Wakilii

Kanoblic Group of Companies Ltd vs Sugar Corporation (U) Ltd (Civil Appeal No 34 of 1997)

Court of Appeal · [1998] UGCA 12 · 1998 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court ruling setting aside the Registrar's certificate awarding compound interest and ordering a refund
Decision
Appeal allowed in part; interest declared to be simple interest; refund order set aside and judgment entered for the appellant for Shs. 2,737,901 with interest

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Cited — treatment unverified cited in 2 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Court of Appeal held that compound interest is not payable save by express or implied agreement, or by binding custom. An arbitral award providing for interest at 30% per annum, silent on compounding, did not imply compound interest where the relationship between the parties was that of debtor and creditor, not banker and customer. Parties cannot re-write an arbitrator's award after the event; any ambiguity should be referred back to the arbitrator. The interest awarded was therefore simple interest. The appeal was allowed in part: ground three succeeded, and the refund order was set aside, with judgment entered for the appellant for Shs. 2,737,901 with interest. Each party to bear its own costs.

Facts

In Arbitration Award No. 7 of 1994, Sugar Corporation Uganda Ltd obtained an award against Kanoblic Group of Companies (U) Ltd for special and general damages plus interest at 30% per annum from 1 October 1992 until payment in full. After unsuccessful challenges to the award, Kanoblic deposited Shs. 130,448,601 as security, which was paid to the respondent in settlement of the decretal amount and interest. Subsequently, the respondent's counsel sought a further Shs. 62,233,667 based on compound interest calculations, and the Deputy Registrar issued a certificate of interest. Garnishee proceedings were commenced against Kanoblic's bank account. Kanoblic contended that the award provided only for simple interest, that compound interest had been wrongly applied, and that there was in fact an overpayment. The High Court set aside the Registrar's certificate, ordered a refund of Shs. 8,403,193 and set aside the attachment. The respondent appealed.

Issues

  1. Whether compound interest was implicit in an arbitral award that provided for interest at 30% per annum without specifying compounding.
  2. Whether parties may, after an award, interpret or re-write the arbitrator's award to include compound interest.
  3. Whether the trial judge erred in ordering the appellant to refund Shs. 8,403,193 to the respondent.

Orders

  • Appeal allowed in part by declaring that the interest awarded was simple interest and not compound.
  • Ground three of the appeal allowed.
  • Order that the appellant refund Shs. 8,403,193 to the respondent set aside.
  • Judgment entered for the appellant for Shs. 2,737,901 with interest at 30% from date of the award till payment in full.
  • Each party to bear its own costs.

Key headnotes

Interest — Compound Interest — Requirement of Agreement, Implication or Custom
There is no right to compound interest save by agreement, express or implied, or by a custom binding on the parties.
Interest — Implied Agreement to Pay Compound Interest — Banker and Customer Relationship
An agreement to pay compound interest is not normally implied except where the relationship between the parties is that of banker and customer; where the relationship is merely that of debtor and creditor, compound interest will not be implied.
Interest — Pleading — Basis for Compound Interest Must be Pleaded
A party claiming entitlement to compound interest must plead the basis for that claim; failure to plead the basis for compound interest is fatal to the claim.
Arbitral Awards — Interpretation — No Power in Parties to Re-write an Award
Parties are not entitled to re-write or put words into an arbitrator's award after it is made; where there is an ambiguity in the award, the proper course is to refer the matter back to the arbitrator, not to reinterpret it themselves.

Legislation cited (6)

  • Arbitration Act s.12
  • Arbitration Rules (S.I. 55-1) rr.7, 8 and 16
  • Civil Procedure Rules Order 46 rr.1, 7 and 8
  • Civil Procedure Rules Order 19 r.26
  • Civil Procedure Rules Order 20 rr.1 and 10
  • Civil Procedure Act s.26

Cases cited (2)

  • Williamson v Williamson (1869) LR 7 Eq 542
  • the Deutsche Bank case (1934) 4 legal Decisions Affecting Bankers, 293
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.