Wakilii

Lubowa Gardens Ltd & Anor v Equity Bank Ltd (HCCS 111 of 2013)

High Court · [2018] UGCOMMC 4 · 2018 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit in the Commercial Division for breach of contract and related relief
Decision
Judgment entered for the plaintiffs on the main claim with general and punitive damages awarded. Counter claim partly allowed for the defendant with exclusion of interest accrued during the period 24 July 2012 to 23 December 2013. Costs to be shared equally.

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 its contractual undertaking when it refused to release the certificate of title after the plaintiffs paid the agreed sum of UGX 312 million. The refusal was unjustified — the bank's allegation of secret subdivision was unsupported, the bank did not know who was subdividing the property, and it revoked its promise after the plaintiffs had already fulfilled their obligations and made advance payments. The plaintiffs were awarded general damages of UGX 100 million and punitive damages of UGX 20 million. However, claims for lost profits failed. The plaintiffs were absolved from paying interest accrued between 24 July 2012 and 23 December 2013, as the bank's conduct prevented them from clearing the outstanding balance during that period.

Outcome

Judgment entered for the plaintiffs on the main claim with general and punitive damages awarded. Counter claim partly allowed for the defendant with exclusion of interest accrued during the period 24 July 2012 to 23 December 2013. Costs to be shared equally.

Facts

The plaintiffs, two sister companies, obtained several loan facilities from the defendant bank, secured by mortgages over two properties including Plot 1269. After falling into arrears, the plaintiffs negotiated a settlement whereby they would pay UGX 312 million in exchange for the bank releasing the certificate of title for Plot 1269. The plaintiffs deposited the agreed sum on 24 July 2012. The defendant refused to release the title, alleging (without supporting evidence) that the plaintiffs were secretly subdividing the other secured property, Plot 1250. The plaintiffs had arranged the UGX 312 million from Agnes Tugume with an understanding to transfer Plot 1269 to her once the title was released. The bank eventually released the title on 20 December 2013. The plaintiffs sued for breach of contract, damages for lost profits, and other relief. The bank counter-claimed for the outstanding loan balance.

Issues

  1. Whether the Defendant was justified in refusing to release the certificate of title after receiving the agreed payment of UGX 312,000,000.
  2. Whether the Plaintiffs suffered losses as a result of the Defendant's refusal to release the certificate of title and if so, whether the Defendant is liable for the losses.
  3. Whether the Plaintiffs breached their loan agreements with the Defendant.

Orders

  • The refusal to hand over the title was unjustified.
  • The claims for loss of profit in respect of both Plaintiffs are dismissed.
  • The Plaintiff is awarded UGX 100,000,000 as general damages for denial of certificate of title.
  • The Plaintiff is awarded UGX 20,000,000 as punitive damages.
  • Interest on general and punitive damages at court rate from date of judgment till payment in full.
  • The Counter Claimant is awarded UGX 693,423,542 plus interest till payment in full but less interest accrued between 24 July 2012 and 23 December 2013.
  • Both parties having made out their cases, costs shall be shared equally.

Rules and key headnotes

Breach of Contract — Unjustified Refusal to Perform Contractual Undertaking
Where parties agree that a creditor will release security upon payment of a specified sum, and the debtor fulfills that obligation and makes advance payments beyond what was due, the creditor's subsequent refusal to release the security on the basis of unsubstantiated allegations of misconduct constitutes a breach of contract, particularly where the creditor does not even know whether the alleged misconduct occurred or who is responsible for it.
Mortgage Security — Release of Security — Effect of Payment Under Settlement Agreement
Where a bank agrees to release one of two secured properties upon payment of an agreed sum that discharges one borrower, clears arrears, and includes advance instalments, and the borrower complies, the bank cannot rely on allegations concerning the remaining security to renege on its promise, especially where the bank conducted due diligence on that security at the time the loan was advanced and found it acceptable.
Damages — Loss of Profits — Proof Required
Claims for loss of profits due to business closure must be supported by credible evidence that the defendant's breach caused the closure and prevented recapitalisation. Where the plaintiff sold the property in question and received substantial proceeds but did not use those proceeds to clear the debt or recapitalise, the claim that the defendant's refusal to release the title caused the business closures cannot be sustained.
Interest — Liability for Interest During Period of Creditor's Breach
Where a creditor's unjustified refusal to release security prevents the debtor from accessing funds that would have cleared the outstanding debt, interest accruing during the period of that refusal cannot be visited upon the debtor. The debtor is absolved from paying interest that accrued as a result of the creditor's own wrongful conduct.
General Damages — Assessment for Breach of Contractual Undertaking
In assessing general damages for breach of contract, the court considers the value of the subject matter, the economic inconvenience suffered by the plaintiff, and the nature and extent of the breach. A plaintiff who mobilised funds and made promises to a buyer in reliance on the defendant's undertaking, only to have that undertaking frustrated, suffers compensable damage warranting an award of general damages.
Punitive Damages — Award for Oppressive and High-Handed Conduct
Punitive damages may be awarded where a defendant's conduct is shown to be oppressive and high-handed, such as where a bank reneges on a promise made to customers who had paid in full and even made advance payments, and then seeks to charge interest on amounts that should not have accrued.

Legislation cited (1)

Cases cited (5)

  • Fredrick Nsubuga v Attorney General (HCCS 13 of 1993)
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Musisi Edward v Bebihuga Hilda [2007] HCB 1, 84
  • Kibimba Rice Ltd v Umar Salim (Supreme Court Appeal No. 17 of 1992)
  • Ongom v Attorney General [1979] HCB 267

Full judgment

↓ Download PDF

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

Lubowa Gardens Ltd & Anor v Equity Bank Ltd (HCCS 111 of 2013) [2018] UGCommC 4 (26 February 2018)
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.