THE REPUBLIC OF UGN{DA
IN THE HIGH COURT OF UGANDA AT I(AMPALA
ICoMMERCTAL DTVTSTONI
ORIGINATING SUMMONS NO.OOOg OF 20/23
ABAIRISAQ NAUR QORANE
(Suing through Abdimalik Mursal Abdi
Holder of Powers of Attorney for
Absairisaq Naur Qorane) PLAINTIFF
VERSUS
ALI JAMA JABRIL::::::::::::::::::::::::::::::::::::::::::::::::DEFENDANT
Before Hon. Lady Justice Patricia Kahigi Asiimwe
Ruling
Introduction
is brought by way of Originating Summons under
1. This matter
Order 37 Rule 4 and 8 of the Civil Procedure Rules for the
determination of the following questions:
i. Whether the Plaintiff as a secured creditor is entitled to
sell the security to wit stock and other assets in the
Defendant's shop trading under the name and style
Green Family Whole and Retail located in Social Centre
Kisenyi Butikira Road Kir,'ule Complex Rooms B08,
809, and B10.
ii. Whether the Plaintiff as a secured creditor is entitled to
sell the said security by private treaty or public auction
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A.
to recover the entire sum due to him together with costs
and expenses related thereto.
111. Whether the Plaintiff is entitled to the costs of the suit.
2. The Originating Summons was supported by an Affidavit sworn
by Abdimalik Mursal Abdi who is the holder of lawful Powers of
Attorney granted to him by the Plaintiff. He stated that:
a) He and the plaintiff are friends and the Plaintiff is
currently in Canada in business engagements.
b) He is well conversant with the facts of the suit.
c) Sometime around 2022, when the Plaintiff was still in
Uganda, the Defendant approached him for a friendly
loan of USD 50,OOO whose purpose was to inject into his
business of retail and wholesale trading.
d) The Ptaintiff left Uganda before the Defendant could pay
back the money.
e) The Defendant adamantly refused/neglected to pay
despite several demands.
0 Since the Plaintiff is away in Canada, he authorized him
(the deponent) to negotiate with the Defendant.
c) He negotiated with the Defendant and in an agreement
dated 5th June 2023 it was agreed that the Defendant
pays USD 50,000 on 10th June 2O23.
h) In the Agreement, the defendant pledged stock and
assets in his wholesale shop trading under the name
Green Family Whole and Retail located in Social Centre
Kisenyi Butikira Road Kirrrle Complex, Rooms 808,
BO9, and B10 as security for the said money.
i) The parties agreed that in the event that the Defendant
fails to pay on lOth June 2023, th,e security becomes
liable to sale.
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j) He has made several reminders to the Defendant, but all
in vain.
3. The Defendant did not file an Affidavit in Reply despite being
served.
Representation
4. The Plaintiff was represented by M/S Macford Advocates.
I ssue s
1 Whether the Plaintiff as a Secured Creditor is entitled to
sell the security to wit stock and other assets in the
Defendant's shop trading under the name and style Green
Family Whole and Retail located in Social Centre Kisenyi
Butikira Road Kivule Complex Rooms BO8, B09, and BlO
lI. Whether the Plaintiff as a secured creditor is entitled to sell
the said security by Private Treaty or Public Auction to
recover the entire sum due to him together with costs and
expenses related thereto
111. Whether the plaintiff is entitled to the costs of the suit.
Submissions
5. Counsel for the Plaintiff cited Section aa(l) of the Security
Interest In Movable Property Act 20 19 which provides that
where a debtor defaults on the obligation to pay or where
another event of default occurs, the interest becomes
enforceable. Section 44(2) b of the Security Interest in Movable
Property Act 20 19 which provides that in case of default, the
secured creditor may enforce the security interest by exercising
any right provided in the Security Agreement.
6. Counsel submitted that in the Agreement dated 5th June 2023
the Defendant pledged his stock and other assets in his shop
trading under the name and style Green Family Whole and
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&
Retail located inSocial Centre Kisenyi Butikira Road Kir,rrle
Complex Rooms BO8 B09 and BlO as security for the money
loaned to him. Further, they agreed that in the event the
Defendant fails to pay the loan then the Plaintiff shall sell the
security pledged. Counsel submitted that the Plaintiff as a
secured creditor is entitled to sell the security.
