Muhamed v Musiwa (Civil Suit 71 of 2023) [2025] UGHC 19 (22 January 2025)

Full Case Text

## THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA HOLDEN AT MBALE

## **CIVIL SUIT NO. 071 OF 2023**

### MUHAMED MUKASA YUSUF

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#### **VERSUS**

### **MUSIWA HASIFA ::::::::::::::::::::::::::::::::::::**

#### **BEFORE: HON. JUSTICE LUBEGA FAROUQ**

#### **JUDGMENT**

#### 1. Introduction:

2. The Plaintiff instituted this summary suit under Order 36 of the Civil Procedure Rules SI.71 against the Defendant for recovery of Ugx: $500,000,000/$ = and costs of the suit.

#### 3. Background

- 4. The background of this suit is that on 15th of May, 2021 the Plaintiff advanced a loan of Ugx: $500,000,000/$ = to the Defendant to be repaid back on the $15th$ of May, 2023. The Defendant deposited a certificate of title for land comprised in leasehold Register Volume MBA6, Folio 12, Plot 28 Republic Street Mbale as security. The Defendant however failed to pay the said loan by $15th$ of May, 2023 which led them to further enter into a memorandum of understanding wherein they agreed to extend the loan payment period for a month, but the Defendant still defaulted hence, this suit. - 5. Summons in summary suit were served on the Defendant on the 19th of December 2023 as per the affidavit of service sworn on 20th of December, 2023 by Makibwe Joel and the same was received by the Defendant. The

Defendant did not however, seek leave of court to file a written statement of defence and a default judgment was entered on 15th of March 2024.

#### 6. Legal Representation

- 7. Counsel Thomas Mwambu and Mr. Wanamu Isa represented the Plaintiff. - 8. The matter set down for formal proof. The Plaintiff submitted the following documents to prove his case- - (a) Loan Agreement dated 5th November 2021 marked PEX 1 - (b) Certificate of title in respect to Plot 28 Republican Street in the names of Musiwa Hasifa marked PEX 2 - (c) Memorandum of understanding dated 6th May 2023 marked PEX 3 - (d) Demand Notice dated 16th May 2023 marked PEX 4 - (e) Demand Notice dated 16th June 2023 marked PEX 5

#### 9. Issues

- (a) Whether there is a breach of contract? - (b) Whether the Defendant is indebted to the Plaintiff? - (c) What remedies are available to the parties?

## 10. Analysis of court

## 11. Issue No.1: Whether there is a breach of contract?

- 12. The Plaintiff, who testified as PW1, stated that on 15th November 2021, the Defendant requested for a loan, promising to repay it by 15th May 2023. In response to the request, the Plaintiff advanced the Defendant a loan of Ugx: $500,000,000/$ = in cash, supported by a signed loan agreement, which was submitted in court as PEXH.1. As security for the loan, the Defendant provided a certificate of title for land in which she holds an interest, described as Leasehold Register Volume MB A6, Folio 12, Plot 28, Republic Street, Mbale. - 13. PW1 further said that when the due date reached on 16th May 2023, he demanded the Defendant to pay the said sum of the money, but she informed him that she did not have the money and instead pleaded for more time within which to pay. Following her plea, a memorandum of understanding was signed in which the Defendant underwent to pay by

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16th of June 2023. However, when that date reached, the Plaintiff got in touch with the Defendant but she still failed to pay.

- 14. From the above evidence plus the exhibits tendered like PEXH.1 and PEXH.3, it is perceptible that there existed a contract between the Plaintiff and the Defendant. - 15. In Bimba Agro Livestock Company Limited V. Landmark University (2020) 15 NWLR (Pt. 1748) 465 (P. 498, paras. A-C), it was stated that-

"The term breach of contract denotes a violation of a contractual obligation, either by failing to perform one's own promise or by *wantonly interfering with another party's performance of the* contract. A breach of contract may be occasioned by non*performance or by repudiation or both.*"

