Kuteesa v Equity Bank Uganda Limited & Another (Miscellaneous Appeal 20 of 2024) [2024] UGCommC 309 (6 September 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPEAL NO.20 OF 2024 (ARISING OUT OF MISC. APPLICATION NO.975 OF 2024)** 10 **(ALL ARISING OUT OF CIVIL SUIT NO.634 OF 2024) KUTEESA PATRICK :::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPELLANT VERSUS 1. EQUITY BANK UGANDA LIMITED 2. VALUE LINK LIMITED :::::::::::::::::::::::::::::::::::::::::::: RESPONDENTS**

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

#### **RULING**

#### Introduction

The appeal was brought by way of Notice of Motion under **Section 37 of the Judicature Act, Cap.16**, **Section 98 of the Civil Procedure Act**, 20 **Cap.282, Order 50 rule 8** and **Order 51 rules 4 and 9 of the Civil Procedure Rules SI 71-1** seeking orders that:

- 1. The Learned Assistant Registrar's ruling and orders in *Misc. Application No.975 of 2024,* granting a conditional temporary injunction, be set aside. - 25

2. A temporary injunction doth issue against the Respondents, their agents, or anyone claiming under them, from disposing of the Appellant's land comprised in Busiro Block 347 Plots 714 and 715 land at Nalumunye Wakiso District, the suit property, until the final 30 determination of the main suit on condition that the Appellant

- 5 deposits 30% of the outstanding balance of UGX 129,669,260/= within 30 days from the date when the order is issued. - 3. Costs of this application be granted to the Appellant.

#### Background

- 10 The background of this appeal is contained in the affidavit in support of the appeal deponed by the Appellant, and is summarized below: - 1. That the Appellant filed *Misc. Application No. 975 of 2024* seeking a temporary injunction. - 2. That on 10th June, 2024, the Learned Assistant Registrar, delivered the ruling and the Appellant is dissatisfied with the same. - 3. That the Learned Assistant Registrar erred in law and fact when he applied **Regulation 13 of the Mortgage Regulations** and ordered a 30% payment deposit of the outstanding amount of 392,758,451.93/= within 14 days from the date of the order when 25 the said outstanding amount is in dispute and there was no proper valuation report on Court record to ascertain the actual forced sale value of the property. - 30 4. That the Respondents did not carry out the valuation of the suit property and did not serve the Appellant with the notice of sale or notice of default before advertising the suit property for sale. - 35

5. That the Learned Assistant Registrar erred in law and fact when he ordered a conditional temporary injunction order ignoring the illegalities by the Respondents of advertising the Appellant's property without complying with the statutory notices as is required by the

40 law.

- 5 6. That the suit property is matrimonial property and the Appellant seeks for a reconciliation of the outstanding balance that he contends is UGX 129,669,260/= as opposed to UGX 392,000,000/= claimed by the Respondents. - 10 7. That the Appellant is willing to pay 30% of the amount he knows of UGX 129,669,260/= as outstanding since the amount sought by the Respondents is in dispute. - 8. That the Appellant has provided an alternative security for land 15 comprised in Busiro Block 397 Plot 2611 since his wife Kasamba Victoria Najjemba sued him together with the Respondents for mortgaging her matrimonial property without her consent. - 9. That it is unfair and unjust to condemn the Appellant to deposit 30% 20 of the outstanding amount which is in dispute and it will be a miscarriage of justice if this application is not granted.

In reply, the 1st Respondent through Mr. Isiko Charles, its Legal Officer, opposed the appeal contending that:

- 1. The Learned Assistant Registrar rightly applied **Regulation 13 of** - 25 **the Mortgage Regulations** and the outstanding amount being in dispute, or the absence of the valuation report, are not exceptions to the said Regulation. - 2. A prior valuation was carried out and the Appellant was duly served 30 with all the requisite notices before the advertisement. - 3. The Learned Assistant Registrar's order to the Appellant to pay 30% of the outstanding amount was right and he needed not to delve into 35 the merits of the main case.

