Letshego Uganda Limited v Kayanja George (Civil Suit No. 188 of 2023) [2025] UGCommC 216 (14 July 2025)

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO 0188 OF 2023**

#### 5 **LETSHEGO UGANDA LIMITED:::::::::::::::::::::::::::::::::::::: COUNTER-CLAIMANT**

#### **VERSUS**

**KAYANJA GEORGE ::::::::::::::::::::::::::::::::::::::::::::::::::: COUNTER-DEFENDANT**

#### **BEFORE: Hon. Lady Justice Dr. Ginamia Melody Ngwatu**

## **JUDGMENT**

#### Introduction

The counter-claimant commenced this counterclaim against the counter-defendant (the plaintiff 15 at the time) following the dismissal of the suit filed by the counter-defendant. The dismissal of the suit by the counter-defendant was on account of their non-appearance under order 9 rule 22 of the Civil Procedure Rules SI 71-1. The counter-defendant did not defend the counter-claim either. This court proceeded to hear the counter-claim. In the counterclaim, the counter-claimant invited court to make a finding that the plaintiff/counter-defendant in *Civil Suit No. 188 of 2023* 20 breached the loan agreement when he defaulted in his loan repayment obligation and sought to recover the outstanding loan sum. The counter-claimant produced various documents including the loan agreement, mortgage deed, notices of default and sale, property valuation reports, and the sale agreement to prove the counter-claim.

#### 25 Background

The background to this counter-claim is that the counter-defendant applied for and was granted a loan facility of UGX 100,000,000/= on 28th May 2018, repayable in monthly installments over a 36-month period. The loan was secured by a mortgage over land comprised in *Kyadondo Block 92B Plot 1442* at Matugga, Wakiso District (hereinafter referred to as "the suit land").

30 The counter-defendant executed the loan agreement and mortgage deed in favour of the counterclaimant. Following the disbursement, the counter-defendant initially complied with the

repayment obligations and paid up to 75% of the loan. However, the counter-defendant defaulted in fulfilling his loan obligation of repayment leaving an outstanding balance. The counter-claimant sold the suit property to Express Ways International Limited in order to recover the remaining loan balance. Subsequently, after a professional valuation of the 5 mortgaged property, the counter-claimant sold the suit land to *Express Ways International Limited*, in exercise of its statutory power of sale. The property was sold at UGX 230,000,000/=, with the net proceeds of UGX 115,819,000/= which the counter-claimant credited to the counter-defendant's bank account.

10 Aggrieved by the sale, the Counter-Defendant then instituted a suit vide *Civil Suit No. 0188 of 2023* seeking to challenge the sale, alleging that it was unlawful, irregular, illegal, conducted without due notice, denying him the right of redemption and effected at an under-value. The defendant sought various orders including: a permanent injunction restraining the counterclaimant and Express Ways from interfering with the plaintiff's occupation, possession and 15 enjoyment of the suit property, general damages, exemplary damages and punitive damages.

In reply, the counter-claimant filed its written statement of defence/counterclaim and then amended the same, denying each and every allegation of fact in the plaint of the counterdefendant herein. The counter-claimant took note of paragraph 1 and 3 of the plaint. In specific

- 20 reply to paragraph 4 of the plaint, the counter-claimant averred that the plaintiff/counterdefendant is not entitled to the reliefs sought and that the suit is an abuse of court process for want of a cause of action; it is frivolous and vexatious. The counter-claimant contended that at the time of the sale of the suit property to Express Ways International Limited, the counterdefendant did not have any interest in the suit property. The counter-claimant asserted that the - 25 counter-defendant in breach of his loan facility agreement defaulted on his loan repayment obligation. The counter-claimant further contended that the counter-defendant was duly served with a default notice and a notice of sale. The counter-claimant argued that the suit property was valued before disposing the same to Express Ways International Limited and that the suit land's open market value was UGX 270,000,000/= and the forced sale value was UGX 160,000,000/=. - 30

# Representation

The hearing of this matter proceeded *ex parte* and the Counter-claimant was represented by Mr. Ivan Eguman from the Letshego Legal Department.

