Finance Trust Bank Limited v Tibamwenda Brenda Jessica (Miscellaneous Application 1442 of 2024) [2025] UGCommC 45 (14 February 2025)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 1442 OF 2024 (ARISING FROM MISC. APPLICATION NO. 1172 OF 2024)** 10 **(ALL ARISING FROM CIVIL SUIT NO. 0761 OF 2024) FINANCE TRUST BANK LIMITED ::::::::::::::::::::::::::::::::::::: APPLICANT VERSUS TIBAMWENDA BRENDA JESSICA ::::::::::::::::::::::::::::::::: RESPONDENT BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA** 15 **RULING**

Introduction

This application was brought by way of Notice of Motion under **Sections 79 and 98 of the Civil Procedure Act, Cap. 282**, **Sections 33 and 38 of the Judicature Act (now Sections 37 and 42 of Cap. 16)**, **Section 33 of** 20 **the Mortgage Act (now Section 32 of Cap. 239)**, **Regulation 13(1) of the Mortgage Regulations, 2012** and **Orders 26 and 52 of the Civil Procedure Rules SI 71-1** seeking orders that:

- a) The Court be pleased to set aside the order for granting a temporary injunction in *Civil Suit No. 761 of 2024* vide *Misc. Application* 25 *No. 1172 of 2024*. - b) The Respondent provides security for costs. - c) That in the alternative but without prejudice to the prayers in (a) and (b), this Honourable Court be inclined to uphold the grant of an injunction in *Misc. Application No. 1172 of 2024* but the same

- 5 should be conditional upon the Respondent depositing 30% of the outstanding loan obligation. - d) Costs for this application be in the cause. - e) Any other relief that the Court deems fit.

#### Background

- 10 The background of this application is contained in the affidavit in support deponed by **Mr. Saabwe Steven,** the Recovery Supervisor of the Applicant, and is summarised below: - 1. That the Learned Registrar erred in law and fact when she granted a temporary injunction to stop the sale of the property without ordering 15 payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as required by law. - 2. That the Learned Registrar erred in law and fact when she found that there was a prima facie case proved by the Respondent on the alleged substantive questions to be investigated by the Court. - 20 3. That the Learned Registrar erred in law and fact when she found that the Respondent would suffer irreparable loss, yet the value of the suit land is ascertainable since the suit land had been valued. - 4. That the Learned Registrar erred in law and fact when she found that *Miscellaneous Application No. 1172 of 2024* did not amount to 25 abuse of Court process. - 5. That in case this Court is inclined to uphold the grant of an injunction, the same should be conditional upon the Respondent depositing 30% of the outstanding loan obligation as required by the law and security for costs to the tune of UGX 30,000,000/= (Uganda Shillings Thirty 30 Million Only).

- 5 In reply, the Respondent through her affidavit in reply, opposed the application, contending that: - 1. The application is misconceived, frivolous, vexatious, bad in law, an abuse of Court process and that the Respondent at the earliest opportunity shall raise a preliminary point of law to have the same 10 dismissed with costs. - 2. The Learned Registrar correctly found that a prima facie case exists, properly assessed the likelihood of irreparable harm and correctly found that the Respondent acted within the legal provisions by filing a fresh suit upon the abatement of the prior case. - 15 3. Contrary to the Applicant's assertion, the 30% deposit required by the Mortgage Act and the Regulations was already made in *Misc. Application No. 381 of 2022* and requiring an additional deposit would amount to double payment hence violating the principles of justice and fairness. - 20 4. It would be in the interest of justice that the application is dismissed with costs.

### Representation

The Applicant was represented by its **Legal Department** while the Respondent was represented by **M/s Springs Advocates.**

25 Both parties were directed to file their written submissions, which they did and the same have been considered by this Court.

In her submissions, the Respondent raised three preliminary objections to the effect that:

i) The application is defective as it was neither signed nor sealed by 30 a Judicial Officer.

- 5 ii) The Applicant's action of filing an application to set aside the order granting a temporary injunction and seek security for costs is procedurally improper. - iii) The application is an abuse of Court process as it was a disguised appeal.

