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Begumisa Financial Services Limited v General Mouldings Limited and Another (Civil Appeal 86 of 2002)

Court of Appeal · [2007] UGCA 72 · 2007 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Cross-appeal from a High Court judgment on a civil suit for breach of contract
Decision
Cross-appeal allowed; interest ordered to run from date of filing the suit and the 2nd respondent restored to the suit as jointly liable

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Holding

The Court of Appeal allowed the cross-appeal. On interest, it held that under section 26(2) of the Civil Procedure Act, where a person is deprived of a liquidated amount through another's wrongful act, interest runs from the date of filing the suit; accordingly the trial judge wrongly exercised his discretion by ordering interest only from the date of judgment, and interest was ordered to run from the filing date until payment in full. On liability, re-evaluating the evidence, the Court found the 2nd respondent jointly and equally liable with the 1st respondent for breach of contract, set aside the dismissal of the suit against it, and restored the suit.

Facts

The cross-appellant carried on a financial consultancy business. On 17 May 1995 the respondents engaged it to negotiate a loan of Shs.235,000,000 from the East African Development Bank, together with ancillary consultancy and appraisal services. The cross-appellant secured a bank guarantee, procured land titles as collateral, prepared an appraisal report, studied the respondents' factory premises, acted as consultant in the loan negotiations, and conducted a market survey. After these tasks were performed, the 1st respondent wrote to the Bank instructing it not to process the loan. The cross-appellant sued for its remuneration. The High Court awarded man-hour remuneration, special damages and general damages, with interest from the date of judgment, but dismissed the suit against the 2nd respondent on the ground it had nothing to do with the arrangements. Evidence showed Mr. Shah was a director of both respondent companies, both sought a mutual loan, an appraisal report and invoice covered both companies, and the 2nd respondent's accountant accompanied inspections of collateral.

Issues

  1. Whether the trial judge erred in awarding interest on the sums from the date of judgment rather than from the date of filing the suit.
  2. Whether the trial judge erred in dismissing the suit against the 2nd respondent for lack of a cause of action.

Orders

  • Cross-appeal allowed with costs here and in the court below.
  • Order of the High Court dismissing the suit against the 2nd respondent set aside and the suit restored.
  • The 2nd respondent held equally liable as the 1st respondent for breach of contract.
  • Order granting interest from the date of judgment set aside.
  • Interest on (a), (b) and (c) to run from the date of filing the suit until payment in full.

Key headnotes

Award of Interest — Date from Which Interest Runs — Liquidated Sums
Where a person is entitled to a liquidated amount and has been deprived of it through the wrongful act of another, interest should be awarded from the date of filing the suit; only where damages must be assessed by the court does interest run from the date of judgment.
Interest under Section 26(2) Civil Procedure Act — Judicial Exercise of Discretion
Although the award of interest under section 26(2) of the Civil Procedure Act is discretionary, that discretion must be exercised judicially; an appellate court will interfere where the trial judge acted on a wrong principle in fixing the date from which interest runs.
Formation — Oral Agreements — Validity
An oral agreement is just as good as a written one in law, and may bind a party engaged through an agent acting on its behalf.
Liability of Companies — Joint Liability in Contract Through Common Director
Where the evidence shows that a single director engaged a contractor on behalf of two companies pursuing a common objective, both companies may be jointly and equally liable for breach of the resulting contract.

Legislation cited (1)

  • Civil Procedure Act s.26(2)

Cases cited (5)

  • J. K. Patel v Spear Motors Ltd (Supreme Court Civil Appeal No. 4 of 1991)
  • Milly Masembe v Sugar Corporation and Another (Civil Appeal No. 1 of 2000)
  • Harbutt's Plasticine Ltd v Wayne Tank and Pump Co Ltd [1970] 1 QB 447
  • Mukisa Biscuit Manufacturing Co Ltd v West End Distributors Ltd (No.2) [1969] EA 696
  • Prem Lata v Mbiyu [1965] EA 592
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.