Wakilii

Rural Credit Finance Company Limited and Moses Kasasa v Microfinance Support Centre (U) Ltd (Civil Suit No. 105 of 2014)

High Court · [2017] UGCOMMC 261 · 2017 Judgment for Plaintiff by Counterclaim AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of outstanding loan balance by counterclaim, following dismissal of plaintiffs' main suit for want of prosecution
Decision
Main suit dismissed for want of prosecution. Judgment entered for defendant/plaintiff by counterclaim on the counterclaim for outstanding loan balance, contractual interest, general damages, and costs.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendants by counterclaim breached a loan agreement by failing to make monthly installment payments and are indebted to the plaintiff by counterclaim in the sum of UGX 835,157,973. Judgment entered for the plaintiff by counterclaim on the counterclaim with the outstanding principal, contractual interest at 13% per annum from date of default until payment in full, general damages for breach of contract of UGX 100,000,000, and interest on general damages at 6% per annum from judgment until payment in full.

Outcome

Main suit dismissed for want of prosecution. Judgment entered for defendant/plaintiff by counterclaim on the counterclaim for outstanding loan balance, contractual interest, general damages, and costs.

Facts

The defendant Microfinance Support Centre advanced a loan of UGX 1,000,000,000 to the first plaintiff Rural Credit Finance Company Limited on 18 October 2012, secured by mortgage over two properties and a debenture over the first plaintiff's assets. The second plaintiff Moses Kasasa stood as surety. The loan was repayable in monthly installments from 11 February 2013 at 13% per annum interest. The plaintiffs defaulted on payments despite notices. The defendant attempted to sell the mortgaged properties. The plaintiffs filed the main suit and sought an injunction. The court ordered the plaintiffs to deposit 30% of the outstanding amount within two weeks; they failed to comply. The properties were sold for UGX 255,000,000. The plaintiffs failed to appear for trial despite substituted service, and their main suit was dismissed for want of prosecution. The defendant proceeded with its counterclaim for the outstanding balance.

Issues

  1. Whether the Defendants by counterclaim are indebted to the Plaintiff by counterclaim as claimed?
  2. Whether the Plaintiff by counterclaim is entitled to the remedies sought?

Orders

  • Plaintiffs' suit dismissed with costs for want of prosecution under Order 9 Rule 23 of the Civil Procedure Rules.
  • The plaintiff/defendants by counterclaim jointly and severally pay UGX 835,157,973 at an interest rate of 13% per annum from date of default till payment in full.
  • General damages of UGX 100,000,000.
  • Interest on the general damages at the rate of 6% per annum from the date of judgment till payment in full.
  • Costs of the suit awarded to the defendant/plaintiff by counterclaim.

Rules and key headnotes

Breach of Loan Agreement — Failure to Make Monthly Installment Payments
Where a borrower executes a loan agreement and defaults on monthly installment payments despite notices of default, the borrower breaches the loan agreement and the entire loan balance becomes due and payable in accordance with the acceleration clause in the agreement.
Dismissal for Want of Prosecution — Non-Appearance Despite Substituted Service
Where a plaintiff fails to appear when a suit is called for hearing despite substituted service by newspaper advertisement ordered by court, the suit may be dismissed for want of prosecution under Order 9 Rule 23 of the Civil Procedure Rules.
Exparte Proceedings — Effect of Unchallenged Evidence
In exparte proceedings where a defendant by counterclaim fails to appear and file evidence in reply, the plaintiff by counterclaim's evidence on oath is deemed unchallenged and truthful, subject to whether the contents pass the test of evidence and are of probative value.
Contractual Interest Rate — Reasonableness and Enforceability
Under section 26(1) of the Civil Procedure Act, a contractual interest rate of 13% per annum agreed upon by parties to a loan agreement is not harsh or unconscionable and is enforceable by legal process.
General Damages for Breach of Contract — Assessment
An award for general damages for breach of contract is meant to put the plaintiff in the position they would have been in had the contract been performed. In assessing quantum, courts are guided by the value of the subject matter, the economic inconvenience suffered, and the nature and extent of the breach.
Interest on General Damages — Discretionary Remedy
An award of interest on general damages is a discretionary remedy geared towards compensating a party who has been kept out of money and is justified where the defendant has had use of the plaintiff's money.

Legislation cited (5)

Cases cited (11)

  • Afrikano Bakaihahwenki v Samueal Patric Nganda (HCMC No. 85 of 2011)
  • Tororo District Administration v Andalalapo Ltd (1977) IV KALR 126
  • Samtoiri Massa v Rose Achieng (1978) HCB 297
  • Crofin East Africa Fund LLS v IK Investec (U) Ltd, James Katarikawe & Harriet Katarikawe (Civil Suit No. 374 of 2011)
  • Fulgensio Semako v Edirisa Ssebugwawo (1979) HCB 15
  • Henry Dhushime v S.M. Tours & Travel Ltd (HCCS No. 23 of 1997)
  • Kazinga Channel Office World Ltd v Attorney General (HCCS No. 276 of 2005)
  • Harbutt's Plasticide Ltd v Wyne Tank & Pump Co. Ltd [1970] 1 QB 447
  • Kibimba Rice Ltd v Umar Salim (SCCA No. 17 of 1992)
  • Charles Acire v Myanna Engola (HCCS No. 743 of 1993)
  • Uganda Commercial Bank v Kigozi [2001] 1 EA 305

Full judgment

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

Rural Credit Finance Company Limited and Moses Kasasa v Microfinance Support Centre (U) Ltd (Civil Suit No. 105 of 2014) [2017] UGCommC 261 (24 March 2017)
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.