Court name
High Court of Uganda
Case number
Civil Suit 80 of 2012
Judgment date
8 May 2020

Sekandi v Equity Bank Limited (Civil Suit 80 of 2012) [2020] UGHC 218 (08 May 2020);

Cite this case
[2020] UGHC 218
Luswata, J



CIVIL SUIT NO. 080 OF 2012

SSEKANDI PAUL::::::::::::::::::::::::::::::::::::::::::::::::::::::PLAINTIFF


EQUITY BANK LIMITED :::::::::::::::::::::::::::::::::::::::::DEFENDANT





   Introduction and brief background.

            The plaintiff’s claim in this suit is for a declaration that the action of impounding and selling his motor vehicle Reg. No. 862F Toyota Hiace (hereinafter referred to as the motor vehicle) by the defendant was wrongful. He accordingly claimed for special, general and aggravated damages to account for his loss, payment for the vehicle at its current market value, as well as costs of the suit.

The plaintiff contends that on 23/07/2008, he entered into a loan agreement with the defendant bank, the successor in title to Uganda Micro Finance Ltd (hereinafter referred to as UMFL). He thereby pledged and deposited the motor vehicle by then registered in the names of Dr. Binta Kahwa as collateral security. That the plaintiff was under obligation to re-pay the said loan by monthly installments of Sh. 532, 000/= each for a period of 12 months with effect from 23/08/2008. That he successively made deposits to the defendant by himself and his two guarantors up and until he discharged his obligation towards the loan. That that notwithstanding, the defendant illegally and wrongfully impounded the vehicle and sold it as a result of which he suffered loss of the vehicle, and in earnings. 

            The defendant admitted the loan but denied the plaintiffs claim in general. They contended that the plaintiff took out a loan of shs. 5,000,000/= (Five Million Uganda Shillings) and contracted to make repayment in 12 equal monthly installments in the above sum. That after making payment for two months, the plaintiff defaulted on his loan obligations, and the persistent defaults attracted both normal and penal interest. That as a result, the loan amount progressively increased until the defendant made the decision to exercise its rights under the loan agreement to attach and sale the subject motor vehicle in May 2019, without recourse to court. They emphasized that several demands for payment were made, and an advert placed in the Daily Monitor Newspaper before sale of the vehicle, but all were ignored by the plaintiff. That at the time the vehicle was impounded and advertised for sale, the plaintiff owed the defendant the sum of Shs. 3,335,725.66 (Uganda Shillings Three Million Three Hundred Thirty Five Thousand Seven Hundred Twenty Five and Sixty Six Cents) which was fully recovered out of the sale and the balance deposited onto the plaintiff’s account with the bank, and subsequently withdrawn by him. It was then pleaded that the plaintiff suffered no actionable damages because the bank rightly impounded the subject motor vehicle in exercise of its contractual right when the plaintiff had defaulted on his loan agreement.

             In reply to the defence, the plaintiff pleaded that prior to impounding the motor vehicle and subsequent sale, he had paid various sums of money to the defendant which were not reflected in his statement of account, and which collectively should have cleared his indebtness in full. He contended that the omission of the above payments from his statement of account was an act of fraud, dishonesty and professional negligence that led to the sale of his motor vehicle. That the motor vehicle was illegally sold because the loan agreement was deemed to be varied, when the defendant accepted payments in installments.

            Issues agreed upon by the parties.

            Mr. Patrick Kasumba presented this claim on behalf of the plaintiff, while the defendants were represented by Mr. Kyewalabye Dennis. During scheduling, counsel agreed on two issues. However for better resolution of this dispute I would exercise my powers under Order 15 rr.1 CPR, to add one additional issue. The issues to be determined are therefore as follows:-

  1. Whether the plaintiff defaulted on his loan repayment obligations?
  2. Whether the defendant wrongfully sold the plaintiff’s motor vehicle Reg. No. 862 Toyota Hiace?
  3. What remedies are available to the parties?

   Preliminary Objection.