## 10 **Order 6 rule 28 of the Civil Procedure Rules** stipulates that:

*"Any party shall be entitled to raise by his or her pleadings any point of law, and any point so raised shall be disposed of by the Court at or after the hearing; except that by consent of the parties, or by order of the Court on the application of either party, a point of law may be set* 15 *down for hearing and disposed of at any time before the hearing."*

Owing to the above, I shall proceed with consideration of the preliminary objections so raised.

- i) Whether the application was neither signed nor sealed by a Judicial Officer, thus defective? - 20 Counsel for the Respondent contended that the Notice of Motion filed by the Applicant is defective as it was neither signed by a Judicial Officer nor sealed thus rendering it incompetent.

According to the electronic file of *Misc. Application No. 1442 of 2024* on ECCMIS, the Registrar in charge, admitted and endorsed the Notice of

25 Motion on 14th November, 2024 at 4:19pm. The Respondent was duly served with the same and she even filed her affidavit in reply.

It is now trite and as was re-echoed in *Mayengo Moses Vs Kiwanuka Edison HCMA No. 3602 of 2023*, the failure by the Court to physically

- 5 sign and seal the Chamber Summons does not render the same incurable defective. This is in line with the Courts adoption of electronic signing of documents under **the Constitution (Integration of ICT into the Adjudication Processes for Courts of Judicature) (Judicial)(Practice) Directions, 2019**. - 10 In light of the above, this preliminary objection is overruled. - ii) The Applicant's action of filing an application to set aside the order granting a temporary injunction and seek security for costs is procedurally improper. - iii) The application is an abuse of Court process as it was a 15 disguised appeal.

I shall resolve these objections concurrently.

On procedural impropriety, the Respondent's Counsel submitted that the instant application to set aside the order granting a temporary injunction is procedurally improper because the Applicant's grievances with the 20 decision of the Learned Assistant Registrar in *Misc. Application No. 1172 of 2024* ought to have been addressed by way of an appeal as provided under **Order 44 rule 1(q) of the Civil Procedure Rules**.

In rejoinder, Counsel for the Applicant submitted that the application is not an appeal but an application seeking to set aside the order granting 25 an injunction.

Analysis and Determination

### **Order 50 rule 8 of the Civil Procedure Rules** stipulates that:

5 *"Any person aggrieved by an order of a Registrar may appeal from the order to the High Court. The appeal shall be by motion on notice."*

I am alive to the holding of the Supreme Court in the case of *Dison Okumu & 7 Others Vs Uganda Electricity Transmission Co. Ltd & 6 Others SCCA No. 18 of 2020* wherein it held that the order for challenging a 10 decision of the Registrar is provided for under **Order 50 rule 8 of the Civil Procedure Rules**. Since in the instant application the Applicant seeks to challenge the orders issued by the Assistant Registrar, I concur with the submissions of Counsel for the Respondent that the right procedure ought to have been filing a Miscellaneous Appeal.

- 15 However, I have also observed that Court has handled applications such as the one at hand wherein the Applicant seeks to challenge the orders of a Registrar in an application but the substance is that of an appeal. The cases include; *Mayengo Moses Vs Kiwanuka Edison (supra)* and *Maji Real Estates (U) Limited & Another Vs Aulogo Cooperative Savings &* - 20 *Credit Society Limited HCMA No. 28 of 2017*. I have observed that the Notice of Motion was brought under **Section 79 of the Civil Procedure Act** among other laws and in its affidavit in support, the Applicant continuously refers to this application as an appeal. In the same affidavit, the Applicant even raised grounds of appeal. - 25 In the case of *Maji Real Estates (U) Limited & Another Vs Aulogo Cooperative Savings & Credit Society Limited (supra),* **Hon. Justice Stephen Mubiru** stated that:

*"Although presented as an application … this is in essence an appeal from the order of the Assistant Registrar of this Court… In any event,*

5 *appeals from orders of Registrars are ordinarily presented by Notice of Motion and this perhaps explains the misnomer in this case."*

In the circumstances of this case, I wish to associate myself with the above holding. Also, considering that this Court is clothed with the jurisdiction to handle such an appeal, and pursuant to **Article 126(2)(e) of the** 10 **Constitution of the Republic of Uganda, 1995**, to administer substantive justice, the above objections are overruled.

