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Create Consult Limited v Jurua & 3 Others (Civil Suit 16 of 2022)

High Court · [2024] UGHC 805 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of outstanding loan sum and damages arising from breach of money lending agreement
Decision
Judgment entered for the plaintiff against the defendants jointly and severally for principal sum, special damages, general damages, interest at reduced rate, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the first defendant borrowed UGX 150,000,000 from the plaintiff under a loan agreement. The court awarded the principal sum, special damages of UGX 5,000,000, and general damages of UGX 20,000,000. The agreed interest rate of 10% per month (120% per annum) was held to be unconscionable when compared to commercial lending rates, and the court substituted an interest rate of 20% per annum from the date of default until payment in full pursuant to section 26(1) of the Civil Procedure Act.

Outcome

Judgment entered for the plaintiff against the defendants jointly and severally for principal sum, special damages, general damages, interest at reduced rate, and costs

Facts

In 2021, the first defendant applied for and received a loan of UGX 150,000,000 from the plaintiff company. The loan agreement stipulated repayment within three months with interest at 10% per month and monthly instalments of UGX 65,000,000. The second, third, and fourth defendants executed the agreement as guarantors, undertaking liability if the first defendant defaulted. At the end of the three-month period, the first defendant was in default. The first defendant admitted indebtedness of UGX 145,000,000 and judgment on admission was entered for that amount. The dispute concerned UGX 5,000,000 of the principal sum and the propriety of the 10% monthly interest rate. The defendant claimed he only received UGX 145,000,000 and paid UGX 4,500,000 as a loan application fee.

Issues

  1. What is the amount due and owing to the plaintiff from the 1st Defendant under the loan agreement?
  2. What remedies are available to the plaintiff?

Orders

  • Judgment entered for the plaintiff against the defendants jointly and severally.
  • Payment of UGX 150,000,000 as the amount borrowed from the plaintiff company.
  • Special damages of UGX 5,000,000 being part of the principal sum borrowed.
  • General damages of UGX 20,000,000.
  • Interest on the principal sum at 20% per annum from the date of default until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Loan Agreements — Proof of Principal Sum
A plaintiff claiming recovery of a loan sum must prove the amount disbursed through documentary evidence such as a loan agreement, disbursement voucher, and acknowledgement of indebtedness signed by the borrower.
Damages & Quantum — Special Damages — Proof Required
Special damages must be specifically pleaded and strictly proven. A plaintiff cannot merely write down particulars and expect the court to award them without proof. It is for the plaintiff to prove their damages.
Damages & Quantum — General Damages — Breach of Loan Agreement
Where a defendant borrows money and defaults on repayment, thereby keeping the plaintiff out of its money and affecting the plaintiff's liquidity and business operations, the plaintiff is entitled to general damages to restore it to the position it would have been in had the loan agreement been performed. General damages are awarded at the discretion of the court to compensate the aggrieved party fairly for inconveniences accrued.
Contract Law — Interest Rates — Unconscionable Terms
An agreed interest rate of 10% per month, amounting to 120% per annum, is excessive, harsh, and unconscionable when compared to commercial bank lending rates which range from 18% to 25% per annum. Such a rate is disproportionate to the commercial norm and ought not to be enforced by legal process.
Statutory Interpretation — Civil Procedure Act s.26(1) — Reopening Unconscionable Interest Agreements
Section 26(1) of the Civil Procedure Act empowers the court to reopen an agreement for payment of interest where the rate is harsh and unconscionable, and to substitute a rate it considers just. This power remains relevant notwithstanding the repeal of the Money Lenders Act.

Legislation cited (1)

Cases cited (7)

  • Bonham Carter v Hyde Park Hotel [1948] 64 TLR
  • Rosemary Naluwadda v Uganda Aids Commission (HCCS 67 of 2011)
  • Kibimba Rice Ltd v Umar Salim (SCCA 17 of 1992)
  • Muhammad Tumusiime v URA Civil Suit NO. 825
  • Alice Okiror v Global Capital Save 2004 Ltd (Civil Suit 149 of 2010)
  • Alpha International Investments Ltd v Nathan Kizito (HCCS 131 of 2001)
  • Topline Investment Limited v Namuli Jenipher Kiggundu and Zimbe Bernard Nakibinge (Civil Suit 966 of 2019)

Full judgment

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

Create Consult Limited v Jurua & 3 Others (Civil Suit 16 of 2022) [2024] UGHC 805 (29 August 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.