Wakilii

Dembe Trading Enterprises Ltd v Welcome Impex Uganda Ltd (HCT-00-CC-CS 246 of 2006)

High Court · [2010] UGCOMMC 8 · 2010 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt following dishonoured cheques; default judgment entered under Order 9 rule 6 CPR; formal proof hearing
Decision
Judgment entered in favour of plaintiff for special damages, interest at reduced rate, nominal general damages and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that the plaintiff proved its claim through ledger accounts, tax invoices, and dishonoured cheques. Defendant was indebted to plaintiff in the sum of UGX 22,554,925 for goods supplied. The contractual interest rate of 3% per month (36% per annum) was harsh and unconscionable under Civil Procedure Act s.26(1) and was reduced to 1% per month (12% per annum). Special damages awarded. General damages awarded nominally at UGX 220,000 as loss was already compensated by interest award. Costs awarded to plaintiff.

Outcome

Judgment entered in favour of plaintiff for special damages, interest at reduced rate, nominal general damages and costs

Facts

Between January and April 2005, plaintiff supplied various goods to defendant on credit terms. Defendant made partial payments leaving an outstanding balance of UGX 22,554,925. Defendant issued five cheques totalling UGX 18,606,275 which were all dishonoured on presentation. One invoice for UGX 3,800,000 remained entirely unpaid. The supplies were evidenced by signed tax invoices and recorded in the plaintiff's ledger account. Terms of payment were cash on delivery, with a contractual provision for 3% monthly interest on overdue accounts. Demand for payment was made by plaintiff's lawyers on 20 June 2005. Defendant failed to file a defence and default judgment was entered by the Registrar.

Issues

  1. Whether the defendant is indebted to the plaintiff in the sum of UGX 22,554,925.
  2. Whether the plaintiff is entitled to the remedies prayed for, including special damages, interest, general damages and costs.
  3. Whether the contractual interest rate of 3% per month is harsh and unconscionable and should be reduced by the court.

Orders

  • Special damages of UGX 22,554,925 awarded.
  • Interest at 1% per month on the special damages from date of default until date of filing suit.
  • Interest at commercial rate of 25% per annum on special damages from date of filing suit to date of judgment.
  • Interest at court rate on the aggregate sum from date of judgment until payment in full.
  • General damages of UGX 220,000 awarded.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Evidence — Burden of Proof — Civil Matters — Standard of Proof on Balance of Probabilities
The burden of proof lies on the party who asserts the affirmative of the question in dispute. When that party adduces evidence sufficient to raise a presumption that what he asserts is true, the burden shifts to the opponent to rebut the presumption. The standard of proof in civil matters is on a balance of probabilities.
Contract Law — Sale of Goods — Action for Price — Buyer's Failure to Pay
Under Sale of Goods Act s.48(1), where property in goods has passed to the buyer and the buyer wilfully neglects or refuses to pay according to the contract, the seller may maintain an action for the price of the goods.
Contract Law — Interest — Contractual Interest Rate — Court's Discretion to Reduce Harsh and Unconscionable Rates
Under Civil Procedure Act s.26(1), where a contractual rate of interest is sought to be enforced and the court finds it harsh and unconscionable, the court may substitute it with such rate as it thinks just. Interest exceeding 24% per annum is presumed excessive under the Moneylenders Act s.12 yardstick. A contractual rate of 3% per month (36% per annum) is harsh and unconscionable.
Contract Law — Interest — Court's Inherent Jurisdiction — Undefended Suits
The court has inherent equitable jurisdiction to reopen unconscionable bargains even in undefended suits. The fact that a suit is undefended does not oblige the court to approve a harsh and unconscionable contractual rate of interest.
Contract Law — Damages — General Damages — Compensatory Principle — No Double Recovery
General damages for breach of contract are compensatory and intended to put the plaintiff in the same position as if the contract had been performed, not a better position. Where loss has already been compensated by an award of interest, only nominal general damages should be awarded for inconveniences suffered.

Legislation cited (11)

Cases cited (2)

  • Muhamed v Athman Shamte (1960) EA 1062
  • Yousuf Abdullah Gulemhusein v The French Somaliland Shipping Co Ltd (1959) EA 25

Full judgment

↓ Download PDF

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

Dembe Trading Enterprises Ltd v Welcome Impex Uganda Ltd (HCT-00-CC-CS 246 of 2006) [2010] UGCommC 8 (25 March 2010)
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.