Arinawe v Cairo Bank Uganda Limited & Another (Miscellaneous Application 260 of 2024) [2024] UGCommC 305 (20 August 2024)

# 5 **THE REPUBLIC OF UGANDA**

## **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **(COMMERCIAL DIVISION)**

#### **MISCELLANEOUS APPLICATION NO. 260 OF 2024**

#### 10 **(ARISING OUT OF ORIGINATING SUMMONS NO.0005 OF 2024)**

## **ARINAWE JOLLY :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT**

#### **VERSUS**

## **1. CAIRO BANK UGANDA LIMITED**

15 **2. KABEGAMBIRE DAVID ::::::::::::::::::::::::::::::::::::::::::: RESPONDENTS**

#### **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA**

#### **RULING**

#### Introduction

This application was brought by way of Notice of Motion under **Order 1**

20 **rules 1 and 10(2) and Order 6 rule 19 of the Civil Procedure Rules SI 71-1** as amended, seeking orders that:

- 1. The Applicant be added to the suit as an interested and necessary party in *Originating Summons No.0005 of 2024***;** *Cairo Bank Uganda Ltd Vs Kabegambire David* by way of amendment of 25 pleadings. - 2. Costs of this application be provided for.

## Background

The background of this application is contained in the affidavit of the Applicant, and is summarized below:

5 1. That the Applicant is legally married to the 2nd Respondent.

2. That the 2nd Respondent applied for and obtained a seasonal agricultural loan of UGX 1,400,000,000/= from the 1st Respondent which was secured with land comprised in Kyadondo Block 250 Plot 10 1168 at Bunga Hill and land comprised in Busiro Block 383 Plot

- 13766 at Kitende.

- 3. That the said properties are matrimonial properties/a residential 15 home where the Applicant resides with the 2nd Respondent together with their children and also where they derive their sustenance. - 4. That the 2nd Respondent obtained the agricultural loan without the knowledge and consent of the Applicant. - 5. That upon realizing that the 1st Respondent had advertised their matrimonial home comprised in Busiro Block 383 Plot 13766 land at Kitende, the Applicant filed *Miscellaneous Cause No.146 of* - 25 *2023 and Miscellaneous Application No.2992 of 2023* in this Court seeking to stop the intending sale and nullify the legality of the existing mortgage on land comprised in Kyadondo Block 250 Plot 1168 at Bunga Hill and land comprised in Busiro Block 383 Plot 13766 at Kitende for lack of spousal consent. - 6. That the 1st Respondent's action of filing *Originating Summons No.0005 of 2024* well aware of *Miscellaneous Cause No.1715 of 2023 Arinawe Jolly Vs Cairo Bank Uganda Limited & Another* which is still pending before this Court for determination without 35 adding the Applicant as an interested party is intended to defeat her interest in the property.

- 5 In reply, the 1st Respondent through Mr. Mwine Allan its Head of Business, duly authorized to swear an affidavit in reply for and on behalf of the 1st Respondent, opposed the application contending that: - 1. Without prejudice to his detailed and specific response to the claims against the Bank;

10 a) From the documents filed on record, it is evident that the current application is a disguised attempt by the 2nd Respondent to frustrate and delay foreclosure against the mortgaged property through legal maneuvering.

- 15 *b)* The current application is anchored on *Miscellaneous Cause No.146 of 2023 (Arinawe Jolly Vs Cairo Bank Uganda Ltd and Kabegambire David)* filed on 8th December, 2023 through M/s Ntegyereize, Ingura & Musiimenta Advocates. However, the said law firm is on 20 record as the lawyers for Mr. David Kabegambire and in *Originating Summons No.0005 of 2024.* - c) On 14th February, 2024, when *Originating Summons No.0005 of 2024* came up for hearing, the 2nd Respondent 25 herein was represented by Counsel from M/s Ntegyereize, Ingura & Musiimenta Advocates. Still, Counsel did not inform the Court of the proceedings instituted in this Court touching the same subject matter. - 30 2. In specific response to the Applicant's allegations, the 1st Respondent contended that: - a) By letter of offer Ref. CBU/313/7/2023 dated 7th July, 2023, Cairo Bank Uganda Limited advanced a term loan facility of 35 UGX 1,440,000,000/= to the 2nd Respondent repayable within

5 twenty-four (24) months on such terms and conditions as set forth in the letter of offer.

