GULU UNIVERSITY

NAME: AMOLA ARTHUR ISAAC

COURSE UNIT: LAND TRANSACTION

REG No: 18/U/1802/GBL/PS

LECTURER: Mr. PAUL LAYOO

Question

Discuss the similarities and differences between the new Mortgage Act and the old Mortgage Act
of Uganda.
Section 2 of the Mortgage Act, 2009 defines a mortgage as any charge over land for securing the
payment of an existing or future contingent debt. Lord Lindley in his dictum in the case of
Santley v Wilde1 also defines a mortgage to mean, ‘An assignment of chattels as security for
payment of debt.’ However, the nature of a mortgage under the Mortgage Act differs from the
Common law mortgage. This is because a mortgage created under the Act takes effect as a
security over the mortgaged and but shall not operate as a transfer of any interest in case of
default by the mortgagor and subject to all the obligations conferred in a transfer of an interest in
the land subject to redemption. Herring CJ in the case of Re Forest Trust Trustees’ Executors
& Agency Co Ltd v Anson 2 describes the effect of a mortgage creating transfers on the creditor
powers to secure the money lent. The debtor remains the owner of the land subject to fulfillment
of his or her obligations under the mortgage agreement.

The similarities of the new Mortgage Act and old Mortgage Act in Uganda is as follows;

Definition of a court as per Section 2 of the Mortgage Act Cap 8 and Section 1 (a) of the
Mortgage Act Cap 229 means a court not lower than grade 1 magistrate has jurisdiction to hear
the subject matter regarding registered and equitable mortgages.

Registered and equitable mortgages are sighted as per Section 3 (4) of the Mortgage Act Cap 8
and Section 1 (b) of the Mortgage Act Cap 229 taking effect upon registration. This is discussed
by Justice Sekandi in the case of Barclays Bank Uganda Ltd v Northcote & Another 3 stating,
‘An equitable mortgage is created by deposit of title deeds accompanied by memorandum
agreeing to execute a legal mortgage.’ This is contrasted by Lady Justice Helen Obura’s
decision in the case of DFCU Bank Ltd v Dotways Marketing Bureau Ltd & Another 4 that
duplication of certificate of title with absence of mortgage deed invalidates the creation of an
equitable mortgage.

1
[1899] 2 Ch 474

2
[1953] VLR 246

3
[1976] HCB 34

4
[2013] UGCOMMC 152
Mortgagee’s action of suing for breach of mortgage is portrayed as per Section 21 of Mortgage
Act Cap 8 and Section 2 of Mortgage Act Cap 229 upon failure of performance of any covenant
in a mortgage by the mortgagor.

Appointment of a receiver is also portrayed as per Section 22 of the Mortgage Act Cap 8 and
Section 4 of the Mortgage Act Cap 229 shall be in writing through an application made to court.
This is witnessed in the case of Grindlays Bank (U) Ltd v Edward Boaz,5 ‘Where mortgage
debt is payable on demand, a written demand for payment is equivalent to notice.’ This is
contrasted in the case of Sendagire Stephen & Nanyombi Gladys v DFCU Limited & Others 6
entrusting the receiver with the sale of mortgaged property provided the sale is documented.

Position of a receiver as an agent is sighted as per Section 22 (6) of the Mortgage Act Cap 8 and
Section 5 of the Mortgage Act Cap 229 placing responsibility for the acts and defaults of the
mortgagee’s interest in land. The order operates from the date when appointment becomes
effective while the receiver becomes entitled to possession of assets.7

Receiver’s power to demand and recover all income in mortgaged land is portrayed as per
Section 22 (7) of the Mortgage Act Cap 8 and Section 6 (2) of the Mortgage Act Cap 229. Justice
Kekewich discusses his dictum in the case of White v Metcalf,8 stating, ‘It means diverting the
income of the mortgaged land so that the money does not go to the mortgagor but the mortgagee
through the receiver.’

Power of mortgagee to take possession mortgaged of land is a creature of statute enshrined as per
Section 24 of the Mortgage Act Cap 8 and Section 7 of the Mortgage Act Cap 229 on default of
payment. Justice Harman states his classic position in the case of Four-Maids Ltd v Dudley
Marshall Properties Ltd9 that, ‘Position requires an interference with the mortgaged property
so as to amount of control and management.’ According to Uganda’s jurisdiction, Justice

5
[1992] of No 23 Supreme Court Civil Appeal

6
[2008] HCCS No 26

7
Keer on the Law & Practice as to Receivers, 16th Edition by Raymond Walton at page 150

8
[1903] 2 Ch 567
Sekandi in his dictum in the case of Epianeti Mubiru v Uganda Credit and Savings Bank
(supra)10 portrays ‘Mortgagee taking possession of premises by physically entering and taking
control of mortgaged land.’

