THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

CIVIL SUIT NO 802 OF 2015

1. WILLS INTERNATIONAL ENGINEERS & CONTRACTORS LTD}

2.GEORGE WILLIAM KIYEGA}.................................................................PLAINTIFFS

VERSUS

DFCU BANK LTD}..........................................................................................DEFENDANT

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

JUDGMENT

The Plaintiffs action against the defendant bank is for declaratory orders that the defendant is
illegally holding the plaintiffs title in respect of Bunamwaya Kyadondo block 260 Plot 7347 and
has illegally, encumbered it with a mortgage. The suit is also for a permanent injunction to
restrain the defendant or any of their servants/agents from interfering with the plaintiff's
ownership and peaceful use of the land, general damages and orders to stop an illegal sale of
property in block 260 Plot 7346 and for costs of the suit.

The defendant denied the claims in the plaint and admitted that it erroneously registered a
mortgage on Plot 7347. Apart from that the defendant’s defence is that the plaintiff owes money
secured by a mortgage on Plot 7346 and it is entitled after due process to proceed to realise the
outstanding amount. The Defendant accordingly counterclaimed for the amount of Uganda
Shillings 416,764,552 together with the interest accruing at the rate of 23% per annum as well as
costs of the suit.
At the hearing, the Plaintiff was represented by Counsel MacDosman W. Kabega of Messrs
Tumusiime, Kabega & Co. Advocates while the Defendant was represented by Counsel Richard
Obonyo of Messrs Kigozi, Sempala, Mukasa Obonyo (KSMO) Advocates.

On the 22nd of February 2017 both parties agreed to facts numbers 1, 2, 3 and 4 of the draft
scheduling notes of the defendant. The points of disagreement were the issues for determination.
The agreed points of agreement/facts are as follows:

 Between June and November 2014, the first plaintiff obtained loan facilities from the
defendant comprised of: a contract finance facility of Uganda shillings 220,000,000/=; a
performance bond facility of Uganda shillings 73,449,366/=, a medium term loan facility
of Uganda shillings 200,000,000/=.
 The monies were secured by land comprised in Bunamwaya block 265 plot 7346.
 The defendant registered mortgages on land comprised in Bunamwaya block 265 plot
7346 and Bunamwaya block 265 plot 7347.
 The defendant issued a notice of sale of mortgaged property to the plaintiffs.

The issues raised for trial are:

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.
4. Remedies

The court was addressed in written submissions and the material facts are sufficient covered
in the written submissions and are not controversial other than there being a controversy
about whether the plaintiffs owe the money claimed in the counterclaim.

Written Submissions:

Issue 1
Whether the plaintiffs are entitled to general damages for mortgages registered
illegally on land comprised in Block 265 Plot 7347 and Plot 7346?

The plaintiff’s Counsel relied on the testimony of the 2 nd Plaintiff (PW2) that he simply
deposited the title for Block 265 Plot 7347 with the Defendant for safe custody and not for
use as collateral for any loan which fact was not denied by the Defendant. DW1 confirmed
in cross examination that the Defendant had a mortgage registered on the titles yet the 2 nd
Plaintiff had not given it for any facility. He also confirmed that the court ordered them to
return the title deeds of Plot 7347 to the Plaintiffs unencumbered but they returned it with
the mortgages not removed and though with a release of mortgage letter. In further cross-
examination DW1 testified that their release letter was for only one mortgage on the title
and yet there were three mortgages entered as such there were no release letters for the rest
of the mortgages. In exhibit P 23 it is shown that one of the mortgages was cancelled and yet
the search letter exhibit P9 clearly shows that there are still three other mortgages registered
on the title. The Plaintiff’s counsel submitted that this was an act of fraud on the part of the
defendant. PW2 testified that as a result of the illegal mortgages on his land, he was unable
as a businessman to use it to get funding for his business. The defendant’s action
embarrassed the 2nd Plaintiff and caused him to suffer loss and stress for which he is entitled
to general damages. Before a Mortgage can be registered on a title deed, a claim to an
interest in the property must exist. In this case, the Defendant had no interest whatsoever in
the 2nd Plaintiff's property but went ahead and illegally encumbered it to date. Counsel cited
the case of Makula International Ltd vs. His Eminence Cardinal Nsubuga & Another
(1982) HCB 11 where the Supreme Court of Uganda held that a Court of law cannot sanction
what is illegal and illegality once brought to the attention of court, over rides all questions
of pleadings including any admissions therein. The Defendant illegally encumbered Block
265 Plot 7347 registered in the names of the second plaintiff which he had handed over for
safe custody. PW2 testified that he received a facility of Uganda Shillings 318,000,000/-
secured by Block 265 Plot 7346 as security and fully paid the loan but to date the mortgage
encumbrance still appears on the title illegally. DW1 confirmed that this money was paid
by the Plaintiff. PW2 further testified that the Defendant illegally transferred a mortgage to
Block 265 Plot 7346 from Plot 7347 which does not/or is not reflected in the Land
Registry under search letter exhibit P8 and which position was confirmed by PW1 the
Land Registrar from Wakiso and DW1. Counsel submitted that this was a case of outright
forgery.

Lastly, the Defendant executed a mortgage and pledged Block 265 Plot 7346 as security
and charged the Plaintiffs Uganda Shillings 1,100,000/= as fees under a Loan Agreement
but this money was not even remitted to Uganda Revenue Authority (See exhibits P37 and
P 38). The Plaintiffs counsel submitted that the defendant should not be permitted to take a
benefit from these illegalities. Any claims against the Plaintiffs arising from the fraudulent
documentation in the Counter-Claim should therefore be rejected. It would be absurd for
court to allow a litigant who has engaged in fraudulent documentation
like the Defendant has to be allowed to claim a benefit out of them. The Court made an
Order on the 10th of June, 2016 directing the Defendant to release the 2 nd Plaintiff's Title in
Block 265 Plot 7347. DW1 further accepted in cross examination that while they gave
back the title, they never removed the mortgages encumbrances on the title deed to date.
He contended that this was in contempt of court and punitive damages ought to be awarded
against the Defendant.

In reply, the defendant’s Counsel submitted that it was not in dispute that mortgages were
registered on the title for the land comprised in Kyadondo Block 265 Plot 7347 under the
instruments cited in evidence when this should not have been done. DW1 Mr. Mustafa
Kasaga testified that the mortgages were registered in error by the Registrar of Titles to
whom the Defendant presented the land title in issue. Both the Registrar of Titles and the
Defendant did not notice the error until later when the present suit was instituted. The
Registrar of Titles conceded that there was an error on their part. The Defendant did not
receive a formal request from the Plaintiffs for release of the mortgage. As soon as the error
relating to the mortgage registration came to the Defendant's attention, it issued a release of
mortgage instrument to the Plaintiffs and evidenced in letter dated 4 th August, 2016, Exhibit
D4. The Defendant had a good Bank/Client relationship with the Plaintiff with whom it has
acted in good faith and mutual respect in all dealings including transactions giving rise to
this suit. In view of the good and well established relationship between the parties, the
Defendant did not hesitate to release the erroneously entered mortgages on Plot 7347 and
returned the title deeds to the Plaintiff. The Defendant’s counsel submitted that the award of
general damages is at the discretion of the court which should always be exercised having
in mind, the circumstances of each case. The Plaintiffs did not suffer any loss on account of
the encumbrances erroneously registered whose release it has not objected to and no
concrete evidence has been presented to Court to augment the claim for general damages
allegedly suffered by the Plaintiffs. Counsel invited court to find that in the circumstances
there is no merit for an award of general damages to the Plaintiffs.