- b) Contrary to the Applicant's claims, the facility was a mortgage finance to be utilized to complete payment of property 10 comprised in Busiro Block 383 Plot 13766 at Kitende Wakiso District (the mortgaged property) which the 2nd Respondent was purchasing from Ms. Kateeba Nicoline Noeline and a Sale Agreement had been executed to that effect. - 15 c) The facility was to be secured by a legal mortgage registered over land and developments described above and Kyadondo Block 250 Plot 1168 at Bunga Hill among other securities. - d) As a requirement, the Bank undertook the necessary due 20 diligence before approving the facility including but not limited to; confirmation of the transaction between Mr. Kabegambire David and Ms. Kateebe Nicoline Noeline, physical inspection of the property by the bank officials and confirmation by Village LCs regarding the borrower's suitability for the loan and his 25 marital status thereof. - e) With regard to his marital status, the 2nd Respondent deponed a statutory declaration in which he confirmed that he had never contracted any form of marriage although he was 30 cohabiting with a one Ms. Jovia Kabazarwe with whom he had four children. Similarly, Ms. Jovia Kabazarwe signed a declaration confirming her marital status with the 2nd Respondent.

- f) Upon being satisfied with the information provided by the 2nd 5 Respondent, the bank disbursed a sum of UGX 1,440,000,000/= per the terms contained in the offer letter. - 10 g) Owing to the 2nd Respondent's failure to remedy the default, the mortgaged property was advertised on 24th November, 2023, with the sale slated to take place within thirty days thereafter. - h) The sale could not be completed as scheduled owing to the conduct of the 2nd Respondent who has denied access to the bank appointed valuers to re-value the property in addition to refusing access to the potential buyers to view the property, 20 prompting the bank to institute *Originating Summons No.0005 of 2024* seeking an order of vacant possession among other reliefs. - 3. The Applicant's application does not satisfy the requirements for the 25 addition of parties because the Applicant has no interest in the case and her claim of being a spouse to the 2nd Respondent is disputed; it is not established how the orders sought in the Originating Summons would legally affect her.

#### Representation

30 The Applicant was represented by **Learned Counsel Ssenoga Julius** of **M/s GM Kibirige & Co. Advocates** while the 1st Respondent was represented by **Learned Counsel Henry Kirunda** of **M/s Terrain Advocates.** The 2nd Respondent was not represented nor did he file an affidavit in reply.

5 The parties were directed to file their written submissions; only the Applicant and the 1st Respondent complied with Court's directives and the same have been considered.

# Issues for Determination

Following **Order 15 rule 5(1) of the Civil Procedure Rules,** and the case 10 of *Oriental Insurance Brokers Limited Vs Transocean (U) Limited SCCA No.55 of 1995,* the Court has rephrased the issues so raised to read as follows:

- 1. Whether it is necessary and proper to add the Applicant as a Defendant to *Originating Summons No.0005 of 2024***?** - 15 2. What remedies are available to the parties?

# Issue No.1: Whether it is necessary and proper to add the Applicant as a Defendant to *Originating Summons No.0005 of 2024***?**

# Applicant's submissions

Counsel for the Applicant submitted that if a matrimonial home is the 20 subject of an application for a mortgage, the mortgagee shall satisfy himself or herself that the consent of the spouse is an informed and genuine consent. Further, that **Regulation 2 of the Mortgage Regulations, 2012** defines a spouse as a husband or wife recognized by the laws of Uganda.