- 5 4. The issues of reconciliation of the outstanding amount are to be resolved in the main suit. - 5. The information in the affidavit in support of this appeal is 10 misconceived and this appeal ought to be dismissed with costs.

In rejoinder, the Appellant reiterated his previous averments and further contended that:

- 1. The Learned Assistant Registrar misdirected himself in applying the said Mortgage Regulations when he did not address his mind to the 15 need for a valuation report since the outstanding amount is in dispute. - 2. The Appellant was never served with any notice of default, and the 20 Respondent never carried out the valuation of the property as averred, since no evidence was adduced to prove the said allegations. - 25 3. The outstanding amount in the advert and the notice of default, differ from the amount sought by the Respondent. - 4. The Appellant is willing to pay 30% of UGX 129,669,260/=, the 30 balance that he knows, and that he will be prejudiced if he pays 30% of UGX 392,758,451.93/= that he denies and seeks to be reconciled in the main suit.

#### Representation

The Appellant was represented by **Learned Counsel Naluwooza Kulthum** 35 of **M/s M. A. Kajubi & Co. Advocates** while the 1st Respondent was represented by **Learned Counsel Mulondo Aiden of M/s Kagera**

5 **Advocates**. The 2nd Respondent was not represented nor did it file an affidavit in reply.

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

## Grounds of appeal

- 10 Counsel for the Appellant submitted that the grounds in support of the appeal are as follows: - 1. The Learned Assistant Registrar erred in law and fact when he ruled that, the Appellant deposits with the Respondent 30% of the outstanding amount of UGX 392,754,451.93/= within 14 days from 15 the date of the order, without a proper valuation report of the mortgaged property on Court record. - 2. The Learned Assistant Registrar erred in law and fact when he ordered a 30% payment conditional order ignoring the illegalities by 20 the Respondents' actions of advertising the Appellant's property without complying with the statutory notices as required by law. - 3. The Learned Assistant Registrar erred in law and fact when he ruled that the Respondent shall be at liberty to exercise its statutory power 25 of sale upon failure by the Appellant to deposit the said 30% with total disregard of the main suit, which has a high likelihood of success. - 4. The Learned Assistant Registrar erred in law and fact when he failed 30 to properly evaluate all the evidence on record hence arriving at a wrong decision and subjecting the Appellant to a conditional deposit of 30% of the outstanding amount.

5 5. The Learned Assistant Registrar unfairly and unjustly condemned the Appellant to deposit 30% of the outstanding amount that is in dispute.

#### Appellant's submissions

Ground 1: The Learned Assistant Registrar erred in law and fact when he 10 ruled that, the Appellant deposits with the Respondent 30% of the outstanding amount of UGX 392,754,451.93/= within 14 days from the date of the order without a proper valuation report of the mortgaged property on Court record.

Counsel for the Appellant relied on **Order 41 rule 1(a) of the Civil** 15 **Procedure Rules,** and the case of *E. L. T Kiyimba Kaggwa Vs Hajji Katende Abdu Nasser HCCS No.2109 of 1984,* and submitted that the Appellant proved all the conditions necessary for the grant of a temporary injunction under *Misc. Application No.975 of 2024,* and the Learned Assistant Registrar granted the same though on a condition of payment of 20 30% security deposit with the Respondent.

Counsel also submitted that in **paragraphs 8 and 9** of the affidavit in support, the Appellant stated that the Learned Assistant Registrar ordered him to make a security deposit of 30% of the outstanding amount of UGX 392,758,451.93/=, an amount which is in dispute yet there was no 25 valuation report on the Court record to ascertain the forced sale value of the property as is required under **Regulation 13(1)** and **Regulation 11 (1) and (2) of the Mortgage Regulations, 2012**. That, in the case of *Parul Ben Barot Vs Victoria Finance Company Limited, HCMA No.319 of 2017,* **Hon. Justice Christopher Madrama Izama** (as he then was), held 30 that the valuation of the property is a condition precedent to the sale and