Furthermore, mortgagee shall be bound by any covenants where land is leased as per Section 24
(5) (c) of the Mortgage Act Cap 8 and Section 7 (6) of the Mortgage Act Cap 229 placing
liability onto the mortgagee. This is discussed in the case of White v City of London Brewery
Co11 placing accountability on the mortgagee when he uses the mortgaged land for his personal
things.

Mortgagee’s power of sale is also a creature of statute enshrined under Section 26 of the
Mortgage Act Cap 8 and Section 10 of the Mortgage Act Cap 229 arising out of failure to pay
debt. This is discussed in the case of Hughes v White12 stating, ‘The exercise of the power of
sale does require default on the part of the mortgagor.’ According to Uganda’s jurisdiction,
Justice Adonyo Henry in his descending judgment in the case of Housing Finance Bank Ltd v
Mugisha Charles Lwanga13 illustrates, ‘Once demand has been made and mortgagor defaults
in payment, the mortgagee is entitled to sell without recourse to court.’

Application of proceeds of sale is by public auction clearly depicted as per Section 31 of the
Mortgage Act Cap 8 and Section 11 of the Mortgage Act Cap 229 specifying the priorities of
payment made by the mortgagor.

Registrar issuing a special certificate of title to the mortgagor is witnessed as per Section 38 of
the Mortgage Act Cap 8 and Section 13 of the Mortgage Act Cap 229 upon expiration of the time
to restore creating a mortgage. This is discussed by Lord Justice Atkins in the famous case of

9
[1957] Ch 317

10
[1978] HCB 109

11
[1889] 42 Ch D 237

12
[1957] 1 WLR 713

13
[2014] UGCOMMC 209
National Provincial and Union Bank of England v Charnley 14 stating, ‘Once a certificate has
been given by the registrar in respect to a specified document, it creates a mortgage.’

Regulations by the minister are issued as guidance is sighted under Section 41 of the Mortgage
Act Cap 8 and Section 17 of the Mortgage Act Cap 229 while determining the forms and notices
to be used while carrying out the mortgage deed.

Extinction of certain right is expressed under Section 37 of the Mortgage Act Cap 8 and Section
12 of the Mortgage Act Cap 229 empowering the registrar to give a notice 30 days to
cancellation of mortgage extinguishing the mortgagee’s right to realization of security.

Minister’s power is also a creature of statute enshrined under Section 42 of the Mortgage Act
Cap 8 and Section 14 of the Mortgage Act Cap 229 giving him control over finances, the rate of
interests in any mortgage transaction.

The following are the differences between the new Mortgage Act Cap 8 and the old
Mortgage Act Cap 229.

Section 2 (b) of the Mortgage Act Cap 8 interprets a mortgage as an interest in land restricted to
Uganda while Section 1 (b) interprets a mortgage as recovery of debt partly in Uganda and
elsewhere.

Section 5 of the Mortgage Act Cap 8 validates mortgage of matrimonial home provided evidence
is adduced by the mortgagor and the spouses living in the matrimonial home whereas the
Mortgage Act Cap 229 is silent. This is discussed by Justice Alfonse Owiny Dollo in the case of
Helen Kipsoy Wafula v Equity Bank (U) Limited & Another 15 while defining a matrimonial
home, ‘As a building where a family may occupy only part of a building and as such is not the
whole building.’

14
[1924] 1 KB 431

15
Civil Suit No 153 of 2013
Section 6 of the Mortgage Act Cap 8 reveals consent to a matrimonial home as paramount
pertaining the terms and conditions repealing the Mortgage Act Cap 229. It should be noted that
consent must be deemed fit to be genuine adduced in writing and witnessed.

Section 7 of the Mortgage Act Cap 8 gives remedy to a mortgagee where customary land is
mortgaged while the Mortgage Act Cap 229 is silent. This is illustrated in the case of Jakana v
Senkaali16 stating a mortgagee enforces his remedies when the mortgage is registered under the
Registration of Titles Act as legal or equitable. According to Uganda’s jurisdiction, Justice
Sekandi’s dictum is contrasted in the case of Y Mutambulire v Yosefu Kimera 17 as he stated,
‘A mortgagee enjoys protection from mortgaged land provided there’s registration of the
transaction.’

According to Section 8 of the Mortgage Act Cap 8, equity intervenes to give relief to mortgage
of land as security repealing the Mortgage Act Cap 229. This is illustrated in the case of Re
Forest Trust Trustees Executors & Agency Company Limited v Anson 18 where Sterring CJ
confers on the creditor merely a group of powers while the mortgagor remains the owner of the
land subject to fulfillment of his obligation under the mortgage agreement. This is contrasted by
Justice Musene in the case of Global Trust Bank v Frank Mugisha 19 where the mortgagee
confers absolute power over the property given as security upon default by the mortgagor
fulfilling his obligation.

