The High Court in Kampala has ordered Tropical Africa Bank Ltd to pay Shs40 million in general damages to two beneficiaries of an estate after declaring null and void a disputed mortgage over eight acres of land in Jungo and Sagala, Wakiso District.
In a judgment delivered on October 22, 2026, Justice Stephen Mubiru of the High Court Commercial Division also ordered the bank to surrender the certificate of title to the Commissioner for Land Registration within 30 days for onward release to the claimants, and directed the cancellation of a caveat the bank had registered against the property in November 1996.
The court further dismissed the bank’s counterclaim seeking to recover Shs11.1 million in alleged outstanding loan obligations through the sale of the land, ruling that the claim was filed outside the statutory limitation period.
The dispute arose from a Shs5 million loan the bank said it had advanced to Janet L. Chota in 1996, allegedly secured by the title to the eight acres under a power of attorney dated October 14, 1993. The bank maintained that Chota had disappeared without repaying any instalment, prompting it to register a caveat against the property on November 20, 1996.
However, the claimants, Joseph Nsamba and Ronald Sseguya, argued that their late father, Yozefu Katoto, had purchased the land from Edward Solomon Mbuku Luwagga Baliruno on May 25, 1976, and that their family had occupied it since then.
They told the court that Baliruno died in 1981, meaning the power of attorney allegedly issued to Chota in 1993 could not have been validly executed by him. They also challenged the bank’s claim to the property, arguing that the mortgage was invalid and that the bank had no legal basis to threaten an auction.
The claimants sought a declaration invalidating the mortgage, removal of the caveat, release of the title and compensation for the interference with their interest in the land.
The bank, in its defence and counterclaim, maintained that Chota had obtained the loan using the power of attorney and deposited the title as security. It argued that the claimants were trespassers, disputed that the land described in the 1976 sale agreement was the same property later registered under Busiro Block 532 Plot 33, and contended that the claimants had no legal standing because they were not the registered proprietors.
The bank also challenged the authenticity of documents presented to establish Baliruno’s death, pointing to discrepancies in the death certificate and a one-day difference between dates given by a witness. It argued that the claimants had not proved fraud and that depositing the title deed and power of attorney was sufficient to establish an equitable mortgage.
Justice Mubiru rejected the bank’s arguments, finding that the evidence established that the land purchased by Katoto in 1976 was the same property later registered as Busiro Block 532 Plot 33.
The judge relied on the evidence that both descriptions referred to eight acres in Jungo and Sagala, that Baliruno remained the registered proprietor under the two registration systems, and that the disputed land had been omitted from his will dated March 23, 1980. The court said these circumstances supported the claimants’ case that the land had already been sold before Baliruno’s death.
The court also rejected the argument that the land had reverted to the seller because Katoto did not pay the full purchase price by the agreed deadline.
According to the sale agreement, the land was sold for Shs4,000. Katoto initially paid Shs1,000 on May 25, 1976, followed by Shs1,300 and groundnuts valued at Shs300 on July 26, 1976. He made another payment of Shs1,300 on December 11, 1976, leaving a balance of Shs100.
The court found that Katoto had paid Shs3,900, representing 97.5 per cent of the purchase price, and that the seller had accepted the delayed instalments without invoking the agreement’s forfeiture provisions.
Justice Mubiru held that accepting overdue payments waived the seller’s right to declare forfeiture on account of the earlier delays. The agreement also required six months’ notice before the buyer could be required to harvest his crops and vacate, rather than providing for automatic reversion of the land.
The judge noted that the claimants’ family had remained in possession for more than four decades and that there was no evidence the seller had terminated the agreement, demanded the outstanding Shs100 or sought to recover the property.
The court therefore recognised the claimants’ equitable interest in the land as beneficiaries of their late father’s estate, despite the absence of a completed transfer of the registered title into Katoto’s name.
A central issue in the case was the validity of the power of attorney allegedly granted to Chota in 1993.
The claimants produced a death certificate and a grant of probate issued on August 31, 1981, which they said established that Baliruno had died approximately 12 years before the power of attorney was purportedly executed.
The bank questioned the documents because the death certificate was registered on March 20, 1994, and issued on June 27, 2002, while the grant of probate had been issued earlier. It also relied on the discrepancy between April 4 and April 5, 1981, in testimony concerning Baliruno’s death.
The judge found that the differences did not outweigh the evidence establishing that Baliruno had died in 1981. He noted that the bank had not produced evidence showing that Baliruno was alive when the power of attorney was allegedly executed.
The court also considered the fact that the document identified the purported donor as “Edward Baliruno”, rather than his full registered name, Edward Solomon Mbuku Luwagga Baliruno, and that the bank had not produced evidence showing that the power of attorney had been registered as required by law.
Justice Mubiru further found that the bank had failed to establish the existence and disbursement of the alleged Shs5 million loan.
The bank’s recovery officer, Stella Nansamba, testified that the loan had been disbursed in cash and that its details were recorded in a book held by the bank. However, the loan application form, offer letter, loan agreement, disbursement records and repayment schedule were not produced in court.
The judge observed that the bank could not establish the terms of repayment and had relied on records that were not presented as evidence. He rejected the argument that the claimants should have sought discovery of the missing documents, holding that the responsibility to prove the alleged debt rested with the bank.
“A mortgage is, by definition, a security for a debt. If there is no debt, there can be no mortgage,” the judge held.
The court also faulted the bank for failing to conduct adequate due diligence before accepting the property as security. It found that the bank had not established that it verified the authenticity of the power of attorney, confirmed the purported donor’s capacity to grant it or adequately investigated who occupied the land.
The judge said a financial institution accepting land as security has a duty to investigate the transaction and inspect the property to establish whether other people are in occupation and may have interests that could be affected.
The court concluded that the bank had failed to prove a valid equitable mortgage and had no legal or equitable interest to justify retaining the title or maintaining the caveat.
The bank’s counterclaim also failed on limitation grounds. The judge found that, according to the bank’s own evidence, the cause of action arose in 1996 when Chota allegedly defaulted and disappeared without making any repayment.
Under the applicable limitation law, the bank had 12 years to pursue recovery of the alleged debt and enforcement of the mortgage. The court held that the period expired in 2008, while the counterclaim was filed on January 27, 2021, more than a decade after the deadline.
The judge dismissed the counterclaim with costs to the claimants.
In assessing damages, the court considered the length of time the caveat had remained on the title, the threat of eviction, the claimants’ inability to freely develop or use the land and the inconvenience caused by the litigation.
Justice Mubiru awarded the claimants Shs40 million in general damages, together with interest at six per cent per annum from October 22, 2026, until payment in full. He declined to award exemplary or punitive damages, finding that although the bank’s conduct demonstrated serious negligence, the evidence did not meet the legal threshold for that exceptional remedy.
The final orders require the bank to surrender the certificate of title to the Wakiso District Land Registry within 30 days. The Registrar is then required to release it to the claimants to enable them to conclude the pending transaction with the estate of the late Baliruno.
The judgment was delivered in Civil Suit No. 0001 of 2021, in which Nsamba and Sseguya were represented by Tumwebaze, Kasirye & Co. Advocates, while the bank was represented by GP Advocates.
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