## 35 The Hearing

The counter-claim was heard on 12th June 2025. Mr. Ivan Eguman appeared for Letshego Uganda Limited, the counter-claimant/first defendant was represented in court by Mr. Ibrahim Musana, the first defendant's Recovery Manager. Neither the counter-defendant nor his representative was in court that day. The counter-claimant's counsel informed court that the

matter was coming up for marking of the trial bundle and hearing of the counter-claimant. Counsel for the counter-claimant prayed to court proceed *ex parte* and the court granted the same. The hearing proceeded ex parte under Order 9 rule 20 and Order 17 rule 4 of the Civil Procedure Rules Cap 71-1. The counsel prayed to court to admit the counter-claimant's trial 5 bundle comprising of 9 attachments and court admitted and marked the same.

The counsel for the counter-claimant opened the counter-claimant's case and proceeded with examination in chief of his witness. The counter-claimant presented one witness, Mr. Ibrahim Musana, the counter-claimant's Recovery Manager. After the examination in chief, the counter-10 defendant was not present to cross-examine and the counter-claimant closed its case and the

# Counter-claimant's written submissions

matter was scheduled for judgment.

The counter-claimant filed written submissions on 16th June 2025. Counsel for the counter-15 claimant argued three main points: first is that the plaintiff disclosed no cause of action against the counter-claimant and that the counter-claimant is entitled to loan recovery, and money had and received by the counter-defendant. Counsel submitted that the plaintiff/counter-defendant despite knowing that his title had been cancelled instituted *Civil Suit No 0188 Of 2023.*

Counsel for the counter-claimant submitted that the counter-defendant obtained a 20 loan facility of UX 100,000,000 from the counter-claimant for a term of three years. The loan facility was secured with a legal mortgage on land comprised in K yadondo Block 92b plot 1442 which, at the time, was registered in the counter-defendant's name; but his title was later cancelled vide *Buso Foundation Limited vs Bob Mate Phillips & 3 Others Misc. Application No. 346/2018*. The counter-defendant 25 defaulted on his loan repayment and had an outstanding balance of UGX 103,085,221.29/=.

The counter-claimant sought to recover its loan by selling the security to Expressways International Ltd, unaware that the counter-defendant's title to the said property had been cancelled. The said property was sold to Expressways

- 30 International Ltd at UGX 230,000,000 and having recovered its outstanding loan, the balance of UGX 115,819,00/= was transferred to the counter-defendant's account held at Housing Finance Bank. As a result of the cancellation of the counter-defendant's title on the aforementioned property, Expressways International Ltd failed to take possession of the said land and the counterclaimant refunded the - 35 UGX 230,000,000/= to Expressways International ltd. The counter-claimant, therefore, seeks to recover its outstanding loan balance of UGX 103,085,221.29/=; and money had and received of UGX 115,819,00/= that was wrongfully paid to the counter-defendant; as well as general damages, interest and costs of the suit.

#### Issues for determination

The counter-claimant raised three issues for determination.

- 1) Whether the plaintiff/counter-defendant has a cause of action against the counterclaimant? - 5 2) Whether the plaintiff/counter-defendant breached the loan agreement? - 3) Whether the counter-claimant is entitled to remedies sought for?

The main issues considered by court in the counterclaim, however, are whether the counterdefendant breached the loan agreement with the counter-claimant and whether the counterclaimant is entitled to the remedies? These issues are resolved as follows:

# 10 *1)* **Whether the Counter-Defendant breached the loan contract with the Counterclaimant?**

In the case of *Nakawa Trading Co. Ltd. vs Coffee Marketing Board Civil Suit No. 137 of 1991*, court defined breach of contract as a failure by one or both parties to fulfill the obligations imposed by the terms. Further in the case of *Patel vs Madhvani International Ltd (1992-1993)*

15 *HCB 189,* court stated that:

*"where one party has absolutely refused to perform or has incapacitated himself from performing, he puts the power of the other party either to sue for breach of contract or to rescind and sue on the quantum meruit for the work done."*

In this instance, therefore, in the event of a finding of breach of contract by the counter-20 defendant herein, the counter-claimant would be entitled to sue for the said breach.

Before determining whether there was a breach of contract, this court will first establish whether there was an existing contract between the counter-claimant and the counter-defendant. Black's Law Dictionary 11th Edition defines a contract as:

25 *"An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable."*

Section 2 of the Contracts Act, Cap 284 defines a contract to mean agreement enforceable by law as defined in [section 9](https://ulii.org/akn/ug/act/2010/7/eng%402010-05-28#part_III__sec_10) of the Act. Section 9 of the Act stipulates that a contract is an agreement made with the free consent of parties with capacity to contract, for a 30 lawful consideration and with a lawful object, with the intention to be legally bound. The court in *Greenboat Entertainment Ltd versus City Council of Kampala HCCS No. 0580 of 2003* stated that:

*"In law, when we talk about a contract, we mean an agreement enforceable at law. For a contract to be valid and legally enforceable, there must be; capacity to contract, intention to*

*contract, consensus ad idem; valuable consideration, legality of purpose and sufficient certainty of terms."*

Section 84 (1) of the Act of the Tier 4 Microfinance Institutions and Money Lenders Act, Cap 5 61 further requires that a money lending contract should be in writing, signed by both the money lender and borrower, and witnessed by a third party.

