[2006] UGCommC 8

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\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\fs28\insrsid1136281\charrsid8084347 \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8941359 {\b\f36\fs28\insrsid8941359 THE REPUBLIC OF UGANDA \par \par IN THE HIGH COURT OF UGANDA AT KAMPALA \par (COMMERCIAL }{\b\f36\fs28\insrsid12986314 COURT }{\b\f36\fs28\insrsid8941359 DIVISION) \par \par }{\b\f36\fs28\insrsid12986314 HCT-00-CC-CS-0}{\b\f36\fs28\insrsid8941359 547 OF 2004 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8941359 {\b\f36\fs28\insrsid8941359 \par SHINE PAY (U) LTD :::::::::::::::::::::::::::::: PLAINTIFF \par \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid802970 {\b\f36\fs28\insrsid8941359 VERSUS \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid8941359 {\b\f36\fs28\insrsid8941359 \par KIYONGA FRANCIS ::::::::::::::::::::::: DEFENDANT \par \par \par BEFORE: }{\b\f36\fs28\ul\insrsid8941359\charrsid10363097 THE HONOURABLE MR. JUSTICE YOROKAMU BAMWINE}{\b\f36\fs28\insrsid8941359 \par \par }{\b\f36\fs28\ul\insrsid8941359\charrsid10363097 J U D G M E N T: \par }{\b\f36\fs28\insrsid8941359 \par }\pard \qj \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10384301 {\f36\insrsid3108559 The Plaintiff\rquote s claim against the Defendant is for US $2933, and interest at the rate of 15% per month on any }{ \f36\insrsid10488469 un}{\f36\insrsid3108559 paid instalment, from 30/7/2004 till payment in full.}{\f36\insrsid8539048 He filed the suit under Summary Procedure, 0.33 r 2 of the Civil Procedure Rules and obtained Judgment against the Defendant. Under Misc. Application No. 709/2004, the said Judgment was set aside and the Defendant filed a }{\f36\insrsid10488469 W}{ \f36\insrsid8539048 ritten }{\f36\insrsid10488469 S}{\f36\insrsid8539048 tatement of Defence. From then on, hearing stalled. Counsel for the Defendant}{\f36\insrsid13374485 failed to appear and }{\f36\insrsid10488469 whenever}{\f36\insrsid13374485 he happened to appear }{\f36\insrsid10488469 he }{\f36\insrsid13374485 would advance an excuse for not proceeding. The Defendant never appeared in Court at all. On 16/3/2006, when neither the Defend ant nor his lawyer appeared in Court, I allowed the Plaintiff to proceed exparte.}{\f36\insrsid8941359 \par }{\f36\insrsid13374485 \par The Plaintiff led evidence of one witness, its Managing Director one Eyasu Sirak. He testified that on 21/4/2004, the Plaintiff advanced US $2,933 to the Defendant. He exh ibited a copy of the loan agreement to that effect. According to this agreement, the Defendant was supposed to pay back the said money in ten equal monthly instalments of US $294, effective July 30}{\f36\super\insrsid13374485\charrsid13374485 th}{ \f36\super\insrsid13374485 }{\f36\insrsid13374485 , 2004.}{\f36\insrsid4068773 Mr. Eyasu\rquote s evidence is that this was a friend ly loan where, however, the Defendant was obliged to pay interest of 15% per month on the unpaid instalments. While the claim is for US $2933, the witness admitted that during the pendency of the suit the Defendant was able to pay off one}{ \f36\insrsid2970861 instalment in the sum of US $294.}{\f36\insrsid13374485 \par }{\f36\insrsid2970861 \par From the evidence of this witness, the amount now due to the Plaintiff from the Defendant is US $2639. }{\f36\insrsid9070008 I have no reason to believe that the Defendant is not indebted to the Plaintiff in that sum. It is decreed to it.}{ \f36\insrsid2970861 \par }{\f36\insrsid9070008 \par This leaves me with on}{\f36\insrsid10488469 e}{\f36\insrsid9070008 issue: that of interest. \par }{\f36\insrsid15991476 \par The Plaintiff\rquote s claim is for interest of 15% per month on any unpaid instalment from 30/7/2004 till payment in full. Mr. David Innocent Nyote has invited me to find that whereas the suit is premised on a loan agreement, wh ich advanced to the Defendant money on a friendly basis, the interest chargeable on the instalment upon which the Defendant}{\f36\insrsid13270043 defaulted i}{\f36\insrsid10488469 s}{\f36\insrsid13270043 okay. That it is perfectly legal in its spirit. That if the Defendant had honoured the agreement, he would not pay any interest. But that he defaulted and continues to do so, and the interest}{\f36\insrsid2504610 of 15% per month is legally levied against him.}{\f36\insrsid15991476 \par }{\f36\insrsid2504610 \par I have very carefully addressed my mind to counsel\rquote s argument. The absence of the Defendant\rquote s participation has of course not made matters any easier for Court. \par \par Be that as it may, it is the stand of this Court that interest, if it is not part of the contract terms, becomes a discretionary remedy. The general rule is that interest can only be claimed if the claim is based on an agre ement for it in the document sued upon or by statute. In the instant case, the interest claimed by the Plaintiff against the Defendant is not based on an agreement. The agreement only provided for payment of }{\f36\insrsid10488469 a penalty at the rate of }{\f36\insrsid2504610 15% per month in the event of a default by the Defendant on the principal sum. By simple arithmetic, 15% per annum translates into 18}{\f36\insrsid10488469 0}{\f36\insrsid2504610 % per annum which by Ugandan Standards is unrealistically high, especially in a situation where the parties agree that it was just a friendly loan.}{\f36\insrsid10488469 There would be nothing \lquote friendly\rquote about it.}{\f36\insrsid2504610

