Wakilii

Choudry v Bank of Baroda (U) Limited [2025] UGHC 143

High Court · 2025 Judgment for Plaintiff (Partial) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and misrepresentation arising from a mortgage loan agreement
Decision
Plaintiff awarded UGX 15,000,000 plus interest and costs; all other claims dismissed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the bank did not misrepresent the nature of the interest rate; the contract expressly provided for a variable rate pegged to the Prime Lending Rate. The plaintiff failed to prove that the bank gave any oral assurances that the escalation clause would not apply. The bank did breach its obligation by disbursing only UGX 345,000,000 instead of UGX 360,000,000 without accounting for the shortfall. The plaintiff was awarded UGX 15,000,000 plus interest.

Outcome

Plaintiff awarded UGX 15,000,000 plus interest and costs; all other claims dismissed

Facts

The plaintiff, a High Court Judge, obtained a mortgage loan of UGX 360,000,000 from the defendant bank in 2009 to construct a residential house. The interest rate was set at 2% below the Prime Lending Rate. The plaintiff alleged that he was assured the rate would be fixed despite an escalation clause in the contract. After disbursement, the bank varied the interest rate multiple times in line with changes to the Prime Lending Rate. The plaintiff protested the increases and claimed he overpaid UGX 84,000,000. He eventually cleared the loan in 2015. The plaintiff sued for breach of contract, misrepresentation, and breach of fiduciary duty.

Issues

  1. Whether the defendant misrepresented some of the terms of the contract to the plaintiff.
  2. Whether the parties agreed upon a variable or fixed rate of interest.
  3. Whether the defendant breached its contractual obligations owed to the plaintiff.
  4. Whether the plaintiff is entitled to the remedies sought.

Orders

  • Judgment entered for the plaintiff.
  • The defendant to pay the plaintiff UGX 15,000,000 as funds unaccounted for.
  • Interest on the award at the rate of 21% per annum from 1st December 2009 until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Parol Evidence Rule — Pre-Contractual Representations
Statements made during pre-contract negotiations are not automatically part of the final contract unless explicitly incorporated or deemed a term by the courts. Where misrepresentation is alleged, pre-contractual communications may be admissible to explain how a contract came about and whether a misrepresentation occurred.
Contract Law — Contractual Interpretation — Standard Form and Special Conditions
When a standard form contract is adopted, the parties need to customise it to reflect the specific terms and conditions agreed upon. In the event of conflict between printed standard terms and special conditions, the special conditions will normally prevail unless expressly provided otherwise.
Contract Law — Variable Interest Rates — Mutuality of Contract
An escalation clause allowing unilateral variation of interest rates does not violate the principle of mutuality if the rate is pegged to an external market benchmark such as the Prime Lending Rate. Mutuality is achieved by an agreement linking the rate to a benchmark from which it is allowed to fluctuate with market conditions, and actual downward adjustments by the bank eliminate one-sidedness.
Banking — Lender-Borrower Relationship — Fiduciary Duty
The mere existence of a lender-borrower relationship does not impose fiduciary obligations on the lender. At common law, in the absence of an advisory relationship and the provision of advice, the only duty of care that a bank owes is a Hedley Byrne duty, that is, when providing advice, the duty to ensure that such advice is full and accurate.
Banking — Duty to Explain — Bank of Uganda Financial Consumer Protection Guidelines
The Bank of Uganda Financial Consumer Protection Guidelines, 2011 do not have contractual force between banker and customer; they simply provide a benchmark as to how banks should behave. They are not a source of implied terms into contracts with banks. Banks have a duty to explain in plain language to the customer, when asked, the financial implications of entering into an arrangement, but this is not a duty to volunteer information if not asked, nor to provide a comprehensive tutorial.
Evidence — Credibility and Reliability of Witnesses — Contemporaneous Records
A witness may be unquestionably truthful in the sense that he or she genuinely believes the evidence, but it is the task of the Court to establish whether that evidence is accurate and reliable. When considering the credibility of witnesses, it is always essential to test their veracity by reference to the objective facts proved independently of their testimony, particularly by reference to contemporaneous documents.
Contract Law — General Damages for Breach of Contract — Mental Anguish
At common law, where the only injury suffered is mental anguish, a recovery of damages for such suffering is not allowed unless they proceed from physical inconvenience caused by the breach, or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. Damages recoverable for breach of contract are restricted to compensation for pecuniary harm.

Legislation cited (7)

Cases cited (16)

  • Great Hill Equity Partners II LP v. Novator One LP and others [2007] EWHC 1210
  • Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896
  • Prenn v. Simmonds [1971] 1 WLR 1381
  • Chartbrook Ltd v. Persimmon Homes Ltd [2009] 1 AC 1101
  • L'Estrange v. E. Graucob Ltd [1934] 2 KB 394
  • Curtis v. Chemical Cleaning and Dyeing Co [1951] 1 KB 805
  • Lachaux v. Lachaux [2017] 4 WLR 57
  • Gestmin SGPS S.A. v. Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)
  • Thomas and another v. Triodos Bank NV [2017] EWHC 314 (QB)
  • Alexander v. West Bromwich Mortgage Company Ltd [2016] EWCA Civ 496
  • Pagnan SpA v. Tradax Ocean Transportation SA [1937] 3 All ER 565
  • Hedley Byrne & Co Ltd v. Heller & Partners Ltd [1964] AC 465
  • Bristol & West Building Society v. Mothew [1998] Ch 1
  • Woods v. Martins Bank Ltd [1958] 3 All ER 166
  • Rainy Sky SA v. Kookmin Bank [2011] 1 WLR 2900
  • Marks and Spencer plc v. BNP Paribas Securities Services Trust Company (Jersey) Limited and another [2015] UKSC 72

Full judgment

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

Choudry v Bank of Baroda (U) Limited 2025 UGHC 143 (31 March 2025)
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.