Anges Nagujja wanted to buy a plot of land in Kavumba, Wakiso.
The land was valued at Shs 76 million, but since she had part of the money, she approached Centenary Bank for a Shs 30 million loan.
In July 2022, the bank agreed to lend her the money, but according to the loan agreement, Nagujja was supposed to pay back the loan in three years at an interest rate of 28% per year.
Her monthly instalment was Shs1.2 million. She offered her kibanja at Buloba and the Kavumba plot she intended to buy as security.
Nagujja, who lives and trades in South Sudan, later fell behind after paying about three instalments.
In December 2022, Centenary sent a notice of default, and five months later, in May 2023, it put up her properties for sale.
In June 2023, recovery agents hired by the bank pasted “Bank property for sale” on the walls of her Buloba kibanja; then, on September 28, 2023, the Kavumba plot, for which she had borrowed the money, was sold to John Sekyanzi for Shs 56 million.
The bank deducted its loan of Shs 30 million and its costs of about Shs 3.6 million, leaving about Shs 22 million in Nagujja’s account.
On October 19, 2023, Sekyanzi was registered as owner of the Kavumba plot, but Nagujja stayed on the land and kept farming it.
Police later arrested her after Sekyanzi complained of trespass.
After Nagujja was freed on police bond, she sued Centenary Bank and Sekyanzi. She argued that she believed only her kibanja was pledged as security and that since she was not well conversant with English, nobody explained the papers to her in Luganda.
She wanted the loan and mortgage declared void, and the sale declared illegal.
However, Centenary Bank denied wrongdoing and its manager, Godfrey Tibishangwa Mafaari, said the loan was secured by both properties and that an independent adviser, John Paul Omony, had explained the papers to her.
Sekyanzi also countersued, insisting he was an honest buyer who had never enjoyed peaceful possession.
Emmanuel Balemezi of KSMO Advocates represented Nagujja, Silas Baguma of Kalenge, Bwanika, Kisubi & Co Advocates acted for Centenary Bank while Winnie Namayenje of Lubulwa Peter & Co Advocates represented Sekyanzi.
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After hearing the arguments, Justice Anna Mugenyi noted that Nagujja herself arranged for the land title to reach the bank on the day she signed.
“It defies commercial sense, and I do not accept that a lender advancing money expressly to enable a borrower complete the purchase of a specific parcel of land would simultaneously agree to leave that same parcel entirely unsecured,” she said.
She also pointed out that Nagujja never asked for the title back in the 13 months before the sale.
On whether the plot could be mortgaged before it was in her name, she said the mortgage was registered on August 18, 2022, after Nagujja became the registered owner on July 26, 2022. She therefore found no fraud and no undue influence.
However, Justice Mugenyi said the bank was not blameless. She doubted the independent advice form, which was titled for a “Matrimonial Home” handed to Nagujja, yet she was not married.
“I do not treat that certificate as reliable proof that independent advice specific to this transaction was given,” she said.
Turning to the notices issued by the bank, Justice Mugenyi said that since Nagujja had not given any postal address, the law required the bank to publish its default notice in a newspaper.
She said it did not, since the post office receipts showed the bank was both the sender and receiver at P.O. Box 1892, Kampala.
“On the face of its own postal record, the bank not only addressed the notices to two different addresses but also ended up posting both notices to itself,” she said.
She said even if the bank had chosen to drop a copy of the notices at Nagujja’s home, or sent them through WhatsApp, that still would not have been right.
“A mortgagor’s admitted default does not, without more, trigger a valid power of sale,” she said, adding that the foreclosure was unlawful.
Sekyanzi, who bought Nagujja’s Kavumba plot, however, was protected. Justice Mugenyi accepted that he checked the notices, visited the land and asked a neighbour and the local council chairperson, who gave him written confirmation.
“A purchaser exercising reasonable diligence cannot be expected to interrogate a mortgagee’s internal postal records,” she said, and she refused to cancel the sale.
So Nagujja lost the land but won something. Justice Mugenyi ordered the bank to pay her Shs 5 million in general damages, with 10% yearly interest from the date of judgment.
She said Nagujja had been deprived of the fair opportunity that proper notice is designed to secure.
On the issue of costs, Nagujja and Centenary Bank were told to each bear their own costs, but Nagujja was told to pay Sekyanzi’s costs in the main suit and in the counterclaim.
