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Kanoblic Group of Companies Uganda Limited v Sugar Corporation Uganda Limited (Civil Appeal 34 of 1997)

Court of Appeal · [1998] UGCA 39 · 1998 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court ruling setting aside a Registrar's certificate awarding compound interest on an arbitration award
Decision
Appeal allowed in part; interest declared simple, refund order set aside, and judgment entered for the appellant for Shs. 2,737,901 with interest

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Holding

The Court of Appeal held that there is no right to compound interest save by express or implied agreement or binding custom. An award of interest at 30% per annum, silent on compounding, attracts only simple interest. Compound interest is implied only in a banker-customer relationship, not the debtor-creditor relationship between these parties. Parties cannot 're-write' an arbitral award through subsequent interpretation; any ambiguity must be referred back to the arbitrator. The appeal was allowed in part: interest was declared simple, and the refund order was corrected so that judgment was entered for the appellant for Shs. 2,737,901 with interest, the relevant deficit having been conceded.

Facts

Sugar Corporation Uganda Ltd obtained an arbitration award against Kanoblic Group of Companies (U) Ltd comprising special and general damages plus interest at 30% per annum from 1 October 1992 until payment in full. Kanoblic's challenges to the award were dismissed, and it deposited Shs. 130,448,601 as security on appeal to the Supreme Court, which also dismissed the appeal. That deposit was paid to Sugar Corporation in settlement of the decretal amount and interest. Subsequently, counsel for Sugar Corporation, applying compound interest based on calculations guided by a Cooperative Bank official, obtained a Deputy Registrar's certificate certifying a further Shs. 62,233,667 due, and commenced garnishee proceedings against Kanoblic's account. Kanoblic contended the award implied only simple interest, having relied on a banking facility from Nile Bank. The High Court set aside the certificate, ordered a refund of Shs. 8,403,193 representing excess payment, and set aside the attachment.

Issues

  1. Whether compound interest was implicit in the arbitrator's award of interest at 30% per annum.
  2. Whether parties could subsequently interpret or re-write the arbitration award to include compound interest.
  3. Whether the High Court was correct to order the appellant to refund a specified sum to the respondent.
  4. Whether the order setting aside the attachment of the appellant's account should be disturbed.

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 or Custom
There is no right to compound interest save by agreement, express or implied, or by custom binding on the parties; an award or judgment silent on compounding bears only simple interest.
Interest — Implied Agreement for Compound Interest — Banker and Customer Relationship
An agreement to pay compound interest is normally implied only where a banker and customer relationship exists, and not where the parties stand merely as debtor and creditor.
Arbitral Awards — Interpretation — Parties' Power to Vary an Award
Parties cannot re-write an arbitral award by subsequent agreement or interpretation; where there is ambiguity in the award, the proper course is to refer the matter back to the arbitrator.
Interest — Pleading — Burden to Plead Basis for Compound Interest
A party claiming compound interest must plead the basis for the claim; failure to do so until a late stage is attributable to that party and defeats the claim.

Legislation cited (6)

  • Civil Procedure Rules Order 46 rules 1, 7 and 8
  • Arbitration Act s.12
  • Arbitration Rules rules 7, 8 and 16
  • Civil Procedure Rules Order 19 rule 26
  • Civil Procedure Rules Order 20 rules 1 and 10
  • Civil Procedure Act s.26

Cases cited (2)

  • Williamson v Williamson (1869) LR 7 E p 542
  • 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.