            In his submissions, defendant’s counsel raised a preliminary objection. He contended that the plaint does not disclose a cause of action and as such, the plaintiff has no locus standi to bring the action against the defendant because the motor vehicle on which the plaintiff bases his action belongs to different person who is not a party to the suit.

            Counsel submitted that the plaintiff admitted in his evidence that the motor vehicle he pledged to secure the loan did not belong to him but to Dr. Binta Kahwa, from whom he had obtained powers of attorney. That no such powers were ever tendered in court in order to establish the nature of powers that were given to him. Basing his arguments on the decision of Auto Garage vs Motokov (NO.3), (1971) EA 514, he submitted that the plaintiff cannot claim to be aggrieved by the sale of a motor vehicle which by his own pleadings and evidence, belongs to another person. He argued that unless the contrary is shown, the person in whose name a vehicle is registered is presumed to be its owner, and the plaintiff was duty bound to adduce evidence to prove that the motor vehicle belongs to him and not Dr. Binta Kahwa, which he failed to do. He concluded that the Traffic and Road Safety Act, Cap 361 prohibits the possession of motor vehicles without registration and therefore that, Court should not condone an illegality by allowing the plaintiff to claim ownership of the suit motor vehicle, without proof of registration.

By his own submission, defendant’s counsel conceded that under Section 30 of the Traffic and Road Safety Act, although a motor vehicle registration book is prima facie evidence of ownership, that presumption is rebuttable by contrary evidence. It is true that the plaintiff in his evidence stated that the actual registered owner of the motor vehicle was Dr. Binta Kahwa from whom he held powers of attorney that he did not have with him in Court. PW2 however explained that by the time loan was secured, the vehicle had been purchased from Binta Kawa. However no documents were tendered in court to support its purchase or similar facts. That said, I notice that it was an agreed fact during scheduling that the loan was secured by the motor vehicle. This would mean that the fact of its ownership was never in issue then, and it is strange that it was then raised at the point of submissions. That notwithstanding, it is my view that the defendant’s predecessor in title and their agents at the time of advancing the loan, conducted themselves in a manner that in law, would estop them denying the fact that the plaintiff had an interest in the motor vehicle used as security. In a way, they waived the right to  that objection. The following are my reasons.

            It is provided in Section 114 of the Evidence Act that;

’’When one person has, by his or her declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon that belief, neither he or she nor his or her representative shall be allowed, in any suit or proceeding between himself or herself and that person or his or her representative, to deny the truth of that thing.’’

            Black’s law Dictionary 6th Edition defines a  waiver as the “intentional or voluntary relinquishment of a known right or such conduct as warrants an inference of the relinquishment of such right or when one dispenses with the performance of something he is entitled to exact or when one in possession of any right, whether conferred by law or by contract, with full knowledge of the material facts, does or forbears to do something the doing of which or the failure of forbearance to do which is inconsistent with the right or his intension to rely upon it.  The renunciation, repudiation, abandonment, or surrender of some claim, right, privilege or of the opportunity to take advantage of some defect, irregularity or wrong. An express or implied relinquishment of a legal right.’’

            It is also stated by the same author 10th Ed. At page 1813 that an implied waiver is “a waiver evidenced a party’s decisive, unequivocal conduct reasonably inferring the intent to waive.”

            In their defence, the defendants admitted the loan and in that all the processes leading to signing of the loan agreement. At the point when the motor vehicle was offered as security, the defendant or their predecessors in title, had notice that it was not registered in the plaintiff’s name, because that information was recorded in the schedule to the memorandum of deposit (EXB P2). It was clearly stated that the plaintiff was being recorded as one with “a third party relationship” to the motor vehicle. It was under those circumstances that they accepted the motor vehicle as security for the loan and its log book was then deposited with them. Subsequently when the plaintiff allegedly defaulted, they went ahead to sale it to recover the debt and paid a balance into the plaintiff’s account with them.


