Wakilii

Absa Bank Uganda Limited v Nabatesi & Another (HCT-00-CC-CS 106 of 2023)

High Court · [2024] UGCOMMC 329 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of loan agreement; formal proof hearing after defendants failed to file defence
Decision
Judgment entered for the Plaintiff; Defendants ordered to pay outstanding loan balance with interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division held that defendants who obtained an unsecured SME loan of UGX 100,000,000 and failed to make repayments breached their loan agreement. The court awarded judgment to the bank for the outstanding balance of UGX 121,253,208 plus interest at 15% per annum from the date of filing suit until payment in full. General damages were declined as interest was deemed sufficient compensation. The ruling clarifies that once interlocutory judgment is entered and the matter proceeds to formal proof, breach of contract is no longer in issue.

Outcome

Judgment entered for the Plaintiff; Defendants ordered to pay outstanding loan balance with interest and costs

Facts

In August 2021, the 1st and 2nd Defendants jointly applied for and obtained an unsecured SME business loan of UGX 100,000,000 from the Plaintiff bank. The loan was disbursed on 31 August 2021 and was to be repaid in 24 monthly instalments of UGX 5,539,939 at an interest rate of 29% per annum. The Defendants signed the loan agreement on 30 August 2021 accepting all terms and conditions. The Defendants defaulted on their loan obligations despite several reminders from the bank. The Defendants did not file a written statement of defence despite being served, and the matter proceeded to formal proof.

Issues

  1. Whether the Defendant breached the contract.
  2. What remedies are available to the plaintiff?

Orders

  • The Defendants pay the Plaintiff UGX 121,253,208 being the outstanding loan balance.
  • The Plaintiff is awarded interest at a rate of 15% per annum on the outstanding sum from the date of filing the suit until payment in full.
  • The Plaintiff is awarded the costs of the suit.

Rules and key headnotes

Breach of Contract — Loan Agreements — Formal Proof After Interlocutory Judgment
Where an interlocutory judgment has been entered in favour of the plaintiff and the matter comes for formal proof, breach of the agreement is no longer an issue for determination.
Loan Recovery — Interest Award — Discretion of Court
Under section 26(2) of the Civil Procedure Act, where a decree is for payment of money, the court has discretion to order interest at such rate as it deems reasonable on the principal sum from the date of suit to the date of decree and further interest from the date of decree to the date of payment.
Remedies for Breach — Interest as Compensation — Basis for Award
The basis for the award of interest is that the defendant has taken and used the plaintiff's money and benefited from it and consequently ought to compensate the plaintiff; the essence of award of interest is restitution in integrum.
Remedies — General Damages — Relationship to Interest Award
Where interest has been granted to a plaintiff for breach of a loan agreement, general damages may be declined where the interest awarded is sufficient to cater for any loss or inconvenience suffered.

Legislation cited (2)

Cases cited (3)

  • Hajji Asumani Mutekanga v Equator Growers (U) Ltd (Civil Suit No. 7 of 1995)
  • Kabandize John Baptist & 21 Others v Kampala City County Authority (Civil Appeal No. 36 of 2016)
  • Premchandra Shenoi and Another v Maximov Oleg Petrovich (Supreme Court Civil Appeal No. 9 of 2003)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Absa Bank Uganda Limited v Nabatesi & Another (HCT-00-CC-CS 106 of 2023) [2024] UGCommC 329 (6 November 2024)
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.