[2025] UGCommC 162

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION] CIVIL SUIT NO. 0969 OF 2024**

10 **NATURINDA ZERUBABEELI ] PLAINTIFF**

**VERSUS**

#### **AMUTUHAIRE LUCKY ] DEFENDANT**

#### 15 **Before: Hon. Justice Thomas Ocaya O. R**

#### **JUDGMENT**

#### **Introduction:**

The Plaintiff's claim against the Defendant is for recovery of UGX 438,000,000/=, General damages for breach of contract, interest at commercial rate of 25% per annum and breach

20 of contract, and Costs of the suit.

The Plaintiff's brief facts are that the Plaintiff extended various friendly loans to the defendant and as at 31st August 2023, the Defendant was indebted to a total of UGX 438,000,000/= and the Defendant acknowledged this indebtedness by entered into a memorandum of understanding on the 15th 25 January 2024.

That the Defendant secured the friendly loans with her land title of a land comprised in Bulemezi Block 604 Plot 34 land in Muwanya.

30 That however, the Defendant did not meet any of the repayment installments and promises for payment, but instead withdrew the security and mortgaged the land with Post Bank Uganda and placed her own caveat.

The Defendant in her Written statement denied the Plaintiff's allegations and intimated 35 she would raise preliminary objections at commencement of hearing, that the suit is


5 barred in law on ground that the matter ought to be referred for arbitration pursuant to clause IV of the contract/memorandum of understanding and that the Plaintiff has no locus standi to bring this suit against the Defendant.

The Defendant however in the alternative partially admitted that she only received UGX 10 80,000,000/= and averred that she deposited the said certificate of title with the Plaintiff hoping to get the loans for the total sums of money as agreed upon in the two memorandums of understanding which never happened as she only received a total sum of UGX 80,000.000/= from the Plaintiff.

15 Further that she is only indebted to the Plaintiff for UGX. 40,000,000/= since she has so far paid UGX 40,000,000/= of the UGX 80,000,000/= that she received from the Plaintiff. The Plaintiff filed a reply to the Written Statement of Defense and reiterated the contents of the Plaint and averred that the Defendant's intended Preliminary Objections are misconceived and an abuse of the court of process. That clause IV of the said 20 memorandum of understanding dated 31st May 2023 and 1st May 2023 were amended by clause 3.2 and 3.5 of the memorandum of understanding dated 15th January 2024.

Further that the Plaintiff has locus and that the Defendant admitted indebtedness of UGX 438,000,000/= as contained in the memorandum of understanding dated 15th January 25 2024. Plaintiff also contends that the payment receipt attached by the Defendant is for UGX 28,000,000/= and not UGX 40,000,000/= as claimed and that this demonstrates deliberate falsehood on the Defendant's part. And that since the Defendant admitted indebtedness of UGX 40,000,000/=, she should be decreed to pay the same, and the Plaintiff shall prove the rest of the claim.

Further that contrary to the Defendant's averment, the parties mutually agreed on the reasonable interest based on the business the Defendant claimed to have been undertaking, and later in the memorandum of understanding dated 15th January 2024, part of the interest was waived, and a lump sum claim of UGX 438,000,000/= remained.

5 Judgment on admission.

On 28th March 2025, upon application by the Plaintiff, Court entered a judgment on admission for the admitted sum of UGX 40,000,000/= and the same was served on the Defendant.

10 Further, this matter proceeded exparte as the Defendant failed and or refused to attend the scheduled court hearings after filing her Written Statement of Defense.

#### **Representation and Submissions:**

The Plaintiff was represented by the law firm of M/S Mujurizi and Tumwesigye Advocates, 15 while the Defendant was represented by the M/S Mbidde and Co. Advocates.

As noted earlier, the matter proceeded exparte despite the Defendant being served with hearing notices and only the Plaintiff filed their submissions. The Defendant did not provide any reason for the failure to comply with Court's directions. Such a scenario is catered for

20 under Order 17 Rule 4 of the Civil Procedure Rules, which provides that; "*Where any party to a suit to whom time has been granted fails to produce his or her evidence, or to cause the attendance of his or her witnesses, or to perform any other necessary act to the further progress of the suit, for which time has been allowed, the Court may, notwithstanding the default, proceed to decide the suit immediately."*

In light of the foregoing, the Court shall rely on the Defendant's Written statement of Defense, in arriving at its decision, being that she is bound by it. See *Order 6 Rule 7* and *Jani Properties Ltd V Dar-es-salaam City Council (1966) EA 281.*

#### 30 **Evidence:**

The Plaintiff adduced one witness, Mr. Naturinda Zerubabeeli, who led his evidence in chief by witness statement, which was admitted in court record as PW1. The Plaintiff filed a trial bundle on record and exhibited 11 Documents in court, exhibited as PEX 1 to PEX 11. The Plaintiff was cross examined by Counsel for the Defendant on his witness statement. Where after directions were given for the filing of written submissions which as stated above were only complied with by the Plaintiff.