Counsel for the counter-claimant argued on the basis of section 57 of the Evidence Act Cap 8 which provides that facts that are admitted by a party in their pleadings not to be proved. On further submissions, counsel relied on *Gab Holdings Limited versus Godfrey Nyakana & Anor* 10 to reiterate section 57 of the Evidence Act and draw a conclusion that the counter-defendant

- admitted to obtaining a loan facility of UGX 100,000,000/= from the counter-claimant as per paragraph 5 (a) of the plaint. - It is clear that there was a contract between the counter defendant and the counter-claimant. The 15 counter-defendant applied for a loan facility from the counter-claimant as indicated in DEX3 and the two parties entered into a loan agreement, DEX4. The principal amount of the loan is UGX 100,000,000/= and the loan agreement was signed by both parties and witnessed by two third parties. It is, therefore, my view that there was a valid contract between the counterclaimant and the counter-defendant. The parties were bound by the terms of the loan agreement. - 20

The main issue is whether the counter-defendant breached the existing loan contract. In civil proceedings, the burden of proof lies upon the party who alleges and they must prove their case on a balance of probabilities if they are to obtain the remedies sought. See Lord *Denning in Miller versus Minister of Pensions (1947)2 ALL ER 372 at page 373. Also see Section 101 and*

- 25 *Section 103 of the Evidence Act.* The Court of Appeal in *Yakobo M. N Senungu & Others versus Cresensio Mukasa, Civil Appeal No. 17 of 2014* held that the burden of proof is on the party who asserts the affirmative on the issue or question in dispute in terms of sections 101, 102, 103 and 106 of the Evidence Act. - 30 Counsel for the counter-claimant cited the case of *Betty Kizito versus David Kizito Kanonya and others Civil Appeal No. 8/2018* wherein the Supreme Court defined breach of contract to mean when a party without lawful excuse refuses or fails to perform, performs defectively or incapacitates himself from performing the contract. Counsel further relied on the holding of Hon. Justice Geoffrey Kiryabwire as he then was in *Gagawala Nursery Bed versus Busingye* - 35 *Properties Limited Civil Suit No. 96/2011* where he found that the defendant having failed to make payment as provided under the contract, breached the contract by non-performance of its parts of the contract.

The Black's Law Dictionary 11th Edition at page 232 defines breach of contract as "violation of a contractual obligation by failing to perform one's own promise, by repudiating it or by interfering with another party's performance". In the case of *Stanbic Bank Uganda Limited versus Haji Yahaya Sekalega T/A Sekalega Enterprises High Court Civil Suit No. 185 of 2009*

# 5 *at page 6* court observed that:

*"A breach of contract is the breaking of the obligation which a contract imposes which confers a right of action in damages to the injured party. It entitles him to treat the contract as discharged if the other party renounces the contract or makes performance impossible or substantially fails to perform his promise."*

Section 57 of the Evidence Act Cap 8 provides that facts that are admitted by a party in their pleadings need not to be proved. In light of section 57 of the Evidence Act, the counterdefendant herein admitted to obtaining a loan facility of UGX 100,000,000/= from the counterclaimant in paragraph 5 (a) of the plaint. This confirms the existence of a loan agreement. 15 Further, the existing loan agreement, D EX4 under paragraph 8 and D EX5 being the loan statement as at 17th February 2025, stipulated 36 months as the loan period. This loan was disbursed to the counter-defendant on 29th May 2018, the date on which the loan period started running. The plaintiff/counter-defendant stated under paragraph 5(b) of the plaint that he started financing the loan facility and had paid 75% of the principle amount of the loan when Covid-19 20 broke out. This is sufficient evidence that the plaintiff/counter-defendant partially fulfilled his loan obligation. The counter-defendant's defense was covid-19 but it cannot be used as an excuse to avoid fulfilling legal obligations arising from a loan agreement.

