Wakilii

Kabuye & Anor v Kim Bowerman (Civil Suit No.535 of 2007)

High Court · [2014] UGHCLD 116 · 2014 Counterclaim Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of land; main claim dismissed for non-appearance; counterclaim proceeded ex parte
Decision
Main claim dismissed; counterclaim allowed with monetary judgment for principal, reduced interest, and general damages awarded to defendant

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court found the plaintiffs in breach of contract for failing to repay a loan secured by land. The main claim was dismissed for non-appearance. On the counterclaim, the court awarded the defendant the principal sum with reduced interest rates, finding the contractual rate of 60% per annum harsh and unconscionable. The court exercised its discretion under the Civil Procedure Act to reduce interest to 8–15% per annum depending on the period. Claims for advocate's fees, surveyor's fees, and farm maintenance expenses were disallowed for lack of proof. General damages of UGX 20,000,000 were awarded for breach of contract.

Outcome

Main claim dismissed; counterclaim allowed with monetary judgment for principal, reduced interest, and general damages awarded to defendant

Facts

On 8 December 2005, the plaintiffs borrowed UGX 4,500,000 from the defendant at 5% interest per month, pledging land at Bunakanda (Kyaggwe Block 441) as security. The land was registered in the name of Bosco Rogers Bugembe as Administrator. The defendant registered a caveat on 20 December 2005 and subsequently left Uganda. The loan was repayable within two months. The defendant returned in February 2006 and on 8 May 2006 entered the suit land, allegedly to protect it from encroachers. The plaintiffs later evicted the defendant from the land on 30 June 2008. The defendant issued demand notices on 8 February 2006, 8 March 2006, and 6 May 2006 but the plaintiffs never repaid any part of the loan. On 27 March 2014, when the matter came for hearing, the plaintiffs and their counsel failed to appear. The main claim was dismissed and the counterclaim proceeded ex parte.

Issues

  1. Whether the plaintiffs were in breach of the loan agreement by failing to repay the loan.
  2. Whether the defendant is entitled to recover the principal, interest, advocate's fees, surveyor's fees and other expenses as claimed.
  3. Whether the contractual interest rate of 5% per month (60% per annum) is harsh and unconscionable and should be reduced by the court.
  4. What remedies are available to the defendant/counterclaimant.

Orders

  • Main claim dismissed under Order 9 Rule 22 CPR for non-appearance by plaintiffs.
  • Counterclaim allowed ex parte.
  • Defendant awarded principal sum of UGX 4,500,000.
  • Interest awarded at 8% per annum from 8 February 2005 to 8 May 2006.
  • Interest awarded at 2% per annum from 9 May 2006 to 30 June 2008 (period defendant was in possession).
  • Interest awarded at 15% per annum from 1 July 2009 until payment in full.
  • Claim for advocate's fees disallowed.
  • Claim for surveyor's fees disallowed.
  • Claim for money spent on looking after the farm disallowed.
  • General damages for breach of contract awarded at UGX 20,000,000 with interest at 8% per annum from date of judgment until payment in full.
  • Costs of the counterclaim awarded to the defendant.

Rules and key headnotes

Contract Law — Breach of Contract — Failure to Repay Loan — Right to Damages
Breach of contract is the breaking of an obligation which a contract imposes, which confers a right of action for damages on the injured party. A borrower who fails to repay a loan when due is in breach and the lender is entitled to general damages and other specific reliefs stemming from the breach.
Banking & Finance — Interest Rates — Unconscionable Rates — Court's Power to Reduce
Where an agreement for payment of interest is sought to be enforced and the court is of the opinion that the rate agreed is harsh and unconscionable, the court may under the Civil Procedure Act give judgment for payment of interest at such rate as it thinks just. An interest rate of 60% per annum is harsh and unconscionable in the absence of special circumstances justifying such a rate.
Banking & Finance — Interest — Court's Equitable Jurisdiction — Undefended Suits
Even in an undefended suit, the court is not obliged to approve a harsh and unconscionable but contractual rate of interest. The court retains its inherent equitable jurisdiction to reopen unconscionable bargains even when suits are undefended.
Land & Property — Mortgages — Realisation of Security — Self-Aggrandisement Prohibited
A transfer of mortgaged property to the mortgagee's nominee in realisation of a loan is legally erroneous as it amounts to a contravention of mortgage law which generally prohibits self-aggrandisement by a mortgagee.
Damages & Quantum — Interest — Basis of Award — Compensation for Use of Money
The basis of an award of interest is that the defendant has kept the plaintiff out of his money and the defendant has had the use of it himself, so he ought to compensate the plaintiff accordingly.
Evidence — Proof of Claims — Documentary Evidence — Failure to Adduce Evidence
Where a party claims expenses such as advocate's fees, surveyor's fees, or maintenance costs but provides no documentary or other evidence to support the claim beyond mere averment, the court will decline to grant such claims.

Legislation cited (3)

Cases cited (5)

  • Kasibante v Shell Uganda Ltd (High Court Civil Suit No. 542 of 2006)
  • Harbutt's Plasticine Ltd v Wayne Tank & Pump Co Ltd [1970] 1 QB 447
  • Shah v Guilders International Bank Ltd (2002) 1 EA 264
  • Mohamed s/o Mohamedi v Athmani Shamte (1960) EA 1062
  • Bank of Baroda (Uganda) Ltd v Kamugunda (Court of Appeal Civil Appeal No. 10 of 2004)

Full judgment

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

Kabuye & Anor v Kim Bowerman (Civil Suit No.535 of 2007) [2014] UGHCLD 116 (21 August 2014)
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.