Supreme Court Holds That a Mortgage Over Family Land Is Invalid Where the Company Mortgagee’s Signatory Has No Proven Authority, the Attesting Witness Was Absent and Written Spousal Consent Is Lacking
Supreme Court Holds That a Mortgage Over Family Land Is Invalid Where the Company Mortgagee’s Signatory Has No Proven Authority, the Attesting Witness Was Absent, and Written Spousal Consent Is Lacking, and That Borrowers May Recover Excess Payments Made to a Money Lender
Coram: Tuhaise, Musoke, Madrama, Bamugemereire and Mugenyi, JJSC. Lead judgment by Tuhaise, JSC.
Appeal from: Court of Appeal Civil Appeal No. 151 of 2012 (Egonda-Ntende, Cheborion Barishaki and Kibeedi, JJA), delivered 29 June 2020; High Court (Commercial Division) Civil Suit No. 149 of 2010 (Obura, J).
OVERVIEW
The Supreme Court of Uganda dismissed an appeal by Global Capital Save (2004) Ltd, a money-lending company, and its managing director, Ben Kavuya, against concurrent decisions of the High Court and the Court of Appeal.
Writing the lead judgment, Tuhaise, JSC held that a document titled “Legal Mortgage” over the respondents’ matrimonial home was invalid because it was not duly executed on behalf of the corporate lender, was not properly attested, and lacked the written spousal consent required by the Land Act.
The Court further held that, having failed, the mortgage entitled the respondents to a refund of sums paid in excess of the loan and lawful interest, general damages, and the return of their certificate of title. The Court was unanimous on the result, but the members of the coram differed in their reasoning.
Mugenyi, JSC, in dissent, held that the Court would have allowed the appellants’ complaints on execution and the power of attorney, while Bamugemereire, JSC, declined to award special damages. The decision carries significant implications for money lenders and financial institutions that take security over residential land.
FACTS
The 1st Appellant, Global Capital Save (2004) Ltd, was a money-lending company and the 2nd Appellant, Ben Kavuya, was its Managing Director. The 1st Respondent, Alice Okiror, and her late husband, Michael Okiror, approached the Appellants for two loans which, they stated, totalled UGX 53,000,000. It was stated that, to secure the loan, they handed over a certificate of title to Kyadondo Block 229 Plot 1253 at Kireka, registered in the name of their daughter, Aguti Rose.
The 1st Respondent also signed documents, including one titled “Legal Mortgage” dated 26 February 2008, by which she mortgaged her land comprised in Kyadondo Block 253 Plot 863 at Lukuli as further security. The repayment period was to run from 26 February 2008 to 20 December 2008. The mortgage was registered on 23 July 2009 under instrument number KLA 423268. The Appellants retained the certificates of title.
It was noted that the Respondents paid UGX 230,000,000 to the Appellants but defaulted. When they asked for their titles back, the 2nd Appellant declined to release them on account of further outstanding balances. The Appellants’ position was that the 1st Appellant had advanced a medium-term loan of UGX 350,000,000, of which UGX 230,000,000 had been repaid, leaving UGX 120,000,000 outstanding. They also denied receiving the title in the name of Aguti Rose.
The Respondents sued in the High Court, seeking declarations that the loan and interest had been paid in full and that the interest charged was illegal, harsh and unconscionable, together with the return of both titles, special and general damages, interest and costs.
The trial Judge found that the mortgage was invalid for want of due execution by the company, want of attestation and want of written spousal consent. She found that the sum lent was UGX 53,000,000 at 12% per month (144% per annum), which was illegal, harsh and unconscionable, substituted an interest rate of 25% per annum, and declared the loan repaid in full. She ordered return of the Lukuli title, and awarded special damages of UGX 192,500,000 (being the excess paid) with interest, general damages of UGX 30,000,000, and costs. She declined to order return of the Kireka title, there being no evidence that the Appellants held it.
The Court of Appeal dismissed the Appellants’ appeal, save that it reduced the applicable interest rate from 25% to 20% per annum. The Appellants then appealed to the Supreme Court as a second appeal.
The Supreme Court noted that, as a second appellate court, its jurisdiction was limited to questions of law or of mixed law and fact that were before the first appellate court, and that it could depart from concurrent findings of fact only in special circumstances, citing Rule 30(1) of the Supreme Court Rules, NEMA v Solid State Ltd, SCCA No. 15 of 2015 and Kifamunte Henry v Uganda, SCCA No. 10 of 1997. It also noted that, because the appeal was filed before the 2023 revision of the Laws of Uganda took effect, it would indicate both the old and revised section numbers where practicable.
