Kobusinge v Centenary Rural Development Bank Limited & Another (Civil Appeal 4 of 2022) [2024] UGHC 538 (11 June 2024)

Full Case Text

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT RUKUNGIRI

### CIVIL APPEAL NO. 04 OF 2022

# (ARISING FROM CIVIL SUIT NO.041 OF 2019)

#### **BETWEEN**

<table>

KOBUSINGE ROSE ::::::::::::::::::::::::::::::::::::

#### **VERSUS**

## 1. CENTENARY RURAL DEVELOPMENT BANK LTD 2. TAREMWA OBED ::::::::::::::::::::::::::::::::::::

[Appeal from a Judgment of Chief Magistrate of Rukungiri Magistrate

Court (His Worship Ntalo Nasulu Hussein) dated 31st August, 2022.]

### BEFORE: HON. JUSTICE TOM CHEMUTAI

#### JUDGMENT

The brief background to this appeal is that; the Appellant filed the above Civil Suit against the Respondents and sought for the following; that the 1st Respondent unlawfully and illegally sold a plot of land at Bukoora Cell, in Kanungu Town Council to the 2nd Respondent, herein referred to as suit land, the sale and transfer be set aside and proprietorship restored, that the Appellant be allowed to redeem the suit land pledged by her husband as security, general damages for the inconvenience, interest and costs.

The Appellant's husband known as Twinomuhangi Paul in June 2015, obtained a loan facility of 10,000.000= (Ten Million shillings) from $1^{st}$ Respondent.

In the process the said Twinimuhangi Paul pledged the Kibanja at Bukoora Cell, Northern Ward in Kanungu Town Council, Kabanja at Kizirancencende, Norther Ward in Kanungu Town Council, Barisigara Julius Account Julius Account Number 5420000441(0774596603), Ngabirano Moses Account Number 542000334833(0782547608) and Business stock as security.

In 2017, the Appellant's husband defaulted in paying the loan facility and the amount due to the 1st Respondent, which was 5,094,501/=. The 1st Respondent instructed the auctioneering firm known as M/S Pabe-Kamu Investment (U) Ltd to recover the loan from the Appellant's husband by selling the mortgaged property. The said auctioneers obtained fresh demand notice and served them on the Appellant and the guarantors who failed to acknowledge the same. The Appellant's husband was hiding due to fear of being arrested by the 1st Respondent's officers.

The Auctioneers advertised the suit land in the ENTASI newspaper on Friday, 27th January, 2017 and thereafter sold the suit land to the 2nd Respondent on the 14th April, 2017.

The Appellant filed this suit claiming that the terms and conditions of the mortgage facility were never interpreted to her by an independent advisor and that the notice of sale of the mortgaged property was never served on any of them. She claimed that the suit land was matrimonial property.

The trial Chief Magistrate, gave his judgment partly in favor of the Appellant. The trial Chief Magistrate further found that irregularity by the 1st Respondent did not affect the purchase of the suit land by the $2^{\tiny{\text{nd}}}$ Respondent as the latter obtained a good title.

He further awarded to the Appellant 11,000,000/ $=$ as general damages at the interest of 10% per annum and costs of the suit.

The Appellant being dissatisfied with his decision, appealed to this Court in Civil Appeal No.04 of 2022. The Appellant's Memorandum of Appeal has four grounds of appeal which appear as follows:

- 1. The Learned Trial Magistrate erred in law and fact by holding that the sale of the mortgaged property was lawful when the due process of foreclosure was not followed. - 2. The Learned Trial Magistrate erred in law and fact by holding that the $1st$ Respondent did not need to advertise the notices of sale in a newspaper of wide circulation after the borrower had changed his address/could not be traced. - 3. The Learned Trial Magistrate erred in law and fact by holding that the 2nd Respondent bought the suit land/mortgaged property in good faith and ordering that the Appellant should vacate the suit land when the remedy was not pleaded or prayed for. - 4. The learned Trial Magistrate erred in law and fact when he did not properly evaluate the evidence on record relating to irregularities or illegalities in the sale of mortgaged property hence reaching a wrong decision

#### Representation

The Appellant was represented by Allan Tumwesigye from M/s Lubega & Co. Advocates while the Respondent was represented by Andrew Muhumza from M/s S&L Advocates.

