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Mukasa John Ssozi I v Semanda Alex Patrick and Another (Civil Suit 1259 of 2023)

High Court · [2026] UGCOMMC 240 · 2026 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt arising from loan agreement
Decision
Judgment entered in favour of the plaintiff against the 2nd defendant only for UGX 114,000,000 plus general damages of UGX 30,000,000, interest at court rate, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that under the Indoor Management Rule, a third party dealing in good faith with a company director may assume internal procedures were followed, and the company is bound even without a board resolution unless bad faith or suspicious circumstances are shown. The court enforced a memorandum of understanding that superseded the original loan agreement, awarding the plaintiff UGX 114,000,000 (principal plus accrued interest) as agreed, rejecting the plaintiff's claim for continuing interest after execution of the memorandum. General damages of UGX 30,000,000 awarded for financial inconvenience. Only the second defendant held liable as a separate legal person.

Outcome

Judgment entered in favour of the plaintiff against the 2nd defendant only for UGX 114,000,000 plus general damages of UGX 30,000,000, interest at court rate, and costs

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. The loan was not repaid within the agreed period. In August 2021, the parties executed a memorandum of understanding acknowledging total debt of UGX 114,000,000 (principal UGX 60,000,000 plus accrued interest UGX 54,000,000) and agreeing that no further interest would accrue on the principal. The memorandum provided a payment schedule. In 2022, the second defendant issued five cheques totalling UGX 100,000,000 which all bounced due to insufficient funds. The defendants failed to pay despite amicable settlement attempts. The defendants did not attend trial despite service of hearing notices, and the matter proceeded ex parte.

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 — Indoor Management Rule — Third Party Dealing with Company Director
Under the Indoor Management Rule, a third party dealing in good faith with a person purporting to act on behalf of a company may assume that internal procedures and requirements have been complied with, and the company may be bound by the transaction even in the absence of a board resolution, unless the third party 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 a loan transaction 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 — Variation of Contract — Superseding Agreement
Where parties freely and voluntarily enter into a subsequent agreement that varies the terms of an earlier contract, including ceasing the accrual of interest, the court will hold the parties to their bargain and will not substitute terms according to its own sense of fairness where the agreement was freely negotiated.
Contract Law — Sanctity of Contract — Judicial Non-Intervention
Courts have no business altering or substituting clauses agreed upon by parties in their contracts where those contracts were freely negotiated and concluded, and judges should not intervene by substituting terms contrary to those which the parties agreed upon themselves.
Damages & Quantum — General Damages — Assessment Principles
In assessing general damages, the court should be guided by the value of the subject matter, the economic inconvenience that the plaintiff may have 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 or wrong 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 (Miscellaneous Application 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 (Civil Suit 1259 of 2023) [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.