“I, Ali Haji Musa Jamil Kamya of P.O. Box 1005 Kampala, hereby give as security my land title, in original form, of Block No. 110,
Plot No. 2192, District of East Buganda to Nakasero Soap Works Ltd. Against the credit they are giving my son Siira Amisi, Managing
Director of Uganda Best Tea Limited, P.O. Box 516 IGANGA, for their products (Soap, Sweets and utensils). Nakasero Soap Works is
at liberty to lodge a caveat on the title deed they are holding as security.
Signed…
Ali Haji Musa Jamil Kamya
01/07/02
Signed
Witnessed…
SIIRA AMISI,
01/07/02
Witnessed by
second defendant
01/07/02
(no name) “
Annexture ‘A’ further has a short letter which reads
“
Nakasero Soap Works Ltd
P. O. Box 218
Kampala
Re:
Debt repayment agreement dated 18th April 2006
I SIIRA HAMISI do hereby make a commitment to make a full and final settlement of the debt of Ug.Shs. 5,907,400/= (five million nine
hundred seven thousand four hundred shillings only) by 5th July 2006. the repayment instalments shall be 2,000,000/= per month starting with the first installment being recovered by Nakasero
Soap Works by 5th May 2006, second installment by 5th June 2006 and last by 5th July 2006.
Failure to repay in or by any of the above dates, deems all the amount cashable and both the security provided earlier plus any of
my personal properties eligible for disposal to recover the amounts owed together with all legal costs.
Signed SIIRA HAMISI
Date:
18/04/06
Witnessed by
name
sign
date
1.
Kibirige Mohamed
(signed)
18/04/06
2.
Namuleme Zam
-do-
-do-
3.
Ali Haji Musa Jamil Kamya
-do-
-do- “
Counsel for the defendant submitted that the transaction had nothing to do with SIIRA HAMISI and his father Ali Haji Musa Jamil Kamya.
That the reference to the first defendant in the pledge note was only a mere address and in any event the first defendant is a corporate
body separate from the other defendants. Both the second and third defendants also depone that they have nothing to do with the transaction
and credit if any should have been given to the second defendant personally which was not the case.
The submissions of counsel for the defendants are as amazing as is the evidence of the second and third defendants by affidavit. To
any third party the two documents of annex ‘A’ tell the whole story.
The letter dated 14thApril 2006 in particular acknowledges the debt owned to the plaintiff of Ug.Shs.5,907,400/= and is signed by the second defendant
and witnessed by the third defendant. How now can they turn around and deny the transaction and blame it on the first defendant which
is their company. Of course they wish to rely on the doctrine of separation of liability between a company and its members as their
defence because counsel for the defendant referred me to the case of
Salomon V Salomon & Co. [1897] AC 22 HL.
With the greatest of respect that is a sham defence and the evidence does not support it. Both the second and third defendants acknowledge
of Ug.Shs. 5,907,400/= and therefore gave false evidence by affidavit that they know nothing about it. Annexture ‘C’
to Mr. Isingoma’s affidavit which is a statement of account clearly shows that the Ug.Shs. 5,907,400/= that both the second
and third defendants is acknowledged was with respect to money owned by first defendant to the plaintiff. It seems to me that the
defendants simply do not wish to pay the debt which is a dishonest business practice and therefore is unacceptable. They should pay
for goods they obtained on credit.
Having found as above, does there exist a right to foreclose? The second and third defendants made available the property comprised
in Block No. 110, Plot 2192 to plaintiffs by way of security and placed a caveat on it to show their interest. Section 129 of The
Mortgage Act (Cap 229) provides that an equitable mortgage is created by deposit by the registered proprietor of his certificate
of title with intent to create a security there on whether or not accompanied by a note or memorandum of deposit.
In the instant case this is exactly what the second and third defendants did. The third defendant as proprietor by his actions and
writings consented to this. There is therefore no doubt in my mind that an equitable mortgage was created with the plaintiff as mortgagee.
Section 8(1) of The Mortgage Act provides that a mortgagee can apply to court to foreclose the right of the mortgagor to redeem the
mortgaged land at any time after breach of covenant to pay. In this case there is default on the payment of Ug.Shs. 5,907,400/= and
the covenant to pay it as acknowledged in the letter to annex ‘A’. Clearly the right to foreclose has crystalised and
I so find. In answer to question number one to the summons, the answer there is yes.
It follows therefore that in answer to question number two, the mortgagee is permitted to sell the mortgaged land now foreclosed in
accordance with the law.
Lastly I award the plaintiff the costs of the suit.
.RTF of original document