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Failure To Pay An Equitable Loan Does Not Confer Rights Of Transfer Of Title To The Creditor, Says The Court of Appeal

Failure to pay an equitable loan does not confer rights of transfer of tittle to the Creditor, says the Court of Appeal in the case of Galina Kyobe (Administrator of estate of the late Dan Kyobe) V Daniel Kibuuka Musoke and Commissioner Land Registration. Civil appeal no 42 of 2016.

The Judges of the Court of Appeal in their Judgment delivered on the 11th June 2019 discuss whether an equitable loan would amount to a transfer of land.

CORAM Hon justice; Kenneth Kakuru, Geoffrey Kiryabwire, Christopher Madrama.

This was a case where the Appellant lent money to the 1st respondent and the security given was land. The Respondent then failed to pay back the money and the Appellant went ahead and transferred the Respondent’s land to himself.

The issue to be determined by Court was whether an equitable loan would amount to a transfer of land. The High Court dismissed the case and ordered the 2ndRespondent to cancel the Appellant’s name on the titles and replace it with the 1st respondent’s name.

The Court of appeal upheld the High Court’s decision stating that the transfer was not legal since an equitable loan in itself does not create a transfer. It also found that the 20% interest rate put by the Appellant was not fair. It further ordered that the 1st Respondent pay back the money he borrowed to the Appellant.