The High Court in Arua has dismissed an application by Stanbic Bank Uganda Limited seeking to foreclose on and sell mortgaged property belonging to Capital Commodities and Beverages Co. Ltd and its director, Adia Godfrey, ruling that the dispute raises contentious issues that cannot be determined through an originating summons.
In a judgment delivered on July 21, 2026, Justice Harriet Grace Magala held that the bank’s application involved disputed facts requiring oral evidence and cross-examination, making the summary procedure of an originating summons inappropriate.
According to court records, Stanbic Bank advanced a business term loan of UGX 90 million to Capital Commodities and Beverages Co. Ltd. The loan was secured by land comprised in FRV Arua 30, Folio 12, Plot 829, Hahua Block 1, Ayivu County, registered in the name of the company’s director, Adia Godfrey, who also executed a personal guarantee in favour of the bank.
The bank told court that the borrowers defaulted on the loan despite being served with notices of default and a notice of sale. It further stated that attempts to realise the security had been frustrated because the property owner remained in occupation and denied access to prospective buyers and agents. As of September 4, 2025, the outstanding loan balance stood at UGX 62.68 million.
Stanbic sought declarations allowing it to foreclose on the mortgaged property, evict the defendants and recover the outstanding debt together with costs.
However, the defendants opposed the application, arguing that the property is matrimonial property and that the bank failed to obtain the legally required spousal consent before the mortgage was executed. They also contended that statutory notices were never properly served and maintained that the company had been servicing the loan and remained willing to clear the outstanding balance.
During the proceedings, the court also considered preliminary objections raised by the defendants challenging the validity of the mortgage. The defendants argued that the bank had failed to obtain a valid power of attorney and proper spousal consent, while the bank insisted that consent had been obtained from a woman it identified as the director’s spouse.
Justice Magala found that there were conflicting claims regarding the identity of the director’s lawful spouse. While the bank relied on documents signed by one individual, the defendant identified another woman as his wife and maintained that her consent had never been obtained. The judge ruled that resolving such a dispute required witnesses and documentary evidence, making it unsuitable for determination as a preliminary objection.
The judge further observed that there was also a dispute over whether the statutory notices required under the Mortgage Act had been properly served on the defendants, another issue that required evidence to be tested during a full trial.
Citing previous court decisions, Justice Magala noted that originating summonses are intended for straightforward and non-contentious matters, not cases involving complex factual disputes requiring witness testimony.
The court consequently dismissed the originating summons with costs awarded to the defendants but left the door open for Stanbic Bank to file an ordinary civil suit, subject to the applicable limitation laws, if it still wishes to pursue recovery of the debt.
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