#### 5 **Issues:**

The following issues were arrived at for the Court's resolution.

- 1. Whether the Defendant breached the memorandum of understanding between the parties dated 15th January, 2024? - 2. Whether the Defendant is indebted to the Plaintiff, and if so, how much? - 10 3. What are the available remedies?

#### **Decision:**

## **Issue 1: Whether the Defendant breached the memorandum of understanding between the parties dated 15th January, 2024?**

- 15 Counsel for the Plaintiff submitted that PW 1 testified that the Defendant obtained a friendly loan from the Plaintiff worth UGX. 220,00,000/= as working capital, and the parties agreed on a monthly interest of UGX 13,500,000/= for a period of six months which was all detailed in a memorandum of understanding in PEX 1 and that on 1st May 2023, the Plaintiff further advanced another friendly loan to the Defendant worth UGX 115,000,000/= as working - 20 capital and the monthly interest was fixed at UGX 6,900,000/= and the parties further executed the memorandum of understanding in PEX 2.

Counsel further submitted that on 31st August, 2023, the Defendant was indebted to Plaintiff to a total sum of UGX 438,000,000/= which the Defendant acknowledged by signing a memorandum of understanding on the 15th 25 January, 2024 in PEX3 and that the Defendant undertook to pay the said sum in two installments within 5 months from the date of the memorandum of understanding ending on 30th May, 2024. The Defendant also secured the friendly loans with her land title of the land comprised in Bulemezi Block 604 Plot 34 land at Muwanya in PEX4.

Counsel also submitted that on 30th August 2023, the Plaintiff handed over the said certificate of title to the Defendant upon her request on condition that she could get a loan from Post Bank to enable her to settle part of the debt and that receipt of the title was acknowledged by the Defendant as per PEX 6. That per PW 1's evidence, which is

35 uncontested, the Plaintiff duly fulfilled its contractual obligations; however, the Defendant


- 5 again did not meet any of the repayment installments and promises for money, but instead mortgaged the land with Post Bank Uganda and placed her own caveat per PEX 7. Counsel cited the case of *Stanbic Bank Uganda LTD versus Hajji Yahaya Sekalega T/A Sekalega Enterprises HCCS No. 185 of 2009*, to define breach of contract as the breaking of obligations which a contract imposes which confers a right of action for damages on the injured party. It - 10 entitles him to treat the contract as discharged if the other party renounces the contract or makes its performance impossible or substantially fails to perform his promise.

In conclusion, Counsel submitted that the Defendant was in breach of the memorandum of understanding dated 15th January, 2024, and has no lawful excuse for failure to fulfill their 15 contractual obligations of payment of the agreed sum by 30th May, 2024.

In civil proceedings, the burden of proof lies upon the party who makes a claim, and the burden is proved on a balance of probabilities. If a party is to obtain the remedies sought. See the decision of Lord Denning *in Miller versus Minister of Pensions (1947)2 ALL ER 372*

### 20 *on page 373*. *See Section 101 and Section 103 of the Evidence Act*.

When a Plaintiff has led evidence establishing his or her claim, he/she is said to have executed the legal burden. The evidential burden thus shifts to the defendant to rebut the Plaintiff's claims.

It is trite law that despite a matter proceeding exparte, the Plaintiff still bears the burden of proving its case on the balance of probabilities. See *Kirugi and another v. Kabiya and three others [1987] KLR.*

- 30 It is the principle that before establishing a breach of contract, there must be a contract as prescribed under Section 10 of the Contracts Act. In this instant case, thus far, there is no contest that the parties entered into a series of memorandum of understanding, and the final one is the one dated 15th January, 2024, in PEX 3. I have perused the same and I am convinced that it is valid and enforceable. See *Green Boat Entertainment Ltd V City Council of* - 35 *Kampala Civil Suit No. 0580 of 2003*.

