Kampala, Media – The High Court has nullified the sale of a Najjera property that was previously repossessed and sold by Housing Finance Bank, ruling that the transaction was conducted irregularly, grossly undervalued, and failed to comply with legal requirements under mortgage recovery procedures.
The court also ordered the restoration of ownership of the property to Barnabas Samuel Aliku and his wife, Christine Mutesi Aliku, bringing to an end a dispute that arose from a mortgage loan default and subsequent auction of their home.
In 2009, the Alikus purchased an incomplete house in Najjera for Shs 115 million. To complete construction and finance the purchase, they secured a mortgage loan of Shs 119 million from Housing Finance Bank, repayable over 20 years at an initial interest rate of 16%, with monthly instalments of approximately Shs 1.65 million.
The couple later encountered financial difficulties in 2010 following an economic downturn in Europe and the loss of employment by Christine Mutesi Aliku in the United Kingdom, which affected their ability to service the loan.
Following repeated loan repayment reminders, the bank initiated recovery proceedings to sell the mortgaged property. At the time, the house was occupied by tenant Tony Lugayizi Mulinde.
The Alikus later alleged that Mulinde, having access to information regarding the impending sale, used his company, Speke Uganda Holidays Ltd, to acquire the property.
They further contended that the bank failed to comply with statutory requirements under the Mortgage Act, particularly in relation to proper service of notices and conducting a transparent auction process.
Housing Finance Bank, through its legal representatives Nangwala, Rezida & Co. Advocates, denied any wrongdoing, stating that statutory notices were duly issued and dispatched to the borrowers’ registered postal address.
The bank maintained that the property was sold through a lawful public auction and that, even after the sale proceeds were applied, the Alikus still owed approximately Shs 15.57 million.
Tony Mulinde defended his acquisition, stating that he acted in good faith after learning of the auction to secure accommodation for his family.
In her judgment, Justice Susan Odongo found significant procedural and substantive flaws in the sale process.
She observed that the property was sold for Shs 135 million despite evidence that the owners had identified a prospective buyer willing to pay Shs 235 million, describing the discrepancy as “shocking” and indicative of gross undervaluation.
The court further held that the bank failed to sufficiently prove that statutory notices had been properly served, noting inconsistencies in witness testimony regarding the dispatch and contents of the notices.
Justice Odongo also faulted the auction process, citing lack of transparency, limited bidder participation, and insufficient documentation to demonstrate a genuine competitive bidding process.
She ruled that the sale was not open as the law requires, but was conducted privately and secretly that disadvantaged the Alikus.
The judge further found that Speke Uganda Holidays Ltd and Mulinde could not be regarded as innocent purchasers, stating that the transaction bore signs of collusion and unfair advantage.
The court declared the sale unlawful, cancelled the title held by Speke Uganda Holidays Ltd, and directed the Registrar of Titles to reinstate the Alikus as the lawful owners of the property.
The company was ordered to vacate the premises within 60 days.
The court awarded the Alikus Shs 3 million in special damages, Shs 20 million in general damages, and Shs 5 million in punitive damages against Housing Finance Bank, with applicable interest and costs. The total monetary award stands at Shs 28 million, excluding interest and legal costs.
Credit: BbegMedia