            I see nothing in the law that requires that the debtor must secure a loan using property registered in their name. It is enough that they offer security satisfactory to the lender and the loan transaction/agreement is then executed. In this case the plaintiff enjoys a right not by virtue of the property they have used to secure a loan, but by the fact that they are a debtor who believe that the loan agreement has been breached by the creditor/lender, for exercising their rights when the loan is not outstanding. Therefore, the defendant is estopped under Section 114 of the Evidence Act from denying ownership of the motor vehicle by the plaintiff as they waived their right to do so when they accepted it as security, and even sold it upon default by the plaintiff.

            The preliminary objection accordingly fails

            Resolution of issues.

Issue One.

Whether the plaintiff defaulted on his loan repayment obligations.

            For the better understanding and resolution of the first issue, the Court needs to break it down into sub issues, which will act as pathfinders for how this loan was disbursed, paid and eventually, how default was handled. The following questions are this pertinent:

  1. What were the terms of the loan agreement?
  2. Were the terms followed by both parties?
  3. Did the loan agreement make provision for variation?
  4. Did the fact of migration from UMFL to the defendant affect the rights of the parties?
  5. Were the accounts under which the loan was managed valid accounts and did their creation affect payments made by the plaintiff?
  6. Did the defendant omit to credit some payments made by the plaintiff onto any of the relevant accounts. If so, did this affect the indebtness of the plaintiff to the defendant?
  7. What had the Plaintiff actually paid at the time of sale?
  8. What was the actual outstanding sum at the time of sale?
  9. Was the sale conducted in accordance with the law?

My decision.

            It is an undisputed fact that money was disbursed to the plaintiff after a loan agreement was executed between him and UMFL. It is not in dispute that the defendant inherited the loan as successor in title of UMFL. The loan agreement dated 23/7/2008 was admitted into evidence as EXP 1. The main terms are that the defendant agreed to grant the plaintiff the sum of UGX 5,000,000. The loan attracted a monthly interest of 4% and the expected principle and interest would at the close of the loan amount to Shs. 5,000,000 and Shs. 1,393,600 (respectively) (i.e. a total sum of Shs.6,393,00) The plaintiff was expected to pay installments of UGX 532,000/= each w.e.f 23/8/2008. There was no strict mode of paying the installments. They could be made bi-weekly, monthly or otherwise. The loan term was not given, but going by the mode of payment, it was to last for 12 months i.e. from 23/7/2008 (the date of the agreement) to 24/7/2009. It was also a term that failure to pay any one installment, the defendant could call in the whole outstanding balance with interest and a monthly default rate. I note that the loan agreement made no provision for variation of any one of the terms. Further, by a memorandum of deposit of the same date, the plaintiff deposited the log book for the Motor Vehicle Reg. No. UAE 862F Toyata Hiace, as a security for the loan.

The plaintiff and his counsel conceded that the plaintiff fulfilled his loan obligations only for the first two months. Thereafter, he suffered financial setbacks and was at that point issued with a demand notice dated 17/04/2009 to pay a sum of Shs. 5,100,000. In response, PW2 the plaintiff’s guarantor deposited a cheque of Shs. 1 066, 000/=[P.EXH P8] but the amount was not credited on the plaintiff’s account until 12/04/2010 (nearly one year later). That the plaintiff by himself made another deposit of Shs. 1,000,000 on 8/04/2010. That before the payment by the gurantor was credited or reflected on the plaintiff’s account, the motor vehicle was impounded on 25/03/2010. He then received a second demand notice dated 14/04/2010 following which he made another cash deposit of Shs. 500,000 on 16/04/2010 P.EXB.3B.

            It was submitted for the plaintiff and he testified that, following the above payments, (several which were uncredited), he had discharged the loan in full, yet his motor vehicle was none the less sold. His counsel argued that failure to debit the account was a tactical move to cheat him. The plaintiff also contended that he was not aware and had not authorized some of the accounts through which the loan was processed. That he was not duly informed of the procedure and details of the sale, or issued with a valuation report.

            In response, counsel for the defendant submitted that the agreement was for the plaintiff to compete repaying the loan by September 2009 but the same remained outstanding until May 2010. It is only then that the bank finally exercised her right and sold the pledged motor vehicle. That by the time the demand was issued, the loan had run for nine (9) months and that had the plaintiff paid the agreed instalments of the loan on time, he would have paid a total of UGX4, 795, 200/=.

