Wakilii

Jamba Soita Ali v David Salaam - (HCT-00-CC-CS 400 of 2005)

High Court · [2006] UGCOMMC 30 · 2006 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for money had and received
Decision
Suit dismissed on grounds of illegality under the Money Lenders Act

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Court held that a money lending transaction conducted by an unlicensed money lender in contravention of the Money Lenders Act is illegal and unenforceable on the basis of ex turpi causa non oritur actio. The plaintiff, who lent money at 25% monthly interest without a money lending licence, could not enforce the loan agreement. Court dismissed the suit with each party bearing its own costs, considering both parties benefited from the illegal transaction.

Outcome

Suit dismissed on grounds of illegality under the Money Lenders Act

Facts

The plaintiff claimed the defendant owed him Shs.9,000,000 advanced as a loan. The defendant admitted receiving money but said it was only Shs.1,850,000 which he had repaid with additional amounts totaling Shs.10,570,000. The defendant issued three undated cheques to the plaintiff. The defendant was subsequently charged and acquitted in the Chief Magistrate's Court for issuing false cheques. Both parties agreed the plaintiff lent money to the defendant at an agreed interest rate of 25% per month. The plaintiff later abandoned his claim for interest. Evidence showed transactions between the parties started in 1999 with no written agreement. The plaintiff was not a registered money lender under the Money Lenders Act.

Issues

  1. Whether the plaintiff advanced to the defendant the sum of Shs.9,000,000 as claimed in the plaint.
  2. Whether the plaintiff is entitled to the reliefs claimed or at all.
  3. Whether the transaction between the parties contravened the Money Lenders Act and was therefore illegal and unenforceable.

Orders

  • Suit dismissed.
  • Each party shall bear its own costs, save any costs which may already have been decreed to either party in any event.

Rules and key headnotes

Money Lending — Unlicensed Money Lending — Illegality under Money Lenders Act
A person who carries on business as a money lender without being registered under the Money Lenders Act carries on an illegal business, and any agreement or contract so made in default is illegal and cannot be enforced by the Courts on the basis of the maxim ex turpi causa non oritur actio.
Money Lending — Definition of Money Lender — Business of Money Lending
Not every person who lends money is a money lender within the meaning of the Money Lenders Act. A man who carries on a money lending business is one who is ready and willing to lend to all and sundry, provided that they are from his point of view eligible, as distinguished from one who merely extends a loan to a friend.
Illegal Contracts — Ex Turpi Causa — Amendment of Pleadings
Where a contract is illegal at its inception, amending the plaint to remove a claim for interest does not purify the illegal transaction. Once a party demonstrates that the transaction was illegal, the cause of action is deemed to have arisen ex turpi causa, and the Court will not lend its aid to enforce it.
Money Had and Received — Quasi-Contract — Distinction from Loan Agreement
Where money is lent by one party to another creating a lender-borrower relationship, the cause of action is based on a contract of lending and borrowing, not money had and received. Money had and received is a quasi-contract applicable where money is paid on a consideration which has wholly failed or by mistake, not where there is a contractual obligation.
Credibility — Contradictory Statements — Previous Sworn Testimony
A man who swears the contrary of that which he stated on a previous occasion is not worthy of belief. Where a party's testimony in a civil trial contradicts his sworn evidence in an earlier criminal trial on material particulars, the Court may reject his evidence as lacking credibility.

Legislation cited (1)

  • Money Lenders Act Cap 273 s.2(4)(b)

Cases cited (3)

  • Naks Ltd v Kyobe Senyange [1982] HCB 52
  • Litchfield v Dreyfus [1906] 1 KB 584
  • M. Kabenge v James K. Mpalanyi (Civil Appeal No. B 56 of 1962)

Full judgment

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

Jamba Soita Ali v David Salaam - (HCT-00-CC-CS 400 of 2005) [2006] UGCommC 30 (2 July 2006)
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.