Wakilii

Midland Emporium Ltd v Woddamba (HCT-04-CV-CS-0035 OF 2000)

High Court · [2005] UGHCCD 26 · 2005 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money owed for goods supplied
Decision
Judgment entered for plaintiff for full amount claimed plus interest and costs

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 High Court held that goods were supplied to and received by the defendant personally, not to a limited liability company that had been improperly incorporated with a deceased person as a shareholder. The defendant issued cheques for the goods as payment, not merely as security. When the cheques were dishonoured, the plaintiff was entitled to recover the full amount under the Bills of Exchange Act. The defendant failed to prove payment. Judgment was entered for the plaintiff for UGX 362,666,000 with interest at 25% per annum from dishonour to judgment and 8% thereafter.

Outcome

Judgment entered for plaintiff for full amount claimed plus interest and costs

Facts

The plaintiff supplied assorted goods (sugar and whitewash) worth UGX 362,666,000 to the defendant between July and August 1999. The defendant traded under the name Bamwaule General Traders. The defendant signed delivery notes acknowledging receipt of the goods and issued six cheques to settle the debt. When presented for payment in December 1999, all cheques were dishonoured with the notation 'refer to drawer'. The defendant argued that the goods were supplied to Bamwaule General Traders Limited, a limited liability company incorporated in 1995, not to him personally. However, evidence showed one of the three purported shareholders had died in 1992, before incorporation, and another died in 1999. The defendant dealt with the plaintiff from 1994, before the company was registered, and issued cheques from his personal bank account. The parties had previously dealt by bank draft but the defendant ceased making payments after July 1999.

Issues

  1. Whether the plaintiff supplied the goods to the defendant.
  2. Whether the defendant issued the cheques amounting to shs. 362,666,000/- to the plaintiff.
  3. Whether the said goods were fully paid for by the defendant.
  4. Whether the said cheques were dishonoured on presentation for payment.

Orders

  • Judgment entered for the plaintiff against the defendant for the sum of UGX 362,666,000/-.
  • Costs of the suit awarded to the plaintiff.
  • Interest at the rate of 25% per annum awarded from the date of dishonour of the cheques till the date of judgment.
  • Interest at the rate of 8% per annum awarded on the sum and taxed costs from date of judgment till payment in full.

Rules and key headnotes

Company Law — Incorporation — Validity — Incorporation with deceased person as shareholder — Effect on limited liability status
Where a limited liability company is purportedly incorporated with a deceased person as one of the subscribers to the memorandum of association, such incorporation is invalid and the company cannot enjoy limited liability status. A company cannot be validly incorporated by a dead person who could not have signed the memorandum of association.
Company Law — Minimum membership — Effect of falling below statutory minimum
Under section 3(1) of the Companies Act, a limited liability company cannot have less than two members. Where a company is reduced to a single surviving member, the limited liability status ceases to exist and the sole surviving member cannot continue to claim the protections of limited liability.
Company Law — Corporate veil — Lifting — Personal liability of director for company debts
Where parties commence business dealings with individuals before a company is formed, and those individuals fail to inform the other party of any change in status to a limited liability company, and continue to conduct business in their personal capacity including issuing cheques from personal accounts, the corporate veil will be disregarded and liability will attach to the individuals personally.
Contract Law — Bills of Exchange — Cheques as payment — Effect of dishonour
Under section 54(1)(a) of the Bills of Exchange Act, the drawer of a cheque engages that on due presentation it shall be paid according to its tenor, and if dishonoured must compensate the holder. Where cheques are issued as settlement for goods supplied, they constitute payment instruments, not merely security, and the holder is entitled to present them for payment when the agreed method of payment is not effected.
Evidence — Burden of proof — Payment as defence — Duty to prove payment
Payment before action is a matter of defence which must be pleaded and proved by the defendant. Under sections 100 and 102 of the Evidence Act, the burden of proving payment lies on the party asserting it, and that party must adduce evidence showing the dates, amounts, and appropriation of payments to the debt sued for.
Contract Law — Bills of Exchange — Defences to liability — Burden on defendant
Where a suit is brought on a cheque and the cheque has admittedly been given, the onus is on the defendant to show circumstances which disentitle the plaintiff to judgment. Under section 28(2) of the Bills of Exchange Act, such circumstances include fraud, duress, force and fear, or illegality. Absent proof of such circumstances, the plaintiff is entitled to judgment for the amount of the bill.
Damages & Quantum — Interest — Commercial transactions — Rate applicable
Awards arising out of commercial or business transactions attract higher rates of interest than general damages which are mainly compensatory. A commercial entity is entitled to interest at a rate reflecting the commercial nature of the transaction, with court retaining discretion to award interest on the basis that the defendant has kept the plaintiff out of money and had the use of it.

Legislation cited (11)

Cases cited (4)

  • J.K. Patel v Spear Motors Ltd [1993] KALR 40
  • Hassanali Issa & Co v Jeraj Produce Store [1967] EA 555
  • Ecta (U) Ltd v Geraldine Namubiru & Another (SCCA No. 29 of 1994)
  • Harbutt's Plasticine Ltd v Wayne Tank & Pump Co Ltd [1970] 1 All ER 225

Full judgment

↓ Download PDF

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

Midland Emporium Ltd v Woddamba (HCT-04-CV-CS-0035 OF 2000) [2005] UGHCCD 26 (6 June 2005)
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.