Defendant’s Counsel continued that the cheque for Shs. 1,066,000/= was deposited on 27/04/2009 and credited onto the plaintiffs loan account on 12/04/2010. He reasoned that during cross examination, the plaintiff himself admitted that the amount in that cheque was not sufficient to pay off the outstanding balance of the loan. That EXH.D2 (statement of the plaintiff’s loan Account No. 1027540349322) indicates that the outstanding balance balance on the plaintiffs loan on 23/04/2009 (which is the relevant transaction date before 27/04/2009), was UGX 5,071,400.66/=. That even if the amount in the cheque had been applied on the same day, it would not have been enough to pay off the loan. Counsel submitted further that after applying the money in the cheque on 14/04/2010, the defendant issued a fresh demand notice EXH.P6B to the plaintiff requesting him to pay the balance of UGX 3,399,000/=. He countered that the loss suffered by the plaintiff as a result of the late application of the amount in the cheque by the defendant is UGX.511, 680/=; A sum that D1 termed a “penalty interest charge” calculated at a rate of 4% as provided under clause 2 of the loan agreement.

In my view the fact that the plaintiff made payments in odd installments or into different accounts of the defendant’s branches, did not necessarily vary the terms of the agreement or affect his debt on the loan. The loan agreement required him to make payments, biweekly, monthly or otherwise. What was required was for each monthly installment to be at least Shs. 532,800 or more.  He was also expected to make cash payments at the branch office from which he obtained the loan. The fact that the bank accepted sporadic payments was only an indication that the plaintiff was struggling to pay the loan. The evidence also shows that payments were made at different branches. I am persuaded that that minor alternation did not make those payments less legitimate, because that did not appear to be a condition in the agreement I say so because the defendant did accept payments made into other branches and in clause 6 of the agreement, the plaintiff was even permitted to make payments to the defendant’s representatives, for as long as receipts were issued. It would in fact be impracticable to expect customers to make payments into one branch only. 

            The evidence brought out the existence of several different accounts. It was submitted for the plaintiff that he was not notified when his account details were changed and he had no knowledge of some accounts. His counsel argued that the duplicity of accounts could have led to the confusion for not crediting some of his payments. His counsel further argued and I agree that, the defendant owed a fiduciary duty to disclose to the plaintiff information of the new accounts especially after the migration from UMFL to the defendant bank in line with the Financial Institutions Act, 2004. That the plaintiff also retained the right to authorize opening of those accounts as banks are expected at all times to be cautious in such matters’’ See Robinson Vrs Mildland Bank Ltd (1924) TLR 41.

            In my view, the different accounts opened and managed for the plaintiff were well explained by DW1.  The loan was contracted with UMFL the defendant’s predecessor in title. The loan sum was for the first time credited onto what was then a Savings Account No.10003957 (EXH.P3A). During 2008, UMFL was taken over and merged into Equity Bank and the core banking system also changed to what DW1 termed “FINNACLE.” He explained that although the system changed, each customer’s account and all the contents remained the same save that the account digits increased from eight to eleven. Accordingly, the plaintiff’s Account number changed to 1027140347112 (EXH.P3BI) and indicates a “migration balance’’ which was the balance available on the plaintiffs saving account at the time of migration from UMFL to Equity bank. The plaintiff had no objection to that account or its migration, his quarrel being that two accounts one being a loan account and another, a Loan Insurance Fund Account (LIF) account, were alien and had not been authorized by him. He also complained that some deposits he made and expected to have been paid onto his savings account, were wrongfully credited into those two contested accounts over which he had no control, and the bank omitted to reflect his payments as disbursed towards the loan.

