Court name
Commercial Court of Uganda
Case number
Miscellaneous Application 298 of 2014
Judgment date
12 January 2015

Assimwe v Uganda Ecumenical Church Loan Fund Ltd (Miscellaneous Application 298 of 2014) [2015] UGCommC 209 (12 January 2015);

Cite this case
[2015] UGCommC 209












UGANDA ECUMENICAL CHURCH LOAN FUND LIMITED ...................................................... RESPONDENT/PLAINTIFF







By this application, the Applicant sought leave of this court to file a defence. Costs of the application were also applied for.


The brief background to the application is that the First Defendant to the suit, that is Kalibaimukya Co-operative Savings and Credit Society Ltd, borrowed shs. 85,000,000/- from the Respondent.  The loan was secured by depositing with the Respondent the certificate of title for the land comprised in Freehold Register Volume 488 Folio 3 Plot 24, Block 331, land at Kibaale measuring 95.5 hectares.


The land was guaranteed by Directors of Kalibaimukya Cooperative Savings and Credit Society Ltd namely Ssekate Julius, Alituna Jackline, Assimwe Justine (Applicant) and Francis Kasumba.


The First Defendant (The Credit Society Ltd) defaulted in payment of the loan, and the Respondent instituted a summary suit against it and the guarantors for the sum of Shs. 96,613,000/- as principal and interest plus costs of the suit.


The Defendant did not seek leave to appear and defend the suit.  A decree was accordingly entered against them on 24.01.14 in the said suit, with interest and costs.  On 23.04.14, the Applicant obtained an order in HC MA 2010/2014 setting aside the decree and hence this application seeking leave to defend on the grounds interalia that the Respondent had other remedies under the Mortgage Act which ought to have been exhausted before filing the suit.


The issue for court to determine is whether this is a proper case for grant of leave to defend.


The parties filed written submissions.  Counsel for the Applicant went through the facts of the case and then contended that the Respondent having been given security in form of the title deed already described in this ruling, as well as a guarantee from the Applicant and her Co directors ought to have exercised its options under the Mortgage Act 2009, before filing the suit.


Counsel reproduced the provisions of S. 20 and 21 of the Act under the subheading “Remedies of the mortgage” indicating the remedies that were open to the Respondent.


Commenting about what was said to be a consent judgment attached to the affidavit in reply, Counsel argued that this was an abuse of court process as the purported judgment was no judgment at all.  He emphasized a consent judgment could not have been entered into on 17.03.14 when a default judgment had already been entered into on 06.11.13.


And that it was irregular and contemptuous of court to make the Applicant sign such a document and it should be declared a nullity by court.


In response, the Respondent also went through the facts of the case, pointing out that when the summary suit was filed and default judgment entered, the Applicant filed Miscellaneous Application 803/13 but never pursued it.


When warrant of arrest was executed, the Applicant made part payment on the account of the Respondent and then consented to pay the judgment debt in four equal installments.


That the application should accordingly be dismissed with costs as the Mortgage Act did not apply to the circumstances of the present case as no legal mortgage was ever registered.


Further that the Applicant had failed to provide any possible defence to the suit and the application is only intended to deter the Respondent from claiming what is due to it.  – The case of Zola and Another vs. Ralli Brothers Ltd and Another [1969] EA 691 page 691 was cited in support.


Also that the Applicant consented to pay the judgment debt and paid part of it by depositing Shs. 5,000,000/- on the Respondent’s account and therefore does not deny liability, only claiming that certain legal requirements were not followed.


Counsel then prayed for dismissal of the application with costs and orders reinstating earlier orders and judgment against the Applicant.


Decided cases have repeatedly stated the principles upon which unconditional leave to appear and defend a suit can be granted.  That is the Applicant has to show that there is a “good defence to the suit on the merits; or that a difficult point of law is involved; or that there is a dispute as to the facts which ought to be tried; or a real dispute as to the amount claimed which requires taking an account to determine or any other circumstances showing reasonable grounds of a bonafide defence”  - See Bhasker Kotecha vs. Adam Mohammed C.A C.A 48/2001 [2002] IEA 112 where the English authorities of Saw vs. Hakim 5 TLR 72 and Ray vs. Barker 4 EX DI 279 were referred to.


In the present case, it is apparent from the submissions and the affidavit in support that the loan was secured by property in Kibaale; which security was not realized before enforcing the guarantee.  While Counsel for the Respondent contends that the mortgage was not registered.


The arguments of both Counsel raise issues as to whether the Respondent acted in contravention of the Mortgage Act, 2009, whether such unregistered transaction is governed by the Mortgage Act, or whether such transaction is enforceable between the parties.


There are also questions as whether notice of default was issued to the mortgagor by the Respondent requiring rectification of the default within the time provided by law; whether the suit was properly filed.  That is whether liability against the guarantors could be enforced by the Respondent without having made a demand on the Applicants or other guarantors.


Court finds that all the above are triable issues that cannot be properly and effectively determined without evidence being adduced by both parties.  As they stand now, they cannot be determined basing on affidavit evidence alone.


There is also an issue as to whether the consent judgment entered into by the Applicant was properly entered into.


For all those reasons, the application is allowed.  The Applicant to file a defence within 10 days from the date of this ruling.  Costs of the application are granted to the Respondent.