Kanoblic Group of Companies Ltd vs Sugar Corporation (U) Ltd (Civil Appeal No 34 of 1997) [1998] UGCA 12 (26 June 1998)
Full Case Text
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Jessica chemeri}{\operator Wor. 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MR. JUSTI}{ \b\insrsid6166848\charrsid12196321 CE C. M. KATO, . J. A., \line }{\b\insrsid12196321\charrsid12196321 \tab \tab }{\b\insrsid6166848\charrsid12196321 HON. MR. }{\b\insrsid12196321\charrsid12196321 JUSTICE (G.}{\b\insrsid6166848\charrsid12196321 M. OKELLO, J. A. & \line }{\b\insrsid12196321\charrsid12196321 \tab \tab }{\b\insrsid6166848\charrsid12196321 HON. MR. JUSTICE J. P. BERKO, J. A. }{\b\insrsid12196321\charrsid12196321 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\b\insrsid6166848\charrsid12196321 \line }{\b\insrsid6166848\charrsid1377709 KANOBLIC GROUP OF \line COMPANIES (U) LTD} {\b\insrsid4002801\charrsid1377709 \'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85}{\b\insrsid6166848\charrsid1377709 APPELLANT \line }{\b\insrsid1377709\charrsid1377709 \par }{\b\insrsid6166848\charrsid1377709 VERSUS}{\b\insrsid12196321\charrsid1377709 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\b\insrsid6166848\charrsid1377709 \line SUGAR CORPORATION \line UGANDA LTD}{\b\insrsid12196321\charrsid1377709 \'85 \'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85}{\b\insrsid6166848\charrsid1377709 RESPONDENT }{\b\insrsid12196321\charrsid1377709 \par }\pard \s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 \line }{\b\insrsid6166848\charrsid12196321 (Appeal}{\b\insrsid4002801 for the Ruling of the Hon. Lady}{\b\insrsid6166848\charrsid12196321 Justice }{\b\insrsid6166848\charrsid4002801 L. E. M. Mukasa}{\insrsid6166848\charrsid12196321 \line }{\b\insrsid12196321\charrsid4002801 Kikonyo}{\b\insrsid6166848\charrsid4002801 go }{ \b\insrsid6166848\charrsid12196321 of 26th February 1997 in Misc. AppI. No. 653/96)}{\b\insrsid12196321\charrsid12196321 \par }\pard \s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\b\insrsid6166848\charrsid12196321 \line }{\b\ul\insrsid12196321\charrsid12196321 JUDGM}{ \b\ul\insrsid6166848\charrsid12196321 ENT }{\b\ul\insrsid12196321\charrsid12196321 OF BERKO, JUSTIC}{\b\ul\insrsid6166848\charrsid12196321 E OF APPEA}{\b\ul\insrsid12196321\charrsid12196321 L.}{\insrsid1377709 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\insrsid6166848\charrsid12196321 The appeal ar}{\insrsid12788118 ose from the ruling of Mukasa -}{ \insrsid12196321\charrsid12196321 Kikonyogo (Mrs.) J }{\insrsid6166848\charrsid12196321 (as she then was) on the }{\insrsid6166848\charrsid12788118 26th }{\insrsid6166848\charrsid12196321 February, 1997 in respect of an}{\insrsid12196321\charrsid12196321 appeal }{\insrsid6166848\charrsid12196321 br}{\insrsid12196321\charrsid12196321 ought under Order 46 rules 1, 7 and}{\insrsid6166848\charrsid12196321 8 o}{\insrsid12196321\charrsid12196321 f The Civil Procedure Rules in }{ \insrsid6166848\charrsid12196321 which she set aside the Registrar\rquote s}{\insrsid12196321\charrsid12196321 Certificate awarding compound }{\insrsid6166848\charrsid12196321 interest, ordered the appellant to refund with}{ \insrsid12196321\charrsid12196321 interest the Shs. 8,403,193/= }{\insrsid1377709 to \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 the respondent/judgment/Debtor a}{\insrsid12788118 nd set aside the attachment }{ \insrsid1377709 r}{\insrsid6166848\charrsid12196321 espondent/Judgment/Debtor\rquote s Accou}{\insrsid12196321\charrsid12196321 nt No. 0150107032. She ordered }{\insrsid6166848\charrsid12196321 each party to bear its own costs. }{\insrsid1377709 \par }{\insrsid6166848\charrsid12196321 The facts of the case are fully set }{\insrsid6166848\charrsid15368133 out in}{\b\insrsid6166848\charrsid12196321 }{\insrsid12196321\charrsid12196321 the judgment appealed }{\insrsid12196321 against. Briefly the }{ \insrsid6166848\charrsid12196321 Respondent/Judgment/Creditor in }{\ul\insrsid6166848\charrsid12196321 A}{\ul\insrsid12196321 rbitration award }{\ul\insrsid6166848\charrsid12196321 No. 7 of 1994 }{\insrsid6166848\charrsid12196321 obtained an a}{ \insrsid12196321 ward in its }{\insrsid15368133 favor}{\insrsid12196321 against the appellant/Judgment/}{\insrsid6166848\charrsid12196321 Debtor in the following terms: \line (I) Shs. 45,475.341/= special}{\insrsid13907747 damages, \line (ii) Shs. 10,000,000/}{\insrsid6166848\charrsid12196321 = General damages, \line (iii) Interest on (I) and (ii) at the rate of 30% p.a. from \line }{\insrsid13907747 1}{\insrsid6166848\charrsid12196321 .10.92 till payment in full \line - Costs of the arbitration \line - Dissatisfied with the terms of the }{\insrsid13907747 award, the appellant/Judgment/d}{\insrsid6166848\charrsid12196321 ebtor instruct}{\insrsid15368133 ed its counsel at that time Mr.