Wakilii

Centenary Bank Limited v Lubmarks Investments Limited (Civil Suit No. 230 of 2012)

High Court · [2017] UGCOMMC 270 · 2017 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money under a master lease agreement
Decision
Judgment entered for the plaintiff with orders for payment of principal, interest, default interest, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendant breached the Master Lease Agreement by failing to pay rental installments as agreed. The defendant was ordered to pay the outstanding sum of UGX 70,577,310 plus contractual interest at 25% per annum from default until payment in full and default interest of 0.5% per month. General damages for breach were declined as the default interest adequately compensated the plaintiff for loss of use of its money.

Outcome

Judgment entered for the plaintiff with orders for payment of principal, interest, default interest, and costs

Facts

The defendant obtained a credit facility of UGX 64,814,000 from the plaintiff bank under a Master Lease Agreement dated 21 November 2011, secured by construction equipment. The loan was repayable in four equal quarterly installments of UGX 17,472,455 over 12 months. The defendant defaulted on the first payment due in November 2011 and repeatedly failed to honor subsequent commitments to pay. By letter dated 10 February 2012, the defendant admitted it could not make payment. The plaintiff recalled the facility on 12 April 2012 when the outstanding sum stood at UGX 73,034,861. Despite several demands and the defendant's acknowledgment of indebtedness through its counsel, no payment was made. The equipment pledged as security could not be traced for liquidation. The defendant entered appearance and filed a written statement of defence but failed to attend hearings, and the matter proceeded exparte on 2 June 2017.

Issues

  1. Whether the defendant failed to pay all the sums owed to the plaintiff under the Master Lease Agreement.
  2. Whether by the said failure the defendant breached the Master Lease Agreement.
  3. Whether the defendant is still indebted to the plaintiff and to what extent.
  4. What remedies are available to the plaintiff?

Orders

  • The defendant is ordered to pay the sum of UGX 70,577,310 being principal and interest.
  • Interest at the rate of 25% per annum from date of default until payment in full is awarded.
  • Default interest of 0.5% per month from the date of cause of action until payment in full is awarded.
  • General damages for breach of agreement are declined.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Failure to Pay — Lease Agreement
A lessee who fails to pay rental installments as specified in a Master Lease Agreement commits a material breach of contract.
Contract Law — Breach of Contract — Definition
Breach of contract occurs when one or both parties fail to fulfill the obligations imposed by the terms of the contract.
Banking & Finance — Lease Facilities — Contractual Interest — Default Interest
Where a lease agreement expressly provides for contractual interest at 25% per annum and default interest at 0.5% per month on amounts in arrears, the court will enforce these rates upon breach by the lessee.
Contract Law — Damages — General Damages for Breach — Default Interest as Adequate Compensation
Where default interest is awarded at a rate agreed in the contract, general damages for inconvenience and loss of use of money may be declined on the ground that the default interest adequately compensates the plaintiff for deprivation of the use of its money.
Banking & Finance — Interest on Money — Rationale for Award
Interest is compensation paid by the borrower to the lender for deprivation of the use of his money. The basis of an award of interest is that the defendant has kept the plaintiff out of his money and the defendant has had the use of it himself, and so ought to compensate the plaintiff accordingly.

Legislation cited (1)

Cases cited (7)

  • Nakana Trading Co. Ltd v Coffee Marketing Board (Civil Suit No. 137 of 1991)
  • Emmanuel Kyoyeta v Emmanuel Mutebi (Civil Suit No. 781 of 2014)
  • Bank of Uganda v Fred William Masaba & 5 Others (SCCA No. 3 of 1998)
  • Esso Petroleum Co. Ltd v Mardon [1976] 2 All ER
  • Riches v Westminster Bank [1947] AC 390
  • Jefford v Gee [1970] 1 All ER 1202
  • Harbutt's Plasticine Ltd v Wayne Tank and Pump Co Ltd

Full judgment

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

Centenary Bank Limited v Lubmarks Investments Limited (Civil Suit No. 230 of 2012) [2017] UGCommC 270 (16 June 2017)
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.