#### Submissions

Both parties filed their respective submissions and authorities thereto, which I have taken into consideration while determining the merit of the appeal.

## Consideration of the court.

The duty of the first appellate Court has been defined in several cases. In the case of Administrator General vs Bwanika James and Others, Supreme Court Civil Appeal No.7 of 2003, Justice Oder, JSC, held:

"It is a well-settled legal principle, embodied in Rule 29 (1) of the Court of Appeal Rules, that on a first appeal, the parties are entitled to obtain from the appeal court its own decision on issues of fact as well as of law. Although in a case of conflicting evidence the appeal court has to make due allowance for the fact that it has neither seen nor heard the witnesses, it must weigh the conflicting evidence and draw its own inferences and conclusions: See Coghland Vs. Cumberland (1898) 1 ch. 704 (Court of Appeal of England): and Pandya V R. (1957) E. A 336)".

I have perused the judgment of the trial Chief Magistrate, the record of the appeal, and the parties' written submissions and authorities thereto cited by Counsel.

In this appeal, the Appellant faults the trial Chief Magistrate for holding that the sale of the mortgaged property was lawful. According to her, the process of foreclosure was not followed. The Appellant's averments were challenged by the 1st Respondent.

It is not disputed the that Appellant's husband, Twinomuhangi Paul obtained a loan facility of 10,000.0001= (Ten Million shillings) from the $1^{st}$ Respondent. The said Twinimuhangi Paul defaulted in clearing his loan facility and the 1st Respondent embarked on the process of recovery and in the end, it sold the suit land to the $2^{nd}$ Respondent.

From the record, it is also clear that the Appellant was aware of the loan facility acquired by her husband. She signed the Micro and Small Loan Agreement and the Offer letter for the loan facility. Furthermore, she acquired independent advice from YW Sande Ben Duncan, Magistrate Grade One (by then).

The Plaintiff's husband defaulted in repayment of the loan and thereafter he vanished in order to evade the payment of the loan and arrest from the 1st Respondent.

The trial Chief Magistrate found, correctly, that per evidence of PW1 and PW2, the 1st Respondent issued and served the require notices on one of the guarantors that is Mr. Ngabirano Moses as well as the Appellant's husband through the Appellant. The Appellant, her Husband and the Guarantors failed to repay the loan faculty despites several reminders from the 1st Respondent to do so.

The Appellant was served with a notice to sell the suit land. She engaged with the Auctioneer firm and the 1st Respondent before the sale of the property. But still she failed to clear the payment of the loan principal and the interest thereon.

The 1st Respondent was left with no choice but to order M/S Pabe -Kamu Investment (U) Ltd to continue with recovery of the loan facility by selling the suit land. Accordingly, the said firm after doing due diligence lawfully sold the suit property to the 2nd Respondent, as correctly held by the trial Chief Magistrate.

I, therefore find no merit in the grounds of the appeal.

Before I take leave of the matter, I wish to address the issue of the general damages of 11,000,000/=, at an interest rate of 10% and costs awarded to the Appellant.

The said general damages were awarded in error to the Appellant by the trial Chief Magistrate. The 1st Respondent advanced the loan facility to the Appellant's husband and the Appellant consented to the said transaction. The Appellant together with her husband failed to repay the loan and the interest thereto, which prompted the 1st Respondent to sell the mortgaged property.

Therefore, the trial Chief Magistrate condemning the 1st Respondent with general damages of $11,000,000/$ = and the interest without clear justification, was very irregular.

I, therefore, set aside the award of $11,000,000/$ = as general damages as well as the interest 10% and the costs of suit awarded to the Appellant.

$\mathsf{6}$

1, therefore, find no merits in the grounds of appeal, I, therefore, dismiss the appeal with costs to the 1st Respondent.

$1m$ Dated at Rukungiri this ------June 2024.

. . . . . . . . . . . . . . . . . . . TOM CHEMUTAI JUDGE