Wakilii

Isanga Dauda v Stanbic Bank Uganda Limited (Civil Suit No. 270 of 2014)

High Court · [2021] UGCOMMC 31 · 2021 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 arising from withdrawal of term loan facility
Decision
Judgment entered for the plaintiff with damages and interest awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The court held that the bank breached the loan facility agreement by withdrawing the approved term loan after the plaintiff had fulfilled all conditions precedent, including providing audited financial statements from a bank-prequalified auditor, registering mortgages over two properties, and paying arrangement fees. The bank's stated reasons for withdrawal—alleged misrepresentation and risk of fund diversion—were unsupported by evidence. The plaintiff was awarded special damages of UGX 9,980,000 for expenses incurred in processing the loan and general damages of UGX 200,000,000 for lost business opportunity and reputational harm.

Outcome

Judgment entered for the plaintiff with damages and interest awarded

Facts

In August 2012, the plaintiff applied to the defendant bank for a term loan facility of UGX 500,000,000 to finance trade in beans, maize, coffee and cement. Following the bank's advice, the plaintiff engaged a bank-prequalified auditor who prepared financial statements, management accounts and cash flow projections at a cost of UGX 3,200,000. The plaintiff provided two properties as security and paid UGX 5,780,000 for mortgage registration costs. The bank issued a facility letter dated 25 October 2012 offering the loan, which the plaintiff accepted by signature on 6 November 2012. Despite the plaintiff fulfilling all conditions, the bank did not disburse the funds. On 20 December 2012, the bank withdrew the facility, alleging the plaintiff had breached representations and warranties by misrepresenting his financial standing. The bank released the mortgages in February 2013. The plaintiff sued for breach of contract, claiming special damages for expenses incurred and general damages for lost business opportunity.

Issues

  1. Whether the Defendant was in breach when it withdrew the term loan facility.
  2. If the Defendant was in breach, what remedies are available to the Plaintiff.

Orders

  • Judgment entered in favour of the Plaintiff against the Defendant.
  • Special damages of UGX 9,980,000 awarded.
  • General damages of UGX 200,000,000 awarded.
  • Interest on special damages at 25% per annum from 20 December 2012 until payment in full.
  • Interest on general damages at 8% per annum from date of judgment until payment in full.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Formation — Acceptance — Binding Agreement Created by Signed Facility Letter
A binding loan agreement is created when a borrower signs the acceptance sheet of a facility letter after fulfilling all conditions precedent, and provides consideration in the form of arrangement fees and security for the loan.
Banking & Finance — Loan Facilities — Withdrawal — Burden of Proof on Bank
Where a bank withdraws an approved loan facility alleging misrepresentation by the borrower, the bank bears the burden of proving the alleged misrepresentation with credible evidence. Unsubstantiated allegations and speculative concerns about potential fund diversion do not justify withdrawal of a facility after acceptance.
Banking & Finance — Loan Facilities — Reliance on Pre-Qualified Auditors — Bank Cannot Repudiate Auditor's Report
Where a bank requires a borrower to obtain financial statements from a bank-prequalified auditor and subsequently relies on those statements to approve a loan facility, the bank cannot later repudiate the auditor's findings without evidence that the auditor's report was materially incorrect or that the borrower provided false information to the auditor.
Contract Law — Breach — Wrongful Withdrawal of Approved Loan Facility
A bank commits breach of contract when it withdraws an approved and accepted loan facility after the borrower has fulfilled all conditions precedent, where the stated reasons for withdrawal are unsupported by evidence and do not constitute events of default under the facility agreement.
Damages & Quantum — Special Damages — Expenses Incurred in Processing Loan
Where a bank breaches a loan facility agreement by wrongfully withdrawing an approved loan, the borrower is entitled to recover as special damages all expenses reasonably incurred in processing the loan, including audit fees, mortgage registration costs, valuation fees, and legal fees for independent advice, provided such expenses are specifically pleaded and strictly proved by documentary evidence.
Damages & Quantum — General Damages — Loss of Business Opportunity
General damages for breach of a loan facility agreement may be awarded to compensate the borrower for loss of business opportunity, stress, damage to business reputation, and loss of trust, assessed on the principle of restitutio in integrum to restore the plaintiff as nearly as possible to the position he would have been in had the breach not occurred.
Damages & Quantum — Interest — Commercial Rate on Special Damages
Where a plaintiff is a businessman deprived of funds due to a bank's breach of a loan facility agreement, interest on special damages should be awarded at a commercial rate reflecting the rate at which the bank lends, to compensate for the loss of use of money that could have been ploughed back into business.

Cases cited (9)

  • Adonia Tumusime v Bushenyi District Local Government & AG (High Court Civil Suit No. 32 of 2012)
  • Kyambade v Mpigi District ADM [1983] HCB 44
  • Robert Coussens v Attorney General (Supreme Court Civil Appeal No. 8 of 1999)
  • K & V Ltd Vs The Registered Trustees of Arya Fractinidili Sabha EA 299 of 2011
  • Dharamshi v Karsam [1974] EA
  • Okello James v Attorney General (High Court Civil Suit No. 574 of 2003)
  • Obong v Kisumu Council [1971] EA 94
  • Uganda Revenue Authority v Steven Mobosi (Supreme Court Civil Appeal No. 16 of 1995)
  • Superior Construction Ltd v Notay Engineering Ltd (High Court Civil Suit No. 24 of 1992)

Full judgment

↓ Download PDF

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

Isanga Dauda v Stanbic Bank Uganda Limited (Civil Suit No. 270 of 2014) [2021] UGCommC 31 (30 June 2021)
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.