High Court Grants Eviction Order for Vacant Possession Post-Mortgage Foreclosure, Affirming that Eviction and Possession Orders Do Not Extinguish Substantive Claims of Fraud, Illegality, or Ownership.

Waboga David
Sep 21
8 min read

Introduction

The law on mortgages in Uganda is straightforward; when a mortgagor defaults, the mortgagee is entitled to realize the security in order to recover the outstanding loan. The scheme of the Mortgage Act is built on this simple principle of commercial certainty. Yet, as practice has shown, defaulting borrowers frequently resort to tactics aimed at delaying repayment or obstructing foreclosure, filing multiple suits, raising allegations of fraud, or exploiting technicalities in statutory compliance. Such maneuvers frustrate the very purpose of mortgage law and threaten confidence in the credit system.

Faced with this reality, the courts have become increasingly practicle and placed themselves in the shoes of the lender, ensuring that the remedial objectives of the Mortgage Act are upheld while maintaining fair safeguards for borrowers.

This judicial approach was firmly articulated in Housing Finance Bank Ltd v Silk Events Ltd (High Court Civil Appeal No. 0300 of 2021). In that case, the respondents sought to invalidate credit facilities on grounds of non-compliance with the Mortgage Act and its Regulations, successfully obtaining an injunction against foreclosure. On appeal, Justice Stephen Mubiru overturned the injunction, stressing that provisions such as Regulation 13(1) on valuation and sale must be interpreted within their full legislative and policy context. The court cited Lord Denning’s observation in Escottigne Properties Ltd v Inland Revenue Commissioners [1958] 1 All ER 406 that a statute “is not passed in a vacuum, but in a framework of circumstances, so as to give a remedy for a known state of affairs.”

The court emphasised that the purpose of the Mortgage Act is not to furnish borrowers with technical loopholes to stall repayment but to balance borrower protections with the lender’s legitimate right to prompt enforcement. Technical breaches should not be elevated above the broader policy goals of market stability, efficient debt recovery, and suppression of mischief. This principle has since guided judicial reasoning in mortgage disputes.

In applying this reasoning, the High Court has in the recent case of Cairo Bank Uganda v Banga Michael Ssemugabi and Another (Miscellaneous Application No. 1406 of 2025) [2025] UGCommC 336 (20 September 2025), reaffirmed the principle that once a mortgagee has lawfully exercised its statutory power of sale and complied with notice requirements, eviction and vacant possession must follow, even where borrowers raise parallel suits alleging irregularities. Just as in Silk Events, the Court emphasised that Section 23 of the Mortgage Act must be construed purposively to ensure lenders can deliver possession to purchasers without undue delay, thereby preserving commercial efficiency.

Together, these decisions signal a firm judicial trend, while borrowers retain the right to challenge fraudulent or unlawful foreclosure in appropriate proceedings, they cannot weaponize unsubstantiated claims or technical arguments to block lawful recovery. Courts are now more willing to grant eviction and possession orders post-foreclosure, ensuring that the mischief of delay is curbed and that the remedy of efficient debt recovery is advanced.

Facts

The applicant, Cairo Bank Uganda Limited, extended a credit facility of UGX 412,000,000 to the respondents on February 12, 2020, secured by a mortgage over Kyadondo Block 244 Plot 4646 (the "mortgaged property") at Kisugu, plus an additional property in Luwero District. The loan, at 22% interest per annum over 60 months, was intended for constructing school facilities and repaying a prior Centenary Bank loan.

The respondents defaulted on repayments.

On November 17, 2022, the applicant issued a Notice of Default demanding UGX 617,963,988 within 45 working days, per Section 18 of the Mortgage Act. Upon non-compliance, a Notice of Sale followed on January 16, 2023, and the property was advertised for public auction on May 13, 2024.

In response, the respondents filed Civil Suit No. 624 of 2024 and Miscellaneous Applications Nos. 1051 and 1053 of 2024, seeking injunctions against the sale. On July 16, 2024, the court granted a conditional injunction in Misc. App. No. 1053, requiring a 30% deposit (of the outstanding loan or forced sale value) within 45 days.

The respondents failed to comply.

The applicant re-advertised the property on October 14, 2024, and February 7, 2025. It was sold at auction to Dr. Byarugaba Jover for UGX 850,000,000 on May 19, 2025, with title transferred to her on June 13, 2025. The sale proceeds cleared the respondents' debt of UGX 638,174,439, crediting a surplus of UGX 97,362,926 (less fees) to their account on July 3, 2025.

On November 18, 2024, and June 30, 2025, the applicant demanded vacant possession, but the respondents refused, citing ongoing efforts to settle the debt. The respondents later filed Civil Suit No. 1060 of 2025 against the applicant, purchaser, and Cairo Bank, alleging fraudulent sale, improper notice service, and breach of an alleged UGX 1,000,000,000 facility (of which only UGX 412,000,000 was disbursed).

The applicant sought vacant possession/eviction orders after the respondents refused to vacate despite full repayment of the loan through sale proceeds.

The respondents opposed, alleging fraud, illegalities, breach of contract, and argued that the matter could only be resolved in pending Civil Suits 624 of 2024 and 1060 of 2025.

Issues

The court framed the following issues under Order 15 r. 3 CPR

Whether the application was competent before the court.
Whether the applicant was entitled to vacant possession of the mortgaged property.
Whether granting the application would render the pending suits nugatory.

Submissions

Applicant

The Applicant submitted that the application is competent under Section 23(2)(c) of the Mortgage Act, which allows court orders for possession without prescribing a specific procedure; Notice of Motion suffices, especially with pending suits.

All statutory steps were followed: valid mortgage, default notice (served per deed via post), sale notices, public auction, and surplus credited to respondents.

