THE REPUBLIC OF UGANJDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

CIVIL SUIT NO. 149 OF 2010

1. ALICE OKIROR            }
2. MICHAEL OKIROR       }:::::::::::::::::::::::::::::::::::::::          PLAINTIFFS           

VERSUS

1. GLOBAL CAPITAL SAVE 2004 LTD}        
2. BEN KAVUYA                                            }::::::::::::::           DEFENDANTS                                     

BEFORE HON. LADY JUSTICE HELLEN OBURA

JUDGMENT

This suit was brought by the plaintiffs jointly and severally seeking for declaration that:- the plaintiffs have paid up the loan of Ug. Shs 53,000,000/= together with interest in full and the interest charged on the loan by the defendant is illegal, harsh and unconscionable; an order that the defendants do return to the plaintiff the Certificates of Title comprised in Kyadondo Block 253 Plot 863 at Lukuli in the name of Alice Okiror and Kyadondo Block 229 Plot 1253 land at Kireka Kamuli Zone in the name of Aguti Rose, special damages of Ug. Shs. 192,500,000/=, general damages, interest on the special and general damages as well as costs.

The defendants in their written statement of defence (WSD) denied the allegations in the plaint and contended that the 1^stdefendant advanced to the first plaintiff a medium term loan of Ug. Shs. 350,000,000/=  repayable by 20^thDecember 2008 which was secured by a legal mortgage created over land comprised in Mailo Register Block 253 Plot 863 at Lukuli Kampala. Further that the legal mortgage was duly registered vide Instrument No. KLA 423268 on 23^rdJuly 2009. The defendants denied that they accepted or received Certificate of Tile for land comprised in Block 229 Plot 1253 land at Kireka in the names of Rose Aguti as security for the loan advances. The first defendant also contended that the first plaintiff failed to repay the loan in full and only paid the sum of Ug. Shs. 230,000,000/= leaving an unpaid balance of Ug. Shs. 120,000,000/=.

In their reply to the WSD the plaintiffs stated that they never received a sum of Ug. Shs. 350,000,000 from the 1^stdefendant and maintained that the legal mortgage relied upon was invalid and unenforceable as it was not executed by the mortgagee or at all. They contended that mere registration of an invalid mortgage does not validate it or make it legal and enforceable. The plaintiffs also averred that the 1^stplaintiff signed a mortgage deed that was blank and the figures were only filled in by the defendants. Further that they initially gave the defendants a Certificate of Title for Block 229 Plot 1253 at Kireka as security for a loan of Ug. Shs 8,000,000 but when they sought for a loan of Ug. Shs. 53,000,000 they presented the title for Block 253 Plot 863 at Lukuli but the defendant refused to release the earlier title.  

At the scheduling, the agreed facts were that the plaintiffs obtained a mortgage loan from the 1^stdefendant on the 26^thday of February 2008. The loan was secured by land title comprised in Kyadondo Block 253 Plot 863 at Lukuli and a mortgage was duly registered. The parties also agreed that the plaintiffs have paid the defendants Ug. Shs. 230,000,000 in settling the loan. The defendants threatened to exercise a power of sale under the mortgage. The Certificate of Title to Kyadondo Block 253 Plot 863 is in possession of the defendants.

The parties agreed on the following issues for determination:

1. Whether the Mortgage Deed dated 26^thFebruary, 2009 between Alice Okiror & Global Capital Save (2004) Ltd was valid.
2. What was the amount of the loan advanced and secured by the mortgage?
3. Whether the 1^stdefendant charged any interest on the loan and if so how much?
4. Whether the interest charged by the defendants, if any, is unconscionable.
5. If so whether the plaintiffs have discharged their obligations.
6. Whether the plaintiffs are entitled to the remedies sought.

I find it necessary at this point to give chronology of events that took place between the time this matter was scheduled and set down for hearing and today when this judgment is delivered because they have a bearing on the conduct and progress of this case. At the scheduling, the parties agreed to adduce evidence by way of witness statements which was duly done. The plaintiff had scheduled to call three witnesses but only two filed witness statements which they were cross-examined upon. Similarly the defendant’s two witnesses filed witness statements but only one witness appeared in court for cross-examination for reason that is elaborated here below.

On 6^thApril 2011 when this matter came up for hearing, the 2^nddefendant was not in court. Counsel for the defendants informed court that he was still out of the country. Upon closure of the plaintiff’s case on the same date, the defendants could not open their case due to the absence of the 2^nddefendant who is also the Managing Director of the 1^stdefendant company. An adjournment was sought to enable him appear. Court granted the prayers and hearing of the defendants’ case was adjourned to 8^thJune 2011.

On 8^thJune 2011 an accountant in the first defendant company who had filed a witness statement was present. The 2^nddefendant who was the other witness was still reported to be out of the country despite the fact that a long adjournment was given to enable him return and testify. Court then ruled that the 2^nddefendant’s evidence be dispensed with and his witness statement be disregarded since he did not appear to be interested in giving evidence.