25 Relating the above to the case at hand, Counsel submitted that the Applicant averred that she is legally married to the 2nd Respondent as per the marriage certificate on Court record, who mortgaged their matrimonial properties comprised in Kyadondo Block 250 Plot 1168 at Bunga Hill and

5 Busiro Block 383 Plot 13766 at Kitende; without her knowledge and consent as per paragraphs 2, 3 and 4 of the affidavit in support of the application.

Counsel relied on the definition in the Mortgage Act of a matrimonial home and submitted that under paragraph 4 of the affidavit in support, the 10 Applicant stated that she resides at the property situated at Busiro Block 383 Plot 13766 in Kitende together with the 2nd Respondent and their children and that they derive their sustenance from the property comprised in land at Kyadondo Block 250 Plot 1168 at Bunga Hill.

Counsel submitted that therefore the Applicant should have been the one 15 to give the consent as per **Sections 5 and 6 of the Mortgage Act**. That hence, the 1st Respondent did not obtain the required consent from the Applicant and did not do the due diligence to ascertain whether the person presented to the 1st Respondent was a genuine spouse.

Furthermore, Counsel for the Applicant submitted that as per **Order 1** 20 **rules 10(2) and 13 of the Civil Procedure Rules,** Court may add a Defendant to a suit any time before the trial on its own motion or upon application by either party. That in the case of the *Departed Asians Property Custodian Board Vs Jaffer Brothers Ltd SCCA No.9 of 1998*, Court guided that a person can be added to a suit if it is shown that either 25 the orders, which the Plaintiff seeks in the suit would legally affect the interests of that person, or that it is desirable, for avoidance of multiplicity of suits, to have such a person joined so that he/she is bound by the decision of the Court in that suit.

In conclusion, Counsel submitted that since the Applicant is the legal wife 30 to the 2nd Respondent and the 2nd Respondent mortgaged their 5 matrimonial properties without her knowledge and consent, it makes her an interested and necessary party to the Originating Summons and therefore she should be added as a Defendant.

## 1st Respondent's submissions

Counsel for the 1st Respondent submitted that in an application to add a 10 party to the suit, the Applicant must prove that his or her presence is necessary for the effective and complete settlement of all questions in the suit and that it must be clearly demonstrated that the orders sought in the main suit would directly or legally affect the party seeking to be added.

Counsel referred to the case of *Vastina Kyalisima Vs Josephine Baasa* 15 *Misc. Application No.500 of 2021,* wherein it was held that:

"*It is a fundamental consideration that before a person can be a party, it must be established that the party has high interest in the case. In addition, it must be clearly demonstrated that the orders sought in the main suit would directly or legally affect the party* 20 *seeking to be added*."

Counsel for the 1st Respondent insisted that the Applicant's consent was not required under the law and therefore she should not be added as a party to the suit.

Counsel contended that *Originating Summons No.0005 of 2024* 25 concerns the repossession of the mortgaged property comprised in Busiro Block 383 Plot 13766 at Kitende whose acquisition by the 2nd Respondent was through a mortgage finance by the 1st Respondent and therefore the Applicant's consent was not needed since the suit property was never owned by the 2nd Respondent until it was purchased by the bank under 30 the mortgage facility. That the suit property was not a matrimonial home

5 at the time when the 1st Respondent acquired it for the 2nd Respondent and registered its mortgage thereafter.

Counsel further relied on the case of *Christine Hope Kayima Vs Mercantile Credit Bank Limited & Another Misc. Cause No.85 of 2021*, where it was held that the onus to establish that the property is a 10 matrimonial home is on the Applicant. To that, Counsel submitted that it is not enough for the Applicant to allege that she is the legal wife, she also has to prove that the suit property was owned by the couple prior to the registration of the bank mortgage and that failure to prove property ownership by either spouse renders the requirement for spousal consent 15 before any dealing in the property inapplicable.