- 5 that a Respondent insisting on **Regulation 13 of the Mortgage Regulations,** should satisfy the Court that it has complied with the statutory conditional precedent and failure to do so, would mean that it cannot insist on the strict enforcement of the statute. - Counsel further submitted that in **paragraphs 9, 10 and 13** of the affidavit 10 in support, the Appellant stated that the Respondent illegally advertised the Appellant's property without complying with the statutory notices yet in the case of *Epaineto Mubiru Vs Uganda Credit and Savings Bank, Civil Suit No.567 of 1965 (digested in) [1978] HCB 109,* Court held that the mortgagee must ensure that the mortgagor is served personally 15 with the statutory notices. In conclusion, Counsel for the Appellant submitted that the Learned Assistant Registrar in his ruling did not address his mind on the illegalities of the Respondent's actions of advertising the Appellant's property without proof of service of the statutory notices. - 20 Ground 2: The Learned Assistant Registrar erred in law and fact when he ordered a 30% payment conditional order ignoring the illegalities by the Respondents' actions of advertising the Appellant's property without complying with the statutory notices as required by law. - I wish to state that, after submitting on ground 1, Counsel for the 25 Appellant submitted on ground 3, which was also repeated on the next page. Accordingly, Counsel for the Appellant did not submit on ground 2 as raised.

Ground 3: The Learned Assistant Registrar erred in law and fact when he ruled that the Respondent shall be at liberty to exercise its statutory power

# 5 of sale upon failure by the Appellant to deposit the said 30% with total disregard of the main suit, which has a high likelihood of success.

Counsel for the Appellant submitted that the Appellant has a pending suit before this Honorable Court in which he seeks a reconciliation of the outstanding balance that he contends is UGX 129,669,260/=, as opposed

- 10 to UGX 392,000,000/= claimed by the Respondents. That the illegal deductions made to the Appellant's account by the 1st Respondent are still under investigation by this Court in the main suit. Counsel relied on a Kenyan Case of *Grace Chemutai Koech Vs Francis Kiplangat Chebiror & 2 Others [2019] eKLR* where the Court granted a temporary injunction 15 by preserving the subject matter of the suit in accordance with the doctrine of *lis pendens*; and submitted that it is in the interest of justice that this appeal be granted as the Appellant is providing an alternative security to the 1st Respondents. - Counsel further submitted that once the Appellant's matrimonial property 20 is sold off, he will be prejudiced since his main suit with a high likelihood of success, will be rendered nugatory. In conclusion, Counsel for the Appellant submitted that in light of the above, the Learned Assistant Registrar erred in law and fact when he ruled that the Respondent shall be at liberty to exercise its statutory power of sale with total disregard of 25 the pending main suit which has a high likelihood of success and compliance with the statutory provisions.

Ground 4: The Learned Assistant Registrar erred in law and fact when he failed to properly evaluate all the evidence on record hence arriving at a wrong decision and subjecting the Appellant to a conditional deposit of 30 30% of the outstanding amount.

5 Ground 5: The Learned Assistant Registrar unfairly and unjustly condemned the Appellant to deposit 30% of the outstanding amount that is in dispute.

Counsel for the Appellant jointly submitted on grounds 4 and 5. Counsel cited the case of *Banco Arabe Espanol Vs Bank of Uganda SCCA No.8*

10 *of 1998*, in which the Supreme Court held that the first appellate Court has the duty to subject the evidence on record at trial to fresh scrutiny, re-evaluate, assess and make its own conclusion. That in **paragraphs 8 and 11** of the affidavit in support, the Appellant stated that the amount of UGX 392,758,451.93/= is in dispute as his known outstanding balance is 15 UGX 129,669,260/=.

Counsel further submitted that there was no property valuation before the sale, the Appellant was never served with the statutory demand notices, and the sums stated in the notices of default and sale are entirely different from the amount being claimed. That had the Learned Assistant Registrar 20 considered the evidence on record, he would have noted that the Respondents did not furnish any evidence on the same.

