Absa Bank Uganda Limited v Nabatesi & Another (HCT-00-CC-CS 106 of 2023) [2024] UGCommC 329 (6 November 2024)

## THE REPUBLIC OF UGANDA

#### IN THE HIGH COURT OF KAMPALA

#### **COMMERCIAL DIVISION**

#### HCT-00-CC-CS-0106-2023

ABSA BANK UGANDA LIMITED ::::::::::::::::::::::::::::::::::::

#### VERSUS

#### 1. CATHERINE NABATESI

#### 2. FRED KANYIKE T/A CATHY &

# FRED GENERAL HARDWARE::::::::::::::::::::::::::::::::::::

#### Before: Hon. Lady Justice Patricia Kahigi Asiimwe

#### Judgment

#### Introduction

1. The Plaintiff's claim against the Defendants is for recovery of UGX. 121,253,208 arising from breach of a loan agreement. The Plaintiff in addition seeks general damages, interest on the outstanding loan at a rate of 15% and costs of the suit.

#### The Plaintiff's case

- In August 2021, the 1 & $2^{nd}$ Defendant jointly applied for an $2.$ unsecured Small Medium Enterprise (SME) business loan. - 3. The Plaintiff offered the 1 & $2^{nd}$ Defendant a loan facility of UGX 100,000,000 which was to be repaid in monthly instalments of UGX 5,539,939. The loan was expected to run for 24 months at an interest rate of 29% per annum.

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$\mathcal{A}$

- $4.$ On 30<sup>th</sup> August 2021, the Defendants signed the loan agreement accepting all the terms and conditions. On 31<sup>st</sup> August 2021, UGX 100,000,000 was disbursed to the Defendants' account. - $5.$ The Defendants defaulted on their loan obligations despite several reminders to fulfil their loan obligations, the Defendants have refused to do so.

## Representation

The Plaintiff was represented by M/s Kasuna, Mpungu & $6.$ Advocates. The Defendant did not file a written statement of defence despite being served and the matter was set down for formal proof.

## Issues

- The issues for resolution are as follows: $7.$ - $\mathbf{1}$ Whether the Defendant breached the contract - $\mathbf{H}$ . What remedies are available to the plaintiff?

## Evidence

- 8. During the formal proof hearing the Plaintiff called one witness, Mr. Otim Osker, the Agency Manager in the Plaintiff's Collections and Recovery Department. - 9. He testified that the Defendants applied and obtained a loan facility of UGX 100,000,000 and subsequently defaulted on their loan obligations. He testified that under the loan statement, the outstanding amount is UGX 121,253,208. He testified that the Bank had suffered inconvenience, financial loss and unnecessary expenses in trying to recover the outstanding loan amounts.

## Resolution

#### *Issue I: Whether the Defendant breached the contract*

- 10. The Black's Law Dictionary 11<sup>th</sup> Edition page 232 defines breach of contract as a violation of a contractual obligation by failing to perform one's own promise. - 11. The Supreme Court in the case of **Hajji Asumani Mutekanga V** Equator Growers (U) Ltd CS No 7 of 1995 noted that where an interlocutory judgment has been entered in favour of the Plaintiff, and that matter came for formal proof, breach of the agreement was no longer an issue. - 12. The Plaintiff's evidence has not been controverted by the Defendants. I find that there was a breach of contract by the Defendants. Therefore, this issue is answered in the affirmative.

#### *Issue II: What remedies are available to the plaintiff?*

13. The Plaintiff prayed for the recovery of UGX 121,253,208, interest on the outstanding amount and general damages.

*a) Recovery of UGX 121,253,208*

14. The Plaintiff submitted in evidence a copy of the Defendants' loans statement (PE 3) which indicates that the outstanding balance is UGX 121,253,208. I therefore find that the Plaintiff is entitled to recovery of the outstanding balance of UGX 121,253,208.

b) Interest of 15%

15. Counsel for the Plaintiff submitted that interest is awarded at the discretion of court and cited section 26 of the Civil Procedure Act,

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Cap 71. Counsel also cited the case of Kabandize John Baptist & 21 Ors Vs Kampala City County Authority CACA No. 36 of 2016, for the holding that the essence of award of interest is restitution intergram.

- 16. Under Section 26(2) of the Civil Procedure Act, "where ... the decree is for payment of money, the court may, in the decree, order interest at such a rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit". - 17. In the case of **Premchandra Shenoi and Anor Vs Maximov Oleg** Petrovich (SCCA No. 9 of 2003) it was held that the basis for the award of interest is that the defendant has taken and used the Plaintiff's money and benefited from it and consequently, the Defendant ought to compensate the Plaintiff. - 18. In the instant case, the Defendants have kept the Plaintiff's money for three years. The Plaintiff is therefore awarded interest of 15% per annum on the outstanding sum from the date of filing this suit till payment in full.

#### *c) General damages*

- $19.$ Having granted interest, I decline to grant general damages as the interest is sufficient to cater for the general damages. - 20. In conclusion, therefore, judgment is entered for the Plaintiff and it is ordered as follows:

$A$

- The Defendants pay the Plaintiff UGX 121,253,208 being $\overline{a}$ the outstanding loan balance; - The Plaintiff is awarded interest at a rate of 15% per annum $b)$ on a) above from the date of filing the suit until payment in full; and - The Plaintiff is awarded the costs of the suit. $c)$

## Dated this 6<sup>th</sup> day of November 2024

$\cdots$

Patricia Kahigi Asiimwe Judge Delivered on ECCMIS