LEGAL REPRESENTATION
Mr Joseph Kyazze, holding brief for Mr Peter Nkurunziza, appeared jointly with Mr Brian Rubihayo for the Appellants. Mr Gilbert Nuwagaba appeared for the Respondents. The parties filed written submissions, which they adopted at the hearing.
SUBMISSIONS
For the Appellants
On Ground 1, counsel for the Appellants submitted that the impugned document was, by its heading and description, a mortgage deed, that the 1st Respondent had admitted signing it as such, and that it was not a loan agreement requiring the lender’s signature.
Relying on General Parts (U) Ltd v Non-Performing Assets Recovery Trust, SCCA No. 5 of 1999, it was submitted that there is no legal requirement for a mortgagee to execute a mortgage for it to be valid. It was further submitted that the requirement for a power of attorney under what is now section 130 of the Registration of Titles Act (RTA) applies to a registered proprietor and mortgagor, not to a mortgagee, and that the mandate of a company to execute documents is governed by its memorandum and articles of association and the Companies Act.
Counsel contended that, under sections 101 to 103 of the Evidence Act and Senkungu v Mukasa, SCCA No. 17 of 2014, the burden lay on the Respondents to prove that the 2nd Appellant lacked authority, and that once the loan and a registered mortgage were agreed facts, the Respondents were estopped from contesting validity.
On Ground 2, it was submitted that the 2nd Appellant was sued in his personal capacity for liability attributable to the company, that he acted only as Managing Director, and that the Respondents had neither pleaded nor proved grounds for lifting the corporate veil under section 20 of the Companies Act. Counsel relied on Luyimbazi Sulaiman v Stanbic Bank (U) Ltd, and invited the Court to hold that the 2nd Appellant was not a proper party.
On Ground 3, counsel submitted that non-attestation was never pleaded and that the deed bore the signature and stamp of the attesting witness, Mr Agaba Kakoni, so that it spoke for itself. It was submitted that the lower courts had wrongly shifted the burden of proof to the Appellants by requiring them to call Mr Agaba, contrary to sections 101 to 103 of the Evidence Act, and that the RTA overrides the Evidence Act on attestation. Counsel relied on Govindji Popatlal v Nathoo Visandjee [1960] 1 EA 361.
On Grounds 4 and 5, it was submitted that lack of spousal consent and the character of the land as family land were neither pleaded nor framed as an issue, and surfaced only in submissions. Counsel relied on Order 6 rule 1 and Order 7 rule 1 of the Civil Procedure Rules, Fang Min & Crane Bank Ltd v Belex Tours & Travel Ltd, SCCA No. 5 of 2013, Luyimbazi Sulaiman v Stanbic Bank and Tororo Cement Co Ltd v Frokina International Ltd, SCCA No. 2 of 2001, for the proposition that parties are bound by their pleadings and courts cannot invent their own issues.
On Ground 6, counsel submitted that there was a valid legal mortgage, that the Respondents had failed to repay the loan, and that the Court of Appeal had therefore erred in awarding special and general damages on the basis of inadmissible oral evidence and without regard to the outstanding loan.
For the Respondents
On Ground 1, counsel for the Respondents submitted that the Court of Appeal had properly re-evaluated the evidence and correctly found that the document had features of both a mortgage and a loan agreement, and that as a loan agreement it required signature by both parties. He invoked the definition of “mortgage” in the then Mortgage Act, Cap. 229, which included a “loan agreement”.
It was submitted that the 2nd Appellant could not execute the deed without a power of attorney, and that the Appellants had shown no resolution or other nomination authorising him. Relying on sections 132 and 146 of the RTA, General Parts and Zaabwe v Orient Bank Ltd, SCCA No. 4 of 2008, counsel contended that a company could execute only by affixing its seal or acting through an appointed attorney, and that the RTA prevails over the Companies Act by virtue of section 2 of the RTA.
On Ground 2, it was submitted that the plea of no cause of action was never raised as a preliminary objection, was not among the agreed issues and was not taken up in the Court of Appeal, so that it was being raised belatedly. Counsel relied on Julius Rwabinumi v Hope Bahimbisomwe, SCCA No. 10 of 2009. In the alternative, it was submitted that the 2nd Appellant filed a witness statement but failed to attend to be cross-examined, and that the UGX 230,000,000 was paid into the joint account of the 2nd Appellant and his wife.