Issue 2

Whether the plaintiff is indebted to the defendant in the amounts claimed in the
counterclaim of Uganda Shillings 416,764,552/=?

The plaintiff’s Counsel submitted that the Plaintiff was not indebted to the defendant to the
extent of an amount of Uganda shillings 416,764,552/= at the time of the issuance of the notice
of sale of the mortgaged property against the Plaintiffs on 9 th November, 2015. The Defendant
did not know the exact amount that was owed by the Plaintiffs if any because DW1 in his letter
Exhibit P13 of 11th March, 2015 to the Plaintiff claimed Uganda Shillings 234,247,582/= as
outstanding yet in exhibit D6 the balance shown is Uganda Shillings 214,163,588/=. On 15 th
June, 2015 DW1 wrote to the Plaintiff in exhibit P14 indicating the loan amount due as Uganda
Shillings 581,000,000/= and which he admitted in cross examination as being false. Both the
outstanding loan of Uganda Shillings 391,383,768/= and the arrears amount of Uganda Shillings
391,383,768/= were false. On the 13th August, 2015 DW1 wrote to the Plaintiff in exhibit P16
indicating the loans limit amount of Uganda Shillings 581,000,000/= and that the outstanding
balances as of 12th August, 2015 in total was Uganda Shillings 391,383,768/=. He confirmed in
cross examination that these totals were all false. On the 2 nd November, 2015 DW1 wrote to the
Plaintiffs in exhibit P17 indicating the loan limit amount of Uganda Shillings 581,000,000/= and
that the outstanding balances as of 29 th October, 2015 in total was Uganda Shillings
391,383,768/=. He also confirmed in cross examination that these totals were all false. The
Defendant's counter - claim is for a sum of Uganda Shillings 416,764,552/-. The law on special
damages is well settled that they must be proved specifically. DW1 admitted in cross
examination that their figures are false and that the additions are wrong yet this formed the basis
of their claim against the Plaintiff. Even the Bank statement filed by the Defendant exhibits D5
and D6 do not reflect this amount as due from the Plaintiffs. In his evidence PW2 stated that he
never took the performance bond facility of Uganda Shillings 73,449,366/= which position was
confirmed by DW1. But DW1 testified that this amount was included in the totals that appear in
exhibit P12 where a total sum of Uganda Shillings 416,764,552/= was demanded from the
Plaintiffs. DW1 denied in re-examination that this figure is not being demanded from the
Plaintiffs. In view of this admission by the defendant that their figures were false and yet it
formed the basis of thee Notice of Sale, Counsel submitted that the defendant did not know the
amount that the Plaintiff owed by 9th November, 2015. The Plaintiff’s were not therefore
indebted in the sums as claimed in the counter claim and the counter claim ought to fail for
failure to prove it specifically.

In reply the defendant’s Counsel submitted that DW1 testified that the loan facilities
obtained by the 1st Plaintiff have not been fully repaid and this is the foundation of the
counterclaim. By Facility Letter dated 30th June, 2014 Exhibit P5, the 1st Plaintiff obtained a
Contract Finance Facility of Uganda Shillings 220,000,000/= (Uganda Shillings Two
Hundred Twenty Million) from the Defendant. The facility was to facilitate execution of
contracts awarded to the 1st Plaintiff and was secured by a continuing charge over land
comprised on Block 265 Plot 7346 in the names of the 2 nd Plaintiff and the 2nd Plaintiff’s
personal guarantee. By a further facility letter dated 21 st November, 2014 (Exhibit P4), the 1st
Plaintiff obtained a medium term loan of Uganda Shillings 200,000,000/= (Uganda Shillings
Two Hundred Million) from the Defendant. The facility was sanctioned for purposes of equity
release and working capital and was to be secured by a further charge over property comprised in
Block 265 Plot 7346 in the names of the 2 nd Plaintiff and the 2nd Plaintiff’s personal guarantee
and rental assignment. DW1 testified that the 1 st Plaintiff as principal debtor did not service the
above loan facilities as agreed and he also did not deny its indebtedness to the Defendant in the
several engagements that the parties had prior to and after the institution of the suit to the tune of
Uganda Shillings 416,764,552/= at the time of issuance of notice of sale of mortgaged property
against the Plaintiffs on 9th November, 2015. This debt was not settled in full and the 1 st Plaintiff
remains indebted to the Defendant to a tune of Uganda Shillings 354,232,440/= (Uganda
shillings three hundred fifty four million two hundred thirty two thousand four hundred forty
only) after taking into account Uganda Shillings 210,000,000/= (Uganda shillings two hundred
ten million only) deposited by the Plaintiffs after institution of this suit. The Plaintiffs
outstanding loan exposure and repayments are reflected in the statements of account exhibits D2,
D3, D5 and D6. DW1 testified that under the regulations, the Defendant is entitled to demand for
interest hitherto suspended which should be taken into account in computing the outstanding
sums payable by the Plaintiff. This is the position stated in regulation 9 (2) of the Financial
Institutions (Credit Classifications and Provisioning) Regulations, 2015. The Plaintiffs admit that
the 1st Plaintiff received the loan funds from the Defendant. The Plaintiffs witness testified that
they have been servicing the loans and are not indebted to the Defendant in the sum of Uganda
Shillings 416,764,552/= but did not provide any evidence to show what they have paid and what
is outstanding as would contradict the evidence of the Defendant in Exhibits D2, D3, D5 & D6.
In stating that the Plaintiffs are not indebted to the Defendant in the sum of Uganda Shillings
416,764,552/=, the Plaintiff’s admitted indebtedness to the Defendant to a certain amount. The
letter dated 27th July, 2015 Exhibit P29 attached to the Plaintiffs trial bundle at page 112 is even
more instructive as it indicates the Plaintiffs total admission of indebtedness to the tune claimed
by the Defendant. The Plaintiffs proposed a payment plan which they have not honoured.
Counsel invited court to find that the evidence presented confirms that the Plaintiffs are indebted
to the Defendant as pleaded in the counterclaim.

Issue 3

Whether the defendant can sell the mortgaged land comprised in Bunamwaya Block 265
Plot 7346 to recover the outstanding loan balance?

