Uganda Academic Enhancement Co. Ltd & Anor v Micro Finance Support Centre Limited (Civil Suit No. 455 of 2013)

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court dismissed the plaintiffs' suit for want of prosecution and entered judgment on the defendant's counterclaim. Where parties entered a loan agreement at 13% per annum interest and the borrowers defaulted, the court held the borrowers liable for the outstanding balance less payments made, with contractual interest at 13% per annum from filing until payment in full. General damages of UGX 50,000,000 were awarded for breach of contract, with interest at the court rate of 6% per annum from judgment. The court reduced the claimed general damages from UGX 200,000,000, finding that the award of contractual interest already remedied part of the lender's inconvenience.

Outcome

Plaintiffs' suit dismissed; judgment entered for defendant on counterclaim for outstanding loan balance, general damages, interest, and costs

Facts

The plaintiffs borrowed UGX 280,000,000 from the defendant under a three-year loan agreement at 13% per annum interest, secured by mortgages on four properties. The plaintiffs alleged the defendant prematurely recalled the entire loan and threatened to sell the mortgaged properties without proper notice. The plaintiffs filed suit seeking an injunction. The defendant counterclaimed for the outstanding balance, alleging default and providing notices of default. The plaintiffs made no efforts to fix the suit for hearing and it was dismissed for want of prosecution in 2015. The counterclaim proceeded ex parte. Before judgment, the plaintiffs paid UGX 80,000,000 and issued post-dated cheques, but no formal rescheduling agreement was concluded. The plaintiffs admitted the debt on the counterclaim.

Issues

1. Whether the plaintiffs' suit for injunction should be dismissed for want of prosecution.
2. Whether the defendant/counter-plaintiff is entitled to judgment on the counterclaim for outstanding loan balance after the plaintiffs admitted the debt.
3. What rate of interest should be awarded on the admitted debt.
4. What quantum of general damages should be awarded for breach of the loan agreement.
5. What rate of interest should be awarded on general damages.

Orders

• Plaintiffs' suit dismissed for want of prosecution.
• Judgment entered on counterclaim against the counter-defendants (plaintiffs).
• Counter-defendants to pay counter-plaintiff UGX 264,090,620 less UGX 80,000,000 already paid.
• Interest on the balance at 13% per annum from date of filing suit (15 August 2013) until payment in full.
• Counter-defendants to pay general damages of UGX 50,000,000.
• Interest on general damages at 6% per annum from date of judgment until payment in full.
• Costs of the counterclaim and main suit awarded to the counter-plaintiff (defendant).

Rules and key headnotes

Legislation cited (5)

• Civil Procedure Act s.26(2)
• Civil Procedure Act s.27(2)
• Contracts Act s.61(1)
• Contracts Act s.61(4)
• Civil Procedure Rules O.9 r.11(2)

Cases cited (6)

• Charles Lwanga v Centenary Rural Development Bank Ltd (Court of Appeal Civil Appeal No. 30 of 1999)
• Hadley v Baxendale (1854) 9 Exch 341
• Henry Dhushime v S.M Tours & Travel Ltd (High Court Civil Suit No. 23 of 1997)
• Sietico Co. v Noble Builders Ltd (Supreme Court Civil Appeal No. 31 of 1995)
• Star Super Market (U) Ltd v Attorney General (Court of Appeal Civil Appeal No. 34 of 2000)
• Grofin East African Fund LLS v J K Investec (U) Ltd & Ors (High Court Civil Suit No. 374 of 2011)

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