Wakilii

Bank of Africa Uganda Limited v Ssuuna Fred (Civil Suit 1036 of 2023)

High Court · [2024] UGCOMMC 15 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for loan recovery filed by way of ordinary plaint, heard ex parte
Decision
Judgment entered for the Plaintiff; Defendant liable to pay UGX 414,713,371 with interest at 28% per annum from date of filing until payment in full, plus general damages of UGX 10,000,000 and costs

Observed later treatment

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Holding

Held that the Defendant defaulted on a loan facility of UGX 240,000,000 and is liable to pay the outstanding balance of UGX 414,713,371. The contractual interest rate of 28% per annum on commercial lending is reasonable and enforceable. General damages of UGX 10,000,000 awarded to compensate the Plaintiff for expenses incurred in attempted loan recovery. Costs awarded to the Plaintiff.

Outcome

Judgment entered for the Plaintiff; Defendant liable to pay UGX 414,713,371 with interest at 28% per annum from date of filing until payment in full, plus general damages of UGX 10,000,000 and costs

Facts

In February 2017 the Defendant obtained a credit facility of UGX 240,000,000 from the Plaintiff bank, secured by a mortgage over land comprised in Block 858 Plots 8 and 9 at Misozi. The Defendant defaulted on repayment and introduced a potential buyer, Atumanya Anxious, who agreed to purchase the security for UGX 280,000,000. The Plaintiff executed a sale agreement and issued an undertaking to refund the purchase price if transfer could not be effected. The buyer was unable to transfer the property because the title had been issued in error by Rakai District Land Board and the land fell within Sangobay Zone under Uganda Land Commission jurisdiction. The title was cancelled. In February 2022 the buyer requested a refund and returned the title and release documents. The Plaintiff reinstated the Defendant's loan in May 2022 with a balance of UGX 297,305,306 at 28% interest per annum. The Defendant continued to default and the Plaintiff filed suit in 2023 claiming UGX 414,713,371. The suit proceeded ex parte after the Defendant failed to enter appearance.

Issues

  1. Whether the Defendant is liable to pay the Plaintiff the sum of UGX 414,713,371 being the outstanding loan balance.
  2. What interest rate should apply to the outstanding loan balance.
  3. Whether the Plaintiff is entitled to general damages.
  4. Whether the Plaintiff is entitled to costs of the suit.

Orders

  • Judgment entered for the Plaintiff against the Defendant for the payment of UGX 414,713,371.
  • Interest awarded at 28% per annum on UGX 414,713,371 from the date of filing the suit until payment in full.
  • General damages of UGX 10,000,000 awarded to the Plaintiff.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Banking & Finance — Loan Recovery — Burden of Proof on Balance of Probabilities
In civil suits for loan recovery, the burden of proof lies on the plaintiff to prove the claim on the balance of probabilities by furnishing evidence whose level of probity is such that a reasonable man might hold that the more probable conclusion is that for which the plaintiff contends.
Contract Law — Loan Agreements — Interest Rates — Enforceability of Contractual Rate
A contractual interest rate on a commercial loan is enforceable where the court finds it reasonable and not harsh or unconscionable, even where the rate has increased from the original facility terms due to changes in commercial lending rates.
Banking & Finance — Loan Default — Reinstatement After Abortive Sale of Security
Where a bank sells mortgaged property to recover a defaulted loan but the sale is reversed due to defects in the security title, the bank is entitled to reinstate the borrower's loan liability at the prevailing interest rate until full settlement.

Legislation cited (2)

Cases cited (9)

  • Lancaster v Blackwell Colliery Co Ltd (1918 WC Rep 345)
  • Sebuliba v Cooperative Bank Ltd [1982] HCB 130
  • Etoma Francis v Alex Agandru and 3 Others (Civil Suit No. 0007 of 2011)
  • Storms v Hutchinson [1905] AC 515
  • Ahmed El Termewy v Hassan Awdi and 3 Others (HCCS No. 0095 of 2012)
  • Kampala District Land Board and George Mitala v Venasio Babwaya (Civil Appeal No. 0002 of 2007)
  • UCB v Deo Kigozi (2002) 1 EA 305
  • Kibimba Rice Ltd v Umar Salim (SCCA No. 17 of 1992)
  • Uganda Development v Muganga Constructions [1981] HCB 35

Full judgment

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

Bank of Africa Uganda Limited v Ssuuna Fred (Civil Suit 1036 of 2023) [2024] UGCommC 15 (19 February 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.