The plaintiffs’ Counsel submitted that the Defendant cannot sell the Plaintiffs property because
one mortgage on it under Instrument No. WAK00038391 is fraudulent. Court should not allow a
party to make a benefit based on illegal/fraudulent documents. In cross examination DW1
confirmed that Instrument No. WAK00038391 for Uganda Shillings 200 million does not appear
on exhibit P8 being the search letter and yet it is reflected on exhibit P 24 which is the title in
possession of the Defendant. He did further confirm that this encumbrance on the title was fake.
Counsel submitted that on another mortgage WAK00058796 for Uganda Shillings 220 million
he demonstrated to Court that the Bank did not pay stamp duty and went ahead to come up with
a forged URA payment receipt. This court cannot condone a fraud which has been cited and
admitted by a defence witness. Based on the illegality brought to the attention of court, the court
should not allow the Defendant to sell the Plaintiff's mortgaged property comprised in Block 265
Plot 7346.

In reply to the plaintiffs’ submissions on this issue, the defendant’s Counsel submitted that if
court finds that the 1st Plaintiff is indeed indebted to the Defendant in the sum claimed or at all,
the debt is secured by the land comprised in Block 265 Plot 7346 which was offered as mortgage
security in the facility letters for the outstanding loan (Exhibits P4 and P5). The Defendant
followed due process under the Mortgage Act to realize the security and as such the Defendant is
entitled to sell the mortgaged property to recover the outstanding loan balance. Paragraphs 4, 6
& 9 of Mustafa Kasaga’s Witness Statement show that the 1 st Plaintiff obtained a Contract
Finance Facility and Medium Term Loan Facility of Uganda Shillings 220,000,000/= and
200,000,000/= respectively which have not been fully repaid and Uganda Shillings
354,232,440/= remains outstanding. The outstanding sum to the Defendant is reflected in the
statements of account marked Exhibit D2, Exhibit D3, Exhibit D5 & Exhibit D6 and confirmed
by the testimony of DW1. The 2nd Plaintiff in his testimony to Court admitted indebtedness and
did not provide evidence of full repayment of the loan to contradict the Defendant's evidence. As
to the existence of a mortgage to secure the debt, DW1 testified that the Defendant has a valid
mortgage registered over the land comprised on Kyadondo Block 265 Plot 7346 to secure the 1 st
Plaintiffs borrowings. The defendant is either entitled to repayment by the Plaintiffs in
accordance with loan facility agreement or to realize the mortgages securing the facilities after
due process of law to recover the loan sum outstanding as indicated in the counterclaim. The
Plaintiffs do not dispute the existence and validity of the legal mortgage registered on land
comprised in Kyadondo Block 265 Plot 7346 land at Bunamwaya. The DW1 testified that the
Defendant issued relevant demands for payment against the Plaintiffs including a Notice of Sale
of security for the land comprised in Kyadondo Block 265 Plot 7346 and also advertised sale of
security, but the Plaintiffs did not honour the demand and notices. The Defendant admitted the
notice of sale notices in the testimony of PW2 and paragraph 24 thereof.

Under section 20 (e) of the Mortgage Act No. 8 of 2009 where the mortgagor is in default and
does not comply with the notice served on him or her under section 19, the mortgagee may sell
the mortgaged property. Further Section 26 (1) of the Mortgage Act, a mortgagor who is in
default of his or her obligations under a mortgage and who remains in default at the expiry of the
time provided for the rectification of that default in the notice served on him or her under section
19 (3) gives the Mortgagee a right to exercise his or her power to sell the mortgaged land. In the
case of Savers International (U) Ltd V DFCU Misc, Application No. 283 of 2002, Hon.
Justice Okumu Wengi cited with approval the holding of Justice Richard Kwach in Bharmal
Kanji Shah and another v Shah Depar Devji [1965] 1 EA 91 that: “As I understand the law, a
dispute as to the exact amount owed under a mortgage is not a ground upon which a mortgagee
who has served a valid statutory notice can be restrained from exercising its statutory power of
sale."

He further submitted that since the Plaintiff is indebted to the Defendant and the Defendant
served the Plaintiffs with a Notice of Sale as well as advertised the property for sale as
prescribed in the Mortgage Act, the Court should find that the Defendant is entitled to sell the
mortgaged property to recover the outstanding loan balance.

Issue 4 Remedies

The Plaintiff’s Counsel submitted that the Plaintiffs prayed for general damages for the illegal
encumbrance on their two titles deeds having shown court that the mortgages that appear on
Block 265 Plot 7347 were illegally entered at the instance of the Defendant. Furthermore, the
Defendant illegally transferred a mortgage to Block 265 Plot 7346 on 28 th January, 2015 from
Block 7347 which does not appear anywhere in the Lands Registry at Wakiso as was indicated in
ExP8. These facts were admitted by the Defendant's witness DW1. The Defendant had no claim
of interest at all in the suit property. The illegal acts caused the plaintiffs loss, stress, anxiety,
embarrassment and inconvenience as they could not use the title deed for getting funding for
their business. In Ferdinand Mugisha vs. Steven Barya & Registrar of titles, HCCS. No. 833 of
2007 Lady Justice Tuhaise awarded Uganda shillings 15,000,000/- for the defendant's act of
caveating the plaintiff's title unlawfully. In the present case court should take into account the
depreciation of the shilling. Counsel prayed that the plaintiff be awarded general damages of
UGX. 100 million taking into account all the circumstances of the case. He further submitted that
on 10th June, 2016 the Court ordered the Defendant to return to the 2 nd Plaintiff his title deeds for
Block 265 Plot 7347 unencumbered. DW1 admitted that the title was returned but that the
encumbrances had not been removed. Counsel submitted that this act of not removing the
encumbrances was an act of defiance and contempt of a lawful court order by the defendant. In
the case of Hadkinson vs. Hadkinson [1952] 2 All ER 567 the Court of Appeal of England
observed that a party who knows of an order of court, whether null or valid, regular or irregular
cannot be permitted to disobey it. In the American case of Michael Lynn Kirkbridge and
Dolores Avoline Kirkbridge, an award of US$ 63,000 was made against the Bank of America
for contempt of court for having wilfully violated a court order they were aware of. In Stanbic
Bank (U) ltd vs. Commissioner General URA HC Misc. App No. 0042/2010 the applicants
brought an action against the Commissioner General for violating an interim order that had been
issued against it and sought for exemplary and punitive damages for contempt of court and the
court in 2011 awarded Uganda Shillings 100 million. Counsel prayed that taking into account the
depreciation of the shilling an award of Uganda Shillings 150 million would be appropriate in
the circumstances for the contemptuous behaviour of the defendant. The Defendant entered a
mortgage on Block 265 Plot 7346 and debited the Plaintiffs Account with Uganda Shillings
1,100,000/= as stamp duty as shown in exhibit P 32 entered on 1 st July, 2014. From the evidence
of PW3 this money was never paid to URA as the Defendant filed forged documents exhibit P
38. Counsel prayed that the defendant refunds this money to the Plaintiff’s account. The Plaintiff
had applied for a performance bond guarantee of Uganda Shillings 73,449,366/= which the
defendant issued late and well after the Plaintiff had notified it that it was no longer required
which position was confirmed by DW1. He also prayed that the charges that the Defendant took
from the Plaintiffs Account of Uganda Shillings 2,948,479/= be refunded to his account as
reflected in ExP32 as debited on 31 st October, 2014. The actions of the Defendant in
encumbering a title Plot 7347 with a mortgage that was simply handed to it for safe custody and
with some mortgages on it not reflected in the land registry was not only an illegality but
bordered on criminality. Further in entering a mortgage on title Plot 7346 and purport to have
paid stamp duty but reflect payment with a forged receipt exhibit P 38 is criminal. In the case of
URA vs. Wanume David Kitamirike C. A. No. 43/2010 on the principle of punitive damages, it
was held that court should not condone criminality on the part of a financial institution charged
with taking care of clients' money. He prayed that the Defendant's conduct be punished and that
the defendant is penalised by way of an award of punitive damages. He proposed a sum of
Uganda Shillings 150 million in the circumstances. He prayed that Court be pleased to find for
the Plaintiffs as prayed with the reliefs sought and the Defendant's counter-claim be dismissed as
it had not proved specific damages. The dismissal should be with costs and interest as prayed for
in the Plaint.