On Ground 3, counsel submitted that paragraph 3 of the reply to the written statement of defence put the validity and attestation of the mortgage in issue, and that the concurrent finding of non-attestation rested on the 1st Respondent’s evidence that she did not know Mr Agaba, that only Mr Kavuya and an accountant known to her as Sam were present when she signed, and that she did not see Mr Kavuya sign. It was submitted that under section 67 of the Evidence Act it was for the party relying on a document required by law to be attested to produce the attesting witness.
On Grounds 4 and 5, counsel submitted that validity was pleaded in the reply, that spousal consent was raised in the Respondents’ witness statements and not at the submission stage, and that the Court of Appeal had relied on Elizabeth Nalumansi v Jolly Kasande, SCCA No. 10 of 2015 and Rule 2(2) of the Court of Appeal Rules for the court’s power to consider a legal issue not framed by the parties.
On Ground 6, counsel submitted that the Appellants had failed to identify the oral evidence said to be inadmissible or the provisions of the Money Lenders Act said to be inapplicable. It was submitted that the awards flowed from the invalidity of the mortgage and the Appellants’ failure to prove advancement of UGX 350,000,000, that the extrinsic evidence was admissible under section 92(a) of the Evidence Act, and that the rate of 20% applied by the Court of Appeal would in fact increase the excess interest.
COURT’S FINDINGS
Lead Judgment of Tuhaise, JSC
Ground 1: nature of the instrument and execution by the company
The Court noted that exhibit D1 was a photocopy, the original having never been produced, and that the Court of Appeal’s reference to it as “exhibit P1” was probably an error. Tuhaise, JSC observed that, although the title indicated a mortgage deed, the wording of the body showed features of both a mortgage deed and a loan agreement, and the lower courts had therefore considered the elements of both.
The Court agreed with the Appellants that a company’s mandate to execute documents is governed by its memorandum and articles and the Companies Act, but held that where registered land is involved section 2(1) of the RTA applies. That section provides that, except where expressly enacted to the contrary, no Act or rule inconsistent with the RTA applies to land under its operation. Relying on Mulenga, JSC in General Parts, the Court held that the RTA provisions on execution prevail over any inconsistent provision of the Companies Act.
The Court held that General Parts had been cited out of context. It observed that:
“While it is correct that the requirement for a power of attorney in the case of General Parts Ltd related to the appellant in that case as a mortgagor and registered proprietor of land, it does not necessarily follow, as the Appellants’ counsel argues, that, in this case, since the Appellant was the mortgagee, the requirement to avail or prove authorization to sign by way of power of attorney did not apply.”
It was noted that the deed bore no seal of the 1st Appellant and that there was no company resolution, provision in the articles or other evidence that the 2nd Appellant was empowered to execute a mortgage on the company’s behalf. Failing such proof, a power of attorney explicitly mandating the director to execute the instrument “would have sufficed”.
The Court accordingly found the lower courts’ questioning of the 2nd Appellant’s mandate to be “well founded”, upheld the finding that D1 doubled as a mortgage deed and loan agreement and was not duly executed by the 1st Appellant, and held that Ground 1 failed.
Ground 2: whether the 2nd Appellant was a proper party
The Court noted that although paragraph 6 of the written statement of defence pleaded that no cause of action was disclosed against the 2nd Appellant, he did not raise a preliminary objection at trial, and did not make the matter a ground of appeal in the Court of Appeal, let alone seek leave of the Supreme Court to argue a new ground. Citing Rule 98(a) of the Supreme Court Rules, the Court held that the issue was “alien to the instant appeal” and that resolving it would serve “only academic purposes”. Ground 2 was rejected.
Ground 3: attestation
The Court found from paragraph 3 of the reply to the defence that invalidity of the mortgage had been pleaded. It noted that the Court of Appeal had cited section 148(2) of the RTA (now section 132(2)) in error, since that provision deals with signatures in Latin character, and that the correct provision was section 147(1) (now section 131(1)), which requires attestation by at least one witness.
Referring to Black’s Law Dictionary for the meaning of an attesting witness, the Court held that the witness needed to be present to verify and witness the signatures of the parties, and that the evidence on record was not satisfactory that the 1st Respondent’s signature was attested.
