Wakilii

Dfcu Bank Ltd v Kinoni Produce Farm Ltd and Another (Civil Suit No. 628 of 2015)

High Court · [2016] UGCOMMC 298 · 2016 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 default. Default judgment entered against 1st defendant. Formal proof hearing.
Decision
Default judgment entered against 1st defendant for principal sum, interest, and costs. Plaintiff discontinued claim against 2nd defendant.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division held that the plaintiff bank proved a contractual relationship under an agency agreement with the Royal Danish Embassy whereby it disbursed loan facilities totalling UGX 463,000,000 to the 1st defendant. The 1st defendant breached the contract by failing to repay despite repeated demands and a rescheduled repayment plan. The court awarded the full principal sum claimed, interest at court rate from date of filing suit until payment in full, and costs.

Outcome

Default judgment entered against 1st defendant for principal sum, interest, and costs. Plaintiff discontinued claim against 2nd defendant.

Facts

On 27 September 2005, Dfcu Bank entered an agency agreement with the Royal Danish Embassy (RDE) to administer a Private Sector Development Programme loan fund. In December 2005, the defendants applied to the RDE for financial support to develop Kinoni Produce Farm Ltd. The RDE approved a loan of DKK 1,150,000 in March 2006. Between April 2006 and February 2007, the plaintiff bank disbursed multiple tranches to the 1st defendant for machinery and operating expenses, totalling UGX 463,000,000. Repayment was due by 12 April 2012. By June 2009, the defendants were in default with outstanding balance of UGX 146,906,049. The bank sent reminders in 2008, 2009, and 2012, and provided a rescheduled repayment plan running from April 2013 to April 2017. No payments were made. The 1st defendant was served with summons on 7 October 2015 but filed no defence. Default judgment was entered on 16 November 2015. The plaintiff discontinued the claim against the 2nd defendant.

Issues

  1. Whether there was a contractual relationship between the plaintiff and 1st defendant and whether the same had been breached.
  2. Whether the plaintiff is entitled to the remedies sought.

Orders

  • Judgment entered against the 1st defendant for UGX 463,000,000.
  • Interest at court rate awarded from the date of filing suit until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Breach — Definition and Elements
Breach of contract occurs when one or both parties fail to fulfil the obligations imposed by the terms of the contract. A breach is the failure to perform a duty arising out of the obligations undertaken by the contract.
Contract Law — Proof — Written Contracts
Where the contract between parties is reduced to writing, the duty of the court is to look at the document itself and determine whether it applies to the existing facts.
Banking & Finance — Loan Recovery — Interest on Unpaid Loans
The award of interest is discretionary. The basis of an award of interest is that the defendant has kept the plaintiff out of his money and has had the use of it himself, and so ought to compensate the plaintiff accordingly.
Banking & Finance — Interest — Date from which Interest Runs
Where a person is entitled to a liquidated amount and has been deprived of it through the wrongful act of another person, he should be awarded interest from the date of filing suit. Where damages have been assessed by the court, interest is only given from the date of judgment.
Civil Procedure — Costs — General Principle
Under the Civil Procedure Act section 27(2), costs should follow the event unless the court for good reasons orders otherwise.

Legislation cited (3)

Cases cited (10)

  • Jackson v Mayfair Window Cleaning Co Ltd [1952] 1 All ER 215
  • Jarvis v Moy Davies Smith Vandenrell & Co [1936] 1 KB 408
  • United Building Services Ltd v Yafesi Muzira T/A Quickset Builders & Co (HCCS No. 154 of 2005)
  • Sietco v Noble Builders (SCCA No. 31 of 1995)
  • Nakana Trading Co Ltd v Coffee Marketing Board [1990-1994] EA 448
  • National Medical Stores v Penjuines Ltd (HCCA No. 29 of 2012)
  • Harbutts Plasticine Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447
  • Mukisa Biscuit Manufacturing Co Ltd v West End Distributors Ltd (No 2) [1970] EA 469
  • Zimbiha v Attorney General (Civil Suit No. 109 of 2011)
  • Groffin East Africa Fund LLC v Investec Uganda Ltd & 2 Ors (Civil Suit No. 374 of 2011)

Full judgment

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

Dfcu Bank Ltd v Kinoni Produce Farm Ltd and Another (Civil Suit No. 628 of 2015) [2016] UGCommC 298 (24 November 2016)
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.