Section 9 of the Mortgage Act Cap 8 sights priorities with respect to mortgages of land being
registered while failing to register renders such a charge as void while the Mortgage Act Cap 229
remains silent. This is sighted in the case of Guaranty Discount Co Ltd v Credit Finance Ltd20
explaining the effect of failure to register a legal mortgage renders such a charge void against the

16
[1988] HCB 167

17
H C C Appeal No 37 of 1972

18
[1953] VLR 246

19
[2012] HCCS 005

20
[1963] E A 345
liquidator. This is also modified with the decision by Justice Madrama in the case of Bank of
Africa Uganda v Ganyana & Another21 stating the official act of registration in the manner
prescribed passes an estate as security.

Section 18 of the Mortgage Act Cap 8 imposes implied covenants preventing the mortgagor from
assigning the right of ownership without consent of the mortgagee whereas the Mortgage Act
Cap 229 is silent. This enables the mortgagee to control activities of the mortgagor especially
those dealings which may prejudice his interest.

Notice upon default as per Section 19 & 20 of the Mortgage Act Cap 8 guides the mortgagee to
serve on the mortgagor notice in writing of the default allowing the mortgagor to rectify the
default within 45 working days while the Mortgage Act Cap 229 is silent. This is portrayed in the
case of Sajjabi v Klamala & Another 22 where court assesses the amount due fixing a date not
exceeding 6 months from the date of default while the Mortgage Act Cap 299 creates room for
delay in enforcement of mortgage by the mortgagee.

Section 23 of the Mortgage Act Cap 8 gives the mortgagee power to lease serving notice to the
mortgagor in the prescribed form and shall not proceed with the execution of that lease until
fifteen working days have lapsed from the service of the notice while the Mortgage Act Cap 229
is silent.

Furthermore, Section 24 of the Mortgage Act Cap 8 states the mortgagee enters into possession
after 5 days while Section 7 of the Mortgage Act Cap 229 states the mortgagee enters into
possession after 6 days.

According to Section 26 (2) of the Mortgage Act Cap 8, power of sale is after 21 working days
while Section 9 (2) of the Mortgage Act Cap 229 power of sale is after 30 working days.

Offences and penalties as per Section 39 of the Mortgage Act Cap 8 imposes liability on persons
who impersonate a mortgagor or forge documents to a fine of not less than forty eight currency

21
Civil Suit No 477 of 2011

22
[1952] 22 E A C A 71
points or imprisonment not less than 24 months whereas the Mortgage Act Cap 229 provides for
liabilities.

Section 42 of the Mortgage Act Cap 8 regulates the minister’s power through approval of
Cabinet to amend the First Schedule while Section 14 of the Mortgage Act Cap 229 gives the
minister power to regulate finances prescribing the rate of interests in Uganda.

To sum up my endorsed research, the Mortgage Act Cap 8 repeals the old Mortgage Act Cap 229
imposing new changes that are quite relevant under mortgages.

REFERENCES
Keer on the Law & Practice as to Receivers, 16th Edition by Raymond Walton at page 150

Santley v Wilde [1899] 2 Ch 474

Re Forest Trust Trustees’ Executors & Agency Co Ltd v Anson [1953] VLR 246

Barclays Bank Uganda Ltd v Northcote & Another [1974] HCB 34

Grindlays Bank (U) Ltd v Edward Boaz [1992] of No 23 Supreme Court Civil Appeal

Sendagire Stephen & Nanyombi Gladys v DFCU Ltd & Others [2008] HCCS No 26

White v Metcalf [1903] 2 Ch 567

Four-Maids Ltd v Dudley Marshall Properties Ltd [1957] Ch 317

Epianeti Mubiru v Credit and Savings Bank (supra) [1978] HCB 109

White v City of London Brewery Co [1889] 42 Ch D 237

Hughes v White [1957] 1 WLR 713

Housing Finance Bank Ltd v Mugisha Charles Lwanga [2014] UGCOMMC 209

National Provincial and Union Bank of England v Charnley [1924] 1 KB 431

Helen Kipsoy Wafula v Equity Bank (U) Limited & another Civil Suit No 153 of 2013

Jakana v Senkaali [1988] HCB 167

Y Mutambulire v Yosefu Kimera H C C Appeal No 37 of 1972

Global Trust Bank v Frank Mugisha [2012] HCCS 005

Guaranty Discount Co Ltd v Credit Finance Ltd [1963] E A 345

Bank of Africa Uganda v Ganyana & another Civil Suit No 477 of 2011

Sajjabi v Klamala & Another [1952] 22 E A C A 71