A High Court judge has cancelled a UGX44 million mortgage held by Pearl Bank Uganda Limited over a Nakasongola family home, ruling that the bank failed to carry out the level of due diligence required before accepting the property as security.
In a strongly worded ruling, High Court Commercial Division Judge Susan Odongo said the mortgage was unlawful because Godfrey Kalule, the husband of one of the registered proprietors, never consented to the transaction despite having lived on the property as his matrimonial home for more than two decades.
The ruling, delivered electronically on July 20, 2026, declared the mortgage “null and void” and permanently barred Pearl Bank, its agents and anyone acting on its behalf from selling, transferring or interfering with Kalule’s occupation of the property.
The dispute arose after Kalule discovered that his wife, Eseza Kalule Nalukwago, and their son, Eric Kagimu Kalule, had mortgaged the family property to secure a UGX44 million credit facility for Ericom Pharmaceuticals-SMC Ltd.
The property, comprised in Block 115 Plot 133 Folio 25 at Central Ward, Buruli-Nakasongola, had been registered in the names of Nalukwago and her son as tenants in common in equal shares in 2013.
But Kalule told court that he and Nalukwago had lived there as husband and wife since 2004, making it their matrimonial home.
“I only became aware in July 2025 that the 2nd and 3rd Respondents had executed a legal mortgage over the suit property,” Kalule said in his affidavit, according to the ruling.
His discovery was followed by a notice of default from Pearl Bank dated August 5, 2025, demanding UGX44,301,045 and threatening sale of the property.
Kalule argued that the bank should have discovered his occupation before accepting the property as security.
He maintained that “the mortgage was executed without his knowledge, consent, or assent” and accused the bank of failing to conduct sufficient due diligence to establish the property’s matrimonial status.
Wife admits she did not involve her husband
One of the most damaging pieces of evidence against the mortgage came from Nalukwago herself.
The judge noted that she admitted being married to Kalule since 1981 and confirmed that the couple had lived on the property since 2004 and raised their children there.
She also admitted that she had not involved her husband in the mortgage transaction.
According to the ruling, Nalukwago said she had signed documents at the bank without reading them and without having their contents explained to her by a legal professional.
She further admitted that she signed a statutory declaration claiming she was of “single marriage status”.
The judge described this as a “critical admission” demonstrating the absence of spousal consent.
The court found that the family’s long occupation of the property outweighed the fact that Kalule’s name did not appear on the certificate of title.
“The Mortgage Act protects the home, not the title,” Justice Odongo stated.
She added that once it was established that the spouses lived there, the property acquired the character of a matrimonial home, and later changes to the registered ownership could not strip it of that protection.
Bank relied on statutory declarations
Pearl Bank disputed Kalule’s account.
The bank said it had carried out a land registry search and found Nalukwago and her son registered as proprietors, with no recorded encumbrances or protected spousal interests.
It also said a physical inspection had been conducted and that inquiries on the ground indicated Kalule was not occupying the property.
The bank relied heavily on statutory declarations in which the mortgagors represented that they were of “single marriage status”.
It argued that it had done “exactly what the law requires of it” and was entitled to rely on the declarations in good faith.
The bank also questioned photographs produced by Kalule, suggesting they were undated and could potentially have been “AI-generated or photoshopped”.
But Justice Odongo rejected that argument as speculative.
“Courts of law act on evidence, not conjecture,” she said.
The judge noted that Pearl Bank produced neither expert evidence challenging the photographs nor competing photographs from the alleged physical inspection.
“If the Bank had truly conducted the physical inspection they claimed in their affidavit, they would have had their own photographs and a valuation report to rebut the Applicant’s evidence,” the judge ruled.
Court says a bank cannot hide behind a piece of paper
Justice Odongo delivered a broader warning to lenders about the protection of matrimonial homes.
She said a bank’s duty to investigate whether property is a matrimonial home goes beyond checking the land register or obtaining a declaration from a borrower.
“A mere search of the register alone is not enough and thus one ought to go beyond the register,” the ruling states, adding that a physical visit could reveal irregularities.
The judge said the Mortgage Act was designed to prevent precisely the situation before her: one spouse secretly mortgaging the family home and leaving the other facing eviction.
“To allow the Bank to rely on the registered name alone would be to render Section 4 of the Act toothless,” she ruled.
Justice Odongo went further, saying banks must investigate the “physical and social reality” of property offered as security.
“The standard of due diligence for banks is not a mere tick-box exercise of obtaining a statutory declaration,” she stated. “It is a substantive duty to verify the physical and social reality of the asset they are taking as security.”
Mortgage declared a legal nullity
The court ultimately found that the property was a matrimonial home and that the mortgage had not been lawfully executed.
The judge identified three key defects: the absence of spousal consent, Nalukwago’s misrepresentation of her marital status and Pearl Bank’s failure to take reasonable steps to establish the marital and residential status of the property.
“The transaction is unlawful and unenforceable against the Applicant’s interest,” Justice Odongo ruled.
She subsequently declared the mortgage void.
“Consequently, pursuant to Section 35(1)(a), the mortgage over Block 115 Plot 133 Folio 25 is hereby declared void,” the judge ordered.
Pearl Bank was ordered to return the duplicate certificate of title to the registered proprietors within 14 days.
The court also issued a permanent injunction preventing the bank, its agents or anyone claiming through it from selling, transferring or interfering with Kalule’s occupation of the property.
Bank can still recover the UGX44.3 million
The judgment did not wipe out the underlying debt.
Justice Odongo expressly stated that although the mortgage was void against the matrimonial home, the UGX44,301,045 debt remained payable by the borrowers.
Pearl Bank may therefore pursue the borrowers and Ericom Pharmaceuticals-SMC Ltd for recovery of the money as an unsecured debt.
But the judge drew a firm line around the family home.
“The Bank is at liberty to seek a money judgment against the 2nd and 3rd Respondents (and Ericom Pharmaceuticals-SMC LTD) to recover the UGX 44,301,045/=,” she ruled.
“However, the Bank cannot realize this debt through the sale of the Suit Property.”
Judge also rebukes lawyers
The mortgage dispute was not the only matter that drew the judge’s ire.
Before determining the substance of the case, Justice Odongo criticised the applicant’s lawyers for citing an outdated provision of the Judicature Act.
She said the lawyers had relied on a provision that, under the revised law, dealt with life imprisonment rather than the equitable remedies being sought in the mortgage dispute.
“It is profoundly disappointing and, quite frankly, annoying,” the judge said of the error.
She described the continued use of superseded laws as “carelessness and professional lethargy” and warned lawyers that her patience with such mistakes was exhausted.
“Next time, the tone of this Court will be far less forgiving, and counsel may find their Case dismissed with costs ordered against them personally,” she warned.
Despite the error, the judge proceeded with the case because she said it would be unjust to punish an uninformed litigant for the mistake of a lawyer.
Kalule ultimately won the application, with costs awarded against Pearl Bank and Nalukwago jointly and severally.
The ruling, therefore, leaves Pearl Bank free to pursue repayment of the loan but strips it of the right to sell the Nakasongola property to recover the debt—a distinction the court said was necessary to preserve the statutory protection of matrimonial homes.