}{\insrsid6166848\charrsid12196321 Kaggwa of Mugerwa & Matovu & Co. Advocates to file an application under }{\ul\insrsid6166848\charrsid12196321 S. 12 of The Arbitration Act }{\insrsid6166848\charrsid12196321 and Rules 7, 8 and 16 of The Arbitration Rules }{\insrsid6166848\charrsid1377709 S. I }{\insrsid6166848\charrsid1377709 55 }{\insrsid6166848\charrsid1377709 \emdash I) to}{\insrsid6166848\charrsid12196321 set aside the award. It was dismissed with costs by the High Court. \line }{\insrsid13907747 \par }{\insrsid6166848\charrsid12196321 Following the dismi}{\insrsid13907747 ssal M/}{\insrsid15368133 s. }{\insrsid6166848\charrsid12196321 Barya and Byamugisha and Co. Advocates representing the Respondent/Judgment Creditor proceeded to carry out execution. Before the execution was carried out, the appellant/judgment debtor thro ugh its new counsel Mr. Mulira filed two applications in the High Court. One application was for stay of execution }{\ul\insrsid15368133 under 0.}{\ul\insrsid6166848\charrsid12196321 19 rule 26 of the Civil Procedure }{\ul\insrsid6166848\charrsid15368133 Rules}{\insrsid6166848\charrsid12196321 whilst the second one was seeking an order of the High Court to set aside the dismissal order to set aside the Arbitration award dated }{\insrsid6166848\charrsid15368133 2/5/95}{\i\insrsid6166848\charrsid12196321 . }{\insrsid6166848\charrsid12196321 Both applications were dismissed on }{\insrsid6166848\charrsid15368133 20.7.95.}{\i\insrsid6166848\charrsid12196321 \line }{\insrsid6166848\charrsid12196321 However, on the application by Mr. M}{\insrsid15368133 ulira, leave was granted to the }{\insrsid6166848\charrsid12196321 appellant/Judgment/Debtor to appeal to the Supreme Court on condition that }{\ul\insrsid6166848\charrsid12196321 security was deposited into }{\ul\insrsid6166848\charrsid15368133 court. In compliance}{\ul\insrsid6166848\charrsid12196321 with the courts order Shs. 130}{\ul\insrsid13916891\charrsid12196321 , 448}{\ul\insrsid1377709\charrsid12196321 , 6011}{\ul\insrsid15368133 /}{\ul\insrsid6166848\charrsid12196321 = by way of bank draft was de}{\ul\insrsid13907747 posited into court. The appeal w}{\ul\insrsid6166848\charrsid12196321 as, again, dismissed with costs to the Respondent. }{\ul\insrsid13907747 \par }{\insrsid6166848\charrsid12196321 \line Judgment/Creditor failing the dismissal of the appeal the Deputy/Registrar Civil of the High Court paid the security amount of Shs. I 30,448,601/= to the Respondent/Judgment Creditor in settlement of the }{ \ul\insrsid6166848\charrsid12196321 Decretal }{\ul\insrsid13907747 amount and interest owed by the }{\ul\insrsid6166848\charrsid12196321 appellant/Judgment Debtor. }{\insrsid6166848\charrsid12196321 \line }{\insrsid13907747 \par }{\insrsid6166848\charrsid12196321 The above payment notwithstanding, on 3/10/96 the learned counsel for the Respondent/Judgment/Creditor wrote to the Deputy Registrar a letter marked Annexture \lquote A\rquote to the affidavit of M. D. Hed}{ \insrsid3746115 ge the Company Secretary of the }{\insrsid6166848\charrsid12196321 appellant/Judgment/Debtor. It was, inter alia, seeking for payment to the Respondent/Judgment/Creditor Shs. 62,233 ,667/}{\insrsid13907747 =}{ \insrsid6166848\charrsid12196321 by the appellant/Judgment/Debtor being money still due as a result of calculations of compound interest made by the}{\insrsid13907747 }{\insrsid6166848\charrsid12196321 counsel for the Respondent/Judgment Creditor as gui }{\insrsid13907747 ded by one official from the }{\insrsid6166848\charrsid12196321 Cooperative Bank as per attached to the letter. Acting on the said calculations the Deputy Registrar Civil proceeded to issue the certificate of interest dated 1 November, 1996. It reads as follows: }{\insrsid13907747 \par }{\insrsid6166848\charrsid12196321 \line }{\b\i\insrsid13907747 \'93This is to certify}{\b\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid13907747 that }{\b\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid6166848\charrsid13907747 in accordance with the Arbitration}{\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid3746115 A}{\b\i\insrsid6166848\charrsid12196321 ward dated 23}{\b\i\super\insrsid13907747\charrsid13907747 rd}{\b\i\insrsid13907747 day}{ \i\insrsid6166848\charrsid12196321 }{\b\i\insrsid6166848\charrsid12196321 of }{\b\i\insrsid13907747\charrsid13907747 January}{\b\i\insrsid6166848\charrsid13907747 ,}{\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid13907747 1995 com}{ \b\i\insrsid6166848\charrsid12196321 pound interest }{\b\i\insrsid6166848\charrsid13907747 on Shs}{\i\insrsid6166848\charrsid12196321 . }{\b\i\insrsid6166848\charrsid12196321 119,308}{\b\i\insrsid13907747 ,846/ at the rate of 30% per annum from 25th}{ \b\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid6166848\charrsid13907747 May}{\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid6166848\charrsid12196321 1995 till September, 1996, is Shs. 62,233,667/= which is }{\b\i\insrsid6166848\charrsid13907747 due from}{\i\insrsid6166848\charrsid12196321 }{\b\i\insrsid13907747 the Respondent (Judgment/Debtor) to the applicant}{\b\i\insrsid6166848\charrsid12196321 (\lquote Judgment/creditor,) }{\insrsid6166848\charrsid12196321 \'93 . The counsel for the appellant/Judgment Debtor were not given a copy of the letter, although it was claimed that Mr. Mike Musisi, an advocate who represented them at taxation, was verbally informed.}{\insrsid13907747 \par }{\insrsid3746115 }{\insrsid6166848\charrsid12196321 Following the issue of the said certificate }{\insrsid13907747 of interest the counsel for the }{\insrsid6166848\charrsid12196321 Respondent/Judgment Debtor filed an exparte chamber }{ \insrsid3746115\charrsid12196321 summons}{\insrsid6166848\charrsid12196321 }{\ul\insrsid13907747 u}{\ul\insrsid3746115 nder o}{\ul\insrsid6166848\charrsid12196321 rder 20 rules 1 }{\insrsid6166848\charrsid12196321 and 10 of The Civil Procedure Rules for Garnishee Proceedings. A decree Nisi returnable on 13/11/96 was issued to be served on both the Bank of Baroda (U) Ltd. hereinafter to be called the Garnishee and the Respondent/Judgment Debtor.}{\insrsid13907747
\par }{\insrsid6166848\charrsid12196321 \line When the matter was placed before the High Court on 13.11 .96 Mr. Nester Byamugisha, who on that day represented the Respondent/Judgment/Creditor, intimated to the High Court that he had di}{\insrsid13907747 scussed the matter with the cou}{\insrsid6166848\charrsid12196321 nsel for the }{\insrsid3746115 a}{\insrsid3746115\charrsid12196321 ppellant}{\insrsid6166848\charrsid12196321 /Judgment }{\insrsid3746115 /}{\insrsid6166848\charrsid12196321 Debtor and they had agreed to settle the matter amicably. He therefore asked the court to adjourn the application to enable them to }{\insrsid3746115\charrsid12196321 finalize}{\insrsid6166848\charrsid12196321 the settlement. Mr. Mukasa, who on that}{ \insrsid8671511 day appeared for the appellant/}{\insrsid3746115 judgment}{\insrsid8671511 /Deb}{\insrsid6166848\charrsid12196321 tor, in reply appeared to have suggested that had they seen the letter to the Deputy Registrar dated 3/10/96 which precipitated the Garnishee proceedings, the matter would not have come to court, but settled. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 The Garnishee was represented by Mr. Magezi who told court that the Garnishee was not in a position to pay the monies on the appellant/Judgment Debtor\rquote s account with the Garnishee to the Respondent/Judgment/Creditor. Since there was a likelihood of an amicable settlement the Garnishee proceedings were adjourned to 18.11 .96. The court rejected Mr. Magezi\rquote s request for costs as the Garnishee would have had to appear before court any way to show cause why the Garnishee should not pay the monies from the appellant\rquote s account to the Respondent.}{\insrsid8671511 \line On 18. 11}{ \insrsid6166848\charrsid12196321 .9}{\insrsid8671511 6 Dr. Barya appeared for the Respondent/Judgment/Creditor, whilst Mr. Tum}{\insrsid6166848\charrsid12196321 usingize represented the Appellant/. Judgment Debtor. Mr. Ma gezi appeared for the Garnishee. Instead of recording a settlement reached upon }{\insrsid8671511 by the part}{\insrsid6295950 ies, }{\insrsid8671511 Mr.}{\insrsid6166848\charrsid12196321 Tumusingize told the court that when they returned to their chambers they }{\insrsid6295950\charrsid12196321 realized}{\insrsid6166848\charrsid12196321 that Shs. 62,233,667/= which was the subject matter of the Garnishee proce edings was not due to the Respondent/Judgment/Creditor. }{\ul\insrsid6166848\charrsid12196321 They had noticed that it had applied compound interest instead of simple interest. }{\insrsid6166848\charrsid12196321 The counsel for the Appellant/Judgment Debtor explained that The Arbit}{\insrsid8671511 ration award spoke of 30% inter}{\insrsid6166848\charrsid12196321 est per annum an d in those circumstances interest had to be simple and not compound based on the Deputy Registrar\rquote s certificate of interest issued in the absence of the counsel for the appellant/Judgment/Debtor. \line As far as they were concerned the total amount of interest at the time payment in full was effected was supposed to be Shs. 66,570,408/= that is as from October, 1992 to September, 1996. At }{\ul\insrsid6166848\charrsid12196321 the time of the payment, the award decretal amount and interest \line }{\ul\insrsid4479217 owing stood at Shs. 122,045,749/}{\ul\insrsid6166848\charrsid12196321 = only. }{\insrsid8671511 The }{\insrsid6166848\charrsid12196321 appellant/Judgme nt/Debtor having deposited into court Shs. 130,448,601/ as}{\insrsid4479217 security which was paid to the }{\insrsid6166848\charrsid12196321 Respondent/Judgment Creditor there was }{\insrsid8671511 an excess payment of }{ \insrsid6166848\charrsid12196321 Shs. 8,403,19}{\insrsid8671511 3/ which was refundable to the }{\insrsid6166848\charrsid12196321 appel1ant/Judgment/Debtor. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 It was explained that when Mr. M ukasa conceded to the adjournment for the purposes of negotiating a settlement, the counsel for the appellant/Judgment/Debtor honestly believed that there was still money owing to the Respondent/Judgment Creditor which they subsequently found was not the case. Without compounding the interest there would not have been any money due and owing to the Respondent/Judgment Creditor. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 It was submitted before the learned Judge that the court could not enforce illegality as the provisions of Section 26(2) of the C ivil Procedure Rules are clear. Counsel submitted that where compound interest was not agreed and determined then the interest in the judgment was deemed to be simple. \par It }{\insrsid8671511 was}{\insrsid6166848\charrsid12196321 contended. on behalf of the appellant, that the arbitrator\rquote s award was based on compound interest on the grounds, firstly, }{\insrsid8671511 that it was not disputed by the }{ \insrsid6166848\charrsid12196321 respondent/Judgment/Debtor that the appellant borrowed the money from the Nile Bank and that it carried interest secondly, the compound interest was not disputed at the time the awa rd was made or at the time of the application for setting aside the award or in the Supreme Court when compound interest was clearly implied. Consequently it was contended that compound interest had been acquiesced and there}{\insrsid8671511 fore the matter was res}{\insrsid4479217 }{\insrsid8671511 judicata.}{\insrsid6166848\charrsid12196321 Finally, it was contended that Mr. Kaggwa, who represented the respondent/Judgment/Debtor at the time the award was made, agreed when the award was interpreted that compound interest was implied. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 The learned Judge rejected the }{\insrsid8671511\charrsid12196321 appellants\rquote }{\insrsid6166848\charrsid12196321 submissions, and upheld the }{\insrsid8671511\charrsid12196321 respondents\rquote }{ \insrsid6166848\charrsid12196321 contention that no compound interest was implied in the award.}{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 The }{\insrsid4346982\charrsid12196321 memorandum c}{\insrsid4346982 ontains}{\insrsid8671511 four grounds, which are:- \par 1.\tab }{\insrsid6166848\charrsid12196321 The learned trial }{\insrsid8671511 judge erred in law and fact by }{\insrsid6166848\charrsid12196321 not finding that compound interest was implicit in the award, }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 2. The learned trial judge erred in law }{\insrsid8671511 and fact by not finding for the }{\insrsid6166848\charrsid12196321 respondent/judgment creditor (now the appellant) on an affidavit of its representative which was uncontroverted a fact which was conceded}{\insrsid4479217 by Counsel for the }{\insrsid8671511 appellant/judgm}{\insrsid6166848\charrsid12196321 ent debtor (now the respondent), \line 3. The learned trial judge erred in law and fact by ordering the respondent/judgment creditor (now the a}{\insrsid4346982 ppellant) to refund Shs. 8,40}{\insrsid8671511 3,1}{\insrsid6166848\charrsid12196321 93/}{ \insrsid8671511 =}{\insrsid6166848\charrsid12196321 by way of decretal amount and interest, and \line 4. The learned trial judge erred in law and fact by setting aside the order of attachment of the appellant/ju}{\insrsid8671511 dgment debtor\rquote s (now respondent)}{\insrsid6166848\charrsid12196321 account No. 0150107032 kept with the Garnishee Bank of Baroda (U) Ltd. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 It was contended in ground one that the learned Judge erred in law and in f act by not finding that compound interest was implicit in the award made by the arbitrator. The reasoning of the learned Counsel was that the arbitrator had evidence before him that the appellant had obtained the money from a Bank and that}{ \insrsid6166848\charrsid4479217 it}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 was a commercial transacti}{\insrsid8671511 on. Therefo}{\insrsid6166848\charrsid12196321 re in awarding }{\insrsid8671511 the 30}{ \insrsid6166848\charrsid12196321 %, the arbitrator had in mind that the interest would be compound. }{\insrsid8671511 \par }{\insrsid6166848\charrsid12196321 On behalf of the respondent M/s Nakabuye Charity contended that no compound interest was implied i}{\insrsid8671511 n the award. She referred to Hal}{\insrsid6166848\charrsid12196321 sbury\rquote s Laws of England vol}{ \insrsid4479217 .