Stanbic Bank Uganda Ltd v Kalule (Civil Appeal No 278 of 2016)

Observed later treatment

No later-treatment classification is recorded for this judgment.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Court of Appeal dismissed the bank's appeal. The lead judgment held that the bank's seizure and sale of the leased truck without the contractually required 14 days' written notice was unlawful and amounted to a repudiatory breach, entitling the respondent to damages assessed on restitutio in integrum. The trial Judge erred in awarding the value of the truck, which remained the bank's property, so the Court substituted general damages of UGX 15,000,000. The bank could not recover future rentals through its counterclaim due to its own breach. In a concurring judgment, Kakuru JA held the transaction was in substance a loan and that the bank contravened section 37 of the Financial Institutions Act 2004.

Outcome

Appeal dismissed; High Court award of the truck's value set aside and general damages increased from UGX 2,000,000 to UGX 15,000,000 with interest

Facts

In September 2009 the respondent obtained a finance lease facility from the appellant bank equivalent to USD 29,750 to purchase a new TATA truck, registered in the bank's names as security. The respondent paid a 15% deposit and rentals were payable over 60 months, with an option to purchase the truck at a nominal fee on completion. The respondent defaulted on scheduled rental payments but had earlier cleared arrears. On 3 March 2011, after further payments, the bank's agents attached the truck without giving the respondent the 14 days' written notice required by clause 11.2.1 of the agreement. The bank then sold the truck by auction, allegedly at a location different from that advertised, for UGX 42,000,000. The respondent sued for breach of contract and recovery of the truck or its value. The trial Judge found the seizure and sale unlawful for want of notice, awarded the truck's value and general damages, and dismissed the bank's counterclaim for the outstanding lease sum.

Issues

1. Whether the seizure and sale of the leased truck without the contractually required 14 days' written notice was outside the lease agreement and unlawful.
2. Whether the trial Judge erred in awarding the respondent the value of the truck whose ownership remained with the appellant.
3. Whether the appellant was entitled to recover the outstanding finance lease sum under its counterclaim.
4. Whether a commercial bank licensed under the Financial Institutions Act 2004 may lawfully engage in the business of finance leasing (per Kakuru, JA).

Orders

• Ground 1 of the appeal disallowed.
• Ground 3 of the appeal disallowed; appellant not entitled to counterclaim for future rentals.
• Ground 2 partially allowed; award of UGX 42,000,000 (value of truck) set aside.
• Award of general damages of UGX 2,000,000 substituted with an award of general damages of UGX 15,000,000.
• General damages of UGX 15,000,000 to carry interest at 6% per annum from the date of the High Court judgment till payment in full.
• Respondent awarded half the costs of the appeal; High Court costs order confirmed.
• Appeal dismissed.

Rules and key headnotes

Legislation cited (16)

• Financial Institutions Act 2004 s.3(k)
• Financial Institutions Act 2004 s.37
• Financial Institutions Act 2004 s.38
• Financial Institutions Act 2004 s.133
• Financial Institutions Act Cap 54 s.18
• Income Tax Act Cap 340 s.59
• Traffic and Road Safety Act Cap 361 s.30
• Traffic and Road Safety Act 1970 s.49
• Chattels Securities Act 2014 s.3
• Hire Purchase Act 2009 s.3
• Evidence Act s.102
• Judicature Act s.14(2)(b)(i)
• Civil Procedure Rules Order 6 rule 3
• Judicature (Court of Appeal Rules) Directions rule 30(1)(a)
• Judicature (Court of Appeal Rules) Directions rule 86(1)
• Judicature (Court of Appeal Rules) Directions rule 102

Cases cited (26)

• Mugambi vs. Housing Finance Company of Kenya Limited [2006] 1 EA 231
• Maithya vs. Housing Finance Company of Kenya & another [2003] 1 EA 133
• Future Stars Investments (U) Ltd v Nasuru Yusuf (HCCS No. 12 of 2017)
• Makula International v His Eminence Cardinal Nsubuga (Civil Appeal No. 4 of 1981)
• National Social Security Fund v Alcon International Ltd (Civil Appeal No. 15 of 2009)
• Peters v Sunday Post Ltd [1958] 1 EA 424
• Fr. Narsensio Begumisa v Eric Kibega (Civil Appeal No. 17 of 2002)
• Financings Ltd v Baldock [1963] 1 All ER 440
• Lombard North Central pic v Butterworth [1987] 1 All ER 267
• Hall Brothers Steamship Company Ltd v Young (1938) 43 Com Cas 284
• Stroms v Hutchinson [1905] AC 515
• Kelly Jarret Silveria v Stanbic Bank Uganda Ltd (Civil Suit No. 230 of 2012)
• Nassolo Farida v DFCU Leasing Company Ltd (HCCS No. 536 of 2006)
• Samuel Black t/a SB Coaches v DFCU Ltd (Civil Suit No. 416 of 2009)
• Otaok Charles v Equity Bank Uganda Ltd (Civil Suit No. 335 of 2010)
• Demand Information (In Administrative Receivership) and another versus Michael Gerson (Finance) PLC and another [2000] 4 ALL ER 734
• Deluxe Enterprises Limited vs Uganda Leasing Co. Limited
• Stanbic Bank (U) Ltd v Nakanyonyi Development Association (Noda) Ltd (Civil Suit No. 137 of 2012)
• Magezi and Another vs Ruparelia [2005] 2 EA 156
• Imelda Nassanga v Stanbic Bank (Civil Appeal No. 10 of 2005)
• Gladys Nyangire v DFCU Leasing Company Ltd (HCCS No. 106, 150 and 78 of 2007)
• Steel vs. Sirs (1980) All ER 529
• Fred Kamanda v Uganda Commercial Bank (Civil Appeal No. 17 of 1995)
• A Tampalin Steamship Co. Ltd vs Anglo-Mexican Petroleum Products CO. Ltd [1916] 2 AC 397
• Trollope 81 Colls Ltd v North West Metropolitan Regional Hospital Board [1993] 2 All ER 260
• Good life Foods Ltd versus Hall Fire Protection Ltd [2018] EWCA CIV 1371

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