7. Counsel further submitted that in the agreement the parties did
not provide a mode of sale. Part of the stock in the shop is
agricultural in nature which has a high chance of decay, and the
other goods also have a short shelf life. Public auction takes a
lot of time and in the process, the stock might get spoilt. Counsel
prayed for sale by private treaty which is quicker as compared
to sale by public auction.
Resolution:
lssue J: Whether the Plaint iff as a Secured Creditor is entitled to sell
the security to uit stock and other assets in the Defendant's shop
trading under the name and style Green Familg Whole and Retail
located in Social Centre Kisenyi, Butikira Road, Kirrule Complex
Rooms 808, BO9, and B1O
8 The law applicable is the Security Interest in Movable
Property Act, No. 8 of 2019 (hereinafter referred to as the
Act.) Under section 2 of the Act, a secured creditor means a
person in whose favour a security interest is created under a
security interest agreement.
9 A security interest agreement is provided for under section 4
of the Security Interest in Movable Property Act. Section 4(3)
provides as follows:
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(3)An agreement for a secuitg interest becomes
enforceable uhere-
(a) the grantor or the otuner has a right in the
collateral or has the pouter to encumber the collateral;
(b) the agreement-
0 is signed by the grantor;
(iil identifies the secured creditor and the
grantor;
(iit) is tuitnessed by a third party;
(iu) describes the collateral in a manner that
reasonably allows its identification, as mag
be prescribed bg regulations made under this
Act.
(ui) describes the secured obligation in a manner
that reasonablg allows for its identification,
uhether pre-eisting, present or future,
determined or determinable, conditional or
unconditiona| fixed or Jluctuating, or a line of
credit, as maA be prescibed by regulattons
made under this Act; and
(ui) indicates the ma-rimum amount for which the
security interest is enforceable; and
(c) the secured creditor giues the collateral a monetary
ualue
10. In this case, the parties entered into an agreement dated 5th
June 2O23. The agreement is signed by both parties, it was
witnessed by third parties, the security is described in
sufficient detail, and the amount for which the security
interest is enforceable is stated. The court finds that the
agreement meets the requirement of section a (3) of the Act
and that the Plaintiff is a secured creditor under the Act.
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{
11. Under section aa (1) of the Act, where a debtor defaults on
the obligation to pay the money due, the security interest
becomes enforceable. Under the security interest agreement,
the defendant undertook to pay the money due on the lOth of
June 2O23. According to the Plaintiff that money has never
been paid thus making the security interest enforceable.
12 Under section 44 (3), where a debtor defaults to perform a
secured obligation, the secured creditor shall serve on the
grantor a notilication, in writing to pay the money owing. The
Plaintiff attached to the Affidavit in support of the Originating
Summons as Annexture D, a demand notice dated 1lth June
2023.
13. The demand notice states the nature of the default, the
amount due, the time within which to pay the money due,
and the consequences of the default and thus meets the
requirements under section aa 14\ of the Act.
14. The Plaintiff is therefore entitled to sell the security' This
question is answered in the affirmative.
Issue 2: uhether the Plaint iff as a seanred creditor is entitled to sell
the said secuitg bg Priuate Treaty or Public Auction to recouer the
sum due to him together u.tith costs and expenses related thereto.
15. Under clause 3.2 of the security agreement, the security is
stated as the shop, trading under the name and style of Green
Family Whole and Retail located in social Center Kisinye
Butikira Road, Kiu:le Complex, Rooms BO8, BO9 and 810. The
agreement is silent on the type of goods in the shop. Neither
does the Plaintiff specify in his affidavit which t5,pe of goods are
in the shop. There is, therefore, no evidence that the goods are
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n-
perishable thus warranting sale by private treaty. The security
should therefore be sold by public auction.
16. In conclusion, the Court hnds that the Plaintiff as a secured
creditor is entitled to sell the security as described in the
security agreement dated sth June 2023. The security shall be
sotd by public auction in accordance with the Security Interest
in Movable PropertyAct No.8 of 20 19. The Plaintiff is awarded
the costs of the suit.
Dated this 24th day of October 2023.
Patricia Kahigi Asiimwe
JUDGE
Delivered on ECCMIS
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