            DW1 explained further that, only three accounts were operated to manage the loan both at UMFL and the defendant bank. In particular that, immediately upon a customer taking out a loan, a loan account was opened. Once payments were made into the savings account, were immediately picked up and transferred to the loan account on which loan disbursements, accruing interest, loan repayments and penal interest (in case of default) were reflected. That the transfers between the two accounts would automatically be reflected in both accounts which would then enable the customer to follow the transactions appearing on the loan account. That for the plaintiff, his loan was given an Account No. 20000532 and when UMFL changed to Equity Bank Uganda limited, it changed to 1027540349322. DWI likewise explained that yet another account, the Loan Insurance Account (LIF) is opened at the same time to act as a “fall back” account in the event that any one installment was not paid. That the customer need only deposit and maintain on that account a sum equivalent to one installment and when any surplus was paid, it would be disbursed back to the LIF account to cater for those times when a customer defaulted. It is evident that old forms of UMFL continued to be used even after the bank had changed the name to Equity bank.


            I am persuaded that the bank did not produce satisfactory evidence to show that the public was notified by these migrations. However it was explained by DW1 that individual customers could obtain that information from the bank, and since they were entitled to bank statements, the information therein would have alerted them of these accounts. In my view, that was a reasonable explanation.

The plaintiff did not contest the fact that while still under UMFL, he had a loan account alongside his savings account. The loans account naturally migrated together with his ordinary account. While a customer at the defendant bank, he operated the savings account and made payments into it over a period of time. He conceded that at one point, a bank teller alerted him that he was about to pay money into a wrong account. That should have alerted him of the presence of the other two accounts. It was shown that on two occasions in May 2010 he obtained statements of his savings account. The remittances into his loan account are evident there.

            On the other hand the plaintiff admitted making a deposit of shs. 15,000 into the insurance account EXH.P5(C).  He is thus estopped from denying knowledge of the multiple accounts in his name. Even then, I do not see how the existence of the three accounts affected his ability to disburse the loan in line with what was agreed. His duty was to make timely deposits into his savings account, retain all deposit slips and nothing more. As shown by DW1, the other two other accounts were the concern of the bank as lender; set up under normal banking practices to assist them into managing the loan in the most efficient manner. It was not shown, as claimed by plaintiff’s counsel that the fictitious accounts were being maintained by the bank or that different accounts statements were produced after a Court order was issued.    

The plaintiff also contended that several payments he made into his savings account by himself and his guarantors were never disbursed towards the loan so that by the time the motor vehicle was impounded, there was a wrong impression that he was indebted to the bank, which was not the case. The payments in contention, are summarized below:

  1. Shs.1, 066, 000 deposited on 29/4/2009 by the plaintiff’s guarantor vide Bank of Africa cheque reflected on the plaintiff’s account on 12/04/10.
  2. Shs.15, 000/= deposited on 26/9/2008.
  3. Shs.600, 000/=deposited on 6/9/2008.
  4. Shs.220, 000/= deposited on the 26/9/2008.

            I believe DW1 satisfactorily explained the three last payments. In particular, Exh.P5A is a deposit slip of UGX 600,000/= dated 6/09/2008. It is reflected as a credit on the plaintiff’s savings account statement Exh.P3A made on 11/9/2008. That payment was admitted by the plaintiff during cross examination. DW1 explained that the deposit was made on 6/09/2008 a Saturday, was first taken to the Insurance account, and then eventually picked up on the savings account and reflected on 11/9/2008. On the other hand, PEX.P5B is a deposit slip of UGX220, 000/= dated 26/09/2008. It is reflected in the plaintiffs loan Insurance Fund Account Number 1027140348167 (Exh.D3) on the same day. It was also admitted by the plaintiff in cross examination. EXH.P5C is a deposit of Shs. 15,000/= dated 26/9/2008. It was also first routed through the plaintiffs Loan Insurance Fund Account Number 1027140348167 (EXH. D3) on the same day, and then transmitted to the loan account. Those three payments were all remitted to the loan account and disbursed towards payment of the loan even before the second demand was made. They were thus not omitted from the final count as claimed.

