[2024] UGHC 779


# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT MBARARA HCT-05-CV-MA-179 OF 2021** 5 **(ARISING FROM COURT OF APPEAL CIVIL APPEAL NO.367 OF 2020) (ARISING FROM HIGH COURT CIVIL SUIT NO.73 OF 2017)**

**BENON MPAIRWE -------------------------------------- APPLICANT**

**VERSUS**

10 **FINANCE TRUST BANK LTD ------------------------- RESPONDENT**

**BEFORE:** Hon. Justice Nshimye Allan Paul M.

## **RULING**

## 15 **REPRESENTATION**

The Applicant was represented by Ngaruye Ruhindi Spencer & Co Advocates, while the Respondent was represented by Muwema & Co Advocates and Solicitors.

## 20 **BACKGROUND**

The Applicant brought this Application by way of Chamber Summons basing on Section 33 of the Judicature Act, Section 98 of the Civil Procedure Act, Order 41 Rules 2 & 9 Civil Procedure Rules and Rule 41 (1) of the Judicature (Court of Appeal) rules seeking orders that;

- i. Pending the hearing final disposal of Civil Appeal no 367 of 2020 in the Court of Appeal of Uganda the respondent be restrained from selling the applicants property that is the subject of the said Civil Appeal. - ii. Costs of this Application be provided for.

The Application was supported by the affidavit of Mpairwe Benon – the Applicant and it was opposed in an affidavit in reply by Ntege Ronald, the recovery manager of the Respondent.

#### **GROUNDS**

The grounds as set out in the Chamber Summons are;

- 1) On 12/9/2017 the applicant filed a suit against the respondent before this honourable court complaining against the respondent and seeking among 5 other remedies a permanent injunction - 2) The suit was determined in favour of the respondent against the applicant and the applicant was aggrieved with the decision appealing to the Court of Appeal - 3) The appeal has a possibility of success. - 10 4) The respondent has re-advertised the applicant's said property and intends to sell it before the appeal is disposed off. - 5) The Applicant will suffer irreparable loss, irreparable injury damage and serious mischief unless this court intervenes and issues an order restraining the respondent from going ahead with the intended sale 15 pending the final determination of the appeal. - 6) This honourable court has the jurisdiction and power to intervene, and it is fair, reasonable and in the interest of justice that this application be granted.

## 20 **SUBMISSION**

#### **Applicant's submission**

The supplicants submitted that the respondent wants to dispose off the applicant's property that is the subject of the appeal as evidenced by the statutory notice of sale issued by the respondent under section 19 of the 25 mortgage act 2009 attached as annexture C to the affidavit In support. counsel submitted that the applicant has lodged a memorandum of appeal in the court of appeal, which is attached as annexture B to the affidavit In support. He contended that the appeal is not frivolous with a possibility of success. He then stated at page 6 of the submissions that;

*"The application is not seeking a stay of execution of the judgement of this court as the respondent wants the honourable court to believe since no process of execution has been issued by the court rather it is an application to stop the sale of land that is the subject matter of the Civil appeal no 367* 35 *of 2020 by the resident before the Court Of Appeal determines the appeal which sale would render the appeal nugatory*"

The applicant then concluded by praying that court issue an order preserving the status quo and the respondent be ordered to pay costs of the application.

# **Respondent submissions in reply**

- 5 The respondent submitted that the applicant has not established before this honourable court any evidence of a serious threat of execution of the decree / judgement. The respondent contended that the mortgagor (applicant) having been in default of his mortgage obligations to the respondent warrantied the mortgagee to serve upon him a notice of default. The respondent then 10 concluded that the applicant has not shown any sufficient ground as to why the - interlocutory order must be issued by this honourable court. The respondent then prayed that the application be dismissed with costs.

#### **Applicants' submissions in rejoinder**

15 The applicant reiterated that they not seeking an order for stay of execution of the judgement in Civil suit 73 of 2017, but rather are seeking an order to stop sale of the suit property pending the determination of Civil appeal 376 of 2020 pending before the court of appeal. He then contended that the respondent's argument that the applicant seeks to stay execution of the judgement of the 20 High court is misplaced.

The applicant then submitted that since this this was not an application for stay of execution, he was under no obligation to deposit security for costs in this application as alleged by the respondent.

# **SALIENT FACTS**

I find it is important to state the chronology of the salient facts as can be deduced from the court record.

- 1. On 02 August 2014 the applicant herein entered into a loan agreement 30 with the respondent for a loan of SHS 150,000,000 (see paragraph 4 a of the plaint) - 2. The applicant defaulted in performance of his loan obligations to the respondent bank - 3. On 12 September 2017 the applicant herein filed a suit against the 35 respondent in HCCS 73 of 2017 at the Mbarara High Court circuit seeking declarations that