In conclusion, Counsel submitted that the Learned Assistant Registrar came to a wrong conclusion because payment of 30% as provided by **Sections 19(1), (2) and (3),** and **26(2) and (3) of the Mortgage Act** is not 25 automatic and that there must be compliance of the precedent as submitted above. Counsel then prayed that Court sets aside the orders of the Learned Assistant Registrar of granting a conditional temporary injunction, and that the status quo be preserved until the final determination of the main suit with costs in the cause or that in the 30 alternative, the Court should grant a non-conditional order as sought in

*Misc. Application No.975 of 2024*.

## 5 1st Respondent's submissions

In his response, Counsel for the 1st Respondent considered the Appellant's grounds of appeal to be intertwined reasoning that they are contesting the imposition of payment of the statutory 30%. To that, he merged them under one ground which is to the effect that:

10 The Learned Assistant Registrar erred in law and fact when he granted a temporary injunction to the Appellant on condition that he pays 30% of the outstanding amount of UGX 392,758,451.93/= within fourteen days from the date of the ruling.

Counsel first reiterated the duty of the first appellate Court and then submitted that the Appellant's grounds are to the effect that the 1st 15 Respondent ought to have a proper valuation report on Court record since the outstanding amount is in contention, that there were illegalities of the 1st Respondent not issuing the statutory notices prior to advertising and that the 30% should not have been on the disputed amount, among others.

20 Counsel submitted that the grant of an order of injunction is not available to an Applicant who is in breach of **Regulation 13(1) of the Mortgage Regulations**, whose constitutional validity was upheld in the case of *Ferdsult Engineering Services Limited and Another Vs the Attorney General and another Constitutional Petition No.18 of 2021*. Counsel 25 further submitted that in the case of *Kingston Enterprises Limited and 3 Others Vs Standard Chartered Bank (U) Limited HCCA No.446 of 2021*, it was held that **Regulation 13 of the Mortgage Regulations** is an enactment of the principle of "pay now, argue later" which is designed to restrict the ability of the mortgagor to use litigation or the Courts to delay 30 the number of frivolous objections to sales by a mortgagee. - 5 Furthermore, Counsel submitted that the Appellant's reliance on the decision in the case of *Parul Ben Barot Vs Victoria Finance Company Limited (supra),* cannot be allowed to stand since the Court of Appeal's decision in the case of *Ganafa Peter Kisawuzi Vs DFCU Bank Limited C. A. C. A No. 64 of 2016* is binding on this Court. That as was held in the 10 case of *Kingston Enterprises Limited and 3 Others Vs Standard* - *Chartered Bank (U) Limited (supra),* it would defeat the entire purpose of the provision if the reason in the case of *Parul Ben Barot Vs Victoria Finance Company Limited (supra),* would be adopted as all it would take for the mortgagor would be to raise a claim in the plaint however frivolous. - 15 In conclusion, Counsel for the 1st Respondent submitted that based on the provisions of the law and the authorities cited above, the payment of 30% of the outstanding amount or forced sale value of the mortgaged property is mandatory before issuance of an order stopping or adjourning a sale of the mortgaged property and therefore, the Learned Assistant Registrar was - 20 right in imposing the condition.

## Analysis and Determination

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

It is a well-established principle that appeals are a creature of statute. To 25 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,** which provides that an appeal shall lie of right from an order made in an

## 5 interlocutory matter by a registrar**. (See also Section 76(1)(h) of the Civil Procedure Act)**.

Therefore, as an appellate Court, this Court has the legal obligation to reappraise the evidence on record and come up with its own decision not disregarding the decision appealed from. (See: **Section 80 of the Civil** 10 **Procedure Act,** *Fr. Narsensio Begumisa & 3 Others Vs Eric Tibebaga*

## *SCCA No.17 of 2002*, *Pandya Vs R (1957) E. A 336*, *Kifamunte Henry Vs Uganda Crim. Appeal No.10 of 1997* and *Bogere Moses & Another Vs Uganda Crim. Appeal No.1 of 1997*).