In reply to the plaintiffs’ submissions, the defendant’s Counsel submitted that the Plaintiffs
instituted this suit for declaratory orders that the Defendant is illegally holding the Plaintiffs
title for Kyadondo Block 265 Plot 7347 and illegally encumbered it with a mortgage, a
permanent injunction restraining the Defendant from interfering with the Plaintiff's
ownership of this land and general damages and orders stopping an alleged illegal sale of
property comprised on Block 265 Plot 7346 and costs of the suit. The defendant’s Counsel
submitted that the Defendant handed back the land title for Plot 7347 along with its
mortgage release instrument to rectify the erroneously entered memorial on the land title
deed. As such the Order for a declaration that the Defendant is illegally holding the title for
Plot 7347 and an injunction restraining the Defendant from interfering with the Plaintiff’s
ownership of this land is overtaken by events and untenable. Court should not grant the
prayers in light of the actions already taken by the Defendant to return the title deeds and
release of mortgage. The defendant has demonstrated willingness to release the title free of
encumbrances. If the court finds that the Plaintiffs are indebted to the Defendant in the sum
counterclaimed or at all, the property which secures the debt should after due process be
sold to recover the outstanding amount. As such the defendant’s counsel submitted that the
plaintiff is not entitled to the orders sought. On the other hand, the Defendant
counterclaimed for recovery of 416,764,552/= which was partly paid leaving a balance of
Uganda Shillings 354,232,440/= (Uganda Shillings Three Fifty Four Million Two Hundred
Thirty Two Thousand Four Hundred Forty) which sum ought to be awarded together with
interest on this sum at the rate of 23% per annum and with costs of the suit. Counsel prayed
that the court considers the resolution on issues numbers 2 and 3 and finds that the 1 st
Plaintiff is indebted to the Defendant as stated above. The sum attracts interest at the rate of
23% per annum.

Counsel cited Section 26 of the Civil Procedure Act for the submission that courts will not
interfere with the interest rate agreed by parties in a contract unless the agreed rate is
unconscionable or excessively high. This principle was applied in the Kenyan case of
Pelican Investment Ltd & Another vs. National Bank of Kenya Ltd [2000] 2 EA 488
where court held that parties are bound by their contracts and court will not interfere with
the interest rate agreed upon unless the same is harsh and unconscionable. Accordingly
Counsel submitted that since the 1st Plaintiff agreed to borrow at an interest rate of 23% per
annum, the court should find that they are liable to pay interest at this rate on the
outstanding loan of Uganda Shillings 354,232,440/= (Uganda shillings three fifty four
million two hundred thirty two thousand four hundred forty) to the
Defendant/Counterclaimant. Regarding costs of the suit, under section 27 (2) of the Civil
Procedure Act, costs follow the event (See Banco Arabe Espanol vs. Bank of Uganda
S.C.C.A No. 8 of 1998). He invited Court to find that the defendant/counterclaimant is
entitled to costs of the suit together with all the other remedies sought by the defendant.

Judgment

I have carefully considered the plaintiffs suit as disclosed in the plaint, the written
submissions of counsel as well as the evidence and the law. The facts in this dispute are not
in controversy. If there are any factual controversies, they do not relate to the material facts
upon which the plaintiff relies in support of the suit.

The facts disclosed in the plaint are that the plaintiff is a customer of the defendant and the
second plaintiff is the first plaintiffs managing director and owner of the land described as
Bunamwaya Block 265 Plots 7346 and 7347. In June 2014, the first plaintiff company sought for
a bank guarantee from the defendant for execution of a contract Number UDC/WRKS/2013 –
2014/00089, using the security of Block 265 Plot 7346 in the names of the second plaintiff and
personally guaranteed by the second plaintiff. The contract was for a duration of four months
commencing on the 14th May, 2015 and ending 30th August, 2014. The first plaintiff applied for a
performance bond facility secured by the said security. The performance guarantee was however
released by the defendant to the first plaintiff on 3 rd November, 2014 long after the head contract
had expired and even after the second plaintiff had notified the defendant that it was no longer
required.
The defendant despite the plaintiff’s letter notifying it illegally registered a mortgage on land
comprised in plot 7347 which was never offered to the defendant as security and without the
plaintiffs consent. The plaintiff alleged that it suffered stress and financial loss forcing the
plaintiff to apply for another loan of Uganda Shillings 350,000,000/= using the security in block
260 Plot 7346. The defendant only released Uganda Shillings 200,000,000/= to the first plaintiff
of which the defendant illegally and erroneously encumbered land comprised in block 265 plot
7347 which was never offered by the plaintiff to the defendant. The plaintiffs alleged that the
conduct of the defendant ensured and further frustrated the plaintiff's efforts to sell off his land
block 265 plot 7347 to offset the first plaintiff’s outstanding loan obligations with the defendant
for which the plaintiff claims general damages.

On 17th of November 2015 the plaintiffs were served with a notice of intention to sell property
comprised in block 265 plot 7346 at Bunamwaya valued at Uganda Shillings 2,000,000,000/= to
recover Uganda Shillings 416,764,552/= which is the outstanding balance owing.