            The same would not apply to the cheque for Shs. 1,066,000 EXH P.8. It was a deposit made by the plaintiff’s guarantor through the Bank of Africa on 27/4/09. And as conceded by DW1, it was not credited into the plaintiff’s account until 12/04/2010, nearly one year later. DW1 attributed that anomaly to what he termed “reconciliation failures”. A bank has a duty to collect all cheques paid into a customer’s account. In my view, their failure to do so in time, was breach of a fiduciary duty but not fraud as submitted by plaintiff’s counsel. By omitting to remit that payment in time, the plaintiff was wrongly charged interest of Shs. 511,680 accumulating over a period of several months that DW1 termed “penalty interest charge”. The bank conceded that they were at fault and were prepared to refund that sum. It was argued however that the sum of the cheque and wrongly computed interest would still not have affected the plaintiff’s debt to the bank.

If I may now revert to the loan agreement; the plaintiff was obligated to re-pay the loan in equal monthly installments of Shs. 532,800 each. By his own admission, he encountered financial problems as early as in the first month. His problems persisted to the extent that after the first three months, he could make no further payments. According to Exh.D2, the statement of plaintiffs Loan Account NO. 1027540349322, the balance outstanding on account by 23/04/2009 was UGX 5,071,400.66/=. The first demand notice was issued on 17/04/2009 for the sum of Shs. 5,100,000 and the plaintiff admitted that he still failed to pay within the allotted 14 days. His guarantors stepped in and paid Shs. 1,066,000/= but as conceded by the defendant, it was not credited in time. A correction was made and that sum was reflected on to the loan account on 12/4/2010. However, the defendant’s counsel is correct. Even after that sum was credited, it was not sufficient to clear the outstanding balance made in the first demand.

There is evidence to show that the plaintiff made some payments after the first demand i.e. Shs. 1,000,000 paid on 8/04/2010 and another cash deposit of UGX 500,000,/= (EXH.P.3B) on 16/4/2010. Those were admitted by the bank. A second demand notice dated 14/04/2010 was issued to the plaintiff requesting that he should pay the sum of Shs. 3, 399,000/= then outstanding on the loan. He responded by paying Shs. 1000,000/= only on 15/4/2010 and 26/4/2010 respectively, which when deducted would reduce the debt to Shs. 2,399,000. 

Clause 2 of the loan agreement provided that;

“If any installment is not paid on the due date, the whole balance of the amount loaned yet unpaid shall become immediately due and payable with interest at monthly default rate of 4%.’’


By his own evidence, the plaintiff stated that he had by the time the demand notices were issued, paid a total sum of Shs.  3,066,000/=. If a deduction  of UGX 511,680 (representing late crediting of his  Cheque N0. 0195) is made from the outstanding balance, he would still be in default as the money being demanded then had already accumulated interest due to late payments.

Parties are bound by their agreement; when the plaintiff defaulted the whole amount became due and payable. He still owed the defendant part of the laon at the time demands for it were made. I therefore find that the plaintiff was in default.

6.0       Issue Two

Whether the defendant wrongfully sold the plaintiff’s motor vehicle Reg. No. 862 Toyota Hiace.


             Counsel for the plaintiff submitted that impounding and sale of the motor vehicle Reg. No. UAE 862F Toyota Hiace was illegal. In response counsel for the defendant submitted that had the plaintiff paid in time, his payments would have been complete by May 2009 and that the motor vehicle was sold a year after that date. That the plaintiff admitted in cross that on the 5/05/2010, the motor vehicle was sold at UGX 3,480,000/= and that by that time he was expecting no money to be owing. That in fact by 14/04/2010 the plaintiff owned the defendant Shs. 3,399,000/= and there is no proof he cleared that amount. That Exh.P3B1 the plaintiffs savings Account No. 1027140347112 shows that on 5/5/2010 there was a deposit of UGX 3,480,000/= which is the same amount the motor vehicle was sold.