Counsel also submitted that all the parties conceded during the locus visit and throughout the Court appearances that the 1st Respondent financed the purchase of the suit property. Furthermore, that the 2nd Respondent deponed a statutory declaration to the effect, that he has never contracted 20 any form of marriage though, he was cohabiting with a one Jovia Kabazarwe at the time of obtaining the loan.

## Analysis and Determination

## **Order 1 rule 10(2) of the Civil Procedure Rules** provides that:

"*The Court may at any stage of the proceedings either upon or* 25 *without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as Plaintiff or Defendant, be struck out, and that the name of any person who ought to have been joined, whether as Plaintiff or Defendant, or whose presence before the* 30 *Court may be necessary in order to enable the Court effectually*

5 *and completely adjudicate upon and settle all questions involved in the suit, be added."*

From the above, it is illustrated that the Court is embraced with discretionary powers to add or remove a party to a suit on its motion. The same has been portrayed in several decisions including, *Kololo Curing*

- 10 *Co. Ltd Vs West Mengo Co-op Union Ltd [1981] HCB 60*. However, such discretion is to be exercised judiciously. As shown in the case of *Yahaya Kariisa Vs Attorney General & Another SCCA No.7 of 1994*, it is intended to enable the Court to deal with matters to their finality so as to curb multiplicity of suits. - 15 In the case of *Departed Asians Property Custodian Board Vs Jaffer Brothers Ltd (supra),* the Supreme Court considered **rule 10(2) of Order 1 of the Civil Procedure Rules** and held that:

"*This rule is similar to the English R. S. C Order 16 r11, under which the case of Amon Vs Raphael Tuck & Sons Ltd [1956]1 ALL ER p.* 20 *273 was considered and decided and in which it was said that a party may be joined in a suit, not because there is a cause of action against it, but because that party's presence is necessary in order to enable the Court effectually and completely adjudicate upon and settle all the questions involved in the cause or matter*."

25 **Hon. Justice Mulenga, JSC (RIP)**, gave consideration for adding a party to a suit and stated that:

"*For a person to be joined on the ground that his presence in the suit is necessary for effectual and complete settlement of all questions involved in the suit one of two things has to be shown. Either it has to* 30 *be shown that the orders, which the Plaintiff seeks in the suit would*

5 *legally affect the interests of that person, and that it is desirable, for avoidance of multiplicity of suits, to have such a person joined so that he is bound by the decision of the Court in that suit."*

In the instant case, it is undisputed that the 1st Respondent advanced the 2nd Respondent a credit facility of UGX 1,440,000,000/= to finance the 10 purchase of property comprised in Busiro Block 383 Plot 13766 at Kitende. Upon completion of the purchase, the title was transferred into the 2nd Respondent's name, and thereafter, registered as a collateral legal mortgage together with property comprised in Kyadondo Block 250 Plot 1168 at Bunga Hill as evidenced by annexure "**E**" attached to the affidavit 15 in reply. According to the 1st Respondent, the 2nd Respondent defaulted on the facility and consequently on 24th November, 2023, property comprised in Busiro Block 383 Plot 13766 at Kitende was advertised for sale. Subsequently, the 1st Respondent also advertised property comprised in Kyadondo Block 250 Plot 1168 at Bunga Hill for sale as per annexure **"A"** 20 attached to the affidavit in support.

Owing to the above adverts, the Applicant on 8th December, 2023, filed *Misc. Cause No.146 of 2023* marked as annexure **"B"** attached to the affidavit in support, seeking orders to stop the sale of the mortgaged properties. The Applicant on the same day, vide *Misc. Application No.* 25 *2992 of 2023* marked as annexure **"C"** attached to the affidavit in support, sought an interim order to halt the advertising and sale of the mortgaged properties pending the determination of *Misc. Cause No.146 of 2023***.** I have perused annexure **"B"** attached to the affidavit in support and therein the Applicant challenges the legality of the mortgage created 30 by the 1st Respondent on the mortgaged properties on grounds that the properties are matrimonial properties and that her consent was not sought

prior to the creation of the mortgage yet she is the legal wife to the 2nd 5 Respondent.

