Wakilii

Ssenyonjo and Another v Stanbic Bank Uganda Limited (civil suit no. 4 2015)

High Court · [2015] UGCOMMC 298 · 2015 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for declaration of illegality and unenforceability of lease agreement and recovery of monies paid
Decision
Lease agreement declared illegal and unenforceable. Defendant ordered to refund all payments and pay damages.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that there was no valid contract between the parties because the defendant's employees violated the Illiterates Protection Act by failing to translate the lease agreement into Luganda, a language the plaintiffs understood, and failing to verify the documents as required. The court declared the lease agreement illegal and unenforceable. The defendant was ordered to refund the plaintiffs' USD 54,000 contribution, all monies deposited for the lease, UGX 85,000,000 in VAT deductions never remitted to the Uganda Revenue Authority, and to pay general damages of UGX 50,000,000. The defendant's counterclaim was dismissed as arising from an illegal contract.

Outcome

Lease agreement declared illegal and unenforceable. Defendant ordered to refund all payments and pay damages.

Facts

In 2009, the plaintiffs sought a lease facility from the defendant bank to purchase two buses. The bank advertised a credit facility for such purchases. Bank staff assisted the plaintiffs in completing application forms. The plaintiffs contributed 20% of the purchase price, and the bank advanced 80%, which the plaintiffs were to repay from bus operations. The plaintiffs received the buses in February 2010 and began making repayments. In August 2010, the bank impounded the buses for alleged arrears. After the plaintiffs paid the arrears, the buses were released. The bank impounded the buses again in December 2010 and February/March 2012, then sold them at UGX 170 million and UGX 120 million respectively. The bank informed the plaintiffs of an outstanding balance of UGX 113,108,802 after the sale. The plaintiffs testified they were illiterate in English, stopped school at primary three and four respectively, and were never given translations of the lease documents into Luganda, their understood language.

Issues

  1. Whether there was a valid contract between the parties
  2. Whether the plaintiffs breached the contract
  3. Whether the impounding and sale of the buses by the defendant was lawful
  4. What remedies are available to the parties

Orders

  • Lease letter of offer and leasing agreements declared illegal and unenforceable.
  • Defendant to refund to the plaintiffs USD 54,000 being their contribution for the purchase of the buses.
  • Defendant to refund all monies deposited by the plaintiffs into their account in respect of the illegal transaction.
  • Defendant to refund UGX 85,000,000 being VAT deductions never remitted to URA.
  • Defendant to pay the plaintiffs UGX 50,000,000 as general damages for mental torture.
  • Defendant to pay interest at 21% per annum on items b, c, and d from the date of filing of the suit.
  • Defendant to pay interest at the court rate of 6% on item e from the date of judgment till payment in full.
  • Defendant to pay the reasonable costs of the suit.

Rules and key headnotes

Contract Law — Illiterates Protection — Requirement for Translation and Verification
For a contract with an illiterate person to be valid, the person who writes the document must write their own true and full name and address on the document, implying they were instructed by the illiterate person, that the document correctly represents their instructions, and that it was read over and explained to them. Failure to comply with these requirements under the Illiterates Protection Act renders the contract illegal and unenforceable.
Contract Law — Validity — Meeting of the Minds — Unequal Bargaining Power
There can be no valid contract where there is no meeting of the minds of the parties, particularly where the parties are of unequal status in understanding the undertaking and the law protects the weaker party as an illiterate protected by statute.
Banking & Finance — Bank Facilities — Duty to Translate and Simplify Terms for Illiterate Customers
Under the Bank of Uganda issued Customer Charter, it is a requirement that all facilities provided by banks supervised by the Bank of Uganda must be translated and simplified to intended beneficiaries before execution. Failure to do so, particularly where the customer is illiterate, renders the facility agreement unenforceable.
Contract Law — Illegality — Ex Turpi Causa Non Oritur Actio
No court will lend its aid to a person who founds their cause of action upon an immoral or illegal act. Where a contract is illegal ab initio, no claim arising from it will be enforced, including a counterclaim by the party who created the illegality.
Contract Law — Restitution — Recovery of Money Paid Under Illegal Contract — Parties Not in Pari Delicto
Where parties to an illegal contract are not in pari delicto, the less guilty party is entitled to recover any money paid or property transferred under the contract. This exception applies particularly where the contract is made illegal by statute with the object of protecting a particular class of persons, such as illiterates protected by the Illiterates Protection Act.
Banking & Finance — VAT Collection — Unjust Enrichment Where VAT Not Remitted
Where a bank collects VAT from a customer in respect of an illegal contract but never remits the VAT to the Uganda Revenue Authority, the bank is tantamount to unjust enrichment and must refund the collected VAT to the customer.

Legislation cited (3)

Cases cited (9)

  • Kasaala Growers Co-Operative Society v Kakooza and Another (Supreme Court Civil Appeal No. 14 of 2010)
  • Kiberu Joseph Mukasa v Butebi Investment Enterprises Ltd (High Court Miscellaneous Application No. 180 of 2013)
  • Mak International v Cardinal Nsubuga [1982] HCB
  • Active Auto Spares Ltd v Crane Bank and Rajesh Prakesh (Supreme Court Civil Appeal No. 14 of 2001)
  • Kiriri Company Ltd v Rachchodas Keshavji Dewani [1955] 1 EA
  • Nuppun Norattam v Crane Bank Limited (Civil Appeal No. 76 of 2006)
  • Fibrosa Spolka Akcyjna v Fairbain Lawson Combe Barbour [1943] AC 32
  • Moses versus Macfarlane
  • Jemba Soita Ali v David Salaam (High Court Civil Suit No. 700 of 2005)

Full judgment

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

Ssenyonjo and Another v Stanbic Bank Uganda Limited (civil suit no. 4 2015) [2015] UGCommC 298 (22 June 2015)
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.