Regarding the Respondent's contention of seeking security for costs in such an application; in order to avoid multiplicity of suits, it is common practice for parties to make an omnibus application. This is one where a 15 party consolidates all its prayers in one application instead of filing multiple applications for different orders. In light of the above, this objection also lacks merit.

I shall now proceed to resolve the matter on its merits.

Grounds of appeal

- 20 1. The Learned Registrar erred in law and fact when she granted a temporary injunction to stop the sale of the property without ordering payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as required by law. - 2. The Learned Registrar erred in law and fact when she found that the 25 30% of the outstanding loan obligation paid as a result of orders in *Miscellaneous Application No. 381 of 2022* under *Civil Suit No. 254 of 2022* that abated sufficed as the security deposit of 30% for grant of an injunction under *Miscellaneous Application No. 1172 of 2024* under *Civil Suit No. 761 of 2024*.

- 5 3. The Learned Registrar erred in law and fact when she found that there was a prima facie case proved by the Respondent on alleged substantive questions to be investigated by Court despite the Applicant's legal and contractual right of recovery, evidence of the Applicant's compliance with the laws on mortgaging and admission 10 of default by the Respondent. - 4. The Learned Registrar erred in law and fact when she found that the Respondent would suffer irreparable loss yet the value of the suit land is ascertainable to be paid back as the suit land has been valued. - 15 5. The Registrar erred in law and fact when she found that *Miscellaneous Application No. 1172 of 2024* did not amount to an abuse of Court process despite the Respondent's blatant and evidenced dilatory conduct in prosecution of *Civil Suit No. 254 of 2022*. - 20 Applicant's submissions

**Ground 1:** The Learned Registrar erred in law and fact when she granted a temporary injunction to stop the sale of the property without ordering payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as required by law.

25 Counsel for the Applicant submitted that the Learned Assistant Registrar ought to have considered *Misc. Application No. 1172 of 2024* in light of **Regulation 13(1) of the Mortgage Regulations**, which enjoins the Respondent to deposit 30% of either the outstanding balance of the facility or the forced sale value of the security as a condition for granting an order 30 to adjourn a foreclosure. The Applicant's Counsel contended that the Respondent is indebted to the Applicant to the sum of UGX 259,515,843/=

5 as at the time of filing pleadings and the 30% of the outstanding amount being UGX 77,854,753/= was neither paid before filing *Civil Suit No. 761 of 2024* nor at filing *Misc. Application No. 1172 of 2024*.

**Ground 2:** The Learned Registrar erred in law and fact when she found that the 30% of the outstanding loan obligation paid as a result of orders

10 in *Miscellaneous Application No. 381 of 2022* under *Civil Suit No. 254 of 2022* that abated sufficed as security deposit of 30% for grant of an injunction under *Miscellaneous Application No.1172 of 2024* under *Civil Suit No. 761 of 2024*.

**Ground 3:** The Learned Registrar erred in law and fact when she found 15 that there was a prima facie case proved by the Respondent on the alleged substantive questions to be investigated by the Court despite the Applicant's legal and contractual right of recovery, evidence of the Applicant's compliance with the laws on mortgaging and admission of default by the Respondent.

20 Counsel for the Applicant submitted that the Respondent's case discloses no serious question that requires this Court's determination because the Respondent, in paragraph 5 of the affidavit in support of *Misc. Application No. 1172 of 2024*, admitted her default in settling her loan obligations, which, admission entitled the Applicant to foreclose the 25 mortgaged property, yet the remedy sought by the Respondent was intended to aid her in running away from her obligations to repay the loan.

**Ground 4:** The Learned Registrar erred in law and fact when she found that the Respondent would suffer irreparable loss, yet the value of the suit land is ascertainable to be paid back as it has been valued. - 5 Counsel for the Applicant submitted that the Respondent would not suffer injury that cannot be atoned by damages because the value of the suit property is ascertainable as it has been valued, and should the Respondent succeed in the vexatious and frivolous main suit, she will be compensated in accordance with the value of the property. - 10 **Ground 5:** The Learned Registrar erred in law and fact when she found that *Miscellaneous Application No. 1172 of 2024* did not amount to abuse of Court process despite the Respondent's blatant and evidenced dilatory conduct in prosecution of *Civil Suit No. 254 of 2022*.