Sometime in July 2012, the plaintiff obtained a loan of Uganda Shillings 380,000,000/= secured
by a mortgage on the block 265 plot 7346. The plaintiff paid up the loan fully but the defendant
continued to illegally and unlawfully encumber the plaintiff’s title. As a result of the illegal
encumbrance, the defendant illegally recovered bank charges from the plaintiffs amounting to a
sum of Uganda Shillings 50,000,000/=. The plaintiff alleged that the continued holding onto the
title for block 265 plot 7247 is illegal and continues to be oppressive and a great inconvenience
and hardship to the plaintiff’s occupation and enjoyment of the suit property for which the
plaintiff claims general damages. The plaintiff alleges that there was no justification in holding
onto the land comprised in block 265 plot 7347. The entry of a mortgage on the suit property is
illegal. The entry of a mortgage facility for Uganda Shillings 73,449,366/= on the said plot 7347
was unknown to the plaintiff and illegal.

Among other things the plaintiff seeks a declaration that they are entitled to the release of the
mortgage on the land comprised in block 265 plot 7347 and a return of the title to the plaintiff. A
declaration that the defendant has no legal right to sell the property comprised in block 265 plot
7346. An order directing the defendant to release the mortgage on the suit property namely plot
7347. A permanent injunction, general damages and punitive damages as well as interest at 26%
per annum from the date of recovery till payment in full. Interest on the general damages, costs
and punitive damages from the date of judgment till payment in full and costs of the suit.

The defendant denied the claim and in the written statement of defence admitted that between
July and November 2014, the first plaintiff obtained loan facilities from the defendant being a
contract finance facility of Uganda Shillings 220,000,000/=, a performance bond facility of
Uganda Shillings 73,449,366/= and the medium term loan facility of Uganda Shillings
200,000,000/=. The parties agreed that payment for the loan facilities were to be secured by
mortgage on the Kyadondo block 265 plot 7346 at Bunamwaya in the names of the second
plaintiff as well as a personal guarantee of the second plaintiff. However, the defendant
erroneously presented mortgage deeds relating to the plaintiff's borrowing to the registrar of titles
for registration but the registrar in error registered a mortgage on the certificate of title for land
comprised in Kyadondo block 265 plot 7347 at Bunamwaya instead of plot 7346 and both parties
did not notice the error before the suit was instituted by the plaintiff. In any case prior to the
institution of the suit the defendant had not received a request for release of the title for plot
7347.

In further response the defendant averred that the plaintiffs did not service the loan facilities as
agreed and have not denied their indebtedness to the defendant to the tune of Uganda Shillings
416,764,552/= secured by the land comprised in Kyadondo block 265 plot 7346 against which
the defendant instituted recovery measures which prompted the filing of the suit. In any case the
defendant has a valid mortgage registered on plot 7346 to secure the first plaintiffs borrowing
and is entitled to realise the mortgage after the due process of law to recover Uganda Shillings
416,764,552/=.

The defendant averred that it has failed to identify charges amounting to Uganda Shillings
50,000,000/= as alleged by the plaintiff.

Accordingly the defendant counterclaimed for the amount of Uganda Shillings 416,764,552
together with the interest accruing at the rate of 23% per annum as well as costs of the suit.
While reiterating the averments in the written statement of defence the defendant alleged that the
plaintiff did not service the loan facilities as agreed. The counterclaimant issued the relevant
demands for payment against the defendants to counterclaim including a notice of sale of the
security namely plot 7346 and also advertised the sale of the security by the defendants who have
not rectified the default through payment. In addition to claiming a liquidated amount of Uganda
Shillings 416,764,552/=, the counterclaimant claims interest at the rate of 23% per annum from
9th November, 2015 until payment in full as well as costs of the suit.

In reply, the plaintiffs denied ever receiving the performance bond facility of Uganda Shillings
73,449,366/=. Secondly, the plaintiffs never authorised the use of the plot 7347 as collateral but
only plot 7346. The plaintiff further maintained that they have been servicing the loans and not
deny the facility for Uganda Shillings 200,000,000/= as well as 220,000,000/=.

At the scheduling conference the following facts are agreed facts.

Between June and November 2014, the first plaintiff obtained loan facilities from the defendant
comprised of a contract finance facility of Uganda shillings 220,000,000/=, a performance bond
facility of Uganda shillings 73,449,366/=, a medium term loan facility of Uganda shillings
200,000,000/=. The monies were secured by land comprised in Bunamwaya block 265 plot 7346.
The defendant registered mortgages on land comprised in Bunamwaya block 265 plot 7346 and
Bunamwaya block 265 plot 7347. The defendant issued a notice of sale of mortgaged property to
the plaintiffs.

It was later proved that the defendant advertised the property for sale and the plaintiff also filed
this suit for injunction and other remedies. On 22 nd February, 2017 the agreed issue number one
was modified to read as follows:

Whether the second plaintiff is entitled to general damages for mortgages registered on
land comprised in Bunamwaya Block 265 Plot 7347 by Instrument Number WAK 0003
8391 on 28th of January 2015 as well as Instrument Number WAK 0004 1022 registered
on 27th of February 2015?

I have carefully considered the question of whether general damages should be awarded for
registration of a mortgage on plot 7347. The fact that a mortgage was registered is not in dispute.
Having reviewed the evidence and the documentary exhibits, the following facts are material.

Summons to file a defence was issued on 3rd December, 2015. On 10th June, 2016 in High Court
Miscellaneous Application No. 1000 of 2015, the plaintiff was granted a conditional temporary
injunction wherein the court ordered for return of the title deeds for Kyadondo block 265 plot
7347 to the plaintiff free of all encumbrances. In the written statement of defence the defendant
admitted that the plot was wrongly encumbered by the registration of a caveat. It has also been
established that the property of the second plaintiff used for security by the first plaintiff was
advertised for sale on 4th December, 2015 in exhibit P2. Exhibit P2 however concerns the
encumbered plot 7346 which encumbrance is not controversial and is based on the contract
between the parties. It was also established by exhibit P9 which is the letter of the Commissioner
for Land Registration that plot 7347 had an encumbrance registered on 5 th February, 2015 under
Instrument Number KLA 565080. A mortgage was also registered on 28 th January, 2015 under
Instrument Number WAK00038391. Another mortgage was registered under Instrument Number
WAK – 00041022 on 27th February, 2015. According to the certificate of title Exhibit P 23,
Instrument Number WAK 00038391 was cancelled on the ground that it was “entered in error”.
It shows that it was a further charge to secure the repayment of Uganda shillings 200,000,000/=.
Instrument number WAK 00041022 is the further charge to secure the repayment of Uganda
shillings 73,449,366/=.

Exhibit P 24 is the certificate of title for plot 7346 and the encumbrance page shows the
registration of the mortgage under instrument number KLA 552933 on 19 th July, 2012. Under
instrument number WAK 0003 8391 registered on 28th of January 2015 there is a further charge
to secure the repayment of Uganda shillings 200,000,000/=. By another instrument number
WAK 0005 8796 there is a further charge to secure the repayment of Uganda shillings
220,000,000/= dated 19th August, 2015.

