Wakilii

Attorney General v Dr. Maj.(Rtd) Jallon Okullo (Civil Appeal No. 207 of 2016)

Court of Appeal · [2019] UGCA 164 · 2019 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal and cross-appeal from a High Court judgment in a contract claim
Decision
Appeal allowed in part; general damages reduced to UGX 50 million and interest on principal debt reduced to 6% simple; cross-appeal dismissed

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Holding

The Court of Appeal allowed the appeal in part and dismissed the cross-appeal. It held that UGX 500 million general damages for breach of contract was inordinately high and substituted an award of UGX 50 million, finding no rational connection between the claimed loss and the breach. Applying section 26(1) of the Civil Procedure Act, the court held the agreed 24% compound interest, expressed in US dollars on a stale 22-year-old claim, was harsh and unconscionable and substituted simple interest at 6% per annum on the principal debt. The certificate for two counsel was properly issued after judgment. The cross-appellant failed to show any error in the 6% interest on general damages.

Facts

In 1988 the Ministry of Defence and the Army contracted the respondent, a medical practitioner and retired army officer, to provide medical services to a high-value army officer. Services were rendered though the officer died. A bill of US$93,150 was rendered in 1989 but remained unpaid until 2011 and 2012, when it was paid in two instalments. In 1989 the Permanent Secretary of the Ministry of Defence agreed that the bill would carry compound interest of 24% per annum. The respondent sued in the High Court to recover the accumulated interest of US$19,362,821, general damages, further interest and costs. The High Court awarded US$3,066,400.44 as compound interest at 15% per annum on the principal, UGX 500 million general damages, and further interest. The Attorney General appealed and the respondent cross-appealed on the quantum of damages and interest.

Issues

  1. Whether the award of UGX 500 million as general damages for breach of contract was inordinately high.
  2. Whether the trial judge erred in reducing the agreed compound interest of 24% to 15%.
  3. Whether the agreed compound interest of 24% per annum was harsh and unconscionable and unenforceable under section 26(1) of the Civil Procedure Act.
  4. Whether the trial judge was functus officio in awarding a certificate for two counsel.
  5. Whether the trial judge erred in awarding 6% rather than 8% interest on the general damages awarded.

Orders

  • Appeal allowed in part.
  • Cross-appeal dismissed.
  • High Court award of UGX 500 million general damages set aside and substituted with UGX 50 million.
  • Compound interest at 15% per annum on the principal debt set aside and substituted with simple interest at 6% per annum from the date of agreement to pay interest until filing of the suit.
  • Interest at 6% per annum on the whole decretal amount from date of judgment until payment in full.
  • Each party to bear its own costs on appeal.

Key headnotes

Damages & Quantum — General Damages — Appellate Interference with Award
An appellate court will not interfere with an award of general damages unless the trial court acted on a wrong principle of law or the award is so high or so low as to be a wholly erroneous estimate of the damage suffered.
Damages & Quantum — General Damages — Rational Connection to Breach
General damages for breach of contract must have a rational connection to injuries flowing from the breach; losses unconnected to the breach, such as the voluntary sale of personal property, cannot found an award.
Contract Law — Interest — Unconscionable Rates under Civil Procedure Act s.26(1)
Where an agreement for payment of interest is sought to be enforced and the court is of opinion that the agreed rate is harsh and unconscionable, the court may under section 26(1) of the Civil Procedure Act give judgment for interest at such rate as it thinks just, even where unconscionability was not pleaded at trial.
Contract Law — Interest — Assessment of Unconscionability
In assessing whether an agreed interest rate is unconscionable, the court may consider that the debt was denominated in a stable foreign currency attracting low rates, that the claim was stale, and the burden imposed on the public purse.
Damages & Quantum — Interest — Discretion and Burden on Appeal
An award of interest is discretionary and rests on the principle that the defendant has kept the plaintiff out of his money; a party challenging the rate must show that the trial court applied a wrong principle or that the rate is so low as to be unjust.
Civil Procedure — Certificate for Two Counsel — Timing and Functus Officio
A certificate for two counsel can only be issued after judgment has been delivered and costs awarded; doing so as a separate post-judgment order does not render the court functus officio.

Legislation cited (3)

  • Civil Procedure Act s.26(1)
  • Civil Procedure Act s.26(2)
  • Civil Procedure Act s.26(3)

Cases cited (13)

  • [1998] UGSC 9
  • Habre International Co Ltd v Ebrahim Alarakia Kassam (Supreme Court Civil Appeal No. 4 of 1999)
  • Fernandes v The People [1972] EA 62
  • Begumisa Financial Services Ltd v General Moldings Ltd and anor [2007] (1) EA 28
  • Shan v Guilders International Bank Ltd [2002] (1) EA 269
  • Captain Harry Gandy v Caspar Air Charters Ltd [1956] 23 EACA 139
  • [2015] UGSC 2
  • Jinaji v Jinaji [1968] EA 547
  • National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd and Anor, Civil Appeal No. 95 of 1999 (unreported)
  • [1999] UGSC 1
  • [2010] UGSC 8
  • Selle & Another v Associated Motor Boat Company Ltd & Others [1968] EA 123
  • [2000] UGSC 2
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.