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I & M Bank Uganda Limited v Pluto Pharmaceuticals Limited and Others (Civil Suit No. 471 of 2024)

High Court · [2024] UGCOMMC 388 · 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 outstanding loan amount following default judgment
Decision
Defendants jointly and severally liable; plaintiff awarded principal sum, general damages, interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendants breached the loan facility agreement by defaulting on repayment obligations. The principal borrower and personal guarantors were jointly and severally liable for the outstanding sum. The plaintiff was entitled to recover the principal sum plus accrued interest, general damages for inconvenience, contractual interest on the principal at the agreed rate, and costs. Interest on general damages was reduced from the contractual rate to avoid unconscionability.

Outcome

Defendants jointly and severally liable; plaintiff awarded principal sum, general damages, interest and costs

Facts

On 2 March 2022, the first defendant obtained two secured loan facilities from the plaintiff: an import invoice finance limit of UGX 100,000,000 repayable as a bullet payment at the end of 12 months, and an overdraft facility of UGX 100,000,000 repayable on demand, both at 21.6% per annum interest. The facilities were secured by fixed and floating charges, upfront cash payment of UGX 40,000,000, monthly cash buildup of UGX 20,000,000, and personal guarantees executed by the second and third defendants. The facilities were disbursed on 22 March 2022 and 18 May 2022. The first defendant defaulted on repayment obligations. The plaintiff issued a notice of default on 26 April 2023 and called on the personal guarantees on 8 August 2023, demanding payment of UGX 128,158,278 being principal and accrued interest. No payments were made. Summons to file defence were served on 21 June 2024 but no defence was filed. Interlocutory judgment was entered on 21 August 2024 and the matter proceeded to formal proof.

Issues

  1. Whether the Defendants breached the terms of the facility agreement entered with the Plaintiff?
  2. What remedies are available to the parties?

Orders

  • It is declared that the Defendants are jointly and severally liable for breach of the terms of the loan facility agreement between them and the Plaintiff.
  • The Defendants shall pay to the Plaintiff UGX 128,158,278/= being the outstanding sum due to the Plaintiff on account of the Defendants' breach of the loan terms.
  • The Defendants shall pay to the Plaintiff general damages amounting to UGX 10,000,000/=.
  • Interest is awarded on the principal sum at the rate of 21.6% per annum from the date of filing this suit until payment in full.
  • Interest is awarded on the general damages at the rate of 6% per annum from the date of judgment until payment in full.
  • Costs of the suit are awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Burden of Proof — Formal Proof Following Default Judgment
When a court sets down a suit for formal proof after a default order, the plaintiff must place before the court evidence to sustain the averments in the plaint, and must prove the existence of the facts asserted on a balance of probabilities, notwithstanding that an interlocutory judgment has been entered.
Contract Law — Breach of Contract — Effect of Interlocutory Judgment — Reopening the Question of Liability
The principle that once an interlocutory judgment is entered, the issue of liability is settled and cannot be reopened at the stage of formal proof, applies only where the question of liability has been admitted by the defendant; where no such admission exists, the plaintiff must still adduce evidence regarding liability to secure the remedies sought.
Banking & Finance — Personal Guarantees — Liability of Guarantor — Default by Principal Debtor
Under section 70 of the Contracts Act, a guarantor's liability arises to the extent to which the principal debtor is liable, and such liability takes effect upon default by the principal debtor. Once the principal borrower defaults, the guarantor has a duty to repay the loan in accordance with the terms of the guarantee deed.
Damages & Quantum — General Damages — Measure of Award — Compensatory Principle
The measure of general damages is such a sum of money as will put the party who has suffered wrong in the same position as he or she would have been had the wrong not been sustained. General damages should be compensatory and should restore some satisfaction, as far as money can do, to the injured plaintiff.
Banking & Finance — Interest on Loans — Contractual Interest Rate — Enforcement of Agreement
It is not the function of the court to make contracts between parties but rather to construe the surrounding circumstances to effectuate the intention of the parties. Where parties have agreed to a contractual interest rate on a loan facility and that rate is not excessive, the court will enforce the agreement and award interest at the agreed rate.
Damages & Quantum — Interest on General Damages — Harsh and Unconscionable Rates — Court's Discretion
Under section 26(1) of the Civil Procedure Act, where a contractual interest rate sought to be enforced on general damages is harsh and unconscionable, the court may give judgment for the payment of interest at such a rate as the court considers just, notwithstanding the agreement between the parties.

Legislation cited (10)

Cases cited (13)

  • Kirungi and Another v Kabiya and Others [1987] KLR 347
  • Hajji Asumani Mutekanga v Equator Growers (U) Ltd (Supreme Court Civil Appeal No. 7 of 1995)
  • Peter Jogo Tabu t/a M/s Ayume, Jogo Tabu & Co. Advocates v The Registered Trustees of the Church of the Province of Uganda (High Court Civil Appeal No. 16 of 2017)
  • Nakawa Trading Co. Ltd v Coffee Marketing Board (Civil Suit No. 137 of 1991)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Meridiana Africa Airlines (U) Ltd v Avmax Spares (EA) Ltd (Civil Suit No. 111 of 2017)
  • Bank of Uganda v Banco Arabe Espanol (Court of Appeal Civil Appeal No. 23 of 2000)
  • Uganda Commercial Bank v Deo Kigozi [2002] 1 EA 305
  • Kabandize John Baptist and 21 Others v Kampala Capital City Authority (Court of Appeal Civil Appeal No. 36 of 2016)
  • Takiya Kashwahiri and Another v Kajungu Denis (Court of Appeal Civil Appeal No. 85 of 2011)
  • Milly Masembe v Sugar Corporation (U) Ltd and Another (Supreme Court Civil Appeal No. 1 of 2000)
  • Omega Bank PLC Ltd v O.B.C Limited [2005] 8 NWLR (pt. 928) 547
  • Uganda Development Bank v Muganga Construction Co. Ltd [1981] HCB 35

Full judgment

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

I & M Bank Uganda Limited v Pluto Pharmaceuticals Limited and Others (Civil Suit No. 471 of 2024) [2024] UGCommC 388 (24 September 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.