- It is now trite that an appellate Court is not to interfere with the exercise 15 of the discretion by a Court below unless it is satisfied that in exercising that discretion, the Court below misdirected itself in some matter and as a result came to a wrong decision, or unless manifestly from the case as a whole, the Court below was clearly wrong in the exercise of the discretion and an injustice resulted. A Court on appeal, should not interfere with the 20 exercise of the discretion of a Court below merely because of a difference of opinion between it and the Court below, as to the proper order to make. - 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* - 25 *Insurance Corporation Vs Mugenyi and Company Advocates [1987] HCB 28; Nakato Margaret Vs Housing Finance Bank Limited and Another HCCA No.687 of 2021*).

Counsel for the Appellant under ground 1 quoted UGX 392,754,451.93/= as the amount that was held by the Learned Assistant Registrar as 30 outstanding however, for the record, according to the *ruling in Misc. Application No.975 of 2024* marked as annexure **"G"** attached to the

5 affidavit in support, the amount held to have been outstanding is UGX 392,758,451.93/=.

The appeal before me is premised on the background that, the 1st Respondent advanced to the Appellant a loan of UGX 924,000,000/=, secured by a mortgage over land comprised in Busiro Block 347 Plots 714 10 and 715 Nalumunye Wakiso District registered in the name of the Appellant. The Appellant defaulted on the loan and his property was advertised for sale. On 24th May, 2024, the Appellant instituted Civil Suit No.634 of 2024, seeking orders among others; a declaration that the Respondents' sale of land and developments comprised in Busiro Block 15 347 Plots 714 and 715 Nalumunye Wakiso District is defective, illegal and unlawful, a declaration that the Respondents' advertisement of the land and developments comprised in Busiro Block 347 Plots 714 and 715 Nalumunye Wakiso District is a breach of the principle of *lis pendens* and that the suit property is matrimonial property.

20 On the same day, the Appellant vide Misc. Application No.0975 of 2024, sought a temporary injunction restraining the sale or any interference with the suit property pending determination of Civil Suit No.634 of 2024.

On 10th June, 2024, His Worship Okumu Jude Muwone, Assistant Registrar, granted the temporary injunction on condition that the 25 Appellant deposits with the Respondent 30% of the outstanding amount of UGX 392,758,451.93/= within 14 days from the date of the order. It was also ordered that should the Appellant fail to pay the 30% within the period stipulated, the injunction shall lapse and the Respondents shall be at liberty to exercise the statutory power of sale under the Mortgage Act, 30 2009.

5 Aggrieved by the above orders, the Appellant appealed against the same laying down several grounds as portrayed above.

I agree with the observation by Counsel for the 1st Respondent that the Appellant's grounds are intertwined. Therefore, I shall jointly resolve grounds 1, 2, 4 and 5 as raised by the Appellant. The said grounds are

10 that;

Ground 1: The Learned Assistant Registrar erred in law and fact when he ruled that the Appellant deposits 30% of the outstanding amount of UGX 392,758,451.93/=, with the Respondent within 14 days from the order date without a proper valuation report of the mortgaged property on Court 15 record.

Ground 2: The Learned Assistant Registrar erred in law and fact when he ordered a 30% payment conditional order ignoring the illegalities by the Respondents' actions of advertising the Appellant's property without complying with the statutory notices as required by law.

- 20 Ground 4: The Learned Assistant Registrar erred in law and fact when he failed to properly evaluate all the evidence on record hence arriving at a wrong decision and subjecting the Appellant to a conditional deposit of 30% of the outstanding amount. - Ground 5: The Learned Assistant Registrar unfairly and unjustly 25 condemned the Appellant to deposit 30% of the outstanding amount that is in dispute.

In analysis, I shall jointly consider the above with the ground below formulated by Counsel for the 1st Respondent:

5 Ground of appeal: The Learned Assistant Registrar erred in law and fact when he granted a temporary injunction to the Appellant on condition that he pays 30% of the outstanding amount of UGX 392,758,451.93/= within fourteen days from the date of the order.

