Wakilii

Stanbic Bank (U) Ltd v Ssenyonjo & Anor (Civil Appeal No. 147 of 2012)

Court of Appeal · [2019] UGCA 35 · 2019 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
First appeal from a High Court (Commercial Division) judgment in a civil suit
Decision
Appeal partly allowed; refund of US$54,000 and associated interest set aside; refund of UGX 83,000,000 VAT and illegality finding upheld

The full judgment

Read the complete, verbatim text of this judgment.

Sign in to read the full judgment
Treatment recorded in citing cases followed in 1 Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Court of Appeal upheld the finding that the lease agreement was illegal and unenforceable because the illiterate respondents signed documents that were never translated or verified as required by the Illiterates Protection Act. However, applying restitution and quasi-contract principles, the court held it was erroneous to order an unqualified refund of US$54,000 where the respondents had received and used the buses, so that head was set aside, together with the associated interest award. The court upheld the refund of UGX 83,000,000 wrongly charged as VAT, holding that VAT is not payable on financial services and the charge was unlawful. The appeal succeeded only in part.

Facts

The respondents, illiterate in English, obtained a bank-financed lease facility from the appellant to acquire two Scania buses. The respondents contributed 20% (US$54,000) of the purchase price and the appellant financed the balance, with the buses registered in the bank's name as security. The respondents operated the buses but defaulted on repayments. The buses were impounded, released after negotiation, then impounded again and sold. The respondents sued, alleging the lease was illegal because the documents were written in English, never translated into Luganda, and not verified as required by the Illiterates Protection Act. The High Court declared the lease illegal and unenforceable, ordered the appellant to refund US$54,000, refund UGX 83,000,000 charged as VAT, and pay general damages of UGX 30,000,000, plus interest. The bank appealed.

Issues

  1. Whether the leasing agreement was illegal and unenforceable for breach of the Illiterates Protection Act.
  2. Whether the trial judge erred in awarding special damages alleged to be unpleaded and unproved.
  3. Whether the trial judge erred in ordering refund of US$54,000 and all money paid under the loan where the respondents had received value.
  4. Whether the interest awarded on the US$54,000 was excessive.
  5. Whether the trial judge erred in ordering refund of VAT of UGX 83,000,000 to the respondents.

Orders

  • Ground 1 of the appeal fails and is disallowed.
  • Ground 2 of the appeal deals with a matter of form not substance, has no merit and is disallowed.
  • Ground 6 of the appeal succeeds and is allowed; the order to refund US$54,000 is set aside.
  • Ground 7 of the appeal succeeds and is allowed; the interest award on US$54,000 is set aside.
  • Ground 4 of the appeal has no merit and is disallowed; refund of UGX 83,000,000 is upheld.
  • Ground 3 of the appeal stands abandoned.
  • The appeal substantially succeeds and the High Court judgment is set aside to the extent decided in grounds 6 and 7.
  • The appellant is awarded one fourth of the costs of the appeal.

Key headnotes

Illiterates Protection Act — Definition of Illiterate — Reference to Script Not Spoken Language
Under the Illiterates Protection Act, 'illiterate' means a person unable to read and understand the script or language in which a document is written or printed; literacy in another language does not make a person literate in the language of the questioned document.
Illegality — Documents Executed for Illiterates Without Verification — Unenforceability
A document executed by an illiterate that was not read over, translated and verified with the writer's name and address as required by sections 2 and 3 of the Illiterates Protection Act is executed in contravention of a mandatory statutory command and is void and unenforceable.
Illegality — Knowledge of Counterparty Immaterial — Class-Protection Statute
Where a statute is enacted to protect a particular class such as illiterates, the counterparty's knowledge of the illiteracy is immaterial; what matters is whether the person was in fact illiterate in the language of the document.
Restitution — Quantum Meruit Under Void or Illegal Contract — Value Received
Nullification of an illegal contract does not entitle a party to recover money paid where that party received value; on the basis of quasi-contract or quantum meruit a court must assess the actual loss suffered and may not order a full refund that produces unjust enrichment.
Special Damages — Pleading Where Facts Within Defendant's Knowledge
Where the facts needed to prove monetary loss are especially within the defendant's knowledge and the defendant alone may lawfully prove them, an averment that the plaintiff will prove such monies at trial is a sufficient pleading, and the omission of the word 'special' is a matter of form not substance.
Value Added Tax — Exempt Financial Services — Loans and Credit
Financial services, including the granting and management of loans and credit, are exempt supplies under the Value Added Tax Act, so charging VAT on a loan facility is contrary to the Act and unlawful, and any sum so charged is refundable to the customer.

Legislation cited (15)

  • Illiterates Protection Act Cap 78 s.1
  • Illiterates Protection Act Cap 78 s.2
  • Illiterates Protection Act Cap 78 s.3
  • Illiterates Protection Act Cap 78 s.4
  • Evidence Act Cap 6 s.57
  • Evidence Act Cap 6 s.106
  • Evidence (Bankers' Books) Act Cap 7 s.1
  • Evidence (Bankers' Books) Act Cap 7 s.2
  • Evidence (Bankers' Books) Act Cap 7 s.3
  • Value Added Tax Act Cap 349 s.1
  • Value Added Tax Act Cap 349 s.4
  • Value Added Tax Act Cap 349 s.18
  • Value Added Tax Act Cap 349 s.19
  • Rules of the Court of Appeal r.30(1)
  • Rules of the Court of Appeal r.86(1)

Cases cited (14)

  • Hart v O'Connor [1985] AC 1000
  • Makula International Ltd v Cardinal Emmanuel Nsubuga and Another [1982] HCB 11
  • Peters v Sunday Post Ltd [1958] 1 EA 424
  • Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
  • Bostel Brothers Ltd v Hurlock [1948] 2 All ER 312
  • Langton v Hughes (1813) 1 M & S 593
  • Kiriri Cotton Co Ltd v Dewani [1958] 1 EA 239
  • Gray v. Southouse (12)
  • Scott v Brown [1892] 2 QB 724
  • Browning v. Morris (10)
  • Kearley v. Thomson (11)
  • Craven-Ellis v Canons Ltd [1936] 2 All ER 1066
  • Clarke v Cuckfield Union Guardians
  • Lawford v Billericay Rural District Council
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.