\par }{\f36\insrsid16712648 \par In my view, while this penalty may have been intended to discourage wilful defaults, interest at 180%}{\f36\insrsid5646035 per annum would be excessive. This Court has a discretion to award interest at less than the contract ual rate when that rate is manifestly excessive and unconscionable. See: }{\f36\ul\insrsid5646035 Juma \endash Vs- Habib [1975] EA 103 (T).}{\f36\insrsid16712648 \par }{\f36\insrsid5646035 \par The Plaintiff has in the plaint prayed for interest of 15% p.m from the date of default till payment in full. The principle of interest as a discretionary}{\f36\insrsid8471884 remedy was laid down by Lord Denning in }{\f36\ul\insrsid8471884 Harbutts Plasticide }{\f36\ul\insrsid14158262 L}{\f36\ul\insrsid8471884 td \endash Vs- Wyne Tank & Pump Co. Ltd [1970] 1 QB 447.}{\f36\insrsid8471884 He observed:}{\f36\insrsid5646035 \par }\pard \qj \li720\ri720\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin720\lin720\itap0\pararsid1911414 {\i\f36\insrsid8471884\charrsid1911414 \'93 An award of interest is discretionary. It seems to me that the basis of an award of interest is that the Defendant has kept the Plaintiff out of his money; and the Defendant has had the use of it himself. So he}{\i\f36\insrsid3496539\charrsid1911414 ought to compensate the Plaintiff accordingly.\'94}{\i\f36\insrsid8471884\charrsid1911414 \par }\pard \qj \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10384301 {\f36\insrsid3496539 \par I agree with the above principle.}{\f36\insrsid7032810 In the instant case, the Plaintiff advanced a friendly loan to the Defendant. The Defendant was given a grace period of three months and when }{\f36\insrsid14158262 the initial }{ \f36\insrsid7032810 payment }{\f36\insrsid14158262 fell }{\f36\insrsid7032810 due, the Defendant }{\f36\insrsid14158262 defaulted}{\f36\insrsid7032810 . To date, a sum of US $2639, is still due and owing. On seeing that the}{\f36\insrsid15821225 payments were not forthcoming, the Plaintiff filed this suit under Summary Procedure. The Defendant then moved in to defend the suit but thereafter disappeared.}{\f36\insrsid3496539 \par }{\f36\insrsid5645631 \par The principle that emerges from the authorities, including }{\f36\ul\insrsid5645631 Sietco \endash Vs- Noble Builders (U) Ltd SCCA No. 31/95}{\f36\insrsid5645631 is that where a person}{\f36\insrsid7018431 is entitled to a liquida ted amount or specific goods and has been deprived of them through the wrongful act of another person, he should be awarded interest from the date of filing the suit. Where, however, damages have to be assessed by the Court, the right to these damages do es not arise until they are assessed. In such event, interest is only given from the date of Judgment. In the instant suit, }{\f36\insrsid14158262 there are no }{\f36\insrsid7018431 damages being claimed.}{\f36\insrsid348228 }{\f36\insrsid5645631

\par }{\f36\insrsid9914069 \par From the evidence on record, Court is satisfied that the Defendant has kept the Plaintiff out of its money. The Defendant has had use of it to warrant an order of compensation on account of that to the Plaintiff. \par }{\f36\insrsid8084347 \par In these circumstances, I award interest on the principal sum of US $2639 at the commercial rate of 25% per annum from the date of fi ling the suit (11/08/2004) till payment in full. The Plaintiff shall also have the costs of this suit, to attract interest at Court rate from the date of taxation till payment in full. \par \par Ordered accordingly. \par \par }{\b\f36\insrsid8084347\charrsid861732 Yorokamu Bamwine \par J U D G E \par 27/03/2006 \par }{\f36\insrsid8084347 \par }{\b\f36\insrsid8084347\charrsid861732 \par }}