Counsel for the Applicant submitted that *Miscellaneous Application No.*

15 *1172 of 2024* and the main suit are merely efforts calculated by the Respondent intended at aiding her to run away from her obligation to repay the loan obtained from the Applicant.

On the other hand, Counsel for the Respondent collectively submitted that the Learned Assistant Registrar correctly found that a prima facie case 20 exists because issues such as unconscionable interest rates, penalties and the unfairness of the Applicant's conduct are substantive questions that require adjudication in the main suit.

Regarding the filing of a fresh suit; Counsel asserted that this remedy is provided for by the law and that therefore, the Applicant's claim to the 25 contrary is baseless and seeks to stifle the Respondent's right to seek justice. That the requirement to deposit the 30% under the **Mortgage Act** was already made in *Misc. Application No. 381 of 2022* before it abated, and therefore requiring an additional deposit constitutes double payment, contrary to the principles of fairness and equity since the payments made

5 remain valid unless forfeited by law or agreement, which is not the case in the matter at hand.

## Analysis and Determination

I have considered the pleadings, the law, evidence, authorities and submissions of both Counsel herein.

10 It is a well-established principle that appeals are a creature of statute. To that effect, **Order 50 rule 8 of the Civil Procedure Rules** provides that:

> *"Any person aggrieved by any order of a registrar may appeal from the order to the High Court. The appeal shall be by motion on notice."*

This is also fortified by **Order 44 rule 1(u) of the Civil Procedure Rules**, 15 which provides that an appeal shall lie of right from an order made in an interlocutory matter by a Registrar. (See also **Section 76(1) (h) of the Civil Procedure Act**). Therefore, this Court has the legal obligation to re appraise the evidence on record and come up with its own decision not disregarding the decision appealed from. (See: **Section 80 of the Civil**

- 20 **Procedure Act**, *Fr. Narsensio Begumisa & 3 Others Vs Eric Tibebaga SCCA No. 17 of 2002* and *Pandya Vs R [1957] E. A 336*. An appellate Court will only interfere with the exercise of discretion of a Registrar where he or she incorrectly applied a legal principle or the decision is so clearly wrong that it amounts to an injustice. (See: *National Insurance* - 25 *Corporation Vs Mugenyi and Company Advocates [1987] HCB 28, Abdul Latif Kamulegeya Vs Blaise Twagirayesu HCMA No. 318 of 2024* and *Nakato Margaret Vs Housing Finance Bank Limited and Another HCCA No.687 of 2021*).

- 5 The brief background of this matter is that; the Respondent executed a credit/loan facility agreement with the Applicant where she received UGX 300,000,000/=, and it was to be repaid with interest according to the terms of the agreement. The loan facility was secured by a mortgage on land comprised in Busiro Block 392 Plots 1041 and 1042 at Sekiunga 10 Wakiso district. The Respondent defaulted on repayment of the loan, and the Applicant took recovery measures, including foreclosure of the mortgaged property, but the Respondent instituted a suit against the Applicant vide *Civil Suit No. 254 of 2022* and subsequently *Miscellaneous Application No. 381 of 2022* wherein she applied for and 15 was granted a temporary injunction stopping the sale of the foreclosed property on condition that the Respondent pays 30% of the outstanding liability. The Respondent paid the 30% of the then outstanding liability but failed to extract summons for directions which resulted into the abatement of *Civil Suit No. 254 of 2022*. The Respondent then filed a fresh suit, - 20 *Civil Suit No. 761 of 2024* and then *Misc. Application No. 1172 of 2024*, wherein she sought a temporary injunction. On 12th July, 2024, **Her Worship Christa Namutebi**, the Assistant Registrar granted the same unconditionally on the premises that all the grounds had been met and that the Respondent had already paid the 30% of the outstanding sum - 25 under *Misc. Application No. 381 of 2022.* Aggrieved by the said orders, the Applicant filed this application.

I shall resolve grounds 1 and 2 concurrently, followed by ground 3, ground 4 and ground 5.