On the burden of proof, the Court held that it had not been wrongly shifted. It observed that:
“Once evidence of non attestation was adduced by the Respondents/Plaintiffs, the burden or duty to rebut that evidence shifted to the Appellants/Defendants, as the ones who tendered exhibit D1 in evidence, by, for instance, availing the attesting witness to prove that the document was attested, which they did not do.”
The Court rejected the argument that the RTA overrides the Evidence Act, holding that the two statutes “could be read or applied together”. Section 147 of the RTA prescribes attestation but does not govern rules of proof, so that when execution of a document is challenged, the party relying on it must meet the evidentiary standards of sections 66, 67 and 68 of the Evidence Act.
The Court also remarked that the Appellants’ statement that, once registration was confirmed, attestation “could be questioned” was probably a typographical error for “could not be questioned”. Ground 3 failed.
Grounds 4 and 5: spousal consent
The Court accepted that spousal consent was not pleaded in the plaint or the reply, and that the matter first came to the trial court’s attention in the Respondents’ witness statements, which stated that the mortgaged land was where they ordinarily lived and that the 2nd Respondent never consented to the loan.
It noted the cardinal principle that parties are bound by their pleadings, but held, on the authority of Makula International v Cardinal Wamala Nsubuga [1982] HCB 11, that once an illegality is brought to the attention of court, it cannot be allowed to stand. It further held that issue one at trial, on the validity of the mortgage, was “very broad” and allowed the trial Judge to consider all elements of a valid mortgage.
The Court endorsed the Court of Appeal’s reliance on KABU Auctioneers v F.K. Motors, SCCA No. 19 of 2009, for the principle that a court may base a decision on an unpleaded matter if it appears from the course followed at trial that the issue was left to the court for decision. It observed that the Appellants had the opportunity to respond, and no miscarriage of justice was occasioned. It held that section 39 of the Land Act (now section 40, Cap. 236) is mandatory, and that:
“The unrebutted evidence that there was lack of spousal consent rendered the mortgage deed void, and the learned justices of Appeal correctly held so.”
Grounds 4 and 5 failed.
Ground 6: damages
The Court noted that the Appellants had failed to show which oral evidence was inadmissible, and that there was a concurrent finding that the mortgage and loan agreement were invalidated for non-execution, non-attestation and want of written spousal consent. It held that the Respondents proved the special damages, that the general damages were in the court’s discretion, and that the 20% interest rate was in line with the prayer in the plaint. The Court declined to interfere, and Ground 6 failed.
Concurring Opinion of Bamugemereire, JSC (dissenting on special damages)
Bamugemereire, JSC stated that she was in “full agreement with the ultimate determination of this appeal”, but appended a concurring opinion to explain doctrinal issues she considered essential.
Nature of a mortgage.
It was held that a mortgage is by its nature predicated on an underlying loan, and that including loan provisions in a mortgage deed does not alter its character as a security instrument. The true intention of the parties, as discernible from the whole document, is the determining factor. She relied on section 2 of the Mortgage Act, Cap. 239, which defines a mortgage as including any charge or lien over land securing a debt.
Spousal consent.
She emphasised that section 39 of the Land Act (cited as Cap. 227) requires prior written spousal consent, but that the requirement “is not presumed; it must be explicitly alleged and substantiated with evidence”. Courts must not invalidate a mortgage or transfer unless it is first established by credible evidence that the land is family land and that the requisite consent was not obtained.
Damages and unjust enrichment.
She noted that damages may be awarded where oppressive conduct is shown, but that courts must prevent unjust enrichment. The object is to restore the injured party to the position it would have occupied but for the wrong, and not to grant compensation “disguised as restitution”.
Relying on Zaabwe v Orient Bank Ltd and Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, she held that restitution is limited to the benefit conferred and is subject to the defence of change of position. Because the Respondents had received the loan proceeds and given property as security, she would concur in the orders of Tuhaise, JSC “save for the award of special damages, which I would disallow”.
Separate Opinion of Mugenyi, JSC (dissenting on Ground 1 and on costs)
Mugenyi, JSC agreed with the final outcome but respectfully took a different view on some questions of law. Her Lordship framed five issues, admissibility of extraneous oral evidence to prove documents; non-endorsement of a mortgage deed by a mortgagee; power of attorney for execution; failure to prosecute a point of law; and determination of unpleaded issues.