I have also considered the facilities under which the above properties were encumbered.
According to exhibit P3 which concerns the Performance bond, it is dated 14 th October, 2014 and
was executed by the first plaintiff’s directors on 15 th October, 2014. Clause 4.1 thereof provides
that the security for the facility is Kyadondo block 265 plot 7346.

It is therefore proven from the documentation agreed that plot 7347 was wrongfully or
erroneously encumbered by the defendant by registering thereon a charge in respect of the
performance bond exhibit P3.
In exhibit P4 which is the facility dated 21 st November, 2014 concerning a medium term loan
facility for Uganda shillings 200,000,000/=, clause 4.1 of the agreement provides that the
security for the borrowing would be plot 7346. The document was signed by the directors of the
plaintiff on 24th of November 2014.

In exhibit P5 which is dated 30th June, 2014, there is a contract finance facility with the facility
amount being Uganda shillings 220,000,000/=. Under clause 4.1 of the agreement the security
for the borrowing is plot 7346. The contract was signed by the directors on 30th of June, 2014.

In exhibit P6 that is a letter dated 29 th September, 2014 written by the second plaintiff as a
director of the first plaintiff concerning the performance bond. In the letter the director wrote that
the performance bond was not needed by the plaintiff anymore. They informed the defendant
that he had executed the contract 85% and what they needed was another loan. The letter was
received by the defendant.

In exhibit P7, there is a performance guarantee or a performance bond dated 3 rd November, 2014
which was received by Uganda Development Corporation on 5 th November, 2014. This was
more than a month after the plaintiffs letter exhibit P6 informing the defendant that the
performance bond was no longer required.

I have accordingly also considered the plaint and in paragraph 5 (a) it is averred that in June
2014, the plaintiff sought the facility for execution of works. The contract is described as
UDC/WRKS/2013 first 2014/00089 and the security for the facility sought is plot 7346. In
paragraph 5 (c) the contract was for four months ending 30 th August, 2014. The plaintiff had
applied for a performance bond security but the same was issued late on 3 rd November, 2014. It
is averred that after the contract had expired, the plaintiff notified the defendant by letter of 29 th
September, 2014. All the above averments have been proven by the documentary exhibits. The
fact that the title plot 7347 was encumbered by the defendant has been admitted. According to
the search letter exhibit P9 dated 5 th September 2016, Instrument Number W8K00041022 was
registered on 27th February, 2015. The court ordered the defendant to remove the encumbrance
on the title and the order was issued on 10th June, 2016. By the time the witness PW1 testified in
April 2017, the encumbrance had not been removed.
General damages are compensatory according to the case of Johnson and another vs. Agnew
[1979] 1 All ER 883. In the above case, it was held by Lord Wilberforce that the award of
general damages is compensatory and meant to place the innocent party so far as money can do
so, in the same position as if the contract had been performed. According to Halsbury's Laws of
England 4th Edition Reissue volume 12 (1) and paragraph 812 thereof general damages are
those losses which are presumed to be the natural or probable consequence of the wrong
complained of. The compensation principle is known as restitutio in integrum and its rationale
was discussed by the East African Court of Appeal in Dharamshi vs. Karsan [1974] 1 EA 41.
They held that general damages are awarded to fulfil the common law remedy of restitutio in
integrum. This means that the Plaintiff has to be restored as nearly as possible to a position he or
she would have been in had the injury complained of not occurred.

The question is therefore whether the second plaintiff who is a director in the first plaintiff as
well as the first plaintiff suffered damages on account of the encumbrance on the title deed.

The suit came for hearing on 24th of April 2017 when PW1 Mr Emmanuel Bamwite, a Senior
Registrar of Titles, Ministry of Lands, Housing & Urban Development testified about the
encumbrances on Bunamwaya Kyadondo block 265 plot number 7347. He had examined the
search letter dated 5th October, 2016 exhibit P9 and also conducted a search of the register. He
confirmed the documentary evidence and most importantly was able to establish that the
particulars in the search letter exhibit P9 admitted in evidence was true and correct at the time of
his testimony on 24th April, 2017 in that it reflected the status quo two weeks before he testified.
He established that instrument number KLA 565080 dated 5 th February, 2013, instrument
number WAK00038391 dated 28th January, 2015 and instrument number WAK – 0004 1022
dated 27th February, 2015 were still on the register at the time of the testimony (24th of April
2017).

Additionally PW1 testified about exhibit P 23 which is a copy of the certificate of title for plot
7347 and exhibit P 24 which is a copy of the certificate of title for plot 7346. According to him
exhibit P 24 and instrument numbers KLA552933 dated 19 th July 2012 and WAK – 0058796
dated 19th August 2015 are still on the register as compared to the search letter exhibit P8. On the
other hand instrument number WAK 0003 8391 dated 28th of January 2015 appearing on exhibit
P24 concerning plot 7347 has never been entered on the register as is confirmed in the search
letter dated 5th of September 2016 exhibit P8. I note that instrument number WAK – 00038391
concerns a loan facility of 200,000,000/=. It was also entered on plot 7347 under the same
instrument number with the words entered in error inserted though not dated.

PW1 confirmed that instruments KLA565080 dated 5th Feb 2013 and WAK – 00038391 dated
28th January 2015 and instrument WAK – 00041022 dated 27th Feb 2015 are registered on exhibit
P23 which is a copy of the certificate of title of plot 7347.

While it is indicated that the encumbrance was entered in error, this is very unlikely in light of
the fact that the same encumbrance was entered on both titles on 28 th January 2015. The error is
allegedly on the part of the Registrar of Titles. No further evidence was adduced concerning the
error.

According to PW2 Mr William George Kiyega and paragraph 7 of his written testimony, as a
consequence of the defendant's failure to provide the performance guarantee in time, the first
plaintiff lost business and suffered loss as a result of the defendant’s breach. As far as loss is
concerned, he testified in paragraph 8 of his written testimony that the defendant charged the
plaintiffs a sum of Uganda shillings 2,948,479/=, an arrangement fee of Uganda shillings
734,493/=. Additional fees for “PBGCom” Uganda shillings 1,101,740/= and the professional
fees of Uganda shillings 1,112,246/= thereby leading to loss on the part of the plaintiff.
Furthermore he testified that sometime in May 2014, the performance bond facility for Uganda
shillings 73,449,366 was required by the first plaintiff from the defendant which the defendant
provided. In the agreement of 14th October, 2014, it was one of the conditions that should the
guarantee crystallise into an effective payment to be paid by the bank, the plaintiffs account shall
be debited to effect such payment. However, the plaintiff’s loan account was never debited and
the amount was not disbursed but the defendant went ahead and lodged a mortgage on the
plaintiff’s property plot 7347. In paragraph 14 he testified that the defendant illegally continued
to encumber his title for block 265 plot 7346 and illegally transferred the mortgage on 28 th
January, 2015. His testimony is that he deposited the title deed on 3 rd November, 2009 for safe
custody. However the defendant without his knowledge and approval illegally entered mortgages
on the title deed. The plaintiffs never gave the said title for plot 7347 to the defendant as
collateral for any facility.

