Wakilii

Jayanth Amratlal Bhimji & Anor v Prime Finane Co Ltd (HCT-00-CC-MA 225 of 2008)

High Court · [2011] UGCOMMC 101 · 2011 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside judgment and decree obtained under summary procedure and for leave to defend the suit
Decision
Judgment and decree set aside; applicants granted leave to defend on condition of depositing the principal sum claimed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Court held that the judgment and decree obtained under summary procedure should be set aside where the applicants' failure to defend resulted from their counsel's professional misconduct, not from the applicants' own dilatory conduct. The errors of counsel should not be visited on a diligent litigant. Further, where illegality (here, alleged excessive interest under the Money Lenders Act) is brought to the court's attention, the matter must be investigated on the merits. Application granted subject to the applicants depositing the principal sum claimed before filing their defence.

Outcome

Judgment and decree set aside; applicants granted leave to defend on condition of depositing the principal sum claimed

Facts

The applicants borrowed US$ 380,000 from the respondent, a licensed money lender, repayable in 10 instalments with interest at 1% per week. The applicants defaulted and the respondent filed a summary suit claiming US$ 366,625. The applicants instructed M/s MWM Advocates & Solicitors to apply for leave to defend. Their advocate, Mr Steven Mwandha, swore the affidavit in support, which contravened regulation 9 of the Advocates (Professional Conduct) Regulations 1979. The application for leave to defend was dismissed as the supporting affidavit was incurably defective, and judgment entered for the respondent. The applicants then filed this application to set aside the judgment, arguing they had been misadvised by counsel and that the interest rate charged by the respondent (1% per week, or 52% per annum) exceeded the statutory limit of 24% per annum under the Money Lenders Act.

Issues

  1. Whether the judgment and decree in Civil Suit No. 307 of 2007 should be set aside on grounds of good cause under Order 36 Rule 11 of the Civil Procedure Rules.
  2. Whether the errors and misadvice of the applicants' former counsel should be visited on the applicants.
  3. Whether the interest rate of 1% per week charged by the respondent exceeds the statutory limit of 24% per annum under the Money Lenders Act.
  4. Whether the court can sanction a judgment based on allegedly illegal interest once the illegality is brought to its attention.

Orders

  • The judgment and decree in Civil Suit No. 307 of 2007 delivered on 18 April 2008 is set aside.
  • Execution of the said decree is set aside.
  • The Applicants are to file a defence within 28 days from the date of this ruling.
  • The Applicants are to deposit in Court the principal sum claimed in the plaint of US$ 366,625 on or before the filing of their Written Statement of Defence.

Rules and key headnotes

Civil Procedure — Summary Procedure — Setting Aside Judgment — Order 36 Rule 11 — Good Cause — Mistake or Misadvice of Counsel
Under Order 36 Rule 11 of the Civil Procedure Rules, a decree obtained under summary procedure may be set aside for good cause. Mistake or misadvice by counsel, though negligent, constitutes good cause where the applicant acted diligently in instructing the advocate and was not guilty of dilatory conduct. The errors or omissions of counsel should not be visited on a lay litigant who instructed the lawyer within the stipulated period.
Civil Procedure — Affidavits — Advocates' Professional Conduct — Regulation 9 of the Advocates (Professional Conduct) Regulations 1979
An affidavit deponed by an advocate in support of a client's application on matters of fact which the advocate cannot personally prove contravenes regulation 9 of the Advocates (Professional Conduct) Regulations 1979 and is incurably defective. Such defect renders the application unsupported, but the failure is the advocate's professional misconduct and should not be visited on the client where the client acted diligently and in good faith.
Banking & Finance — Money Lending — Excessive Interest — Money Lenders Act s.12
Under section 12 of the Money Lenders Act, where interest charged exceeds 24% per annum, the court shall presume the interest is excessive and the transaction harsh and unconscionable. An agreement for interest at 1% per week (52% per annum) raises a triable issue of excessive interest and illegality which the court must investigate on the merits.
Statutory Interpretation — Illegality — Court's Duty to Investigate — Makula International Principle
A court of law cannot sanction what is illegal. Illegality, once brought to the attention of the court, overrides all questions of pleadings including any admissions made thereon. Where a judgment was entered on a technicality and the issue of legality of the underlying transaction is raised, the court must not sustain the judgment without investigating the alleged illegality, as to do so would be to promote such illegality.
Civil Procedure — Setting Aside Judgment — Conditions — Deposit of Principal Sum
Where a judgment is set aside and leave to defend granted, the court may impose conditions to balance the interests of justice. Where the applicants admit borrowing the principal sum and only contest the interest charged, it is fair to condition the grant of leave to defend upon the applicants depositing the principal sum claimed into court before filing their defence.

Legislation cited (7)

Cases cited (5)

  • Caltex Oil (U) Ltd v Kyobe [1988-1990] HCB 141
  • Godfrey Magezi & Anor v Sudhir Ruparelia (Supreme Court Civil Appeal No. 10 of 2002)
  • Sepinja Kyamulesire v Justine Bikandulila Bagambe (Supreme Court Civil Appeal No. 20 of 1995)
  • S. Kyobe Seruyange v Naks Ltd [1980] HCB 30
  • Makula International Ltd v His Eminence Cardinal Nsubuga and Anor [1982] HCB 11

Full judgment

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Jayanth Amratlal Bhimji & Anor v Prime Finane Co Ltd (HCT-00-CC-MA 225 of 2008) [2011] UGCommC 101 (17 April 2011)
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.