Wakilii

Hamwe Investiments Ltd v Babigumira (Civil Suit No. 24 of 2012)

High Court · [2015] UGCOMMC 48 · 2015 Suit Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money lent
Decision
Suit dismissed — plaintiff failed to prove indebtedness and interest rates were unconscionable and not in accordance with law

Observed later treatment

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Holding

Held that the plaintiff money lender failed to prove the debt of UGX 53,012,747 on a balance of probabilities due to absence of proper records as required under the Money Lenders Act. The interest rate of 1% per month for five months and 5% per month thereafter exceeded the statutory limit of 24% per annum under s.12 of the Money Lenders Act, rendering the transaction harsh and unconscionable. Where a money lender fails to maintain proper books of account as required by s.9, the court cannot reopen the transactions to establish true indebtedness. Suit dismissed with costs to the defendant.

Outcome

Suit dismissed — plaintiff failed to prove indebtedness and interest rates were unconscionable and not in accordance with law

Facts

On 1 September 2009, the plaintiff money lender advanced UGX 65,450,000 to the defendant at an interest rate of 1% per month for five months, then 5% per month upon default. The defendant made a part payment of UGX 20,000,000 through the sale of a pledged motor vehicle. The defendant admitted borrowing the principal but contended he had taken multiple loans from the plaintiff between August 2007 and December 2009 totalling UGX 111,500,000 and had repaid UGX 187,085,000 and surrendered two motor vehicles and land. The defendant sought to reopen all transactions between the parties to establish the true balance. The plaintiff claimed a balance of UGX 53,012,747 after part payment. The plaintiff did not maintain proper books of account as required by statute. The evidence adduced was contradictory and incomplete, with scattered receipts and agreements relating to multiple loans over the years.

Issues

  1. Whether the defendant is indebted to the plaintiff in the sum of UGX 53,012,747.
  2. Whether the defendant is entitled to re-open the loan transaction between himself and the plaintiff between 26 July 2007 and 8 December 2009.
  3. Whether the interest charged on the loans was harsh and unconscionable.
  4. What remedies are available to the parties.

Orders

  • Suit dismissed.
  • Costs awarded to the defendant.

Rules and key headnotes

Money Lending — Statutory Requirements — Maintenance of Proper Books of Account
A money lender is required by s.9 of the Money Lenders Act to maintain proper record books of all transactions, and failure to do so prevents the court from determining the true indebtedness of the borrower even where the court would otherwise exercise its power to reopen transactions under s.11.
Money Lending — Interest Rates — Excessive and Unconscionable Interest
Where an interest rate exceeds 24% per annum, s.12 of the Money Lenders Act deems such interest excessive and unconscionable; a rate of 5% per month translates to 60% per annum and is unconscionable and unenforceable in law.
Money Lending — Reopening Transactions — Conditions for Exercise of Court's Discretion
Under s.11(1) of the Money Lenders Act, a court may reopen transactions between a money lender and borrower and take an account where the interest or charges are excessive and the transaction is harsh and unconscionable, but such exercise is contingent on the availability of proper records; where no proper books of account exist, reopening becomes futile.
Burden of Proof — Loan Recovery — Plaintiff's Duty to Prove Indebtedness
In an action for recovery of money lent, the plaintiff money lender bears the burden of proving on a balance of probabilities the precise amount of indebtedness; where records are contradictory, incomplete, and do not comply with statutory requirements, the plaintiff fails to discharge this burden.
Money Lenders Act — Conversion of Annual Interest Rate to Monthly Rate
The statutory interest rate of 24% per annum under the Money Lenders Act translates to 2% per month when expressed on a monthly basis.

Legislation cited (4)

  • Money Lenders Act Cap. 273 s.9
  • Money Lenders Act Cap. 273 s.11(1)
  • Money Lenders Act Cap. 273 s.12
  • Civil Procedure Rules O.8 r.2

Cases cited (2)

  • Alice Okiror & Michael Okiror v Global Capital Save Ltd & Anor (High Court Civil Suit No. 149 of 2010)
  • Alpha International Investments Ltd v Nathan Kizito (High Court Civil Suit No. 131 of 2001)

Full judgment

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Hamwe Investiments Ltd v Babigumira (Civil Suit No. 24 of 2012) [2015] UGCommC 48 (18 February 2015)
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.