Wakilii

MTK (U) Limited v Attorney General & 3 Others and DFCU Bank Limited v MTK (U) Limited & Another (Civil Suit 578 of 2022)

High Court · [2024] UGCOMMC 159 · 2024 Judgment for Counter Claimant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance counterclaim for recovery of outstanding loan facility following abatement of main suit; default judgment entered on liquidated claim with formal proof hearing for unliquidated claims
Decision
Counter claimant awarded recovery of USD 5,220,009 plus interest at 12% per annum from filing to payment in full; general damages denied; costs awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that where the main suit abates under Order 11A Rule 1(2) CPR for failure to take out summons for directions, a counterclaim survives as a separate suit and proceeds independently. Default judgment was entered for the liquidated sum outstanding on a loan facility guaranteed by the second counter defendant. General damages were denied following the common law principle that delay in repayment of debt does not entitle a lender to general damages absent extraordinary circumstances or losses beyond the ordinary course of events. Interest awarded at 12% per annum from date of filing until payment in full.

Outcome

Counter claimant awarded recovery of USD 5,220,009 plus interest at 12% per annum from filing to payment in full; general damages denied; costs awarded

Facts

MTK (U) Limited obtained trade finance facilities totalling USD 5,000,000 from DFCU Bank secured by mortgages over property and a personal guarantee from Fiona Kitaka Nakkazi Migadde. The facilities financed working capital, stock purchase, and refinancing of existing loans from Ecobank. MTK defaulted on repayment obligations. DFCU appointed auctioneers who advertised and sold two mortgaged properties realising UGX 1,710,000,000, leaving USD 5,220,009 outstanding. MTK filed a main suit against the Attorney General and three banks alleging losses from government breach of a vaccine supply contract. The main suit abated for failure to take out summons for directions within the statutory period. DFCU's counterclaim survived the abatement. The counter defendants filed no defence to the counterclaim and did not appear. DFCU applied for and obtained default judgment on the liquidated claim and formal proof on unliquidated claims.

Issues

  1. Whether the Counter Defendants are indebted to the Counter Claimant to the tune of USD 5,220,009?
  2. What are the remedies available to the Parties?

Orders

  • Judgment entered for the counterclaimant against the counter defendants jointly and severally for recovery of USD 5,220,009 plus accrued interest to the date of filing.
  • Interest awarded at 12% per annum on the decretal amount from date of filing until repayment in full.
  • Costs of the suit awarded to the counter claimant to be borne by the counter defendants jointly and severally.

Rules and key headnotes

Civil Procedure — Abatement — Effect on Counterclaim
A counterclaim is treated as a separate suit from the action commenced by the plaint. The abatement of a suit does not affect a counterclaim except if the law or order of court abating the same explicitly provides so.
Civil Procedure — Default Judgment — Mixed Claims
Where a plaint or counterclaim contains both a liquidated claim and an unliquidated claim and no defence is entered, default judgment may be entered on the liquidated claim and the unliquidated claim set down for formal proof.
Contract Law — Damages for Breach — Delay in Debt Repayment
The position at common law is that a delay in the repayment of a debt beyond the contractually agreed period of time does not entitle a party to general damages except if the loss for which general damages are sought did not arise from the ordinary course of events and in such cases, general damages are only awarded for losses which the adverse party would have had actual knowledge of.
Banking & Finance — Loan Recovery — General Damages for Non-Performance
A lender is not entitled to general damages for hardships arising from a non-performing loan facility, such as the need to make provisions required by the central bank or commit staff resources to recovery efforts, as such losses arise in the ordinary course of events and do not constitute extraordinary loss beyond the defendant's contemplation.

Legislation cited (9)

Cases cited (22)

  • David Segulani v Rosemary Natukunda (HCMA No. 61 of 1991)
  • Need Sacco Ltd v Lulume Nambi Norah (Civil Appeal No. 89 of 2019)
  • Kampala City Council & Another v James Bwogi & Sons Enterprises Limited (CACA No. 52 of 2009)
  • Uganda Baati v Patrick Kalema (HCCS No. 126 of 2010)
  • Transtel Limited & Another v Mahi Computers & Appliances Ltd & Another (HCCS No. 397 of 2015)
  • Valery Alia v Alionzi John (HCCS No. 157 of 2010)
  • Abbey Panel & Sheet Metal Co Ltd vs. Barson Products (a firm) [1947] 2 All ER 809
  • Miller versus Minister of Pensions (1947)2 ALL ER 372
  • Storms versus Hutchinson (1905) AC 515
  • Dembe Trading Enterprises Ltd v Uganda Confidential Ltd and Teddy Ssezi Cheeye (Civil Suit No. 612 of 2006)
  • Dr Warran Namara v James Mwangushya (HCCS No. 338 of 2019)
  • Uganda Commercial Bank v. Kigozi [2002] 1 EA 305
  • President of India v. La Pintada Compagnia Navigacia SA ('La Pintada') [1985] AC 104
  • Hungerfords v. Walker (1989) 171 CLR 125
  • Barore Company Limited v Katamba Samuel Muhozi & Another (HCCS No. 11 of 2019)
  • Dr Warren Namaara v James Mwangusya (HCCS No. 338 of 2019)
  • Premchandra Shenoi & Another v Maximov Oleg Petrovich (Supreme Court Civil Appeal No. 9 of 2003)
  • SIETCO v Noble Builders (U) Ltd (Supreme Court Civil Appeal No. 31 of 1995)
  • Anglo- Cyprian Trade Agencies Ltd v. Paphos Wine Industries Ltd, [1951] 1 All ER 873
  • Harry Ssempa v Kambagambire David (HCCS No. 408 of 2014)
  • Iyamuleme David v Attorney General (SCCA No. 4 of 2013)
  • Kwizera Eddie v Attorney General (SCCA No. 1 of 2008)

Full judgment

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

MTK (U) Limited v Attorney General & 3 Others and DFCU Bank Limited v MTK (U) Limited & Another (Civil Suit 578 of 2022) [2024] UGCommC 159 (13 May 2024)
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.