**Ground 1**: The Learned Registrar erred in law and fact when she granted 30 a temporary injunction to stop the sale of the property without ordering

5 payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount as required by law.

**Ground 2**: The Learned Registrar erred in law and fact when she found that the 30% of the outstanding loan obligation paid as a result of orders in *Miscellaneous Application No. 381 of 2022* under *Civil Suit No.* 10 *254 of 2022* that abated sufficed as security deposit of 30% for grant of

an injunction under *Miscellaneous Application No. 1172 of 2024* under *Civil Suit No. 761 of 2024*.

**Regulation 13(1) of the Mortgage Regulations** stipulates that:

*"The Court may on the application of the mortgagor, spouse, agent of* 15 *the mortgagor or any other interested party and for reasonable cause, adjourn a sale by public auction to a specified date and time upon payment of a security deposit of 30% of the forced sale value of the mortgaged property or outstanding amount."*

- In the matter at hand, Counsel for the Applicant contends that the Learned 20 Registrar ought to have ordered the Respondent to repay the 30% of the outstanding sum since the conditional temporary injunction order that was granted and complied with in *Misc. Application No. 381 of 2022* abated with *Civil Suit No. 254 of 2022*. On the other hand, Counsel for the Respondent averred that the 30% deposit required under the **Mortgage** - 25 **Act** was already paid in *Misc. Application No. 381 of 2022*. That much as *Civil Suit No. 254 of 2022* abated, the payments made thereunder remained valid unless forfeited by law or agreement which was not the case in the matter at hand.

I have perused annexure "**A**" attached to the Affidavit in support, the ruling

30 in *Misc. Application No. 1172 of 2024* issued by **Her Worship Christa**

5 **Namutebi, the** Assistant Registrar on 12th July, 2024. According to the said ruling, the Learned Assistant Registrar reasoned that much as the suit and the interim reliefs collapse after the main suit's abatement, in the case at hand, the Respondent herein had paid the 30% required under **Regulation 13(1) of the Mortgage Regulations** before *Civil Suit No. 254* 10 *of 2022* abated and therefore, ordering for payment of a further 30% would be an affront to the law as it would amount to payment of 60% which is over and above the required percent. In the case of *Kingston Enterprises Limited and three others Vs Standard Chartered Bank (U) Limited HCCA No. 0446 of 2021***, Hon. Justice Stephen Mubiru** 15 rationalized **Regulation 13(1) of the Mortgage Regulations** as follows:

*"Regulation 13 of The Mortgage Regulations, 2012 is an enactment of the principle "pay now, argue later." It is designed to restrict the ability of the mortgagor to use litigation or the Courts, to vexatiously delay the realisation of money due to the mortgagee. It is intended to reduce* 20 *the number of frivolous objections to sales by a mortgagee and guarantee that the mortgagee will not be unnecessarily prejudiced by a delay in payments, inevitably occasioned by litigation. It ensures that the mortgagees are not left out of pocket due to the time that lapses over the course of litigation, while on the other hand* 25 *encouraging a mortgagor to hasten the progress of litigation so as to improve on its ability to expand its business, or pay debts, or to mitigate any detrimental effect imposition of the condition may have had on the mortgagor's liquidity."*

In my opinion, the above rationale, object and purpose of **Regulation 13(1)**

30 **of the Mortgage Regulations** were fulfilled when the Respondent paid the 30% of the outstanding liability in fulfilment of the conditional temporary

5 injunction granted vide *Misc. Application No. 381 of 2022* and as rightly held by the Learned Assistant Registrar, ordering the Respondent to repay the same would be an affront to the law, and would in effect amount to paying 60% of the outstanding amount in respect of the same transaction since *Misc. Application No. 1172 of 2024* arose from the same facts, 10 mortgaged property, loan facility and parties as in *Misc. Application No. 381 of 2022.*

In the circumstances, grounds 1 and 2 fail.

**Ground 3:** The Learned Registrar erred in law and fact when she found that there was a prima facie case proved by the Respondent on the alleged

- 15 substantive questions to be investigated by Court despite the Applicant's legal and contractual right of recovery, evidence of the Applicant's compliance with the laws on mortgaging and admission of default by the Respondent. - In the matter at hand, Counsel for the Applicant contended that the 20 Respondent's case discloses no serious questions that require this Court's determination and that further, the Respondent admitted being in default in settling her loan obligation.