Nature of the instrument (Ground 1(i))
Mugenyi, JSC held that section 1(b) of the then Mortgage Act, Cap. 229, merely brought within the definition of a mortgage any instrument creating a charge over land, and made no provision for a hybrid of a legal mortgage and loan agreement. Applying sections 91 and 92 of the Evidence Act, Uganda Revenue Authority v Mabosi and General Industries (U) Ltd v NPART, she held that a document should speak for itself and the intention of the parties was important. Clause 1 of the deed showed that its essence was a legal mortgage, with the debt terms incidental to the security. It was noted that, ideally, the loan and security terms should be in separate instruments and the Mortgage Regulations, 2012 specimen followed, but that courts “ought not to be quick to attribute hybrid arrangements” to references to underlying loan obligations.
In the alternative, she held that even if the deed were a hybrid, the loan arose under a money-lending arrangement governed by section 6(1) of the then Money Lenders Act, Cap. 273, which requires the borrower’s signature but is silent on the lender’s. She would therefore have overruled the concurrent findings and allowed Ground 1(i).
Execution and power of attorney (Ground 1(ii))
Mugenyi, JSC held that the absence of a mortgagee’s signature does not of itself invalidate a mortgage, because under section 115 of the then RTA a mortgage is created when the proprietor signs the prescribed form.
Relying on Zaabwe v Orient Bank, she held that a company may under section 132(1) of the RTA opt for signatures in place of its seal, provided the signatories’ identity and designation are indicated, as was the case here since the 2nd Appellant signed as Director.
She held that sections 146(1) and (4) of the RTA apply to proprietors of land, leases or mortgages, and, relying on General Parts v NPART [2000] UGSC 10, that the requirement relates to a mortgagor and not to a mortgagee. She therefore disagreed with the Court of Appeal and would have allowed Ground 1(ii).
Ground 3: attestation
Mugenyi, JSC held that the reply to the defence raised non-execution and questionable attestation. She regarded the 1st Respondent’s not knowing the witness as irrelevant, but agreed with the Court of Appeal that section 148(2) of the RTA “by implication necessitates the presence of the attesting witness at the execution of the instrument”.
She held that section 92 of the Evidence Act concerns the terms of a document and does not bar oral evidence on execution or attestation, and that section 92(a) expressly permits proof of “want of due execution”. On the burden of proof, she held that the legal burden lay on the Respondents under sections 102 and 103, but once they adduced prima facie evidence of improper attestation the evidential burden shifted to the Appellants, who adduced none.
Ground 3 failed.
She added that improper attestation would not necessarily negate the mortgage relationship. Relying on section 129(1) of the then RTA and General Parts v NPART [2006] UGSC 3, she held that the deposit of the title with intent to create security created an equitable mortgage.
Grounds 4 and 5 unpleaded issues and spousal consent
Relying on Sinba (K) Ltd v Uganda Broadcasting Corporation, General Parts v NPART [2000], Order 15 rule 5(1) of the Civil Procedure Rules and Hwan Sung Industries Ltd v Taidin Hussein, she held that a court may decide an unpleaded matter where the parties have led evidence and addressed the court on it, and that a trial court may frame additional issues provided the parties are heard on them, as also required by Fang Min.
The Appellants had ample opportunity to counter the evidence on spousal consent and did not seize it, and “equity aids the vigilant”. It was noted that under rule 3 of the Mortgage Regulations, 2012, the onus of ascertaining the spousal status of an intending mortgagor is on the mortgagee, carrying an inferred duty of due diligence. Under section 39(1) of the Land Act, spousal consent is a condition precedent to formation of the contract and “goes to the root of a mortgage, whether legal or equitable”, so that failure to secure it renders the mortgage void. Grounds 4 and 5 failed.
Grounds 2 and 6 joinder and remedies
On Ground 2, she held that the preliminary objection was pleaded but never argued and could not be raised for the first time in the Supreme Court (Rwabinumi v Bahimbisomwe).
On Ground 6, she held that since the equitable mortgage was void for want of spousal consent, the Respondents were entitled to remedies, and she noted that section 12 of the then Moneylenders Act, Cap. 273, presumes interest above 24% per annum to be excessive and the transaction harsh and unconscionable. The interest rate was a question of fact on which the Court must defer to the lower courts, and she agreed with the lead judgment in declining to interfere with the damages.
On costs, because the Appellants had emerged partially successful, she would have awarded the Respondents 50% of the costs in the Supreme Court and the courts below.
HOLDING
The Supreme Court held that the appeal be dismissed and the decision of the Court of Appeal upheld. The Court held that:
The instrument dated 26 February 2008 was not duly executed on behalf of the 1st Appellant, there being no proof that the 2nd Appellant had authority to sign for the company and no company seal.