             In Fred Kamanda v Uganda Commercial Bank (Civil Appeal NO.17 of 1995)) [1996] UGSC 10 (15 August 1996) reference was made to The Law and Practice of Banking by J.M. Holden, 7th Edn. Vol.2 page 261. He advised that:

’’A pledge arises when goods (or documents of title thereto) or bearer securities are delivered by one person (called the pledgor to another person (called the pledgee) to be held as a security for the payment of a debt or for the discharge of some other obligation upon the express or implied undertaking that the subject matter of the pledge is to be restored to the pledgor as soon as the debt or other obligation is discharged. Where a definite time for payment has been fixed, the pledgee has an implied power of sale upon default, but if there is no stipulated  time for payment, the pledgee may demand payment and on default thereof may exercise his power of sale after giving notice to the pledger of his intension to do so.’’


            EXP2 dated 23/7/2008, is proof that plaintiff surrendered his log/registration book to the bank as a sign of his commitment to the undertaking that it was being offered as security for the loan. It was specifically provided in clause 4 that:

“In the avoidance of any doubt, in the event that the buyer (read borrower) defaults in the payment of any installments of the loan amount as and when they fall due or commits any other or further breach of the terms of and under the loan agreement the lender shall have the undisputed right to dispose of the security in realization thereof.”  

In my considered view, that document voluntarily executed by the plaintiff gave the defendant implied powers to seize and sale the motor vehicle in case of default by the plaintiff.

            It was held in the case of Equity Bank Uganda Ltd v Musolo (HCT – 01 – CV – CA – 0019 OF 2016) [2017] UGHCCD 132 (31 October 2017) that the bank had a right to claim the debt in full upon default by issuing a notice of demand/commencing legal proceedings against the respondent. According to Section 7 Chattels Securities Act No. 7 of 2014, such notice shall be in writing. Further Section 73 (1) (c) of same Act provides that where a debtor is in default, a secured party may realize collateral by sale under section 76. It is elaborated in Section 76(1) where a debtor is in default, a secured party may sell any or all of the collateral in its condition or following any commercially reasonable preparation or processing. According to Section 79; before any sale can take place, notice of 20 days has to be given.


            In the instant case, the document executed by the plaintiff gave the defendant bank power to sale the pledge without recourse to court in case of default. Clause 11 of the loan agreement provided that;

 “It is hereby agreed that if any of the moneys for the time being owing to the UML are not forthwith paid on demand or having become payable without demand, UML shall sell the borrower’s pledged property without recourse to court, by either private treaty or by public auction, whichever UML deems necessary and borrower irrevocably gives his unconditional and complete consent thereto.’’

             There is evidence that before sale of the plaintiff’s motor vehicle, two demand notices were issued; The second notice dated 14/4/2010 made a demand for payment within seven days. There was a corresponding notice in the Monitor Newspaper on Wednesday, 14/04/2010. The sale took place on 5/5/2010. The statutory 20 days had elapsed, which would make the sale valid.

            In conclusion I find that, PEX 1 and 2 executed by the plaintiff gave the defendant power to sale the motor vehicle which was the pledge for the loan, without recourse to court in case of default, which was done. It was a lawful and proper sale and the second issue is thus resolved in favour of the defendant.

            Issue 3

What remedies are available for the parties?

Since the 1st and 2nd issues have been resolved in favour of the defendant, the plaintiff has failed to prove his claim. I would accordingly decline to grant him the claim for special, general, and aggravated damages. In addition I decline to award any interest.

            However I have found that the failure of the bank to make full and proper credits of the plaintiff’s account was breach of their duty. Had the sum paid by the plaintiff’s guarantor been credited on time, the loan would not have accumulated the antecedent interest of Shs. 511, 680. The defendant conceded that that amount was owing from the bank to the plaintiff and should have been deducted when the bank offset the outstanding loan sum after sale of the motor vehicle. They did not do so and the plaintiff could not thus put it to other useful use. I accordingly grant commercial interest against that sum at the rate of 22% from 5/5/2020, until its payment in full.

            Although the plaintiff has substantially failed to prove his claim, the defendant has also been faulted for faulting a fiduciary duty of crediting a customer’s account in a timely and professional manner. It is possible that had they done so, the plaintiff would have handled his loan differently and this lengthy litigation would have been avoided. For that reason, I deny to award the defendant costs as would have been the case. Instead, I order that each party meet their costs of the suit.

I so order



Eva K. Luswata