Wakilii

Equity Bank (U) Limited v Hameyimana (Civil Appeal No. 10 of 2016)

Court of Appeal · [2023] UGCA 53 · 2023 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from High Court (Commercial Division) judgment in a suit contesting sale of a leased vehicle
Decision
Appeal allowed; lower court awards set aside; respondent held liable to appellant for UGX 1,955,000 with interest at court rate

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Holding

The Court of Appeal allowed the bank's appeal, holding the respondent had defaulted on his monthly lease instalments, which constituted a breach entitling the appellant to impound and sell the leased vehicle. By defaulting, the respondent lost any legitimate expectation to purchase the vehicle. The court held that awards for loss of business and the value of the vehicle were neither pleaded nor proved, and that simultaneously awarding the vehicle's value plus instalments paid constituted unjust enrichment. Special damages, being unproven or fees mandatory to obtain the lease, were wrongly awarded. The counterclaim was reassessed, and the respondent was found to owe the appellant UGX 1,955,000 with interest at court rate.

Facts

The respondent entered a Micro Leasing facility agreement with the appellant bank, governed by a Lease Offer dated 13 May 2008, to acquire a motor vehicle truck. Under the agreement, the respondent was to pay 24 monthly rental instalments of UGX 2,474,106, with an option to purchase the vehicle at the end of the lease for 2% of the original cost if all terms were satisfied. The respondent fell into arrears, failing to pay the full agreed instalments for August 2009 and several other months. The appellant issued a demand notice dated 14 April 2009 for unpaid instalments. The appellant subsequently impounded and sold the vehicle. The respondent sued contesting the sale, seeking return of the vehicle or its value plus damages and costs. The appellant counterclaimed for the outstanding loan balance. The trial court found in the respondent's favour, awarding the vehicle's value, loss of business, refunds of deposits, and special damages, and dismissed the counterclaim. The appellant appealed.

Issues

  1. Whether the trial Judge erred in finding that the respondent had not defaulted on his rental payments under the micro leasing facility.
  2. Whether the impounding and sale of the suit vehicle by the appellant was unlawful.
  3. Whether the trial Judge erred in awarding UGX 62,211,000 as loss of business when it was neither pleaded nor proved.
  4. Whether the trial Judge erred in awarding the respondent the value of the suit vehicle (UGX 37,500,000) which he did not own and had not paid for.
  5. Whether the trial Judge erred in awarding sums sought only as alternatives to the value of the vehicle.
  6. Whether the special damages awarded were specifically pleaded and proved.
  7. Whether the trial Judge erred in dismissing the appellant's counterclaim.

Orders

  • Appeal allowed.
  • Respondent found to owe the appellant UGX 1,955,000, payable at court rate from the date the counterclaim was filed on 4 June 2010.
  • Costs to the appellant in this Court and in the court below.

Key headnotes

Contract Law — Lease Facility — Default and Breach of Repayment Obligations
Where a lease facility requires both monthly instalment payments and completion of all payments within a fixed term, failure to meet the monthly obligation amounts to default and breach of contract, regardless of whether the overall lease period has lapsed.
Contract Law — Hire Purchase/Lease — Remedies on Default and Loss of Option to Purchase
A lessee who defaults on monthly payments forfeits a conditional option to purchase the leased asset where the contract makes the option contingent on satisfaction of all terms, and cannot rely on legitimate expectation to resist a lawful sale by the lessor.
Civil Procedure — Pleadings — Relief Not Pleaded or Prayed For
A court cannot grant relief that was neither pleaded nor prayed for, and a general prayer for 'any other reliefs' does not empower a court to make awards that are not proved and properly justifiable.
Damages & Quantum — Special Damages — Requirement to Specifically Plead and Strictly Prove
Special damages must be specifically pleaded and strictly proved as actually suffered; fees mandatorily paid to obtain a facility and maintenance costs voluntarily incurred under a contractual obligation cannot be recovered as loss.
Restitution — Unjust Enrichment — Prohibition of Double Recovery
A claimant cannot recover both the full value of an asset and the sums paid towards acquiring it, as such double recovery constitutes unjust enrichment, and a court should offset sums a claimant still owes the other party.
Civil Procedure — Appeals — Duty of First Appellate Court to Reappraise Evidence
A first appellate court is obliged to reappraise the evidence and draw its own inferences and conclusions, making due allowance for not having seen or heard the witnesses.

Legislation cited (4)

  • Judicature (Court of Appeal Rules) Directions S.I. 13-10 Rule 30(1)(a)
  • Judicature (Court of Appeal Rules) Directions S.I. 13-10 Rule 32(1)
  • Civil Procedure Act s.33
  • Civil Procedure Act s.98

Cases cited (17)

  • Fred Kamanda v Uganda Commercial Bank (Civil Appeal No. 17 of 1995)
  • Bank of Uganda v Joseph Kibuuka & 4 Others (Civil Appeal No. 281 of 2016)
  • Musoke v Departed Asian Property Custodian Board & Anor [1990-1994] 1 EA 279
  • Stanbic Bank Ltd v Kiyimba Mutale (Civil Appeal No. 2 of 2010)
  • Uganda Revenue Authority v Stephen Mabosi (Civil Appeal No. 26 of 1995)
  • James Sabwiri & Fred Musisi v Uganda (Criminal Appeal No. 5 of 1990)
  • Bonharm Carter v Hyde Park Hotels Ltd (1948) 64 TLR 777
  • Tumusiime & 318 Others v Bushenyi District Local Government & Anor (HCCS No. 0032 of 2012)
  • Pandya v R (1957) EA 336
  • Fr. Nasensio Begumisa & 3 Others v Eric Kibebaga (Civil Appeal No. 17 of 2002)
  • Jarvis vs. Moy, Davies, Smith, Vandervell & Co. [1936] 1 KB 399
  • Altica Sea Carriers Corporation vs. Ferrostoal Poseidon Bank Reederei GMBH [1976] 1 Lloyds Rep. 250
  • Messrs. Trojan & Co. Vs. RM,N.N. Nagappa Chettiar AIR 1953 SC 235
  • Bharat Amratlal Kothari Vs. Dosukhan Samadkhan Sindhi & Ors., AIR 2010 SC 475
  • Moses v Macfarlane (1760) 2 Burr
  • Shell Uganda Limited v Captain Naeem Shair Chaudry (Civil Appeal No. 32 of 2010)
  • SIETCO v Noble Builders Ltd (Civil Appeal No. 31 of 1995)
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.