- 5 The Plaintiff's claim is based on breach of contract. It is defined in Black's Law Dictionary, 11th Edition, Page 232, as a violation of a contractual obligation by failing to perform one's promise, by repudiating it, or by interfering with another party's performance. Also see *Ronald Kasibante v. Shell Uganda Ltd Civil Suit No. 542 of 2006***.** - 10 A breach occurs when one party to a contract fails or neglects to perform his or her obligations or performs them in a way that does not correspond with the agreement. The doctrine of *pacta sunt servanda* encapsulates the necessity of honoring undertakings that are legally enforceable. - 15 In this instant case, the Plaintiff adduced a litany of evidence, including the last memorandum of understanding in PEX 3, where in clause (d) of the recitals, the Defendant acknowledged that she failed to make payments for the money borrowed as per the agreed timeline of 31st August 2023. This is an unequivocal admission of admission of breach of a contract. - 20 Further, I am informed by the Defendant's partial admission of indebtedness in paragraph 4(d) of her Written Statement of Defense, where she admitted to being indebted to the tune of UGX 40,000,000/= only. Notwithstanding, the dispute on the actual amount of her indebtedness to the Plaintiff, this admission is sufficient to establish the Defendant's breach of contract.

Therefore, on the basis of the above evidence, I am convinced the Defendant breached the contract with the Plaintiff and I am inclined to find as such.

Issue 1 is held in the affirmative.

## **Issue 2: Whether the Defendant is indebted to the Plaintiff and, if so, how much?**

Counsel for the Plaintiff submitted that the Plaintiff filed this suit for an order for recovery of UGX 438,000,000/=, and that when the suit came up for hearing on 28th March 2025, judgment on admission was entered against the Defendant for a sum of UGX 40,000,000/=

35 based on the Defendant's admission. That the claimed amount of UGX 438,000,000/= less UGX 500,000/= paid on 24th April, 2024, and less of UGX 40,000,000/= leaves an outstanding

 5 balance of UGX 397,500,000/= which remains unpaid to date as stated in Paragraph 27 of PW 1's evidence in chief.

PW 1, in his evidence in chief, which is uncontested, testified that the unpaid and outstanding amount by the Defendant is UGX 397,500,000/=. This uncontested evidence coupled with 10 the Defendant's failure to adduce of a completed payment of her debt acknowledgement in clause (d) in the recitals to the memorandum of understanding in PEX 3 is convincing enough for one to easily arrive at the conclusion that the Defendant is indeed indebted to the Plaintiff to the tune of UGX 397,500,000/=.

15 It is trite law that an acknowledgement of debt is an admission, and as observed in the case of *Madhvani International S. A. v. Attorney General, CACA No. 48 of 2014,* the court stated that - An acknowledgement is an admission which must be clear, distinct, unequivocal and intentional. That there should be no doubt that the debt is being admitted, although the amount does not have to be stated, and such acknowledgement must be made by the person 20 liable to pay or his agent and can be made to the agent of the creditor.

In this instant case, the above observation holds true despite the fact that the Defendant acknowledges partial indebtedness, whilst she failed to adduce evidence of complete payment of the debt. In the premises, I am inclined to agree that the Plaintiff, through his 25 evidence and the Defendant's lack thereof, proved that the Defendant is indebted to the tune of UGX 397,500,000/=.

Therefore, issue 2 is held for the Plaintiff, and the Defendant is found to be indebted to the Plaintiff to the tune of UGX 397,500,000/=.

#### **Issue 3: What are the available remedies?**

The Plaintiff in his claim prayed for recovery of UGX 438,000,000/=, General damages for breach of contract, interest at a commercial rate of 25% per annum, and Costs of the suit.

### 5 *Recovery of UGX 438,000,000/=.*

Having established and found in issue 2 above, that the Defendant is indebted to the Plaintiff in the tune of UGX 397,500,000/= as proven, plus the earlier entered judgement on admission of UGX 40,000,000/= brings the Plaintiff's entitled recovery to be UGX

10 437,500,000/=.

Therefore, the Plaintiff is entitled to recover UGX 437,500,000/= only.

## *General damages.*

- 15 The trite law is that damages are a direct result of a breach of contract and the principle is that of; restitution inter gram, where a party who sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed see *Robinson v. Harman (1848) 1 Exch 850* **as** cited with approval by Justice Steven Mubiru in *Waiglobe (u) Limited v Sai Beverages* - 20 *Limited Civil Suit No. 016 of 2017.*

In Principles Governing the Award of Damages in Civil Cases, A paper by Bart Katurabe [*Justice Emeritus*] stated on General damages that, according to Lord McNaughten in the oftcited case of Stroms V. Hutchinson [1905] AC 515, are such as the law will presume to be the 25 direct natural or probable consequence of the act complained of, to that, only claims of damages that are proximate are attainable by court and those that are so remote are not for the claim of damages is not awarded on the whim of pleadings or intended to derive benefit for the Plaintiff where there is none.

