Wakilii

Rwankote v Zziwa & Another (Civil Suit 940 of 2021)

High Court · [2024] UGCOMMC 258 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money; formal proof hearing following interlocutory judgment entered against defendants in default of defence
Decision
Defendants held jointly and severally liable for principal debt, general damages, interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division found the first defendant liable for breach of an undertaking agreement to repay UGX 200,000,000 and held the second defendant liable as guarantor based on postdated cheques issued to secure the debt. The court awarded the principal sum, general damages of UGX 40,000,000, interest at court rate from judgment until full payment, and costs.

Outcome

Defendants held jointly and severally liable for principal debt, general damages, interest and costs

Facts

On 13 January 2016, the first defendant requested and received UGX 200,000,000 from the plaintiff to raise capital for the second defendant company and to purchase goods from abroad. The parties entered into an undertaking agreement whereby the first defendant acknowledged the debt and undertook to repay it by 14 March 2016. The second defendant company, where the first defendant held shares, issued postdated cheques as security. Upon default, the second defendant issued further cheques on 14 April 2016, but these were dishonored when presented for payment. The plaintiff claimed he pledged his property in Kyadondo Block 273 plot 5981 to a money lender to obtain the funds advanced to the first defendant and subsequently lost that property. The defendants were served with summons but did not file a defence. Interlocutory judgment was entered on 24 January 2023 and the matter proceeded to formal proof of damages.

Issues

  1. Whether the defendants breached the undertaking agreement entered on 13 January 2016 to pay UGX 200,000,000 to the plaintiff.
  2. Whether the 2nd defendant is liable as a guarantor to pay the money.
  3. Whether the plaintiff is entitled to general damages, interest and costs of the suit.

Orders

  • Judgment entered for the plaintiff against the defendants.
  • Defendants to pay UGX 200,000,000 being the outstanding amount under the undertaking agreement.
  • Defendants to pay UGX 40,000,000 as general damages.
  • Interest on the sum in (a) and (b) at court rate from the date of judgment until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Failure to Pay Debt on Agreed Date
Where a party undertakes to pay a specified sum by a specified date and fails to do so, that party commits a breach of contract entitling the other party to sue for damages and to be placed, as far as money can do it, in the same situation as if the contract had been performed.
Contract Law — Guarantee — Liability of Guarantor — Oral Guarantee
A contract of guarantee may be oral or written. Where a company issues postdated cheques to secure payment of a debt owed by another party who is its shareholder and director, and does so for the exact amount owed, the court may infer from such conduct an intention to guarantee the debt, making the company liable as guarantor upon default by the principal debtor.
Contract Law — Guarantee — Extent of Guarantor's Liability
Under section 71 of the Contracts Act 2010, the liability of a guarantor is co-extensive with that of the principal debtor and takes effect upon default by the principal debtor.
Damages & Quantum — General Damages — Breach of Contract — Assessment
Where a plaintiff establishes breach of contract but fails to adduce evidence proving the specific loss claimed, the court may nonetheless award general damages taking into account that the defendant kept the plaintiff out of the use of his money for a considerable period. The award must be just and reasonable in the circumstances.
Civil Procedure — Default Judgment — Formal Proof of Damages — Effect of Defendant's Failure to File Defence
A defendant who neither enters appearance nor files a defence is precluded from taking part in the proceedings during formal proof hearing when there is a subsisting interlocutory judgment. Where interlocutory judgment has been entered in favour of the plaintiff, the question of liability is no longer in issue; only the assessment of quantum of damages remains.

Legislation cited (6)

Cases cited (12)

  • Hajji Asumani Mutekanga v Equator Growers (U) Ltd (Supreme Court Civil Appeal No. 7 of 1995)
  • Ronald Kasibante v Shell (U) Limited (High Court Civil Suit No. 542 of 2006)
  • Cargo World Logistics Limited v Royale Group Africa Limited (High Court Civil Suit No. 157 of 2013)
  • Paul Kasagga and Another v Barclays Bank (U) Ltd (High Court Miscellaneous Application No. 113 of 2008)
  • Ariam Properties Ltd v Royal Transit Ltd (High Court Civil Suit No. 31 of 2021)
  • Kibimba Rice Ltd v Umar Sazim (Supreme Court Civil Appeal No. 17 of 1992)
  • Hadley vs Baxendale (1894) 9 Exch 341
  • Robert Cuossens v Attorney General (Supreme Court Civil Appeal No. 8 of 1999)
  • Uganda Commercial Bank v Kigozi [2002] UGSC 16
  • Harbutts Plasticine Ltd vs Wyne Tank & Pump Co. Ltd
  • Kinyera v The Management Committee of Laroo Building Primary School (High Court Civil Suit No. 99 of 2013)
  • Jennifer Behange, Rwanyindo Aurelia, Paul Bagenzi v School Outfitter (U) Limited (Court of Appeal Civil Appeal No. 53 of 1999)

Full judgment

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

Rwankote v Zziwa & Another (Civil Suit 940 of 2021) [2024] UGCommC 258 (19 August 2024)
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.