}{\insrsid6166848\charrsid12196321 27 3rd Ed page 8 where the learned author had this to say about compound interest:}{\insrsid3552200 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\b\insrsid3552200 \'93Compound interest will not be }{\b\insrsid6166848\charrsid3552200 allowed except where there is an agreement, express or implied to pay it or where the debtor had employed the money in trade and had presumably earned it, or unless its allowance is in accordance with a usage of a particular trade or business\'94.}{ \insrsid6166848\charrsid12196321 }{\insrsid3552200 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\insrsid6166848\charrsid12196321 She contended that the agreement between the appellant and its Bankers had nothing to do with what happened between the appellant and t he respondent. In any case compound interest was not claimed in the plaint. It was argued on behalf of the respondent that it was riot proper to interpret the award of the arbitrator to imply compound interest when the award was silent on }{ \insrsid6166848\charrsid4479217 it}{\b\insrsid6166848\charrsid12196321 . }{\insrsid6166848\charrsid12196321 Finally}{\insrsid6166848\charrsid4479217 it}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 was contended th}{ \insrsid3552200 at the award of interest is }{\insrsid6166848\charrsid12196321 governed by the provisions of S}{\insrsid3552200 .26 of the Civil Procedure Act. I}{\insrsid6166848\charrsid12196321 t was for the court to determine the interest to be awarded and not the parties. \line I will start by setting out }{\insrsid3552200 the relevant part of the award }{\insrsid6166848\charrsid12196321 concerni ng interest: The arbitrator introduced the subject as follows: - \line }{\b\insrsid6166848\charrsid3552200 \'93The applicant also claimed interest on the claimed accounts at the rate of }{\b\insrsid3552200 30}{\b\insrsid6166848\charrsid3552200 % from 1st October, 1992, till pa}{\b\insrsid3552200 y}{\b\insrsid6166848\charrsid3552200 ment in full. The respondent did not address me on the question of interest. The claim by the applicant is for delayed payments and none payments of monies on a contract. That source o}{\b\insrsid3552200 f his money was the Bank which charged interest. T}{\b\insrsid6166848\charrsid3552200 he transaction was a commercial transaction in which interest is contemplated in case a party fails to pay the other.\'94}{\b\insrsid3552200 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 Thereafter he made the following finding:}{\insrsid3552200 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\b\insrsid3552200\charrsid3552200 \'93In }{\b\insrsid6166848\charrsid3552200 the circums}{ \b\insrsid3552200\charrsid3552200 tances I find that interest is }{\b\insrsid6166848\charrsid3552200 payable on the monies the respondent owes to the applicant as awarded here}{\b\insrsid2644875 }{\b\insrsid6166848\charrsid3552200 in.\'94}{ \insrsid3552200 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 He then made the following award:}{\insrsid3552200 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\insrsid4479217 }{\b\insrsid6166848\charrsid3552200 \'93I therefore award interest on the monies awarded h}{ \b\insrsid15995536 erein at the rate of 30% from 1}{\b\super\insrsid15995536\charrsid15995536 st}{\b\insrsid6166848\charrsid3552200 October 1992 till payment in full\'94.}{\insrsid6166848\charrsid12196321 }{\insrsid3552200 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 There is no reference any where in this award to compound interest. In the plaint it was not pleaded that the parties agreed to pay compound interest. So I would reject any suggestion that there is any express agreement to pay compound interest.}{ \insrsid3552200 \par }{\insrsid3763840 }{\insrsid6166848\charrsid12196321 Then, was there an implied agreement to pay compo}{\insrsid3763840 und interest. Compound interest }{\insrsid6166848\charrsid12196321 are only implied when there is a Banker and customer relationship. There are respectable authoritie}{\insrsid5587968 s }{\insrsid6166848\charrsid12196321 on the point. The case of }{\b\ul\insrsid5587968\charrsid5587968 Williamson }{ \b\ul\insrsid6166848\charrsid5587968 v Williamson}{\ul\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 (1869) LR 7 E p}{\insrsid6166848\charrsid3763840 542}{\i\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 was a case of Banker and customer. It was held that the Bank was entitled to charge compound interest up to the date of the customer\rquote s dea}{\insrsid3763840 th but not thereafter. James V-}{\insrsid6166848\charrsid12196321 C said:}{\insrsid5587968