I find that the plaintiff/counter-defendant defaulted in repaying the loan facility he obtained 25 from the counter-claimant and, therefore, breached the loan agreement between him and the counter-claimant. In consideration of the loan statement (D EX5) which is uncontested, the counter-claimant is entitled to recover the amount of UGX 103,085,221.29/= as claimed.

# *2) Whether the counter-claimant is entitled to the remedies sought?*

- 30 It should be observed that the counter-claimant did not specifically seek the remedies sought in their pleadings. The remedies sought were raised in their written submissions. It is a settled principle of civil procedure that courts cannot grant a party what it has not specifically prayed for in the pleadings. This principle is fundamental to the judicial process, ensuring that courts do not exceed the scope of what has been specifically requested by the parties involved. This - 35 position was reinforced in *Interfreight Forwarders (U) Ltd versus East African Development Bank* [1990-1994] E. A. 117, where the Court of Appeal held that:

*"A court of law cannot grant a relief which has not been pleaded unless it arises as a necessary consequence of what has been pleaded."*

Further, the Supreme Court in *J. K. Patel versus Spear Motors Ltd* SCCA No. 4 of 1991, that:

*"The general rule of pleading is that each party must state his whole case and must plead all facts on which he intends to rely; otherwise strict proof is required* 5 *before granting relief not prayed for."*

In finding that the counter-defendant breached the loan agreement and pursuant to section 98 of the Civil Procedure Act Cap 282, it follows, therefore, that the counter-claimant has a right to claim remedies and the remedies sought in the counterclaim will be considered.

In addition to the counter-claimant's prayer for an order for recovery of the outstanding loan 10 balance of UGX, 103,085,221.29/=, the counter-claimant also sought the remedies of: an order of recovery of UGX 115,819,000 as money had and received, UGX 30,000,000 as general damages, interest at commercial rate and costs of the suit; in his written submissions. These are considered as follows:

## 15 *Claim for money had and received*

In civil litigation, the burden of proof requires the plaintiff, who is the creditor, to prove to court on a balance of probability, the plaintiff's entitlement to the relief being sought. Considering that a finding was made in favour of the counter-claimant, on the order to recover the outstanding loan balance, it is incumbent on the counter-claimant to prove that they are also 20 entitled to an order for recovery of the UGX 115,819,000, as money had and received.

This court, in the case of *Gloria Kubajo versus Francis Drate, Civil Suit No. 0889 of 2020,* explained the common law claim of money had and received as follows:

*"… a form of suit used by claimants who seek to recover from the defendant* 25 *money which had been paid to the defendant: (i) by mistake; (ii) upon a consideration which has totally failed; (iii) as a result of imposition, extortion or oppression; or (iv) as the result of an undue advantage which had been taken of the claimant's situation, contrary to the laws made for the protection of persons under those circumstances, or where an undue advantage was taken of plaintiffs'* 30 *situation whereby money was exacted to which the defendant had no legal right."*

Further, a claim for money had and received seeks to restore money where equity and good conscience require restitution. It is not premised on wrongdoing, but seeks to determine to 35 which party the money rightfully belongs; and it seeks to prevent unconscionable loss to the payer and unjust enrichment to the payee.

A cause of action for money had and received is not premised on wrongdoing, but looks only to the justice of the case and inquires whether the defendant has received money that rightfully belongs to another. In short, it is an equitable doctrine applied to prevent unjust enrichment. The elements for a successful "money had and received" claim are: (a) the defendant has, or had,

5 possession of money; and (b) the money belongs to the plaintiff in equity and good conscience. Being a restitutionary cause of action, the plaintiff must prove: (i) that the defendant received money intended to be used for the benefit of the plaintiff; (ii) that the money was not used for the plaintiff's benefit; and (iii) that the defendant has not given the money to the plaintiff. A claim for money had and received is quasi-contractual in nature and is a cause of action for a 10 debt not evidenced by a written contract between the parties.

A suit for money had and received is based on an implied promise which the law creates to restore money which the defendant in equity and good conscience should not retain. The law implies the promise from the receipt of the money to prevent unjust enrichment. The measure of

15 the liability is the amount received. Recovery is denied in such cases unless the defendant himself has actually received the money.

