Wakilii

Bisaso Nathan v Eva Ssenyonga and Another (Civil Appeal No. 67 of 2023)

Court of Appeal · [2025] UGCA 337 · 2025 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal from a judgment of the High Court (Commercial Division), heard together with a cross-appeal and a notice to affirm the decision on other grounds
Decision
Appeal partly allowed: the general damages award of UGX 1,007,875,000 set aside; the remainder of the appeal, the notice to affirm, and the cross-appeal dismissed.

The full judgment

Read the complete, verbatim text of this judgment.

Sign in to read the full judgment

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 trial court's finding that the 2 June 2014 and 8 September 2016 agreements were money lending transactions disguised as sales of goods, illegal and unenforceable because the appellant lent money at interest without a money lending licence, and that the supporting invoices and delivery notes were forgeries. Although the trial judge wrongly applied the Tier 4 Microfinance Institutions and Money Lenders Act 2016 instead of the Money Lenders Act Cap 273 in force at the time, the result was unaffected. The award of UGX 1,007,875,000 general damages to the respondents was set aside because it was never pleaded and damages cannot flow from an illegal contract. The cross-appeal and notice to affirm were dismissed.

Facts

Between 2013 and 2016 the appellant, a stationery dealer, and the respondents (a pastor and an associate) entered several transactions. The appellant characterised them as credit sales of stationery; the respondents said they were money loans disguised as sales, at compounding interest of 20% per month. The first transaction (14 February 2013, PE1, UGX 913,891,200) was supported by delivery notes and invoices. On 2 June 2014 a document titled "Agreement for a short-term loan" (D7) recorded debts of UGX 620,125,000 and UGX 781,000,000, secured by certificates of title and attracting 20% monthly compound interest. The debt accumulated to about UGX 12,308,147,200 by November 2015. In September 2016 the parties renegotiated the debt to UGX 5,270,000,000 under an agreement (PE2) titled "agreement to pay outstanding debt due for supply of goods". The respondents paid UGX 270,000,000, leaving UGX 5,000,000,000, which the appellant sued to recover. The appellant held no money lending licence.

Issues

  1. Whether the agreement executed on 2 June 2014 was a sale of goods agreement or a money lending agreement disguised as a sale of goods.
  2. Whether the delivery notes and invoices relied upon were forgeries.
  3. Whether the 2 June 2014 and 8 September 2016 agreements were illegal and unenforceable because the appellant lent money without a valid money lending licence.
  4. Whether the trial judge erred in applying the Tier 4 Microfinance Institutions and Money Lenders Act 2016 rather than the Money Lenders Act Cap 273 in force when the transactions were made.
  5. Whether the appellant could recover anything under the impugned agreements.
  6. Whether the trial judge erred in awarding the respondents UGX 1,007,875,000 in general damages arising from an illegal and unenforceable agreement.
  7. Whether the first transaction of 14 February 2013 (PE1) was a sale of goods agreement or a disguised loan (cross-appeal).

Orders

  • Ground 6 of the appeal succeeds; the award of general damages of UGX 1,007,875,000 to the respondents is set aside.
  • Ground 7 of the appeal is struck out as too general.
  • The rest of the appeal is dismissed.
  • The Notice to Affirm the decision on other grounds is dismissed.
  • The cross-appeal is dismissed.
  • Each party to bear its own costs both in the High Court and in the Court of Appeal.