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

- 10 *"The Court may on the application of the mortgagor, spouse, agent of 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."* - 15 In the case of *Ferdsult Engineering Services Limited and Another Vs the Attorney General and Another, (supra)*, the Constitutional Court clarified that:

*"A reading of Regulation 13(1) of the Mortgage Regulations requires all mortgagors who apply to adjourn or stop a sale to pay 30% of the* 20 *outstanding amount or forced sale value of the mortgaged property. The provision demands formal compliance by all mortgagors seeking relief under the provision and the fact that the provision levies a requirement that might be burdensome to a person who may not be able to raise the deposit amount does not necessarily that it prefers* 25 *persons who might have the deposit amount. The requirement to make a deposit under Regulation 13(1) is clearly devised to stop frivolous and vexatious mortgagors from frustrating mortgagees seeking recovery of monies rightfully owed. The Regulation is necessary to protect mortgagees from unnecessary adjournments or stoppage of* 30 *sales that would result in satisfaction by defaulting mortgagors."*

5 The Constitutional Court further went on to state that:

*"Regulation 13(1) of the Mortgage Regulations was enacted to provide an equitable opportunity for an aggrieved person to seek relief from Court while at the same time protecting the mortgagee's right to sale as guaranteed by the Mortgage Act."*

- 10 In the instant case, the Appellant disputes the payment of 30% of the outstanding amount arguing that the amount referred to by the Learned Assistant Registrar is in dispute in the main suit and that no proper valuation report was considered to ascertain the actual forced value of the property. - 15 Counsel for the Appellant relied on the case of *Parul Barot Ben Vs Victoria Finance Company Limited (supra)* and contended that it is a requirement that prior to the grant of the deposit of 30%, there must have been a valuation of the property, the outstanding amount should not be in dispute and the mortgagee ought to have complied with the provisions - 20 of the Mortgage Act, such as serving all the requisite notices, which was never complied with.

In response, Counsel for the Respondent submitted that following the provisions of the law and the case of *Kingston Enterprises Limited and 3 Others Vs Standard Chartered Bank (U) Limited (supra)*, the 25 payment of the 30% deposit is mandatory and therefore, the Learned Assistant Registrar rightly imposed the same.

In the case of *Blue Wave Beverages Limited and 2 Others Vs Lillian Kiiza and Another Court of Appeal Civil Application No.1308 of 2023*, the Court of Appeal cited with approval the holding in the case of 30 *Ganafa Peter Kisawuzi Vs DFCU Bank Limited (supra),* wherein, it was

5 held that if an Applicant is in breach of **Regulation 13(1) of the Mortgage Regulations**, the grant of an order of a temporary injunction stopping the intended sale, is not available to him.

This was re-echoed in the case of *Namakajo Sewava Habib Vs KCB Bank (U) Limited and Another HCMA No.523 of 2023*, wherein, **Hon. Lady** 10 **Justice Patricia Kahigi Asiimwe,** while relying on the Constitutional Court judgment in the case of *Ferdsult Engineering Services Limited and Another Vs the Attorney General and Another (supra)*; held that the Applicant has to pay the security deposit of the forced sale value of the mortgaged property or outstanding amount for an order for a temporary 15 injunction to be granted.

In the matter at hand, the Learned Assistant Registrar considered the amount outstanding as per the Respondent's pleadings in the main suit. Even though the Appellant disputes the above amount, he does not dispute indebtedness to the 1st Respondent. The issue of the amount owed 20 cannot be finally determined at this stage but rather, in the main suit. The same applies to the argument by the Appellant that the main suit has a high likelihood of success. The payment of the 30% as per **Regulation 13(1) of the Mortgage Regulations** is not tagged to the success of the main suit and therefore this argument is not tenable in law. In the 25 premises, the Learned Assistant Registrar did not err in law or fact when he ordered the Appellant to deposit 30% of the outstanding amount.