Recovery under a "money had and received" claim focuses on whether retaining the money claimed would unjustly enrich the defendant, not the parties' agreement or intent. In *Moses v* 20 *Macfarlane (1760)2 Burr* at page 10 it was held that:

> "*The principle of unjust enrichment requires: first that the Defendant has been enriched by the receipt of a benefit; secondly that this enrichment is at the expense of the Plaintiff and thirdly, that the retention of the enrichment is unjust. This qualifies restitution."*

#### 25

Counsel for the counter-claimant, in their written submissions, submitted that the plaintiff/counter-defendant admitted that he received UGX 115,819,000/= under paragraph (5f) of the plaint. Counsel contended that the counter-claimant paid the said money to the counterdefendant under a bonafide mistake that it had realized the security pledged to it by the 30 plaintiff/counter-defendant yet the counter defendant was not entitled to the money and he has since not returned the same to the counter-claimant. Counsel relied on *Uganda Farmers Meat Co. Limited versus Fresh Cuts Uganda Limited, Civil Suit No. 942 of 2020 and Amos Mander versus Byensi Jameson, High Court Civil Suit No. 136 of 2021* to back up his arguments.

I find that indeed the plaintiff/counter-defendant did not deny receiving the UGX 115,819,000/= 35 and did not adduce any evidence to suggest that he returned or contested the amount. The counter-claimant is, therefore, entitled to recover money had and received by the Plaintiff/Counter-Defendant.

## *General Damages*

The counter-claimant prayed for general damages. In *Uganda Wildlife Authority versus Kuluo Joseph Andrew & 2 others, CACA No. 3 of 2011*, Christopher Madrama, J (as he then was), in his judgment cited the case of *Dharamshi versus Karsan (l974l) I EA 4l* where the East African

- 5 Court of Appeal cited with approval *Halsbury's Laws of England*, to state that the fundamental principle by which the courts are guided in awarding damages is *restitutio in integrum*. According to this principle, the plaintiff is restored as nearly as possible to a position he or she would have been at, had the injury complained of not occurred. See also *Kampala International University and Others vs Hon. Justice Prof. Dr. G. W. Kanyeihamba Civil Appeal No. 368 of* - 10 *2020.*

In the Oxford Dictionary of Law, 5th Edition published by Oxford University Press, Elizabeth A. Martin defines 'damages' as; "a sum of money awarded by a court a compensation for a tort or breach of contract". Mulenga JSC (as he then was), in the case of *Gullabhai Ushillingi vs Kampala Pharmaceuticals ltd, Supreme Court Civil Appeal No. 6 of 1999*

15 observed that damages are intended to restore the wronged party into the position he would have been in if there had been no breach of contract. This means that the counter-claimant ought to be restored as nearly as possible to a position he/she would have been in, had the injury complained of not occurred.

#### *Interest*

- 20 ln *Begumisa Financial serurzes Ltd versus General Holdings Ltd & Anor t20011 EA 28*, it was held that an award of interest is discretionary and 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 ought to compensate the plaintiff accordingly. Further, in the case of *Kabandize John Baptist & 2l others versus KCCA CA No. 36 of 2016*, Madrama, JA, (as he then was), noted - 25 that; "interest is meant to compensate the plaintiff for deprivation of the use of money withheld by the defendant. The counter-defendant has since defaulted in the payment of the loan the facility.

## *Costs*

30 Section 27 of the Civil Procedure Act, Cap 282 provides that costs follow the event. In the instant facts, the counter-claimant omitted to include the prayers for the three reliefs in its amended written statement of defense and counterclaim.

In the circumstances, I find that the counter-claimant is entitled to be restituted having established that the counter-defendant breached the contract between them. It is reasonable in 35 the circumstance to award general damages and interest to the counter-claimant for the loss it has incurred as a result of the counter-defendant's failure to fully service the loan facility advanced to him by the counter-claimant within the agreed repayment period as discussed in above.

In light of the foregoing, the counterclaim succeeds and judgment is entered against the counterdefendant in the following terms:

- 1. The counter-claimant shall recover from the counter-defendant its outstanding loan amount of UGX 103,085,221.29/=. - 5 2. The counter-claimant shall recover from the counter-defendant UGX 115,819,000/= being money had and received. - 3. The counter-claimant is awarded general damages of UGX 20,000,000/=. - 4. The counter-claimant is awarded interest on the outstanding loan amount at court rate from the date of filing this suit till payment in full. - 10 5. The counter-defendant shall pay the costs of this suit to the counter-claimant.

I so order.

*Dr. Ginamia Melody Ngwatu Ag. Judge 14th* 15 *July 2025*

*Ruling delivered electronically via ECCMIS*