Wakilii

Hot Loaf Bakery Ltd v Semwanga t/a Abbey Semwanga & Sons (Civil Suit No. 112 of 1999)

High Court · [2001] UGHC 121 · 2001 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 for goods supplied on credit
Decision
Judgment entered for plaintiff for partial amount proven with interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The defendant purchased bread on credit from the plaintiff under an arrangement whereby he issued post-dated cheques. When cheques totalling UGX 35,796,450 were dishonoured, the defendant claimed he had paid cash to the plaintiff's employees who destroyed the cheques. The court rejected this defence as incredible and lacking evidence, finding the defendant never paid for the goods. The court also found no proof of alleged fraud or conspiracy by the plaintiff's employees. Judgment was entered for the plaintiff for UGX 20,739,300, being the sum properly proven through bank statements and receipts, with interest at bank rate from judgment.

Outcome

Judgment entered for plaintiff for partial amount proven with interest and costs

Facts

Hot Loaf Bakery Ltd supplied bread on credit to Abbey Semwanga trading as Abbey Semwanga & Sons between 1995 and 1996. Under the credit arrangement, Semwanga took delivery of bread up to a maximum value of UGX 2,000,000 and issued post-dated cheques in payment. The cheques were to be banked on their maturity dates. Some post-dated cheques issued by Semwanga were dishonoured by Hot Loaf's two banks, Uganda Commercial Bank and Nile Bank. In 1997, during an audit of Hot Loaf's accounts, external auditors discovered that numerous post-dated cheques totalling UGX 35,796,450 had been dishonoured. When confronted, Semwanga claimed he had paid cash to Hot Loaf's employees, particularly the late Mrs Nkubito (Chief Cashier), in place of the dishonoured cheques, and that the cheques had been destroyed in his presence. Hot Loaf's officials, including General Manager Mr Matano, Chief Accountant Mr Rwanyindo, and Mr Sebayiga who banked cheques, all denied receiving any cash payments and denied that cheques were re-banked or destroyed as claimed.

Issues

  1. Whether or not the defendant paid for goods supplied to him by the plaintiff.
  2. Whether or not the plaintiff's employees fraudulently received money from the defendant and converted it to their use.
  3. Whether or not the plaintiff is entitled to the reliefs sought.

Orders

  • Judgment entered in favour of the plaintiff for UGX 20,739,300.
  • Interest awarded at bank rate from the date of judgment until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Evidence — Burden of proof — Defence of fraud and conspiracy — Particulars and standard of proof required
Where fraud and conspiracy are pleaded as defences, they must be pleaded with full particulars as required by the Civil Procedure Rules. The standard of proof for fraud is more than a mere balance of probabilities though less than the criminal standard of proof beyond reasonable doubt. The burden of proving fraud lies upon the party who pleads it.
Evidence — Credibility — Assessment of competing versions — Commercial reasonableness
Where a defendant claims to have paid cash for dishonoured cheques but that the plaintiff's employees destroyed the cheques and issued no fresh receipts for the cash payments, such a defence will be rejected as incredible where it presupposes that the plaintiff company had no business sense and knowingly continued to accept cheques from an untrustworthy customer, wasted resources handling cheques knowing they would be dishonoured, and condoned and encouraged criminal conduct.
Contract Law — Payment — Post-dated cheques — Effect of dishonour
Where goods are supplied on credit with payment by post-dated cheques as the agreed mode of payment, and the cheques are dishonoured on presentation to the bank, no payment has been made unless there is clear evidence that the cheques were re-banked and cleared, or that cash was paid in substitution for the dishonoured cheques.
Evidence — Documentary evidence — Bank statements and receipts — Proof of amount due
In a claim for recovery of debt for goods supplied, the amount due must be proved by proper documentary evidence. Where bank statements show certain cheques were dishonoured but some cheques listed in the claim do not appear in the bank statements or cannot be matched with certainty to entries in the statements, judgment will be entered only for the sum that is properly proved by a combined reading of the bank statements and receipts.
Commercial Law — Interest on debt — Business transactions — Justification for award
Where parties to a commercial transaction are both in business, late payment for goods sold and delivered has an adverse effect on the cash flow of the seller's enterprise. A buyer who has been holding on to the seller's money for years should pay interest on the debt at bank rate from the date of judgment until payment in full.

Legislation cited (2)

Cases cited (2)

  • Fam International and Another v Mohamed El-Fatih (Supreme Court Civil Appeal No. 19 of 1993)
  • R.G. Patel v Lalji Makanji [1957] EA 314

Full judgment

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

Hot Loaf Bakery Ltd v Semwanga t_a Abbey Semwanga & Sons (Civil Suit No. 112 of 1999) [2001] UGHC 121 (5 July 2001)
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.