Key headnotes

Money Lending — Carrying on the Business of Money-Lending — Question of Fact
Whether a person carries on the business of money-lending is a question of fact in each case, requiring proof of system, continuity and repetition; occasional or disconnected loans to friends, relations or acquaintances, whether or not interest is charged, do not by themselves amount to carrying on a money-lending business.
Money Lending — Lending Without a Licence — Illegality
A transaction in which a person carrying on the business of money-lending lends money at interest without a valid money lending licence is illegal and unenforceable.
Illegality — Disguised Contracts — Circumvention of Statute
A contract designed to circumvent a statute — such as a money lending agreement dressed up as a sale of goods to evade the licensing requirement — is illegal, null and void, and the court will not enforce any obligation arising from it.
Illegality — Recovery — In Pari Delicto
A party who is in pari delicto with the other cannot recover money or property transferred under an illegal contract, except where induced to enter it by fraud, duress or oppression, where ignorant of the illegality, or where a member of a class the statute was enacted to protect.
General Damages — Relief Not Pleaded — Illegal Transaction
A court cannot grant relief that was not claimed in the pleadings; general damages cannot be awarded where they were never sought, and in any event damages cannot flow from an illegal transaction.
Applicable Law — Validity Determined by Law in Force at Time of Transaction
The validity of a transaction is determined by the law in force when the transaction was undertaken, not the law in force at the time judgment is delivered; applying a later statute to an earlier transaction is an erroneous retrospective application of the law.
Evaluation of Evidence — Appellate Interference with Findings of Fact
An appellate court will not interfere with a trial court's findings of fact founded on its evaluation of the evidence unless the findings are perverse or based on a wrong principle of law.

Legislation cited (11)

  • Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.86
  • Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.36
  • Money Lenders Act Cap 273 s.11
  • Contracts Act 2010 s.18
  • Evidence Act s.5
  • Evidence Act s.8
  • Evidence Act s.92
  • Sale of Goods Act Cap 82
  • Interpretation Act Cap 2
  • Judicature (Court of Appeal) Rules r.91
  • Judicature (Court of Appeal) Rules r.92

Cases cited (25)

  • Behange Jennifer vs School outfitters LTD (1997-2001) UCLR
  • Nazmudin Gulam Hussein Viram v Nicholas Roussos (Civil Appeal No. 7 of 2006)
  • Management Training and Advisory Centre v Patrick Kakuku Ikanza (SCCA No. 6 of 1985)
  • Lawrence Kitsa v Bugisu Cooperative Union (Civil Appeal No. 15 of 2004)
  • Brian Kaggwa v Peter Muramira (Civil Appeal No. 26 of 2009)
  • Francis Sembuya v All Ports Services Uganda Limited (Civil Appeal No. 6 of 1999)
  • Energo (U) Co Ltd v Geoffrey Rubaramira and Attorney General (Civil Appeal No. 183 of 2013)
  • Abed Nortey v African Institute of Journalism [2014] 77 GMJ 1 SC
  • Mary Wanjiku Gachigi v Ruth Muthoni Kamau (Civil Appeal No. 172 of 2000)
  • Adesina v Ojo (2012) 10 NWLR p.552 (CA)
  • Litchfield v Dreyfus [1906] 1 K.B. 584
  • Edgelow v MacElwee [1918] 1 KB 205
  • Ahenfie Sellers Association v Philomena Mensah & 3 Ors (SCCA No. 417 of 2010)
  • West Construction Co. Ltd v Batalha (2006) 9 NWLR (pt 986) pg SC
  • Alao v African Continental Bank (1998) 3 NWLR (pt 542) pg 339 SC
  • Seascope Sai Nxa v Syed Izhar bin Syed Salleh [2006] 3 MLJ 756
  • Awoiugbagbe Light Industries Ltd v Chinukwe (1995) 4 NWLR (pt 390) pg 390 SC at pg 422
  • Adetunji v Agbolo (1997) 1 NWLR (pt 484) pg 705 at 718
  • Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corp [2018] 4 MLJ 284 CA
  • Fang Min v Belex Tours and Travel Limited (Civil Appeal No. 6 of 2013)
  • American Cynamide v Vitality Pharmacy Ltd (1991) 2 NWLR 15 at 31
  • Eliochin (Nigeria) Ltd v Mbadiwe (1986) 1 NWLR 47
  • Advocates Coalition for Development and Environment & Others v Attorney General (Constitutional Petition No. 14 of 2011)
  • Investment Masters Ltd v Ambrose Kagangure (HCCS No. 312 of 2005)
  • Damalie Byakusaaga Bisobye v Byakusaaga Bisobye Sebulime & Anor (HCMA No. 1295 of 2023)
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.