Non-Performing Assets Recovery Trust vs Ples Quality Printers Ltd and Another (Civil Appeal No. 19 of 1997)

Observed later treatment

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.

Holding

The Court of Appeal allowed the bank's appeal, holding that the loan contract was for setting up a printing press, not for procuring a particular machine; the offer letter (Ex.P2) mentioned no specific machine, so non-delivery of the Heidelberg machine did not invalidate the contract. The bank had no legal duty to deliver the machine, which was the supplier's obligation. The Tribunal erred in finding coercion, undue influence, misrepresentation and negligence against the bank, since the borrowers had bribed a bank officer by giving shares to his son and freely accepted the supplier. The mortgage remained enforceable while the loan was unpaid. Judgment was entered for the appellant with costs.

Outcome

Appeal allowed; Tribunal decision set aside and judgment entered for the appellant against the respondents jointly and severally

Facts

The first respondent applied for a loan of US$256,600 from Uganda Commercial Bank, whose interest passed to the appellant under a deed of assignment. The loan was granted on 13 March 1990, secured by a legal mortgage over the second respondent's property (Mengo Block 28 Plot 843), repayable over 48 months after a 12-month grace period. The stated purpose was to set up a printing press at Wandegeya. The first respondent's utilisation proposal (Ex.D14) referred to a Heidelberg single-colour offset press to be imported from the UK, West Germany or Denmark, but the offer letter (Ex.P2) named no particular machine. A bank officer, Mulindwa, obtained shares in the first respondent for his infant son and a friend as a condition for processing the loan quickly. The chosen Greek supplier, Inter Economic, failed to deliver the machine. The first respondent had used part of the funds for iron sheets, cement and a van, and defaulted on repayment. The appellant sued to recover arrears of Ug.Shs.263,745,531. The Tribunal awarded amounts spent on other materials but dismissed the machine claim.

Issues

1. Whether the purpose of the loan contract included the purchase of a particular printing machine such that its non-delivery invalidated the loan.
2. Whether Exhibit D1 amounted to an acceptance of the loan offer.
3. Whether the appellant's staff were guilty of coercion, undue influence, misrepresentation or negligence rendering the loan transaction invalid.
4. Whether the appellant bank was legally obligated to deliver the printing machine to the first respondent.
5. Whether the second respondent's mortgage obligation lapsed upon non-delivery of the machine.

Orders

• Appeal allowed.
• Judgment and orders of the Tribunal set aside.
• Counterclaim rejected.
• Judgment entered for the appellant against the respondents jointly and severally as prayed in the plaint.
• Costs of the appeal and in the Tribunal awarded to the appellant.

Rules and key headnotes

Legislation cited (1)

• Contract Act s.4(2)

Cases cited (3)

• Lloyds Bank Ltd v Bundy [1975] QB 326
• Esso Petroleum Co Ltd v Mardon [1975] 1 All ER 203
• Ngaire v National Insurance Corporation [1973] EA 56

Cases citing this judgment (3)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Ossiya Solomon Alemu v Koluo Joseph Andrew and Another (Election Petition Appeal No. 15 of 2021)
• Ochwa v Ogwari and Anor (Mbale Election Petition No. 4 of 2021)
• Mujuni Lincoln v Transafrica Insurance Company Limited (Civil Suit 16 of 2013)

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