Respondents' allegations of fraud, partial disbursement, and improper service are unsubstantiated and should be resolved in pending suits; possession is a separate procedural right.

Failure to grant possession would breach the applicant's contract with the purchaser and cause irreparable loss.

Respondents

The Respondent submitted that the application is incompetent, as it should have been by Originating Summons under Order 37 r. 4 CPR, given the legal nature of the claim; Notice of Motion is irregular and an abuse of process.

Disputed facts (e.g., fraud in sale, illegal mortgage creation post-sale, bad-faith service despite known address, and breach of a larger UGX 1,000,000,000 facility) require full trial in pending suits, not summary eviction.

Granting possession would moot the suits, causing substantial loss of proprietary interest without hearing on merits; the applicant concealed repayments and acted mala fide.

Court’s Findings

Issue 1: Competence of the Application

The court rejected the respondents' plea for Originating Summons, noting it suits uncontested legal issues without pending suits (none here, as related Civil Suits Nos. 624/2024 and 1060/2025 involve the same parties/subject matter).

Filing by Notice of Motion was proper in this context since there are pending suits as it aligns with Section 98 CPA and Section 33 of the Judicature Act, avoiding multiplicity of proceedings.

Dismissing on a technicality would amount to abuse of court process.

No prejudice to respondents' fair hearing was shown, and the Mortgage Act does not mandate a specific mode as such the Court found the application to be competent.

Issue 2: Entitlement to Vacant Possession

Drawing on Section 23 of the Mortgage Act, the court affirmed the mortgagee's power to seek possession post-default cure period (45 days under Section 18) and five-day notice of intent. "Vacant possession" ensures exclusive use free of occupants.

The Court noted that there was statutory compliance of the default notice (November 17, 2022) which was validly served via post, per Clause 8(h) of the Mortgage Deed as such, the proof of posting suffices.

The Court further noted that the Respondents’ institution of suits challenging the sale confirmed knowledge of the notices.

The purchaser was entitled to possession, and the applicant was obligated to hand it over.

The Court interpreting Section 23's heading which states "Power of mortgagee to take possession" the text promotes lender security, borrower due process, and market stability citing Housing Finance Bank Ltd v. Silk Events Ltd [2021] and Heydon's Case.

An overview

These authorities emphasize a purposive approach to statutory construction, focusing on legislative intent, policy objectives, and remedying defects in the law, rather than a strict literal reading.

This allowed the court to affirm the mortgagee's broad powers to seek vacant possession post-default, balancing lender protections with borrower safeguards.

In Housing Finance Bank Ltd v. Silk Events Ltd (High Court Civil Appeal No. 0300 of 2021) centered on a dispute over three credit facilities extended by Housing Finance Bank Limited (the appellant) to Silk Events Limited and another (the respondents). The respondents had sued the bank, seeking declarations that the facilities were invalid due to non-compliance with statutory requirements under the Mortgage Act and related regulations, including improper security enforcement and loan structuring.

The bank appealed an interlocutory ruling granting the respondents an injunction against foreclosure, arguing that the lower court misapplied Regulation 13(1) of the Mortgage Regulations (on valuation and sale procedures).The appellate court, per Justice Stephen Mubiru, overturned the injunction, holding that statutory provisions like Regulation 13(1) must be interpreted in their full contextual "framework of circumstances" to advance Parliament's remedial goals, such as efficient debt recovery and market stability, rather than allowing technical breaches to frustrate enforcement.

Quoting Lord Denning in Escottigne Properties Ltd v. Inland Revenue Commissioners [1958] 1 All ER 406, the judgment stressed:

"A statute is not passed in a vacuum, but in a framework of circumstances, so as to give a remedy for a known state of affairs." It further invoked policy as a decisional factor, noting that even detailed regulations incorporate equitable and practical reasons to "suppress the mischief in the law and advance the remedy."

Relation to the Eviction Ruling

The court in the Cairo Bank case directly cited this precedent while construing Section 23 (on mortgagee possession powers) to emphasise similar policy imperatives: protecting lenders' security through due process (e.g., notices and auctions) while ensuring borrower interests via cure periods and judicial oversight.

Just as in Silk Events, the ruling rejected a narrow interpretation that could enable "evasions" (like unsubstantiated fraud claims) to delay possession, promoting economic efficiency in Uganda's mortgage framework.

This reinforced granting the eviction order despite the respondents' pending suits alleging irregularities.

The court thus observed that the Respondents' fraud/illegality claims are for pending suits; they do not bar possession, as the sale was complete, surplus credited, and title transferred.

The applicant is entitled to possession.

Issue 3: Impact on Pending Suits

The Court observed that possession orders are procedural (akin to interim injunctions), determining interim use without resolving ownership/fraud claims. Pending suits remain viable; any respondent loss (e.g., if suits succeed) is compensable by damages, with no evidence the applicant (a bank) is impecunious.

Grant of possession does not determine ownership or fraud issues; those remain for trial. Any loss suffered can be compensated in damages.

Therefore, granting possession would not render pending suits nugatory.

Holding

The application succeeded.
Respondents were ordered to deliver vacant possession of Block 244 Plot 4646 Kyadondo, Kisugu to the applicant for handover to the purchaser.
Costs were awarded against the respondents.

Key Takeaways

Courts will not dismiss applications purely for wrong procedure where no prejudice is shown and pending suits exist.
Service by post is valid where agreed under the mortgage deed, and subsequent litigation by the borrower evidences knowledge.
The Mortgage Act entitles a mortgagee (and ultimately the purchaser) to possession once statutory notices are complied with.
Eviction and possession orders do not extinguish substantive claims of fraud, illegality, or ownership disputes, they proceed separately.
Courts balance lender’s security interests with borrower’s rights by ensuring compliance with statutory notice and preserving remedies in damages.

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