- a. A declaration that the defendant (respondent herein) acted in breach of its duty to the plaintiff (applicant herein) by failing to inform the plaintiff (applicant herein) that under the Mortgage law, the Customer is entitled to independent legal advice prior to signing 5 the loan agreement. - b. A declaration that the defendant (respondent herein) fraudulently handled the plaintiff (applicant herein) account thereby affecting the interest payable and in affecting his liability to the defendant (respondent herein). - 10 c. A permanent injunction restraining the defendant (respondent herein) from proceeding to sell off the plaintiff mortgaged property. - 4. On 30th October 2020, the Hon Justice Tadeo Asiimwe delivered a judgement dismissing the High Court Civil Suit 73 Of 2017 filed by the 15 applicant herein, he also ordered that the respondent herein shall proceed to sell the mortgaged property if the applicant herein fails to pay the decretal outstanding loan amounts in accordance with the procedures in the Mortgage Act. - 5. On 28th December 2020 the applicant herein filled a memorandum of 20 appeal in the Court of Appeal Civil Appeal 367 Of 2020 being aggrieved against the decision in the High Court Civil Suit 73 Of 2017. (see annexture B to the affidavit in support of the application) - 6. On 31st March 2021, the respondent herein issued a statutory notice to the applicant under section 19 of the Mortgage Act 2009. see annexture 25 C to the affidavit in support of the application) - 7. On 16 July 2021 the applicant herein filed this application 179 of 2021 in the Mbarara High Court Registry seeking orders to restring the applicant's property pending the determination of Court of Appeal Civil Appeal 367 Of 2020. - 30

# **DETERMINATION**

I have considered the submissions of both parties and I find that I need to first determine whether in this matter the applicant is presenting an;

- 1. An application for stay of execution, or - 35 2. An application for stoppage of sale of mortgaged property. - Page **4** of **7**

In principle, unlike appeals to the High Court where the law in Order 43 Rule 4 (3) of the Civil Procedure Rules lays down the conditions to be fulfilled when applying for a stay for execution pending the hearing of the appeal in the High Court, there is no provision in the Civil Procedure Rules providing conditions for

5 stay of execution when dealing with an appeal to the Court of Appeal as was held in **EJULU MARTIN V ITOBU MARGRET HCMA 160 OF 2022**, when Hon Justice Dr Henry Adonyo stated that

*"There is no specific in the civil procedure rules regarding stay of execution of a decree where an appeal lies to the court of appeal from the High* 10 *Court, and this an area in which the court exercises its inherent powers"*

In applying the High Court's inherent powers, guidance is offered by The Supreme Court decision in **HON. SSEKIKUBO & 3ORS V ATTORNEY GENERAL & 4 ORS (CONSTITUTIONAL APPLICATION NO. O6 OF 2013)** where it laid down conditions a court ought to consider in an application of stay of execution 15 pending appeal as follows: -

- 1. That a notice of appeal has been filed and steps have been taken to prosecute the appeal - 2. The intended appeal raises triable issues with a strong likelihood of success. - 20 3. Applicants will suffer irreparable damage if their application is not granted. - 4. The balance of convenience favours the grant of the application. - 5. That the application was instituted with out delay. - 25 The applicant in his submission stated that his application is NOT for stay of execution, arguing that it is the reason as to why he is not bound to deposit security for costs. In my analysis I find that the applicant by his own submissions confirms that he is not seeking a stay of execution of High Court civil suit 73 of 2017. This means that it is not necessary for me to determine the application in - 30 relation to conditions that would apply to an application for stay of execution.

The applicant by his own submission at page 6 states that the application is to stop the sale of land. In paragraph 4 of the affidavit in support of the application, he notes that the land is under threat of due to a statutory notice issued 35 pursuant under section 19 of the Mortgage Act 2009 (now section 18 of the Mortgage Act cap 239) see the notice attached as annexture C to the affidavit in support of the application.

In my view basing on the applicants' submissions and prayers, he ought to have filed an application basing on the provisions of the Mortgage Act and Mortgage regulations, which was not done.

- 5 The respondent as a registered financial institution has a right to issue a statutory notice under section 18 of the Mortgage Act CAP 239 and may further exercise power to sale as stipulated in Section 25 (1) of the Mortgage Act CAP 239, which stipulates that; - 10 *"25. Mortgagee's power of sale.* - *(1) Where a mortgagor is in default of his or her obligations under a mortgage and 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 18 (3), a mortgagee may exercise his or her power to sell the* 15 *mortgaged land"*

I find that;

- 1. Firstly, that it is not contested that the applicant and respondent executed a mortgage, wherein the respondent mortgaged some properties. - 20 - 2. Secondly, The respondent had statutory authority to issue the applicant with a Statutory notice pursuant to section 18 of the Mortgage Act cap 239 (formerly section 19 of the mortgage Act 2009) , and - 25 3. Thirdly, I have perused the judgement of Hon Justice Tadeo Asiimwe in High Court Civil Suit 73 Of 2017 and find that the Judge ordered that "*the respondent herein shall proceed to sell the mortgaged property if the applicant herein fails to pay the decretal outstanding loan amounts"* . This is an order of court that still subsists and the applicant has not applied for 30 its stay as the applicant expressly stated in his submissions that he is not seeking to stay the execution of the judgement in High Court Civil Suit 73 Of 2017.

I therefore find that a case has not been made out to justify issuing an order 35 baring a mortgagee from excising its rights under the law governing mortgages. In conclusion, I order that;

1. This application HCT-05-CV-MA-179 OF 2021 is dismissed.

. . . . . . . . . . .

2. The applicant shall pay the costs of the application to the respondent.

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NSHIMYE ALLAN PAUL M. **JUDGE** 28-08-2024

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