30 PW 1 in his evidence in chief in paragraphs 28 and 29 testified that the Defendant was supposed to have paid the outstanding amount by 31st August 2024, but she defaulted, and that he has suffered significant inconveniences, financial loss, and distress for which he prayed for general damages of UGX 100,000,000/=.

5 Counsel submitted that it is over 14 months (*by the time of submission, I presume*) since the Defendants' obligation to pay the Plaintiff the contractual sum arose, and yet to date, the Defendant has completely failed and/or neglected to fulfill their end of the bargain.

In the premises, having perused the Plaintiff's evidence, I find it satisfactory that the Plaintiff 10 did incur financial loss and inconveniences as the money was lent to the Defendant with the understanding and hers too, to pay back and her failure to do so, did put the Plaintiff in a financial predicament.

In the premises, those conditions warrant the grant of general damages to put the Plaintiff in 15 a near position he would have been in had the Defendant not breached the contract.

While I am inclined to agree with the Plaintiff for an award him General damages, I'm however of the considered opinion the sum of UGX 70,000,000/= is a fair and considerate amount.

Therefore, the Plaintiff is awarded General damages of UGX 70,000,000/=.

# *Interest at a commercial rate of 25% per annum.*

- Section 26 (2) of the Civil Procedure Act provides for the awarding of interests at the Court's 25 discretion. Bark Katurabe [Chief Justice Emeritus] in Principles Guiding awarding of Damages quoted Order, JSC in Premchandra Shenoi and Another v Maximov Oleg Petrovich, SCCA No. 9 of 2003, where he stated that: - In considering what rate of interest the respondent should have been awarded in the instant case, I agree that the principle applied by this Court in Sietco v Noble Builders (U) Ltd SCCA No. 31 of 1995, to the effect that it is a - 30 matter of the Court's discretion is applicable. The basis of the awarding of interest is that the Defendant has taken and used the Plaintiff's money and benefited from it.

In this case, PW 1 in her evidence in chief in paragraph 28 testified that that the Defendant was supposed to have paid the outstanding amount by 31st August 2024 which did not and

for that reason, he prayed for interest at the commercial rate of 25% per annum from 1st 35 September, 2024 until payment in full.


- 5 Counsel for the Plaintiff submitted that where a person is entitled to a liquidated amount, he should be awarded interest from the date of default till payment in full. That the Plaintiff has been put out of use of its monies since the Defendant's breach of the memorandum of understanding occurred. - 10 In the instant case, it has been established that Defendant borrowed the friendly loan which she was to completely pay back, and as such, I find it more probable than not that the Defendant benefited in withholding that payment to her benefit and the Plaintiff's detriment. In the premises, I award the Plaintiff interest at the rate of 15% per annum on the outstanding balance of UGX 437,500,000/= from 1st September, 2024, when the debt 15 crystallized until payment in full, having considered the inflation over time when the debt became owed.

Therefore, the Plaintiff is awarded interest at the rate of 15% per annum on the outstanding balance of UGX 437,500,000/= from 1st September, 2024, until payment in full.

## *Costs*.

It is trite law that costs follow the suit unless there is a strong reason to suggest the contrary, and are awarded at the court's discretion. See *Harry Ssempa V Kamabagambire David HCCS 408 of 2014, Lyamuleme David V. AG SCCA No. 4 of 2013, Anglo-Cyprian Trade* 25 *Agencies Ltd V. Paphos Wine Industries Ltd, [1951] 1 ALL ER 873.*

In the instant case, having found for the Plaintiff on all the issues, I find no reason to deny the Plaintiff costs of the suit.

## 30 **In Conclusion:**

I accordingly make the following orders,

- a) There was a breach of contract by the Defendant. - b) The Defendant is indebted to the Plaintiff and the Plaintiff is entitled to recover the UGX 437,500,000/= from the Defendant. - 35 c) The Plaintiff is awarded General Damages of UGX 70,000,000/=. - d) The Plaintiff is awarded interest at the rate of 15% per annum on the outstanding

balance of UGX 437,500,000/= in (b) above from 1st 5 September, 2024, until payment in full.

> The Plaintiff is award interest on (c) above at the rate of 8% per annum from the date of this Judgment till payment in full.

- e) The Plaintiff is awarded the costs of the suit. - 10

I so order.

**Dated** this\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_2025, delivered electronically and uploaded on **ECCMIS** 27th May

**Ocaya Thomas O. R**

# **Judge,**

**27th May, 2025.**

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