Wakilii

Dennis Osikol Eric v Mutebi Eric (Civil Suit No 640 of 2022)

High Court · [2024] UGCOMMC 450 · 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 loan amount and interest
Decision
Judgment entered for the plaintiff with damages and costs awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Court held that a principal-agent relationship existed between the plaintiff and Kabagambe Mathias who executed the loan agreement on behalf of the plaintiff. The defendant was indebted to the plaintiff for UGX 70,000,000. The agreed interest rate of 6% per month (72% per annum) was harsh and unconscionable and was reduced to 2% per month (24% per annum). Special damages of UGX 70,000,000, general damages of UGX 5,000,000, and costs were awarded to the plaintiff with interest on the aggregate sum at 6% per annum from judgment until payment in full.

Outcome

Judgment entered for the plaintiff with damages and costs awarded

Facts

The plaintiff, through his agent Kabagambe Mathias, entered into a loan agreement dated 4 January 2021 with the defendant for UGX 70,000,000 payable in two installments of UGX 27,500,000 and UGX 42,500,000, with interest at 6% per month for six months. The defendant deposited his certificate of title on land in Kyadondo Block 184 Plot 793 as security and an equitable mortgage was registered. The plaintiff contended that the first installment was advanced on 4 January 2021 and the balance on 8 January 2021, but the defendant defaulted on repayment. The defendant contended that the loan agreement was frustrated because the amounts were never advanced by the plaintiff, but rather that Kabagambe Mathias personally lent him UGX 45,000,000 (UGX 2,500,000 on 6 January 2021 and UGX 42,500,000 on 8 January 2021). A power of attorney was executed on 2 November 2021 authorizing Kabagambe Mathias to sue on behalf of the plaintiff.

Issues

  1. Whether the defendant is indebted to the plaintiff
  2. What remedies are available to the parties
  3. Whether the plaintiff has a cause of action against the defendant (preliminary objection)

Orders

  • The defendant is indebted to the plaintiff in the sum of UGX 70,000,000.
  • Special damages of UGX 70,000,000 awarded to the plaintiff.
  • Interest on the principal sum at the rate of 2% per month (24% per annum) from date of filing suit to date of judgment.
  • General damages of UGX 5,000,000 awarded to the plaintiff.
  • Interest on the aggregate sum at 6% per annum from date of judgment till payment in full.
  • Costs of the suit awarded to the plaintiff.
  • Preliminary objection overruled.

Rules and key headnotes

Agency — Principal and Agent Relationship — Formation
An agent and principal relationship does not require consideration or a written document. The authority of an agent may be express or implied from the circumstances of the case. Where a loan agreement is signed by an agent on behalf of a named principal, and the third party is aware the agent is not contracting personally, a principal-agent relationship is established.
Agency — Authority — Ratification by Conduct
Where an agent enters into a contract on behalf of a principal before formal written authority is granted, but a power of attorney is later executed explicitly authorizing the agent to sue on the principal's behalf, the principal has ratified the agent's actions and has locus standi to sue on the contract.
Scheduling Conference — Preliminary Objections — Duty to Schedule
A party who raises a preliminary objection in their pleadings has a duty to ensure that the point of law is scheduled as an issue for determination during the scheduling conference. Failure to do so does not preclude the court from determining the preliminary objection where it has been pleaded and submitted upon.
Electronic Evidence — Authenticity — Burden of Proof
For electronic evidence to be admitted and given evidential value, proof of its authenticity must be established. The evidence must have integrity, remain complete and unaltered, and be capable of being displayed to the person to whom it is presented. The burden of proof lies on the person seeking to introduce the electronic evidence.
Interest Rates — Harsh and Unconscionable Terms — Court's Discretion
Courts have discretion under section 26(1) of the Civil Procedure Act not to enforce interest rates that are harsh and unconscionable. An interest rate of 6% per month (72% per annum) on a friendly loan where the lender is not a licensed money lender is harsh and unconscionable and may be reduced to a reasonable rate.
Friendly Loans — Interest Rates — Permissible Limits
Friendly loans between friends or family with a reasonable interest rate are legally acceptable and enforceable. Interest may be charged on friendly loans provided that the interest rates are lower than those charged by a licensed money lender.
Witness Credibility — Inconsistent Testimony
A witness who gives testimony inconsistent with their previous sworn statements is dishonest and unreliable. Where a defendant previously denied owing any money to an agent but later admits owing the agent personally while denying debt to the principal, such testimony undermines the defendant's credibility.

Legislation cited (10)

Cases cited (8)

  • Tororo Cement Co. Ltd v Frokina International Ltd (Supreme Court Civil Appeal No. 02 of 2001)
  • W.M Kyambadde v Mpigi District Administration IIe84lHCB
  • Damalie Byakusaaga Bisobye v Byakusaaga Bisobye Sebulime Bokoso & Anor (High Court Miscellaneous Application No. 1295 of 2023)
  • Hadley v Baxendale (1854) 9 Exch 341
  • Robert Cuossens v Attorney General (Supreme Court Civil Appeal No. 8 of 1999)
  • Uganda Commercial Bank v Kigozi [2002] EA 305
  • Jennifer Behange, Rwanyindo Aurelia, Paul Bagenzi v School Outfitter (U) Limited (Court of Appeal Civil Appeal No. 53 of 1999)
  • Kinyera v The Management Committee of Laroo Building Primary School (High Court Civil Suit No. 099 of 2013)

Full judgment

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

Dennis Osikol Eric v Mutebi Eric (Civil Suit No 640 of 2022) [2024] UGCommC 450 (28 October 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.