Wakilii

Karegyeja Geoffrey T A Kloaf Bakery v Crane Management Services Ltd and Others (Civil Suit No. 966 of 2020)

High Court · [2025] UGCOMMC 296 · 2025 Judgment for Defendant / Counterclaim Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of tenancy agreements with counterclaim for outstanding rent arrears
Decision
Plaintiff's suit dismissed; counterclaim allowed with damages and costs awarded to the 1st Defendant/Counterclaimant

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the plaintiff's suit for breach of tenancy agreements and fraud, finding that the plaintiff failed to prove breach or fraud. The 2nd, 3rd, and 4th defendants were struck out as they were not parties to the tenancy agreements. The court upheld the counterclaim, holding that the plaintiff breached the agreements by failing to pay rent arrears of USD 6,320 and failing to give proper notice or restore the premises. The security deposit could not be used to offset arrears without the landlord's written consent under clause 4.0 of the agreements.

Outcome

Plaintiff's suit dismissed; counterclaim allowed with damages and costs awarded to the 1st Defendant/Counterclaimant

Facts

The plaintiff, trading as K-Loaf Bakery, entered into two tenancy agreements with the 1st defendant on 11 September 2018 for commercial premises at Market Street, Kampala. The plaintiff paid security deposits totalling USD 6,400. In March 2019, the plaintiff gave notice to vacate and requested that the security deposits be used to offset rent. The 1st defendant refused, citing the requirement for three months' notice under clause 16.0 of the agreements. On 18 April 2019, the 1st defendant locked the shops and distrained the plaintiff's goods for alleged rent arrears. The plaintiff sued for breach of contract, fraud, and recovery of goods and security deposits. The 1st defendant counterclaimed for outstanding rent arrears of USD 6,320, comprising USD 1,320 for Shop G.16 and USD 5,000 for Shop G.19, arising from the plaintiff's failure to pay rent for the full notice period and failure to restore the premises.

Issues

  1. Whether the 1st Defendant is liable for breach of the tenancy agreements with the Plaintiff?
  2. Whether there was fraud, and if so, by whom?
  3. Whether the Counter-Defendant is indebted to the Counterclaimant?
  4. What remedies are available to the parties?

Orders

  • The suit as against the 2nd, 3rd and 4th Defendants is struck out with costs.
  • The suit is dismissed as against the 1st Defendant with costs.
  • A declaration that the Counter-Defendant breached the agreements entered into on 11th September, 2018.
  • Special damages of USD 6,320 awarded to the Counterclaimant.
  • General damages of UGX 20,000,000 awarded to the Counterclaimant.
  • Interest on special damages at the rate of 10% per annum from the date of default until payment in full.
  • Interest on general damages at the rate of 8% per annum from the date of judgment until payment in full.
  • Costs of the suit awarded to the Counterclaimant.

Rules and key headnotes

Contract Law — Tenancy Agreements — Security Deposits — Use to Offset Rent Arrears
A security deposit under a tenancy agreement may only be used to offset rental arrears at the determination of the tenancy if the landlord agrees to such use in writing, where the agreement expressly provides that the deposit cannot be used by the tenant to cover rent payments except as an offset for payment in lieu of notice or outstanding rental arrears at determination unless the company agrees in written form.
Contract Law — Termination — Notice Period — Breach
Where a tenancy agreement requires three months' notice for termination and the tenant gives only two months' notice, the tenant remains liable for rent for the full notice period and cannot unilaterally apply the security deposit to cover the shortfall without the landlord's written consent.
Company Law — Corporate Personality — Lifting the Corporate Veil — Directors' Liability
Directors of a company are not personally liable for the company's contractual obligations absent proof of fraud or other exceptional circumstances justifying the lifting of the corporate veil. Ownership and control of a company are not sufficient criteria to pierce the corporate veil.
Contract Law — Interpretation — Intention of Parties — Commercial Purpose
In construing a written agreement, the court must discover the intention of the parties from the words used, considering the commercial purpose and factual background against which the agreement was made. The cardinal presumption is that parties intended what they have in fact said.
Tort Law — Fraud — Definition — Standard of Proof
Fraud is an intentional perversion of truth for the purpose of inducing another to part with something valuable or surrender a legal right. Fraud must be proved strictly, the burden being heavier than the balance of probabilities generally applied in civil matters.
Contract Law — Trade Names — Minor Discrepancies — Effect on Validity
Where a landlord interchangeably uses a tenant's trade name with and without the word 'Limited' in tenancy documents, but the tenant brought the anomaly to the landlord's attention and subsequent statements of account used the correct name, there is no deception or fraud by the tenant as to its trade name.

Legislation cited (5)

Cases cited (23)

Full judgment

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

Karegyeja Geoffrey T A Kloaf Bakery v Crane Management Services Ltd and Others (Civil Suit No. 966 of 2020) [2025] UGCommC 296 (5 June 2025)
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.