 November 2014, after the contract it secured had already expired and after the plaintiff had notified the bank it was no longer required. The first plaintiff serviced the loans but disputed the defendant's demand for UGX 416,764,552. The bank issued a notice of sale for Plot 7346 on 9 November 2015. Following an interim court order, the plaintiff paid over 50% of the claimed amount (UGX 210 million) to stop the sale. The bank had previously been ordered to return the title for Plot 7347 free of encumbrances on 10 June 2016 but had not removed the mortgage registrations at the time of trial.

Issues

  1. Whether the plaintiffs are entitled to general damages for mortgages registered illegally on land comprised in Block 265 Plot 7347 and Plot 7346.
  2. Whether the plaintiff is indebted to the defendant in the amounts claimed in the counterclaim of Uganda Shillings 416,764,552.
  3. Whether the defendant can sell the mortgaged land comprised in Bunamwaya Block 265 Plot 7346 to recover the outstanding loan balance.

Orders

  • The court confirmed its earlier order in Miscellaneous Application No. 1000 of 2015 that the title deed of Plot 7347 should be returned to the plaintiff free of encumbrances.
  • The second plaintiff is awarded nominal damages of Uganda Shillings 20,000,000.
  • The defendant is ordered to refund Uganda Shillings 2,948,479 being charges for the performance bond facility.
  • The defendant is not entitled to sell the property in Kyadondo Block 265 Plot 7346 at Bunamwaya.
  • The notice of sale of the suit property is hereby revoked.
  • There shall be a reconciliation of accounts pursuant to which the plaintiff will continue servicing the loan.
  • The counterclaim is dismissed with no order as to costs and without prejudice to payment by the plaintiff of the remaining outstanding amount after reconciliation of accounts.
  • The plaintiff's suit succeeds with costs.

Rules and key headnotes

Banking & Finance — Mortgage Security — Wrongful Registration — Deposit for Safe Custody
Where a bank erroneously registers a mortgage on land that was deposited for safe custody and was never offered as collateral for any loan facility, the registration is wrongful and the depositor is entitled to nominal damages even where actual financial loss is not proven.
Land & Property — Mortgage — Registration in Error — Liability of Mortgagee
A mortgagee bank that presents title deeds to the Registrar of Titles for registration of a mortgage on the wrong plot bears responsibility for the wrongful encumbrance, notwithstanding that the Registrar may have committed the actual error of registration, where the bank presented titles for both plots when only one was offered as security.
Contract Law — Performance Bond — Late Issuance — Charges
Where a bank issues a performance bond facility after the contract it was meant to secure has expired and after being notified by the customer that the bond is no longer required, the bank is not entitled to retain charges levied in respect of that facility and must refund them to the customer.
Banking & Finance — Loan Accounts — Proof of Indebtedness — Conflicting Demand Letters
Where a bank issues multiple demand letters claiming different outstanding loan amounts and its own witness admits that the figures in the demand letters are false, the bank fails to prove the amount claimed in a counterclaim and the counterclaim will be dismissed unless the actual amount owing can be established from admissible account statements.
Banking & Finance — Mortgagee's Power of Sale — Disputed Amount Owing — Mortgage Act 2009
Under section 26 of the Mortgage Act 2009, where a borrower has paid over 50% of the amount claimed in a notice of sale pursuant to a court order and the actual amount owing has not been conclusively established, the mortgagee is not entitled to proceed with the sale and the notice of sale should be revoked pending reconciliation of accounts.
Banking & Finance — Nominal Damages — Infringement of Legal Right — No Proof of Actual Loss
A plaintiff whose legal right has been infringed by wrongful mortgage registration is entitled to nominal damages where he fails to prove that he requested return of the title or that he sought to use the title for sale or other purposes, and thus cannot establish actual financial loss flowing from the wrongful encumbrance.
Civil Procedure — Costs — Costs Follow the Event
Under section 27(2) of the Civil Procedure Act, costs follow the event. Where a plaintiff succeeds on the main claim but a defendant's counterclaim is dismissed without conclusive determination of all amounts owing, the plaintiff is entitled to costs of the suit while the counterclaim is dismissed with no order as to costs and without prejudice to payment of remaining amounts after account reconciliation.

Legislation cited (9)

Cases cited (14)

  • Makula International Ltd v His Eminence Cardinal Nsubuga & Another (1982) HCB 11
  • Savers International (U) Ltd v DFCU (Miscellaneous Application No. 283 of 2002)
  • Bharmal Kanji Shah and Another v Shah Depar Devji [1965] 1 EA 91
  • Ferdinand Mugisha v Steven Barya & Registrar of Titles (HCCS No. 833 of 2007)
  • Hadkinson v Hadkinson [1952] 2 All ER 567
  • Michael Lynn Kirkbridge and Dolores Avoline Kirkbridge
  • Stanbic Bank (U) Ltd v Commissioner General URA (HC Misc. App No. 0042/2010)
  • URA v Wanume David Kitamirike (C.A. No. 43/2010)
  • Johnson and Another v Agnew [1979] 1 All ER 883
  • Dharamshi v Karsan [1974] 1 EA 41
  • The Owners of the Steamship Mediana v The Owners, Master and Crew of the Lightship Comet [1900] AC 113
  • Beutmont v Greathead (1846) 2 CB 494
  • Pelican Investment Ltd & Another v National Bank of Kenya Ltd [2000] 2 EA 488
  • Banco Arabe Espanol v Bank of Uganda (S.C.C.A No. 8 of 1998)

Cases citing this judgment (3)

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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Wills International Engineers & Contractors Ltd & Anor v DFCU Bank Ltd (Civil Suit No. 802 of 2015) [2017] UGCommC 87 (28 August 2017)
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.