Wakilii

Gagawala Nurseru Bed v Busingye Properties Ltd (HCT-00-CC-CS 96 of 2011)

High Court · [2012] UGCOMMC 164 · 2012 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and recovery of money
Decision
Plaintiff awarded penalty interest, general damages, and costs following defendant's breach of contract

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The defendant breached a supply contract by failing to pay for delivered seedlings as agreed. Though the principal sum was subsequently paid after criminal proceedings commenced, the plaintiff was entitled to penalty interest and general damages. A contractual penalty clause of 50% on unpaid invoices was reduced from 50% to 5% as the original provision was unconscionable and unclear in its application.

Outcome

Plaintiff awarded penalty interest, general damages, and costs following defendant's breach of contract

Facts

On 4 October 2010, the plaintiff, a community-based organisation, entered into a contract with the defendant company to supply seedlings worth Ushs. 77,460,000/=. Payment terms were: 10% down payment, 40% after delivery, and 50% two months after completion. The plaintiff delivered the seedlings in October 2010. The defendant paid only Ushs. 16,560,000/=, leaving a balance of Ushs. 60,900,000/=. The defendant issued three cheques totalling Ushs. 57,000,000/=, all of which were dishonoured. The plaintiff filed suit on 23 March 2011. Criminal proceedings were instituted against a director of the defendant company. The parties entered into a Memorandum of Understanding dated 23 June 2011 whereby the defendant agreed to pay the outstanding principal sum of Ushs. 60,900,000/=, which was subsequently paid. The remaining issues for trial were general damages, penalty, interest, and costs.

Issues

  1. Whether there was breach of contract by the defendant
  2. Whether the plaintiff is entitled to the remedies sought

Orders

  • Defendant found to have breached the contract by non-performance.
  • Claim for special damages (principal sum of Ushs. 60,900,000/=) overtaken by events as it was paid after criminal proceedings commenced.
  • Penalty interest of 5% on the unpaid invoice awarded, amounting to Ushs. 3,045,000/=.
  • General damages of Ushs. 3,000,000/= awarded to the plaintiff.
  • Interest at 21% per annum on the penalty from the date of filing suit until payment in full.
  • Interest at 8% per annum on general damages from the date of judgment until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Non-Performance of Payment Obligations
A breach of contract occurs when one party fails to fulfil its obligations under the contract. Where a party fails to make payment as provided under a supply contract, that party breaches the contract by non-performance.
Contract Law — Penalty Clauses — Reduction of Unconscionable Penalties
A contractual penalty provision that is unclear in its application and would result in a harsh and unconscionable outcome ought not to be enforced in its literal terms. The court may reduce a penalty of 50% on unpaid invoices to a more reasonable rate where the provision fails to specify whether it applies to the invoice amount, per annum, or per month, and where literal enforcement would be unconscionable under Section 26 of the Civil Procedure Act.
Civil Procedure — Default in Filing Submissions — Court's Power to Proceed
Under Order 17 rule 4 of the Civil Procedure Rules, where a party fails to file submissions or perform any other act necessary to the further progress of the suit for which time has been allowed, the court may proceed to decide the suit notwithstanding that default.
Damages & Quantum — General Damages — Breach of Contract
Where breach of contract is established, the court will award general damages to compensate the injured party for loss flowing from the breach.

Legislation cited (2)

Cases cited (2)

  • Nakana Trading Co Ltd v Coffee Marketing Board (1994) 2 KALR 15
  • JB United Civil Engineering and Building Contractors v Lira Municipal Council (HCCS No. 35 of 2007)

Full judgment

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

Gagawala Nurseru Bed v Busingye Properties Ltd (HCT-00-CC-CS 96 of 2011) [2012] UGCommC 164 (20 December 2012)
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.