According to annexure **"A"**, the Learned Assistant Registrar, while resolving the issue of a prima facie case, observed that:

25 *"Paragraph 8 of the affidavit indicates the issues for investigation which include a determination on whether the interest rate and penalties charged by the Respondent (Applicant herein) are unconscionable, unlawful; whether the Respondent (Applicant herein) is in breach of its statutory duty and or provisions relating to default,*

5 *valuation and whether the intended sale is illegal. These are serious questions to be determined by Court."*

I concur with the Learned Assistant Registrar's holding and therefore, the Learned Assistant Registrar was right when she held that there was a prima facie case proved by the Respondent. Therefore, ground 3 fails.

**Ground 4:** The Learned Registrar erred in law and fact when she found 20 that the Respondent would suffer irreparable loss, yet the value of the suit land is ascertainable to be paid back as it has been valued.

In the cases of *Giella Vs Cussman Brown and Co. [1973] E. A 358* and *Kiyimba Kaggwa Vs Katende [1985] HCB 43*, irreparable damage was defined as:

25 *"…it does not mean that there must be the substantial or material physical possibility of repairing the injury, but it means that the injury or damage must be a substantial or material one, that is, one that cannot be adequately atoned for in damages."*

According to annexure **"A"**, while resolving this issue, the Learned 30 Assistant Registrar considered the fact that; the Respondent was in physical possession, enjoyment and ownership of the suit land, the disposal of the mortgaged property would displace the Respondent as she and her family resided on the suit land and held that for the above mentioned reasons, the Respondent was likely to suffer irreparable 35 damage if the injunction was not granted.

In light of the above authority and holding, the Learned Assistant Registrar was right when she found that the Respondent would suffer irreparable loss much as the value of the land was already ascertained.

5 Ground 4 also fails.

**Ground 5:** The Learned Registrar erred in law and fact when she found that *Miscellaneous Application No.1172 of 2024* did not amount to abuse of Court process despite the Respondent's blatant and evidenced dilatory conduct in prosecution of *Civil Suit No. 254 of 2022*.

- 10 **Section 98 of the Civil Procedure Act** and **Section 37 of the Judicature Act** enjoin this Court to curtail abuse of Court process. In the case of *Attorney General & Another Vs James Mark Kamoga & Another, SCCA No. 8 of 2004* **Mulenga JSC** (RIP) in his lead judgment relied on the **Black's Law Dictionary, 6th Edition** and stated that: - 15 *"A malicious abuse of legal process occurs when the party employs it for some unlawful object, not the purpose which it is intended by law to effect; in other words, a perversion of it."*

In the instant case, Counsel for the Applicant contends that *Misc. Application No. 1172 of 2024* is an abuse of Court process intended at 20 aiding the Respondent to run away from her obligations to repay the loan. This contention was also raised during the hearing of *Misc. Application No. 1172 of 2024* before the Learned Assistant Registrar.

It is now trite that if the suit abates for failure to take out summons for directions within 28 days, the Plaintiff has a right to file a fresh suit as 25 provided under **Order XIA rule 1 subrule (7) of the Civil Procedure Rules as amended.**

According to annexure **"A"**, the Learned Assistant Registrar held that filing a fresh suit after the suit has abated does not amount to abuse of Court process since the remedy is provided for by the law. I agree with the

5 reasoning of the Learned Assistant Registrar since the remedy for filing a fresh suit subject to the law of limitation is provided for by the law as stated herein above.

In light of the above, the Learned Assistant Registrar was right when she found that *Miscellaneous Application No.1172 of 2024* did not amount

10 to abuse of Court process.

In the circumstances, ground 5 fails.

In the premises, this application fails and the ruling of **Her Worship Christa Namutebi** in *Misc. Application No. 1172 of 2024* delivered on 12th July, 2024 is hereby upheld. Costs of this application shall abide by 15 the result of the main suit.

I so order.

Dated, signed and delivered electronically via ECCMIS this **14th** day of **February, 2025.**

Patience T. E. Rubagumya **JUDGE** 14/02/2025