This evidence was never contested and in fact the defendant’s witness Mr Mustafa Kasaga, the
special assets manager in the special assets Department of the defendant testified that pursuant to
the facility terms, duly executed by the parties, the defendant presented title deeds to the registrar
for registration. The Registrar of titles erroneously registered the mortgage on the certificate of
title comprised in Kyadondo block 265 plot 7347. Prior to the suit, the defendant did not receive
a formal request from the plaintiffs for the defendant to release the mortgage erroneously
registered on the title. However the defendant issued the release of mortgage on the property and
also handed over the land title of the property to the plaintiff by letter dated 4 th of August 2016.

The conclusion is that the defendant presented titles of both Plots to the registrar of titles when it
should only have presented title for Plot 7346 and not 7347. Furthermore Plot 7347 was wrongly
encumbered with a charge as security for a performance bond facility which was not required
because the contract it was required for had expired. The plaintiff is entitled to recover all
charges and fees charged in respect of the performance bond facility.

However the plaintiff testified that it had tried to sell the suit property namely Plot 7347 but it
was encumbered but there is no credible evidence to support this assertion. There is no evidence
that the plaintiff requested the defendant to hand over the title. The plaintiff obtaining further
loans is not related to the encumbrance as plot 7346 was the security agreed to.

I agree that the encumbrance of plot 7347 was wrongful and seemed deliberate. However did it
lead to loss?

For the above reason the plaintiff will be awarded nominal damages in adition to the order to
recover all charges and fees paid in respect of the performance bond.
Nominal damages are defined by Maule J, in the case of Beutmont vs Greathead (1846) 2 CB
494 AT 499 as, a sum of money that may be spoken of but that has no existence in point of
quantity or ‘a mere peg on which to hang costs’. According to Halsbury’s Laws of England, 4 th
Edition, Volume 12 (1) Para 813 a plaintiff is entitled to nominal damages where (i), his or her
rights have been infringed, but he has not in fact sustained any actual damage from the
infringement or he fails to prove that he or she has (ii) although he or she has suffered actual
damage, the damage arises not from the defendant’s wrongful act but from the conduct of the
plaintiff himself or (iii), the plaintiff is not concerned to raise a question of actual loss but brings
his action simply with a view of establishing his right. Furthermore, nominal damages may be
awarded in respect of breach of contract or in respect of torts for which they are actionable per
se. Lord Halsbury C in The Owners of the Steamship Mediana vs. The Owners, Master and
Crew of the Lightship Comet; “the Mediana” [1900] AC 113 held that:

"nominal damages is a technical phrase, which means that you have negatived anything
like real damage, but that you are affirming by your real damage that there is an
infraction of a legal right, which, though it gives you no right to any real damages at all,
yet gives you a right to the verdict on a judgment because your legal right has been
infringed. But the term nominal damages does not mean small damages.”

In the premises, the plaintiff is entitled to nominal damages in addition to recovery of all charges
in respect of the performance bond facility.

Issue 2: Whether the Plaintiffs are indebted to the defendant in the amount
counterclaimed?

The question of whether the plaintiffs are indebted to the defendant is a question of fact. The
defendant counterclaimed for Uganda shillings 416,764,552/=.Subsequently the defendant’s
counsel submitted that what is now outstanding is Uganda shillings 354,232,440/-. The plaintiff
on the other hand submitted that the defendant did not know the exact amount owed by the first
plaintiff. There were inconsistencies in demand letters written by the defendant which include
exhibit P14 dated 15th June 2015 where the defendant claimed Uganda shillings 581,000,000/=.
ON 13th August 2015 in exhibit P16, the defendants official wrote claiming Uganda shillings
581,000,000/=. On the 2nd of November 2015 DW1 wrote on behalf of the defendant claiming
Uganda shillings 581,000,000/= as outstanding. On the other hand DW1 disowned the
correspondence which he acknowledged as having written to be false. Instead the outstanding
balance by 29th October, 2015 was Uganda shillings 391,383,768/=. However, the counterclaim
is for Uganda shillings 416,764,552/=. Counsel further submitted that the bank statements
exhibits D5 and D6 do not show the amount due as being that demanded by the defendant. He
submitted that special damages have to be specifically proved and the defendant failed to prove
it. On the other hand the performance bond of Uganda shillings 73 million was included in the
amount claimed by the defendant.

I have carefully considered the evidence. Starting with the court order in the temporary
injunction application, the plaintiffs were required under Rule 13 of the Mortgage Regulations
2012 to deposit money with the defendant. The Court Order was that the plaintiff would deposit
30% of the forced sale value of Plot 7246 or 30% of the outstanding amount. The 30% of the
outstanding amount was not to take into account charges in respect of the performance bond
facility of Uganda shillings 73,449,366/=. The court also ordered that if the first plaintiff wished
to redeem the property it would pay 50% of the outstanding amount.

I have accordingly perused the record and in a letter dated 12 th July 2016 copied to the registrar,
the first plaintiff’s lawyers wrote to the defendant on a proposed settlement in which they found
Uganda shillings 400,198,470/= as the outstanding sum agreeable and proposed monthly
instalments to effect payment. DFCU bank did not accept the proposal and on 14 th July, 2016 the
Plaintiffs lawyers wrote indicating that they paid 50% on the loan value as ordered by the court
to stop sale of the property.

In exhibit D4 dated 4th August 2016 the defendants lawyers Messrs KSMO wrote to the Plaintiffs
Lawyers Messrs Tumusiime Kabega & Co. Advocates on the subject of HCCS NO. 802 of 2015
and acknowledged receipt of Uganda shillings 210,000,000/= on 15 th July 2016 out of which the
bank applied Uganda shillings 121,762,487/= on the outstanding loan leaving a balance of
Uganda shillings 88,484,256/= which would be treated as pre payment of the loan. They wrote
that the outstanding loan would reduce to Uganda shillings 403,484,256/= which would continue
to accumulate interest at 27% per annum. They claimed that the outstanding amount was
Uganda shillings 613,484,256/= by the time they received the amount of Uganda shillings 210
million.

I have accordingly compared this to the demand letter dated 9 th November 2015 and is exhibit
P12 claiming that the outstanding amount was Uganda shillings 416,764,552/=.

I have re-considered the agreed facts which disclose two categories of loans apart from the
performance bond which is a third facility. These loans were obtained between June and
November 2014. It is an agreed fact that the first plaintiff obtained loan facilities from the
defendant comprised of a contract finance facility of Uganda shillings 220,000,000/=, a
performance bond facility of Uganda shillings 73,449,366/=, a medium term loan facility of
Uganda shillings 200,000,000/=. Upon examination of the contract finance facility in comparison
to the account statement the following can be deduced.