\par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\b\insrsid5587968 \'93With }{\b\insrsid6166848\charrsid5587968 r}{\b\insrsid5587968 egard to the interest accruing }{\b\insrsid6166848\charrsid5587968 after the }{\b\insrsid5587968\charrsid5587968 testator\rquote s}{\b\insrsid6166848\charrsid5587968 death, I should take some time be fore assenting to the proposition that the account did not bear simple interest, but I have not to decide the point. I am bound, however, by authority of the House of Lords to hold that compound interest is incidental to the continuance of the relation of bank and customer. From the tes}{\b\insrsid5587968 tators death therefore, only Simp}{\b\insrsid6166848\charrsid5587968 le interest of }{\b\insrsid5587968 5}{\b\insrsid6166848\charrsid5587968 % will be allowed on the account\'94}{\b\insrsid5587968
\par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\insrsid6166848\charrsid12196321 But the death of the customer is not the only event which will bring the relationship of Banker and customer to an end. In the }{\b\ul\insrsid6166848\charrsid5587968 Deutsche Bank case (1934) 4 legal Decisions}{\ul\insrsid6166848\charrsid12196321 }{ \b\ul\insrsid6166848\charrsid5587968 Affecting Bankers,}{\ul\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 293, the}{\insrsid6166848\charrsid5587968 Plaintiff}{\i\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 bank advanced \'a3 100,000 to the defendant Bank before the 1914}{\insrsid5587968 -1}{\insrsid3763840 8 war. In 1}{\insrsid6166848\charrsid12196321 930 t}{\insrsid3763840 he plaintiff issued a writ for }{\insrsid1377709 t}{ \insrsid6166848\charrsid12196321 he recovery of the sum lent with compound interest. }{\b\insrsid6166848\charrsid3763840 Scrutton}{\insrsid3763840 L.}{\insrsid6166848\charrsid12196321 J at page 295 }{\insrsid5587968 said: }{ \b\insrsid6166848\charrsid12196321 \line }{\b\insrsid5587968\charrsid5587968 \'94}{\b\insrsid6166848\charrsid5587968 In my opinion, after December 31}{\b\super\insrsid3763840\charrsid3763840 st}{\b\insrsid6166848\charrsid5587968 1914, this was not such an account; Germany was at war with Russia and there were no mutual dealings between the Dentsche Bank and the Moscow Merchant Banks, only debits of interest and credits for securities sol d by the English Government. I should be of the opinion, if it were necessary to decide the }{\b\insrsid5587968\charrsid5587968 question that}{\b\insrsid6166848\charrsid5587968 compound interest should stop after the account of December 3l}{ \b\super\insrsid5587968\charrsid3763840 st}{\b\insrsid6166848\charrsid5587968 1914\'94.}{\b\insrsid7610627 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 Romer L. J said (at 297): }{\insrsid7610627 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 \line }{\b\insrsid6166848\charrsid7610627 \'93 In these circumstances it is plain that the defendants must be taken to have agreed to be charged wit compound interest. It is, however, established by several }{\b\insrsid7610627\charrsid7610627 authorities}{\b\insrsid6166848\charrsid7610627 that this implied agreement must be limited in its operation to the time during which the relation of Bank and Customer existed betwee n the parties. The Plaintiffs cannot justify the charge of compound interest after the mercantile account current for mutual transactions had be}{\b\insrsid7610627 en closed and the relations between the p}{\b\insrsid6166848\charrsid7610627 arties had become merely that of creditor and debtor\'94. }{\b\insrsid7610627 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 The Law is well }{\insrsid3763840\charrsid12196321 summarized}{ \insrsid6166848\charrsid12196321 in Paget on Banking }{\insrsid7610627\charrsid3763840 (9}{\super\insrsid7610627\charrsid3763840 th}{\b\super\insrsid6166848\charrsid3763840 }{\insrsid6166848\charrsid12196321 Ed. 1982) at page 116 as follows: }{ \b\insrsid3763840 \par }{\b\insrsid6166848\charrsid12196321 \'93The endorsement of a statement of }{\b\insrsid6166848\charrsid7610627 claim}{\insrsid6166848\charrsid12196321 }{\b\insrsid6166848\charrsid12196321 must }{\b\insrsid6166848\charrsid7610627 show how the claim is}{ \insrsid6166848\charrsid12196321 }{\b\insrsid7610627 based}{\b\insrsid6166848\charrsid12196321 . }{\b\insrsid6166848\charrsid7610627 