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Mukasa John Ssozi I v Semanda Alex Patrick and Another [2026] UGCOMMC 240

High Court · 2026 Judgment Partly Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of loan monies
Decision
Judgment entered in favour of the plaintiff against the 2nd defendant for UGX 114,000,000 plus general damages and interest

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that a valid loan transaction existed between the plaintiff and the second defendant company. Applying the Indoor Management Rule from Royal British Bank v Turquand, a third party dealing in good faith with a company director may assume internal procedures were followed. The court enforced the memorandum of understanding which superseded the original loan agreement, freezing further interest accrual at UGX 54,000,000 upon execution. The second defendant was ordered to pay UGX 114,000,000 (principal plus agreed interest), general damages of UGX 30,000,000, and interest at court rate from judgment.

Outcome

Judgment entered in favour of the plaintiff against the 2nd defendant for UGX 114,000,000 plus general damages and interest

Facts

In September 2020, the first defendant as director of the second defendant company borrowed UGX 60,000,000 from the plaintiff at 15% interest per month for two months, depositing two land titles as security. In August 2021, the parties executed a memorandum of understanding acknowledging the debt of UGX 60,000,000 and accrued interest of UGX 54,000,000 totalling UGX 114,000,000, agreeing that no further interest would accrue on the principal. In 2022, the second defendant issued five cheques totalling UGX 100,000,000 which bounced due to insufficient funds. The defendants failed to pay despite amicable settlement attempts. The plaintiff sued for UGX 276,000,000 claiming continued interest accrual. The defendants denied liability, claimed full payment, and contested the validity of the transactions. The defendants did not attend trial despite service.

Issues

  1. Whether there was a valid loan transaction between the plaintiff and the defendants.
  2. Whether the defendants are still indebted to the plaintiff to the tune of UGX 276,000,000.
  3. Whether upon default of honouring the memorandum of understanding of 14th August 2021 the percentage interest continued accruing.
  4. Whether an interest rate of 15% was harsh and unconscionable.
  5. Whether the plaintiff is entitled to the remedies sought.

Orders

  • The 2nd defendant shall pay to the plaintiff UGX 114,000,000 being principal and interest thereon as agreed.
  • The plaintiff is awarded general damages of UGX 30,000,000 for the inconvenience occasioned by the 2nd defendant's actions.
  • The plaintiff is awarded interest on the decretal sum at court rate per annum from the date of judgment till payment in full.
  • The plaintiff is awarded costs of the suit.

Rules and key headnotes

Company Law — Corporate Borrowing — Indoor Management Rule — Validity of Loan Without Company Resolution
Under the Indoor Management Rule established in Royal British Bank v Turquand, a third party dealing in good faith with a company director may assume that internal procedures and necessary resolutions were followed, and the company will be bound by the transaction unless the lender knew there was no authority, the transaction was suspicious, or the director clearly acted outside normal powers.
Company Law — Separate Legal Personality — Director's Personal Liability
A director acting on behalf of a company in his capacity as director cannot be held personally liable for the debts of the company, which is a separate legal person, unless the corporate veil is lifted by law.
Contract Law — Freedom of Contract — Court Intervention in Agreed Terms
People who freely negotiate and conclude a contract should be held to their bargain, and judges should not intervene by substituting terms according to their sense of fairness that are contrary to those which the parties have agreed upon themselves.
Contract Law — Loan Agreements — Modification of Interest Terms — Effect of Subsequent Agreement
Where parties to a loan agreement subsequently execute a memorandum of understanding that explicitly provides that interest shall cease to accrue on the principal sum upon execution, the court will enforce that agreement and interest will not continue to accrue beyond the date of the memorandum regardless of subsequent default.
Damages & Quantum — General Damages — Assessment — Loan Recovery
In assessing general damages for breach of a loan agreement, the court should be guided by the value of the subject matter, the economic inconvenience the plaintiff has been put through, and the nature and extent of the injury suffered, with the purpose being to restore the aggrieved person to the position they would have been in had the breach not occurred.

Cases cited (6)

  • Royal British Bank v Turquand (1856) 6 E & B 327
  • CTM Uganda Ltd v Allmuss Properties Uganda Ltd and 2 Others (M. A. No. 806 of 2015)
  • Mahony v East Holyford Mining Co. (1875) LR 7 HL 869
  • Stockloser v Johnson (1954) 1 All ER 630
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 305
  • Harbutt's Plasticine Ltd v Wayne Tank & Pump Co. Ltd [1970] 1 QB 447

Full judgment

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

Mukasa John Ssozi I v Semanda Alex Patrick and Another 2026 UGCommC 240 (23 April 2026)
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.