Regarding a term loan of Uganda shillings 200,000,000/= by 25 th November 2014, Uganda

Exhibit D5 is an admitted Credit Finance Facility statement commencing 1 st July 2014 with a
credit of 220,000,000/= by 14th April 2015 it is in debit by -220,330,184/=.

Trade Finance facility had 220,330,184/- by 30 th April, 2015 and is account number
01015112491914. By 31st March 2016 it was in debit by Uganda shillings -130,721,349/-. This
account statement was made after the demand letter exhibit P12 which a notice of sale dated 9 th
November 2015 demanding a total outstanding amount of Uganda shillings 416,764,552/=. The
letter reads in part as follows:

“TAKE NOTICE that in accordance with Section 26 of the Mortgage Act, 2009, dfcu
Bank Limited shall after 21 working days from the date of receipt of this notice proceed
to sell the mortgaged property comprised in Kyadondo Block 265 Plot 7346 at
Bunamwaya, unless the total sum of UGX 416,764,552/- (Uganda shillings Four
Hundred Sixteen Million, Seven Hundred and Sixty Four Thousand, Five Hundred
Fifty Two only), being the total sum outstanding on your contract Finance and Term
Loan Facilities respectively, is paid in full to the mortgagee within that time, Note that
this sum continues to accrue interest and excludes recovery costs.”

According to exhibit D6, which is a statement of account, by 30 th July, 2015 the term loan on
account number 01015032759988 had a debit of Uganda shillings -168,579.975/=. By 25 th
November 2015 the term loan account had a debit balance of Uganda shillings -185,494,626/=.
On 15th July 2016 Uganda shillings 110,673,086/= was paid to account number 01015032759988
leaving a debit balance of -120,884,235/=. On 26 th July 2016 another amount was paid leaving a
balance of Uganda shillings 115,693,916/=. Again on 5th August 2016 another amount of
88,237,513/- was paid to account number 01015032759988 leaving a debit balance of Uganda
shillings -27,456,403/= and by March 2017 this had grown to a debit balance of Uganda shillings
-33,673,841/= by 24th March 2017. The payments are confirmed by the statement admitted as
exhibit P25 being from the corporate current account of the plaintiff account number
01013500020862 which account statement was printed on 12th August, 2016.

By 24th of March 2017 the term loan had a debit balance outstanding of -33,673,841/=. On the
other hand the figures for the trade finance loan are for the period ending 31 st of March 2016
giving a debit balance by that date of Uganda shillings -130,721,349/-. Without taking into
account any further accrued interest for the period August 2016 up to 31 st March 2017 this gives
a total of both credit finance facility and term loan of Uganda shillings -164,395,190/= being the
debit balance owing. This demonstrates a clearance of the loan through payment by the first
plaintiff of more than 50% of the amount reflected in the notice of sale of Uganda shillings
416,764,552/- (Uganda shillings Four Hundred Sixteen Million, Seven Hundred and Sixty Four
Thousand, Five Hundred Fifty Two only). The plaintiff under rule 13 (5) of the Mortgage
Regulations 2012 is entitled to redeem the suit property namely plot 7246.

In the premises issue number 2 is answered as follows: the plaintiffs are not indebted to the
defendant in the amount of Uganda shillings 416,764,552/= as contained in the counterclaim by
the time of this judgment.

Issue Number 3:

Whether the Defendant can sell the mortgaged land Comprised in Block 265 Plot 7346 to
recover the outstanding loan balance?

Following the court order in Miscellaneous Application Number 1000 of 2015 the plaintiff has
paid over 50% of the outstanding amount and is entitled to a stay of the sale of Plot 7346, the
subject matter of the intended sale. Secondly, the actual outstanding amount owed by the
plaintiff has not been established. Thirdly, following resolution of issue number 2 above the
defendant is not entitled to sell the mortgaged property in the circumstances though the plaintiff
is obliged to pay what is owed. What is owed, if any, was not established in the counterclaim.

Whether the parties are entitled to the reliefs claimed?

Following the resolution of issues numbers 1, 2, and 3 above the remedies if any should flow
from the resolution of the issues.
Regarding the declarations sought that the defendant illegally and wrongfully caveated plot
7347, it is an admitted fact that the said title deed was wrongly caveated. The declaration to that
effect would be of no value to the plaintiff especially in light of the return of title deeds to the
plaintiff. The court already ordered in High Court Miscellaneous Application No. 1000 of 2015
pursuant to admissions of the defendant that the title deed of plot 7347 should be returned to the
plaintiff free of encumbrances. This order is enforceable and confirmed as the judgment of this
court. What remained was an issue of execution. Instead what the court considered is whether
general damages should be awarded to the plaintiffs.

I have already held that the plaintiff did not prove that it requested for the title deed or sought it
for purpose of sale of the suit property. The plaintiff sought damages for unlawful acts of
encumbering the title. In the premises the court would award the plaintiff the amounts charged
on the performance bond facility being an amount of Uganda shillings 2,948,479/= which is
hereby awarded to the plaintiff.

Secondly, the second plaintiff is awarded nominal damages of Uganda shillings 20,000,000/=.
The prayer for general damages by the first plaintiff on the ground of illegal encumbrance of plot
7347 is disallowed.

On the second issue the defendant did not prove the amount claimed or what lesser amount owed
and instead the court established that pursuant to the order in Miscellaneous Application No.
1000 of 2015, the plaintiff paid over 50% of what owed pursuant to the notice of sale of suit
property. This also resolves the third issue as to whether the defendant is entitled to sell
Kyadondo Block 265 plot 7346 at Bunamwaya. The defendant is not entitled to sell the property
and the notice of sale of the suit property is hereby revoked. Because the court cannot leave the
issue of what amount is actually owed pending, the court established that the plaintiffs owe some
money to the defendant. The actual amount outstanding was not conclusively determined.
However these are the findings of the court namely:

By 24th of March 2017 the term loan had a debit balance outstanding of -33,673,841/=. For the
trade finance loan and up to the period ending 31 st of March 2016 there was a debit balance of
Uganda shillings -130,721,349/-. Without taking into account any further accrued interest for the
period August 2016 up to 31st March 2017 or further payments made by the plaintiff if any, this
gives a total for both credit facilities of Uganda shillings -164,395,190/= being the debit balance.
There shall be a reconciliation of accounts pursuant to which the plaintiff will continue servicing
the loan. In the premises 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 third issue was resolved and the defendant is in the circumstances not entitled to sell the
plaintiffs property.

Finally the plaintiff’s suit succeeds with costs.

Judgment delivered in open court on 28th August, 2017

Christopher Madrama Izama

Judge

Judgment delivered in the presence of:

Ivan Kyateka holding brief for Counsel M Kabega

Jacob Kalabi holding brief for Counsel Richard Obonyo for the Defendant

Charles Okuni: Court Clerk

Julian T. Nabaasa: Research Officer Legal

Christopher Madrama Izama

Judge

28th August, 2017