Wakilii

Ndiburungi v Crane Bank (In Liquidation) & Anor (Miscellaneous Application No. 124 of 2017)

High Court · [2018] UGCOMMC 49 · 2018 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction restraining respondents from commencing loan recovery measures pending determination of main suit
Decision
Application for temporary injunction dismissed with costs to respondents

Observed later treatment

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Holding

The court dismissed the application for temporary injunction. Held that the applicant failed to establish a prima facie case where it admitted indebtedness under clear written facility letters and sought to rely on an alleged oral contract to vary the written terms. The court found that oral contracts exceeding UGX 500,000 are unenforceable under the Contracts Act 2010 s.10(5), that the applicant did not prove the alleged oral agreement, and that any loss could be compensated by damages. An injunction should not issue where indebtedness is admitted.

Outcome

Application for temporary injunction dismissed with costs to respondents

Facts

On 7 July 2014, Crane Bank advanced Ndiburungi Sugar Works Limited UGX 4.5 billion for 12 months, secured by mortgage over two properties. On 8 June 2015, Crane Bank advanced a further UGX 3 billion. On 6 February 2016, the applicant obtained a bridge loan of USD 1 million. All facilities were on demand terms as stated in the facility letters and secured by demand promissory notes. On 23 January 2017, DFCU Bank, which had taken over Crane Bank's assets and liabilities, issued a notice of default giving 45 days to rectify. The applicant instituted Civil Suit No. 127 of 2017 and applied for a temporary injunction to restrain the respondents from recalling the loans and commencing recovery measures. The applicant alleged an oral agreement that the bridge loans would be converted into European Investment Bank development loans at low interest rates, which the respondents denied.

Issues

  1. Whether the applicant has a prima facie case with probability of success.
  2. Whether the applicant stands to suffer irreparable loss or damage if the application is not granted.
  3. Whether the balance of convenience, in case of doubt in resolving the first two issues, is in favour of the applicant.

Orders

  • Application dismissed.
  • Costs awarded to the respondents.

Rules and key headnotes

Civil Procedure — Injunctions — Temporary Injunctions — Conditions for Grant
For a court to exercise its discretion to grant a temporary injunction, the applicant must satisfy three conditions: (1) the applicant must have a prima facie case with probability of success; (2) the applicant stands to suffer irreparable loss or damage if the application is not granted; and (3) if there is doubt in resolving the first two issues, the balance of convenience must be in favour of the applicant.
Contract Law — Parol Evidence — Variation of Written Contracts by Oral Agreement
A court will not permit oral evidence to vary the clear terms of a written contract. Where parties have reduced their agreement to writing with clear terms in facility letters, an alleged oral contract cannot be used to override or alter those written terms.
Contract Law — Oral Contracts — Enforceability under Contracts Act 2010
Under section 10(5) of the Contracts Act 2010, where the subject matter of an oral contract exceeds Uganda Shillings Five Hundred Thousand, courts cannot enforce such contracts. An alleged oral agreement involving billions of shillings is unenforceable.
Contract Law — Proof of Oral Contracts — Burden of Proof
The burden of proving the existence of an oral contract lies on the person claiming its existence. The claimant must provide sufficient details including the identity of the persons who entered into the contract, the date, and the material terms.
Civil Procedure — Injunctions — Admission of Indebtedness — Effect on Grant of Injunction
Where an applicant does not deny but admits indebtedness under a loan facility, an injunction should not issue to restrain the lender from enforcing its contractual rights. The purpose of a temporary injunction is to preserve the status quo, not to serve as a tool for escaping contractual obligations.
Civil Procedure — Injunctions — Irreparable Damage — Compensability by Damages
Where a party has agreed to mortgage property as security for a loan and was aware of the consequences of default as stated in the facility letters, that party cannot claim to suffer irreparable damage when the lender seeks to enforce its contractual rights. Any loss suffered can be compensated by an award of damages.

Legislation cited (7)

Cases cited (8)

  • Kiyimba Kaggwa v Katende [1985] HCB 43
  • Ramanlal T. Bhatt v R [1957] EA 332
  • Pan Afric Impex (U) Limited Vs Berclays Bank PLC HCT-00-CC-MA-0804-2007
  • Black Pool and Fydle Aero Club Vs Black pool BC [1990] 1 WLR 1195 at 1202
  • John Kaggwa Vs Insaat Turizm & Others HCT-OO-CC-CS-0318-2012
  • Jiwali v Jiwali [1968] EA 547
  • Smile Communication Limited v Eaton Towers Uganda Limited (Miscellaneous Application No. 791 of 2016)
  • American Cyanamid Vs Ethicon Limited [1975] 2 WLR 316

Full judgment

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

Ndiburungi v Crane Bank (In Liquidation) & Anor (Miscellaneous Application No. 124 of 2017) [2018] UGCommC 49 (24 July 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.