Court proceeded to hear the evidence of the accountant Mr. Sam Kamwada. He confirmed his witness statement already on court record and was cross examined upon it.  During cross examination of DW1, counsel for the plaintiff prayed for orders that the witness produces receipts of various payments made in respect of the transaction and the demand note. Although this prayer was made belatedly, court granted it in the interest of justice and for reason that all relevant materials if made available to court would facilitate it to arrive at a just and fair decision. In any case the defendant’s counsel had not shown that any prejudice would be occasioned to his clients by production of those documents. The matter was adjourned to 31^stAugust 2011 for further cross examination and to enable DW1 produce the documents he undertook to furnish to court.

On the 31^stAugust 2011, DW1 and counsel for the defendants did not appear in court. Counsel holding brief for the defendants’ counsel sought an adjournment and the hearing of the case was adjourned. On 19^thJanuary 2012, DW1 appeared with only two of the documents and was cross examined and re-examined on his evidence. Both counsel sought to file written submissions and time lines were set within which the same should be done. The matter was then fixed for mention to ensure compliance and give a date for judgment.

On 16^thMarch 2012, when the case came up for mention, counsel for the defendants did not appear. He had also not filed his written submission which court directed him to file by 23^rdFebruary 2012. The defendants were also absent and no explanation was provided for that turn of events.

Court then ruled that it would proceed to decide the suit on the basis of the evidence and submissions on court record in accordance with Order 17 rule 4 of the Civil Procedure Rules. The written submissions of the defendants were consequently dispensed with.

However, on the 30^thMay 2012 at around 4.00 pm as court was in the final stages of preparing the judgment, a copy of the defendants’ written submission filed by their counsel the previous day 29^thMay 2012 at 4.30 pm was brought to court’s attention. I found this rather unprofessional to say the least. For counsel to have waited for almost the eve of delivering the judgment and rushed to court with his written submission without first showing cause why he had in the first place failed to file it as directed, was in my view, conduct unbecoming of an advocate. This court had made an order to dispense with the defendants’ written submission and that order had not been set aside. I therefore do not see how the submission could just be filed as if there was no court order dispensing with it.

Be that as it may, when this matter came up for judgment on 31^stMay 2012 counsel for the defendants appeared and prayed that the order to dispense with the defendants’ submission be set aside and the defendants’ written submission that was already filed be accepted. The ground of this prayer was that counsel fell sick soon after the matter was adjourned for submissions and this prevented him from filing the submission in time and appearing in court on the date of mention. He prayed that in the interest of justice the inordinate delay caused by his ill-health should not be visited on his clients.

Counsel for the plaintiffs left the matter for court to decide but prayed that in the event that court was inclined to accept the submission, he should be allowed to make a rejoinder.

In the interest of justice, court set aside the order and accepted the submission. It observed that getting submissions from both sides would facilitate it to come up with a just and fair decision having fully listened to both sides of the dispute. Counsel for the plaintiffs was allowed to file a rejoinder and a new date for judgment was set. Counsel for the plaintiffs filed his rejoinder as allowed.

With that background highlighted, I now proceed to consider the issues agreed upon.

ISSUE 1:        Whether the Mortgage Deed dated 26^thFebruary, 2008 between Alice Okiror & Global Capital Save (2004) Ltd was valid.

On this issue, the 1^stplaintiff, Mrs. Alice Mary Anyait Okiror (PW1) stated in her witness statement that she is the registered proprietor of the property comprised in Kyadondo Block 253 Plot 863 comprising of a bungalow and a flat where she has lived with her family since 1997. PW1 informed court that with her husband they approached Mr. Kavuya sometime in 2008 for a short term loan of Ug. Shs 12,000,000/= which they secured with the title of land comprised in Kyadondo Block 229 Plot 1253 at Kireka.

It was her evidence that the Certificate of Title in the name of Aguti Rose was retained by Mr. Kavuya and that later on in February 2008 they sought to borrow and amalgamate a loan of Ug. Shs 41,000,000 from Mr. Kavuya with the earlier loan of Ug. Shs 12,000,000/= to make it a total of Ug. Shs 53,000,000/=. Further that Mr. Kavuya demanded for another security upon which she gave him the title for their home comprised in Kyadondo Block 253 Plot 863 at Lukuli.

The mortgage deed was marked as Exhibit D1.  It was also the evidence of PW1 that  she made requests in writing for extension of the loan but the words in the requests were at all times dictated by the second defendant who did not want her to state the amount owed in her requests. She further stated that she handed over the Certificate of Title for Block 253 Plot 863 to the accountant of the 1^stdefendant.

Michael Okiror, PW2 in his evidence kept insinuating that he was part of the transaction and yet the agreement shows that it was his wife who was a party and not him. He however corroborated the evidence of PW1 on the amount that was lent and that a mortgage was created over the property in dispute. He also stated that although he had agreed with his wife to borrow money, they agreed to use