In this instant application, the Applicant seeks to be added as a Defendant to *Originating Summons No.0005 of 2024* wherein the 1st Respondent seeks orders to foreclose and sell or vacant possession of property 10 comprised in Busiro Block 383 Plot 13766 at Kitende which the Applicant alleges to be her matrimonial home that was mortgaged by the 2nd Respondent without her consent.

To prove her interest in the main suit, the Applicant adduced a marriage certificate. According to the marriage certificate, the Applicant and the 2nd 15 Respondent solemnized their marriage at St. Peters Church of Uganda, Kyankwanzi on 14th February, 2009. To this, the 1st Respondent contended that the Applicant's consent was not required at the time of the registration of the property. The 1st Respondent according to the affidavit in reply further disputes the Applicant's claim of being a spouse to the 2nd

20 Respondent.

In my opinion, the question of whether or not the Applicant's consent as the legal wife of the 2nd Respondent was required before the mortgaging of the properties cannot be handled in this application as it the subject of *Misc. Cause No.146 of 2023*.

Furthermore, since the Applicant avers that she is a legal wife to the 2nd 25 Respondent and that her family resides at the property being sought to be foreclosed and sold among others; then she would in my considered opinion be affected by the orders that the Court would issue in respect of that property thus making her presence necessary in *Originating* 30 *Summons No.0005 of 2024* for its effectual and complete settlement as

5 was held in the case of *Departed Asians Property Custodian Board Vs Jaffer Brothers Ltd (supra).*

**Section 37 of the Judicature Act, Cap.16** mandates this Court to determine matters, in a way that as far as possible all matters in controversy between the parties be completely and finally determined and 10 all multiplicity of legal proceedings concerning any of those matters avoided.

In light of the law, the facts in *Misc. Cause No.146 of 2023*, *Originating Summons No.0005 of 2024* and the present application, it is prudent that the Applicant is added to *Originating Summons No.0005 of 2024*

15 as a Defendant to determine all the issues and disputes involved to its finality. In the premises, in the interest of avoiding multiplicity of suits and effectually and completely adjudicating upon and settling all questions involved in *Originating Summons No.0005 of 2024* and in accordance with **Section 37 of the Judicature Act;** the Applicant is hereby allowed 20 to be added as a Defendant in *Originating Summons No.0005 of 2024* to determine the dispute to its finality.

I also find it in the best interest of all the parties in this matter that the Applicant is added as a party and the pleadings thereto amended. In the 25 premises, the Applicant has satisfied this Court that her presence is necessary for the effective and complete settlement of all questions in *Originating Summons No.0005 of 2024*.

I have also considered the concerns by the 1st Respondent's Counsel 30 regarding the same law firm representing the Applicant as the same representing the 2nd Respondent to *Originating Summons No.0005 of 2024*. Since Counsel for the Applicant was silent on the issue, the same

5 is hereby reserved for the proceedings in *Originating Summons No.0005 of 2024*.

Issue No. 1 is resolved in the affirmative.

## Issue No.2: What remedies are available to the parties?

Having resolved issue No.1 above in the affirmative, the following orders 10 are issued by Court:

- 1. The 1st Respondent is hereby directed to add the Applicant as the 2nd Defendant to *Originating Summons No.0005 of 2024* and to amend the pleadings accordingly and serve the Defendants with the amended Originating Summons within seven (7) days from the date 15 of this Ruling. - 2. The Applicant is directed to file and serve her reply to *Originating Summons No.0005 of 2024* on all parties within fifteen (15) days after receipt of the amended Originating Summons. - 3. Costs of the application shall be in the cause. - 20 I so order.

Dated, signed and delivered electronically via ECCMIS this **20th** day of

**August**, **2024.**

Patience T. E. Rubagumya **JUDGE** 2520/08/2024 6:50am