Wakilii

Sketchway Limited v Lutaaya George William (Civil Suit No. 102 of 2024)

High Court · [2026] UGCOMMC 300 · 2026 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of loan agreement and enforcement of mortgage security
Decision
Judgment entered for the plaintiff for UGX 165,000,000 principal plus interest at 20% per annum and general damages of UGX 20,000,000. Prayers for eviction and sale of mortgaged properties dismissed as the mortgage was found invalid.

Observed later treatment

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Holding

The court held that the loan agreement was valid and the defendant breached it by failing to repay within the stipulated period. The contractual interest rate of 10% per month plus 0.5% daily surcharge was found unconscionable and reduced to 20% per annum. The mortgage over the suit property was declared invalid because the defendant had previously sold the land to a third party in 2021 and therefore lacked authority to mortgage it in 2023. The defendant was ordered to pay the outstanding principal balance with interest at 20% per annum and general damages.

Outcome

Judgment entered for the plaintiff for UGX 165,000,000 principal plus interest at 20% per annum and general damages of UGX 20,000,000. Prayers for eviction and sale of mortgaged properties dismissed as the mortgage was found invalid.

Facts

On 2 August 2023, the defendant borrowed UGX 250,000,000 from the plaintiff at 10% interest per month, repayable within four months. To secure the loan, the defendant mortgaged properties comprised in Kibuga Block 23 plots 498 and 510 at Busega with spousal consent. The defendant defaulted on repayment. The plaintiff issued default notices and advertised the properties for sale. The defendant admitted liability but disputed the interest calculation and claimed the mortgage was procured under duress. Evidence revealed that the defendant had previously sold the suit property to a third party on 8 May 2021 under an installment sale agreement. The defendant made partial payments totalling UGX 85,000,000 before and during the suit.

Issues

  1. Whether the loan agreement is valid and whether the defendant breached it.
  2. Whether the interest charged by the plaintiff is unconscionable.
  3. Whether the defendant mortgaged properties comprised in Kibuga Block 23 plots 498 and 510 to secure the loan.
  4. What remedies are available to the parties.

Orders

  • The defendant shall pay to the plaintiff the sum of UGX 165,000,000/- being the balance of the money advanced under the loan agreement.
  • Interest is awarded on the above sum at a rate of 20% per annum from the date of filing this suit until payment in full.
  • The plaintiff is awarded general damages of UGX 20,000,000/-.
  • The plaintiff is awarded the costs of the suit.

Rules and key headnotes

Contract Law — Formation — Essential Elements — Capacity, Intention, Consensus, Consideration, Legality, Certainty
For a contract to be valid and legally enforceable there must be capacity to contract, intention to contract, consensus ad idem, valuable consideration, legality of purpose and sufficient certainty of terms.
Contract Law — Signed Documents — Binding Effect — Absence of Fraud or Misrepresentation
Once a document containing contractual terms is signed, then in the absence of fraud or misrepresentation, the party signing it is bound by its terms and it is wholly immaterial whether he has read the document or not.
Banking & Finance — Loan Agreements — Unconscionable Interest — Court's Discretion under Civil Procedure Act s.26(1)
Where the court is of the opinion that the rate of interest agreed to be paid is harsh and unconscionable and ought not to be enforced by legal process, the court may give judgment for the payment of interest at such a rate as the court may consider just. An interest rate of 10% per month coupled with a 0.5% daily surcharge on default is unconscionable as it is penal rather than compensatory.
Land & Property — Sale of Land — Equitable Title — Effect on Seller's Disposing Power
Once a contract for the sale of land is executed, the buyer holds equitable title and the seller holds the legal title in trust for the buyer. The seller no longer has disposing power which he or she may exercise for his or her own benefit. A seller who has entered into an installment sale agreement cannot validly mortgage the property to a third party.
Contract Law — Breach of Contract — Definition and Elements
A breach of contract is a violation of any of the agreed upon terms and conditions of a binding contract and includes circumstances where an obligation that is stated in the contract is not completed on time. It is a failure without a legal excuse to perform any promise that forms all or part of the contract.
Damages & Quantum — General Damages — Breach of Contract — Purpose and Assessment
Where there is breach of contract, the party who suffers the breach is entitled to receive general damages from the party who breached the contract. General damages constitute the natural and probable consequence of the wrong complained of and are awarded at the discretion of the court to restore the aggrieved person to the position they would have been in had the breach or wrong not occurred.

Legislation cited (3)

Cases cited (8)

  • Greenboat Entertainment Ltd v City Council of Kampala (Civil Suit No. 580 of 2003)
  • L'Estrange v Graucob Ltd [1934] 2 KB 394
  • Derrick Munywevu & Another v Maersk Agency Uganda Limited (Civil Suit No. 528 of 2021)
  • JAS Ventures International Limited v Atuhaire Juliet (Civil Suit No. 76 of 2021)
  • Dr. Maj. Rtd Anthony Jallon Okullo v Attorney General (Civil Appeal No. 3 of 2020)
  • Jomayi Property Consultants Limited v Henry K Tumukunde (Miscellaneous Application No. 1517 of 2021)
  • Stroms v Hutchinson [1905] AC 515
  • Hadley v Baxendale (1854) 9 Exch 341

Full judgment

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

Sketchway Limited v Lutaaya George William (Civil Suit No. 102 of 2024) [2026] UGCommC 300 (7 June 2026)
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.