[2015] UGCommC 152

[2015] UGCommC 152

The court found that while the subcontract agreement provided for a penalty interest of 6% per week, this rate translated to 288% per annum, which is grossly excessive and unconscionable compared to prevailing commercial rates. Relying on Section 26 of the Civil Procedure Act and relevant case law, the court...

Source-derived case information.

Citation
[2015] UGCommC 152
Parties
Plaintiff: Mectron Technical Services Ltd; Defendant: Jevi Media Solutions Ltd; Third Party: Kampala Capital City Authority
Court
Commercial Court of Uganda
Jurisdiction
Uganda
Judgment Date
13 November 2015
Case Number
Civil Suit No. 516 of 2013
Procedural Posture
Civil Suit / Judgment
Outcome
judgment for plaintiff
Legal Topics
Contractual Interest, Penalty Clauses, Unconscionable Terms, Award of Costs, Consent Decree
Source Language
english
Commercial and Corporate Civil Procedure Contractual Interest Penalty Clauses Unconscionable Terms Award of Costs Consent Decree

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Summary, issues, holding and outcome

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Parties

Mectron Technical Services Ltd

Plaintiff

Jevi Media Solutions Ltd

Defendant

Kampala Capital City Authority

Third Party

Procedural Posture

Civil Suit / Judgment

Legal Issues

  1. 1 Whether the plaintiff is entitled to penalty interest at the rate of 6% per week as per the subcontract agreement.
  2. 2 Whether the agreed interest rate is harsh and unconscionable and thus unenforceable.
  3. 3 Whether the plaintiff is entitled to interest on the contractual sum and costs of the suit.

Ratio Decidendi

The court found that while the subcontract agreement provided for a penalty interest of 6% per week, this rate translated to 288% per annum, which is grossly excessive and unconscionable compared to prevailing commercial rates. Relying on Section 26 of the Civil Procedure Act and relevant case law, the court exercised its discretion to award a fair and legal rate of interest. The plaintiff demonstrated actual financial loss due to the defendant's breach, including increased loan obligations. However, the justice of the case required that the penalty interest be set at 24% per annum from the time the cause of action arose until payment in full. The contractual sum agreed upon in the...

Court Disposition

judgment for plaintiff

Orders

  • The plaintiff is awarded Uganda Shillings 134,154,377 at 24% penalty interest per annum from the time the cause of action arose until payment in full.
  • The plaintiff is awarded costs of the suit as against the defendants.