The mortgage was not duly attested, the purported attesting witness not having been present at execution, and the Appellants having failed to call him or otherwise rebut the 1st Respondent’s evidence.
The mortgage was void for want of the prior written spousal consent required by the Land Act, which the trial court could properly consider although it was not pleaded, the Appellants having had an opportunity to respond.
The Appellants’ complaint on the 2nd Appellant’s joinder was not before the Court, having been neither argued at trial nor raised in the Court of Appeal.
The Respondents were entitled to remedies for the harsh and unconscionable interest charged, and the Court would not interfere with the concurrent findings on interest and damages.
The Court accordingly made the following orders:
Order | Decision | Dissent |
Special damages of UGX 192,500,000 (the excess paid) to the Respondents, with interest at court rate from the date of filing suit in the High Court until payment in full | Majority, 4 to 1 | Bamugemereire, JSC |
General damages of UGX 30,000,000, with interest at court rate from the date of the High Court judgment until payment in full | Unanimous | None |
Appellants to return to the 1st Respondent the certificate of title for Kyadondo Block 253 Plot 863, Lukuli, with immediate effect | Unanimous | None |
Costs in the Supreme Court and the courts below awarded to the Respondents | Majority, 4 to 1 | Mugenyi, JSC (would award 50% of costs) |
Musoke, Madrama, Bamugemereire and Mugenyi, JJSC agreed with the lead judgment, save that Mugenyi, JSC dissented and would have allowed Ground 1, and Bamugemereire, JSC dissented on the award of special damages.
Read the full decision
KEY TAKEAWAYS
1. A company mortgagee must be able to prove its signatory’s authority
The majority held that, where registered land is concerned, the RTA execution provisions prevail over the Companies Act, and that a corporate mortgagee signing through a director should show authority by seal, resolution, articles or power of attorney. Mugenyi, JSC took a contrary view, holding that a mortgagee need not execute at all and that a company may sign through a designated director. Lenders should nonetheless keep proof of signatory authority on file.
2. Hybrid instruments carry risk
The Supreme Court observed that a document headed "Legal Mortgage" was in substance a hybrid of a mortgage deed and a loan agreement, because its body used loan-agreement language such as "it is hereby agreed". As a loan agreement, it required execution by both parties. Bamugemereire and Mugenyi, JJSC took the view that such a document should be treated as a mortgage, but that was not the view of the majority. Lenders should therefore use a separate loan agreement and mortgage deed, in line with the Mortgage Regulations, 2012.
3. Attestation is a substantive validity requirement
Where attestation is challenged, the party relying on the deed must call the attesting witness or satisfy sections 67 and 68 of the Evidence Act. The RTA and the Evidence Act operate together, and a signature and stamp on the face of the deed are not conclusive.
4. Lack of written spousal consent renders a mortgage over family land void
The Court treated section 39 (now 40) of the Land Act as mandatory. The majority and Mugenyi, JSC allowed the issue to be determined even though it was unpleaded, because evidence was led and the Appellants could respond. Bamugemereire, JSC, however, stressed that it must be alleged and proved. Mugenyi, JSC also identified a mortgagee’s duty of due diligence to establish the mortgagor’s spousal status. Lenders should obtain and retain signed spousal consent for residential property.
5. Parties are bound by their pleadings
Courts may decide unpleaded matters, particularly those touching on illegality, where they arise from the evidence and the opposing party has had a fair opportunity to respond. Trial courts that frame new issues must hear the parties on them.
6. A ground not raised in the Court of Appeal cannot be argued in the Supreme Court without leave
Under Rule 98(a) of the Supreme Court Rules, a point that was pleaded but never pursued at trial or on first appeal will be treated as abandoned.
7. A failed security does not defeat the borrower’s remedies
Where the mortgage fails, a borrower may still recover the excess paid under the Money Lenders Act, which presumes interest above 24% per annum to be excessive and the transaction harsh and unconscionable. Courts will defer to concurrent findings of fact on the interest charged.
8. Remedies for unconscionable lending must be restitutionary
Bamugemereire, JSC cautioned that relief should restore the parties to their pre-transaction position and must not produce a windfall, reasoning that may shape future arguments on damages. Mugenyi, JSC noted that a failed legal mortgage may take effect as an equitable mortgage by deposit of title, although the lack of spousal consent defeated that here.
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