Loan Default

Babigumira & Anor v Global Trust Bank Ltd & 3 Ors (CIVIL SUIT NO 344 OF 2013) [2017] UGCOMMC 11 (20 January 2017);


Headnote and Holding: 

The plaintiff contested the validity of the sale and transfer of its property by the first defendant, alleging the transaction was tainted by illegality and fraud. The mortgaged property was auctioned in a public sale pursuant to the terms of the credit facility agreement concluded between the parties. 

The contract permitted that the first defendant could execute the property without application to a court if the plaintiff defaulted on payment. In accordance with this provision, the first defendant advertised and sold the plot in a public auction to the second defendant who made the purchase in good faith.

The plaintiffs challenged the first defendant’s actions on several grounds with no success before the High Court. It was argued that, because the sum advanced by the first defendant fell marginally short of the anticipated amount, it did not have to perform its obligation under the contract to pay the stipulated installments, despite having received and utilised the sum advanced by the first respondent. 

The court dismissed this argument along with further technical attacks to the alleged unlawfulness of the advertisement of the auction, the sale agreement’s adherence to statutory formalities, and the first defendant’s failure to ‘release’ the plaintiff from the mortgage following the sale of the property to the second defendant. 

The judge found in favour of the defendants, ruling that the advertisement, sale and transfer of the property had occurred lawfully and did not offend any aspects of the parties’ agreement.

Subscribe to RSS - Loan Default