Bank ordered to deposit sh52m in court to secure appeal
The judge warned that failure to deposit the money within the stipulated 30 days would automatically cause the stay to lapse without any further court order.
The dispute arose from a failed transaction involving the proposed purchase of mortgaged property in Kyamula, Kampala. (File photo)
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The Court of Appeal has ordered Housing Finance Bank to deposit sh52.5m in court within 30 days as security for compliance with a ruling in a failed property purchase dispute.
Justice Esta Nambayo, sitting as a single justice of the Court of Appeal in Kampala, issued the order on October 29, 2026, while granting the bank a stay of execution of a High Court judgment pending determination of its appeal against businessman Patrick Kalinda.
“The execution of the judgment would remain suspended until the determination of the appeal, provided the bank complies with the security requirement,” she ruled.
The judge warned that failure to deposit the money within the stipulated 30 days would automatically cause the stay to lapse without any further court order. She said the costs of the application would be determined after the outcome of the appeal.
Nambayo found that the bank's appeal raised arguable issues that required consideration by the appellate court.
She noted that the Chief Magistrate's Court and the High Court had reached different conclusions on whether a binding contract existed between the parties.
“The question whether agreement was reached, and if so whether the 5% retention term was binding and enforceable, requires consideration of the evidence and applicable law by the appellate court,” Nambayo observed.
She added that Kalinda's objections concerning the proposed mortgage sale also required consideration, concluding that the appeal was not frivolous.
On the question of substantial loss, the judge noted that Kalinda had already commenced execution proceedings, making the threat of enforcement real rather than hypothetical.
Nambayo found that the amount at risk was substantial and that uncertainty over recovery could undermine the benefit of a successful appeal.
She also held that the application had been filed without unreasonable delay, having been lodged approximately eight days after the High Court dismissed the bank's earlier application for a stay.
Bank ordered to provide security
Despite granting the stay, Nambayo emphasised that Kalinda was entitled to enjoy the fruits of his judgment, noting that he had been kept out of the money deposited with the bank for a considerable period.
“The court had to balance Kalinda’s right to receive the money against the risk that the bank might struggle to recover it if execution proceeded and the appeal succeeded,” she noted.
The judge further observed that the bank had expressed willingness to provide security for the due performance of the decree.
Background
The dispute arose from a failed transaction involving the proposed purchase of mortgaged property in Kyamula, Kampala.
According to court documents, the bank advertised the property for sale on February 3, 2020, and Kalinda offered sh600m for it on February 20, 2020.
However, the parties disagreed over whether the letter confirmed an existing agreement or amounted to a counteroffer.
Kalinda subsequently proposed a different payment schedule in a letter dated July 21, 2020, and paid sh260m towards the proposed purchase.
The transaction was not completed. On February 8, 2021, the bank revoked its acceptance and refunded sh227.5m, retaining sh32.5m, representing 5% of the stated purchase price.
Kalinda sued the bank in Nakawa Chief Magistrate's Court, seeking recovery of the retained money, interest, general damages and costs.
On November 3, 2023, the magistrate dismissed his claim, finding that a valid contract existed and that the bank was entitled to retain the money.
Appeal
Kalinda appealed to the High Court, which overturned that decision.
In a judgment delivered on February 25, 2026, the High Court held that no contract had been formed and ordered the bank to refund sh32.5m, with interest at 20% per annum from April 21, 2021, until payment in full.
The bank was also ordered to pay sh20m in general damages, with interest at 20% per annum from the date of judgment until payment in full, as well as costs in both courts.
Dissatisfied with the ruling, the bank lodged an appeal at the Court of Appeal, challenging, among other issues, the findings on contract formation, undue influence, the interpretation of the Mortgage Act, the retention of the disputed money and the award of damages.