Regarding whether the ruling in *Parul Barot Vs Victoria Finance Company Limited (supra)* which requires that for a mortgagee to be awarded the 30% when stopping or adjourning a sale, they must have 30 conducted a valuation of the mortgaged property, served the mortgagor with all the requisite default notices and the amount outstanding should

5 not be in dispute, relied upon by Counsel for the Appellant is still good law, **Hon. Justice Stephen Mubiru** in the case of *Kingston Enterprises Limited and 3 Others Vs Standard Chartered Bank (U) Limited (supra)* held that:

*"On the other hand, another line of authorities has taken the view that* 10 *the requirement is not mandatory and the Court has the discretion whether or not to require the deposit as a pre-condition to the grant of an injunction, especially where; the validity of the mortgage or the amount outstanding is being challenged; or where there is a procedural irregularity in the statutory notices prior to the* 15 *advertisement for sale of the mortgaged property; or where there is no credible evidence of the current market and forced sale value of the mortgaged property (see for example … Parul Barot Vs Victoria Finance Company Ltd, H. C. Misc. Application No. 319 of 2017…It was argued by Counsel for the Appellant that a dispute over the legality of* 20 *the mortgage, the procedure of its enforcement or the amount outstanding is reason enough not to impose the 30% deposit requirement. If this were to be adopted as a valid reason, then the entire purpose of the provision would be defeated… Similarly, it is equally disingenuous to seek to defeat the purpose of the provision by* 25 *adverting to Regulation 11(2) of the Mortgage Regulations, 2012 which requires a valuation report to be made more than six months before the date of sale. That requirement is specific to the value at the time of sale by the mortgagee, not necessarily for purposes of the adjournment or postponement of a sale."* [**My Emphasis]**

30 Furthermore, this Court has emphasized the fact that a valuation report is not a pre-requisite for the application of **Regulation 13(1) of the**

- 5 **Mortgage Regulations.** This was held as so, in the cases of *I&M Bank Uganda Limited Vs Nadia Manji and Another HCML No.18 of 2023* and *Lucy Kagoro Muramuzi Vs Cairo Bank Uganda Limited HCML No. 14 of 2023*. I wish to associate myself with the above rulings. - I have perused the record of appeal and according to annexure **"G"** 10 attached to the affidavit in support of this appeal, the ruling in respect of *Misc. Application No.975 of 2024*; the Learned Assistant Registrar took into consideration the fact that the suit property was a matrimonial property, the Respondent had advertised the property for sale without serving the Appellant with the requisite notices of default and that there 15 was a dispute in regards to the amount outstanding before granting the conditional temporary injunction.

In the premises, the Learned Assistant Registrar properly evaluated all the evidence on record and did not act unfairly or unjustly when he granted the Appellant a conditional temporary injunction.

- 20 Counsel for the Appellant also contended that the Appellant is willing to pay 30% of the balance that he thinks he owes the 1st Respondent of UGX 129,669,260/=. In light of **Regulation 13(1) of the Mortgage Regulations** and the authorities cited above, the requirement is; payment of 30% of either the forced sale value of the mortgaged property or of the outstanding - 25 amount. Therefore, the Appellant's argument lacks legal basis.

In the circumstances, grounds 1, 2, 4 and 5 of the appeal fail.

Ground 3: The Learned Assistant Registrar erred in law and fact when he ruled that the Respondent shall be at liberty to exercise its statutory power of sale upon failure by the Appellant to deposit the said 30% with total

30 disregard for the main suit which has a high likelihood of success.

- 5 In the case of *Housing Finance Bank Limited Vs Silk Events Bank Limited and Another HCCA No.300 of 2021*, **Hon. Justice Stephen Mubiru** held that **Regulation 13 of the Mortgages Act** strikes a balance between the competing desire of the mortgagee to realize the security following default and that of the mortgagor to have his or her day in Court - 10 on questions regarding the legality or propriety of events triggering that process whilst the mortgagor pursues his or her various remedies.

In light of the above authority, the Learned Assistant Registrar did not err in law or fact when he ruled that the Respondent shall be at liberty to exercise its statutory power of sale upon failure by the Appellant to deposit

15 the 30% of the outstanding amount.

Therefore, ground 3 of the appeal also fails.

In the premises, the appeal fails and the ruling of **His Worship Okumu Jude Muwone** in *Misc. Application No.975 of 2024* delivered on 10th June, 2024 is hereby upheld.

20 Costs of this appeal shall abide by the result of the main suit.

I so order.

Dated, signed and delivered electronically via ECCMIS this **6th** day of **September, 2024.**

Patience T. E. Rubagumya **JUDGE** 6/09/2024 6:45am

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