Wakilii

Ochama v Post Bank Uganda Ltd (Civil Suit No. 418 of 2016)

High Court · [2016] UGCOMMC 98 · 2016 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Judgment on costs following consent judgment in civil suit for mortgage declaration, breach of contract and damages
Decision
Defendant's application for payment of debt collector's costs dismissed; parties to bear own costs per consent judgment

Observed later treatment

No later-treatment classification is recorded for this judgment.

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AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The court held that expenses incurred by a bank in instructing debt collectors cannot be recovered without evidence and must be pleaded as special damages. Absent proof that the expenses were reasonable and properly incurred after valid default, the claim for 10% commission to debt collectors failed. Each party bore its own costs per the consent judgment.

Outcome

Defendant's application for payment of debt collector's costs dismissed; parties to bear own costs per consent judgment

Facts

The Plaintiff obtained a loan of UGX 50,000,000 from the Defendant bank secured by mortgage and motor vehicles. Following alleged default, the Defendant instructed debt collectors Eventide Associates who impounded the Plaintiff's vehicles and advertised the securities. The Plaintiff filed suit challenging the mortgage registration, the impoundment, and charging illegal interest. The parties reached a consent judgment on 2 August 2016 agreeing the Plaintiff owed UGX 36,331,383 (reduced from UGX 45,993,764), payment terms, and that each party would bear its own costs. Clause 8 provided that costs of Eventide Associates, if any, would be paid subject to court order. The Defendant subsequently claimed UGX 3,633,138 (10% of the reduced balance) as commission payable to Eventide Associates under their service level agreement.

Issues

  1. Whether the Defendant's agents Eventide Associates should be paid by the Plaintiff and if so how much.
  2. Whether the Plaintiff can be compelled to pay 10% of the reduced loan balance as costs to the Defendant's debt collection agents.
  3. Whether expenses incurred by the Defendant in instructing debt collectors can be recovered as special damages absent evidence and pleading.

Orders

  • The claim for Uganda shillings 3,633,138 as reasonable expenses to Eventide Associates is dismissed.
  • Each party shall bear its own costs of the submissions pursuant to clause 8 of the consent judgment.

Rules and key headnotes

Debt Collection — Recovery of Costs of Debt Collectors — Special Damages Requiring Proof
Expenses incurred by a bank in instructing debt collectors must be proved as special damages and cannot be recovered without evidence showing the amounts were reasonable and properly incurred pursuant to valid default by the borrower.
Privity of Contract — Third Party Rights — Debt Collection Agreements
A service level agreement between a bank and its debt collection agents does not create an enforceable right in the borrower to pay the debt collector's commission, as only parties to a contract may enforce or be bound by its terms under section 65 of the Contracts Act 2010.
Special Damages — Pleading and Proof — Debt Collection Costs
What is not pleaded as special damages cannot be proved; a claim for debt collection expenses must be specifically averred in the pleadings with particulars, and cannot be introduced through submissions or consent judgment clauses requiring court approval.
Consumer Protection — Reasonableness of Costs — Bank of Uganda Guidelines
Guideline 9(a)(i) of the Bank of Uganda Consumer Protection Guidelines 2011 prohibits a financial service provider from claiming unreasonable costs and expenses incurred; the bank bears the burden of justifying the quantum and reasonableness of debt collection costs.

Legislation cited (9)

Full judgment

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

Ochama v Post Bank Uganda Ltd (Civil Suit No. 418 of 2016) [2016] UGCommC 98 (17 October 2016)
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.