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Nalubwama Mariam v EFC Uganda Limited (MDI) (Civil Suit No. 633 of 2022)

High Court · [2026] UGCOMMC 266 · 2026 Both Claims Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and fiduciary duty arising from a loan agreement, with counterclaim for recovery of outstanding loan balance
Decision
Both the plaint and counterclaim partly succeeded. Plaintiff ordered to pay reduced loan balance. Defendant at liberty to sell mortgaged properties upon non-payment subject to Mortgage Act provisions.

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Holding

The court held that both parties breached the loan agreement. The defendant bank breached its fiduciary duty by restructuring the plaintiff's loan in 2022 without her knowledge or consent, in violation of Bank of Uganda Financial Consumer Protection Guidelines requiring 30 days' notice. The plaintiff breached by failing to make agreed loan repayments. The court set aside amounts demanded based on the unauthorised 2022 restructure and ordered the plaintiff to pay only the outstanding principal of UGX 59,987,306.47 plus accrued interest and penalties of UGX 19,978,692.67, with interest at 18% per annum from filing date.

Facts

On 30 September 2019, the plaintiff obtained a loan of UGX 75,000,000 from the defendant bank, repayable over 52 months at 37.5% interest per annum, secured by land and motor vehicles. The plaintiff made the first five monthly instalments but began defaulting from April 2020 due to COVID-19 financial constraints. She requested and received loan restructures in April 2020 and July 2021. The defendant issued a default notice in November 2021 recalling the outstanding balance of UGX 63,803,997. The defendant restructured the loan again in July 2022 without the plaintiff's knowledge or consent, capitalising accrued interest and increasing her liability. By September 2024, the plaintiff had paid a total of UGX 95,287,949 but the defendant claimed the outstanding balance was UGX 119,505,213.99. The plaintiff challenged the unauthorised restructure and excessive interest charges.

Issues

  1. Whether either party breached the terms of the contract between them?
  2. Whether the Plaintiff/Counter Defendant is indebted to the Defendant/Counterclaimant, and if so, to what extent?
  3. What remedies are available to the parties?

Orders

  • It is declared that both the Plaintiff/Counter Defendant and the Defendant/Counterclaimant breached the terms of the contract.
  • The Plaintiff/Counter Defendant shall pay the Defendant/Counter Claimant UGX 59,987,306.47 being the outstanding principal sum.
  • The Plaintiff/Counter Defendant shall pay the Defendant/Counter Claimant UGX 19,978,692.67 being the accrued interest and late payment penalties.
  • The Plaintiff/Counter Defendant shall pay interest at the rate of 18% per annum on the outstanding principal sum from the date of filing the suit until payment in full.
  • Each party shall meet the costs of its suit.
  • The Defendant/Counterclaimant will be at liberty to exercise its right to sell the mortgaged/pledged properties upon the Plaintiff/Counter Defendant's failure to pay the total outstanding loan balance subject to the provisions of the Mortgage Act, Cap. 239.

Key headnotes

Banking & Finance — Loan Restructuring — Requirement of Borrower Consent and Notice
A bank breaches its fiduciary duty and the loan agreement when it unilaterally restructures a borrower's loan without the borrower's knowledge or consent, particularly where the restructure increases the borrower's liability by capitalising accrued interest.
Banking & Finance — Financial Consumer Protection — Notice Requirements
Paragraph 8 of the Bank of Uganda Financial Consumer Protection Guidelines 2011 requires banks to notify customers of any change to the terms and conditions of their relationship at least 30 days before implementing the change, and failure to do so constitutes breach of fiduciary duty.
Banking & Finance — Fiduciary Duty — Duty to Inform and Act in Good Faith
A bank owes a fiduciary duty to a borrower to act in good faith and with utmost transparency when restructuring a loan, including a duty to advise the borrower on the new loan liability and to inform the borrower about changes to the loan account status.
Contract Law — Breach of Contract — Mutual Breach
Where both parties to a loan agreement breach their respective obligations under the contract, the court will declare mutual breach and adjust remedies accordingly, including denying general damages to both parties and ordering each party to bear its own costs.
Contract Law — Variation of Contract — Requirement of Consent
Under Section 66 of the Contracts Act Cap. 284, a contract cannot be unilaterally varied without the consent of all parties, and any variation made without consent is null and void and will be set aside by the court.

Legislation cited (14)

  • Contracts Act Cap. 284 s.9(1)
  • Contracts Act Cap. 284 s.32
  • Contracts Act Cap. 284 s.60(1)
  • Contracts Act Cap. 284 s.60(4)
  • Contracts Act Cap. 284 s.66
  • Evidence Act Cap. 8 s.101
  • Evidence Act Cap. 8 s.102
  • Evidence Act Cap. 8 s.103
  • Evidence Act Cap. 8 s.104
  • Civil Procedure Act s.26
  • Civil Procedure Act s.27(2)
  • Civil Procedure Rules Order 15 rule 5(1)
  • Mortgage Act Cap. 239
  • Bank of Uganda Financial Consumer Protection Guidelines 2011 paragraph 8

Cases cited (17)

  • Oriental Insurance Brokers Limited v Transocean (U) Limited (Supreme Court Civil Appeal No. 55 of 1995)
  • SBI International Holdings (U) Ltd v COF International Co. Ltd (Court of Appeal Civil Appeal No. 194 of 2014)
  • Eden International School Limited v East African Development Bank Ltd (Civil Suit No. 271 of 2015)
  • Charles Harry Twagira & Another v DFCU Bank Limited (Civil Suit No. 188 of 2018)
  • John Bwiza v Patrick Yowasi Kadama (Court of Appeal Civil Appeal No. 35 of 2011)
  • Sharif Osman v Haji Haruna Mulangwa (Supreme Court Civil Appeal No. 38 of 1995)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Meridiana Africa Airlines (U) Ltd v Avmax Spares (EA) Ltd (High Court Civil Suit No. 111 of 2017)
  • Omega Bank Plc Vs O.B.C Limited [2005] 8 NWLR (pt.928) 547
  • Fina Bank Ltd Vs Spares and Industries Ltd [2000] 1 EA 52
  • Takiya Kashwahiri & Another v Kajungu Denis (Court of Appeal Civil Appeal No. 85 of 2011)
  • Kabandize John Baptist & 21 Others v Kampala Capital City Authority (Court of Appeal Civil Appeal No. 36 of 2016)
  • Uganda Commercial Bank Vs Deo Kigozi [2002] 1 E.A 305
  • Milly Masembe v Sugar Corporation (U) Ltd and Another (Supreme Court Civil Appeal No. 1 of 2000)
  • Wallersteiner Vs Moir [1975] 1 All ER 849
  • Mohanlal Kakubhai Radia v Warid Telecom Uganda Ltd (High Court Civil Suit No. 224 of 2011)
  • Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35
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.