Where}{\insrsid6166848\charrsid12196321 }{\b\insrsid6166848\charrsid12196321 the customer has acquiesced in the charging of }{\b\insrsid7610627\charrsid12196321 interest that}{\b\insrsid6166848\charrsid12196321 would justify the claim. Such acquiescece will justify the charging of compound interest }{ \b\insrsid6166848\charrsid3763840 or}{\insrsid6166848\charrsid12196321 }{\b\insrsid6166848\charrsid12196321 interest with periodical rests, so long as the relation of banker and customer exists, and the relationship is not changed into that of mortgagee and mortgagor\'94. }{\b\insrsid7610627 \par }{\insrsid6166848\charrsid3763840 It is}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 plain }{\insrsid6166848\charrsid3763840 from the above that the person}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 claiming to be entitled to compound interest ought to have pleaded the basis for his claim for compound interest in the first place. If that was not done, as in this case, then the failure to take that point until at a late stage can be blamed entirely on him. }{\insrsid7610627 \par }{\insrsid6166848\charrsid12196321 In my view compound interest was not implied in the award as the relationship between the parties was not that of Banker and customer. The relationship was pure and simple that of a debtor and creditor. For this reason ground one must fail. }{\insrsid7610627 \par }{\insrsid6166848\charrsid12196321 In ground two}{\insrsid6166848\charrsid3763840 it}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 was argued that}{\insrsid6166848\charrsid3763840 if}{\b\insrsid6166848\charrsid12196321 }{ \insrsid3763840 interest w}{\insrsid6166848\charrsid12196321 as not expressly awarded, the parties later interpreted the award to include}{\insrsid7610627 compound interest. I agree that}{\insrsid6166848\charrsid12196321 parties}{\insrsid7610627 ca}{ \insrsid6166848\charrsid12196321 n settle th}{\insrsid7610627 eir cases after judgment. What }{\insrsid6166848\charrsid12196321 they are not entitled to do is to put words into the mouth of the court. If there is an ambiguity in a judgment or order of the court, the course open to the parties is to refer the }{\insrsid7610627 matter to the Judge or court for}{\insrsid6166848\charrsid12196321 clarification. In the instant case, what Kaggwa and others }{\insrsid7610627\charrsid12196321 did}{\insrsid6166848\charrsid12196321 was to }{\b\insrsid6166848\charrsid7610627 \'93re-write\'94}{\insrsid6166848\charrsid12196321 the award. This they were not entitled to do. If they felt that there was an ambiguity in the award of interest, they ought to have referred the matter back to the arbitrator.}{\insrsid3763840 \par }{\insrsid6166848\charrsid12196321 In my view, the fact that Mr. Anatoli Kamugisha\rquote s affidavit in reply was not controverted is neither here nor there. The fact on the matter is that the parties were not entitled to }{ \b\insrsid6166848\charrsid12196321 \'93re-write\'94 }{\insrsid6166848\charrsid12196321 the award made by the arbitrator. The Judge was right when she held that the alleged consent subsequent to the award could not entitle the appellant }{ \insrsid7610627\charrsid3763840 to com}{\insrsid6166848\charrsid3763840 pound}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid3763840 interest}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 which had not been awarded at the time the award was made. }{\insrsid7610627 \par }{\insrsid6166848\charrsid12196321 Ground two therefore should fail.}{\insrsid7610627 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid1377709 {\insrsid6166848\charrsid12196321 \line }{\insrsid7610627 For the reasons I have given, I}{ \insrsid6166848\charrsid12196321 would hold that the appellant is not entitled to compound interest. I would }{\insrsid3763840\charrsid12196321 summarize}{\insrsid6166848\charrsid12196321 those reasons as follows: }{\insrsid1377709 \par }{\insrsid6166848\charrsid12196321 (I) there is no right to compound interest save by agreement, express or implied, or custom binding on the parties, }{\insrsid1377709 \par }{\insrsid6166848\charrsid12196321 (11) there was no express agreement to pay compound interest in this case.}{\insrsid7610627 \par }\pard \s15\ql \fi60\li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid1377709 {\insrsid14115477 (I1}{\insrsid6166848\charrsid12196321 1) an agre}{\insrsid7610627 ement to p ay compound interest }{\insrsid6166848\charrsid12196321 may be implied by acquiescence; but \line (IV) Such an agreement is not normally implied except as to Banker and Customer relation which is not so in the instant case; \line (V) the appellant never pleaded or proved a custom entitling it to charge compound interest in its dealing with the respondent an}{\insrsid7610627 d (VI) the alleged subsequent inter}{\insrsid6166848\charrsid12196321 pretation }{ \insrsid6166848\charrsid14115477 put}{\b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 on the award is unlawful, as it had the effect of rewriting the award of the arbitrator.}{\insrsid7610627 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\insrsid6166848\charrsid12196321 In ground three it was argued that even at simple interest there was still a deficit of 2,737,901/= which should have been paid to the appellant and therefore the Judge was wrong to order the appellant to refund Shs. 8,403,193/= to the respondent. This wa s readily conceded by M/s. Nakabuye Charity. \line So ground 3 should succeed. With regard to ground 4, I do not think it is necessary to disturb the order of the learned Judge because of the small sum that is outstanding. }{\insrsid7610627 \par }{\insrsid6166848\charrsid12196321 In the result I would allow the appeal in part by declaring that the interest awarded was simple interest and not compound. The appeal in ground three allowed. The order that th}{\insrsid4346982 e appellant should refund Shs. }{\insrsid6166848\charrsid12196321 8,403,193/= to respondent is set aside. In place therefore judgment is entered for the appellant for the sum of Shs. 2}{\insrsid4346982 ,737,901/= with interest at }{\insrsid14115477 the rate}{\insrsid6166848\charrsid12196321 of 30% from date of the award till payment in full. Each party to bear its own costs.}{\insrsid14115477 \par }{\insrsid6166848\charrsid12196321 }{\insrsid14115477 }{\insrsid6166848\charrsid12196321 Dated at Kampala this }{\insrsid4346982 26}{\super\insrsid4346982\charrsid4346982 th}{\insrsid4346982 }{\insrsid6166848\charrsid12196321 day of }{\insrsid4346982 June}{\i\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 1998.}{\insrsid4346982 \par }\pard \s15\qc \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid2644875 {\b\ul\insrsid4346982\charrsid14115477 J. P Berko}{\b\insrsid14115477 \par }{\b\ul\insrsid4346982\charrsid14115477 JUSTICE OF }{\b\ul\insrsid6166848\charrsid14115477 APPEAL. }{\b\ul\insrsid4346982\charrsid14115477 \par }{\insrsid4346982 \par \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\b\ul\insrsid6166848\charrsid14115477 JUDGMENT OF C. M. KATO, J. A}{\ul\insrsid6166848\charrsid12196321 .}{ \ul\insrsid14115477 \par }{\ul\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 I }{\insrsid4346982 have had the benefit of re}{\insrsid6166848\charrsid12196321 ading the j}{\insrsid4346982 udgment of Berko, J. A. in draft,}{\insrsid6166848\charrsid12196321 I agree with it entirely for the reasons given by}{\insrsid4346982 h}{\insrsid6166848\charrsid12196321 im.}{\insrsid5076888 }{\insrsid6166848\charrsid12196321 The appeal is accordingly allowed to the extent he has proposed.}{\insrsid14115477 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid1377709 {\insrsid6166848\charrsid12196321 Dated at Kampala this }{\insrsid4346982 26}{\super\insrsid4346982\charrsid4346982 th}{ \insrsid4346982 }{\insrsid6166848\charrsid12196321 day}{\insrsid4346982 of June}{\insrsid6166848\charrsid12196321 1998. \line }{\b\insrsid3213824\charrsid3213824 }{\b\ul\insrsid4346982\charrsid14115477 C. M.}{ \b\ul\insrsid6166848\charrsid14115477 KATO}{\b\insrsid6166848\charrsid14115477 \line }{\b\insrsid3213824 }{\b\ul\insrsid6166848\charrsid14115477 JUSTICE OF APPEAL}{\b\insrsid6166848\charrsid14115477 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 {\ul\insrsid4346982 \par }{\b\ul\insrsid6166848\charrsid14115477 JUDGMENT OF G. M OKELLO, JA.}{\b\ul\insrsid14115477 \par }{\insrsid6166848\charrsid12196321 I have had the chance to read in draft }{\insrsid4346982 the judgment prepared by Berko }{\insrsid6166848\charrsid12196321 JA. and I agree entirely}{\insrsid6166848\charrsid14115477 with}{ \b\insrsid6166848\charrsid12196321 }{\insrsid6166848\charrsid12196321 it and with the order, proposed by him. \line I have nothing useful to add}{\insrsid14115477 \par }{\insrsid4346982 Dated at Kampala this 26}{\super\insrsid4346982\charrsid4346982 th}{\insrsid4346982 day of June 1998}{\insrsid6166848\charrsid12196321 \line }{\insrsid10882217 }{\b\ul\insrsid4346982\charrsid14115477 G. M. }{ \b\ul\insrsid6166848\charrsid14115477 OKELLO}{\b\ul\insrsid1377709 \par }{\b\insrsid10882217 }{\b\ul\insrsid6166848\charrsid14115477 JUSTICE OF APPEAL}{\ul\insrsid6166848\charrsid12196321 . }{\insrsid6166848\charrsid12196321 \par }\pard\plain \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid2644875 \fs24\lang2057\langfe1033\cgrid\langnp2057\langfenp1033 {\lang1033\langfe1033\langnp1033\insrsid6166848\charrsid12196321 \par }{\insrsid10825639\charrsid12196321 \par }}