16. Further in Ronald Kasibante V. Shell Uganda Ltd HCCS No. 542 of **2006 [2008] ULR 690**, it was stated that:

> "Breach of contract is the breaking of the obligation which a contract imposes which confers a right of action for damages on the injured party. It entitles him to treat the contract as discharged if the other Part renounces the contract or makes *the performance impossible or substantially fails to perform his* promise; the victim is left suing for damages, treating the *contract as discharged or seeking a discretionary remedy.*

- 17. In this case, the Plaintiff entered in to a loan agreement with the Defendant which was supposed to be repaid back on 15th May, 2023 but the Defendant failed to honour the terms of the contract. Following the Defendant's failure to pay, the parties agreed to enter into a memorandum of understanding where further terms were agreed upon but still the Defendant failed to pay. - 18. I have perused PEXH.1 and PEXH.3 and noted that under PEXH.1, paragraph 4 suggests that, the loan sum was to be paid back within a period of 18 months from the date of execution which was 15th November, 2021 and payable on 16th May 2023. The said loan agreement was signed

by the Plaintiff and the Defendant and witnessed by Kayongo Jackson Advocate.

- 19. Upon failure to honor PEXH.1, the parties further entered into a memorandum of understanding where they agreed that the Defendant shall pay the total sum in two instalments within 15 days each. The first instalment was supposed to be Ugx: $300,000,000/$ = payable by 31st May, 2023 and the remaining balance of Ugx: $200,000,000/$ = was to be paid still within 15 days starting from 31st May, 2023. This document was also signed by the same people as PEXH.1 - 20. Despite the aforementioned agreements, the Defendant failed to honor any of them and, to date, has not paid a single coin of the total amount owed. - 21. As established in the cited authorities, a breach of contract refers to the violation of a contractual obligation by failing to fulfill a promise. In this instance, the Defendant committed to repaying a loan amount of UGX 500,000,000 by 16th June 2023 but failed to honor that obligation. Consequently, this failure constitutes a breach of contract. - 22. Issue No. 1 is answered in the affirmative. - **23.** Issue No.2: Whether the Defendant is indebted to the Plaintiff? - 24. The Plaintiff stated that he issued a loan of UGX 500,000,000 to the Defendant in 2021 at her request, but to date, she has not repaid it. His claim is supported by evidence marked as PEXH.1 and PEXH.3. - 25. From these two exhibits, it is clear that the plaintiff advanced a loan of Ugx: $500,000,000$ = to a one Musiwa Hasifa, the Defendant in this case. Therefore, the defendant is indebted to the plaintiff. - 26. Issue No.2 is answered in the affirmative.

**27.** Issue No. 3: **What remedies are available to the parties?**

28. Section $61(1)$ of the Contracts Act provides that-

"*Where there is a breach of contract, the party who suffers the* breach is entitled to receive from the party who breaches the

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contract, compensation for any loss or damage caused to him or her."

29. In Bimba Agro Livestock Company Limited V. Landmark University **(Supra),** the court noted that-

> "*Every breach of contract gives rise to a claim for damages, and*" may give rise to other remedies. Even if the injured party *sustains no pecuniary loss or is unable to show such loss with* sufficient certainty, he has, at least, a claim for nominal damages. If a court chooses to ignore a trifling departure, there is no breach and no claim arises."

30. In Kabona Brothers Agencies v Uganda Metal Products & Enameling **Co Ltd [1981-82] HCB 74** court while citing *Hadley v Baxendale* [1843-1860] ALLER 461 stated that;

> "*Where two parties have made a contract which one of them*" has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may *fairly and reasonably be considered as either arising naturally, i.e.*, according to the usual course of things, from such breach of contract itself or such as may reasonably be supposed to have been in the contemplation of both parties at the time they *made the contract as the probable result of the breach of it.*

- 31. As established in this judgment, the Defendant is clearly indebted to the plaintiff in the amount of Ugx: $500,000,000/$ =. According to the position of the law, a party who suffers a breach of contract is entitled to compensation from the breaching party for any or damage incurred as a result of the breach caused to him or her. - 32. However, the property offered by the Defendant as security for a loan is jointly owned by two other individuals. She does not have sole ownership of the property for it to be subject to attachment. - 33. Be the above as it may, the Plaintiff is entitled to the refund of his money from the Defendant.

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- 34. The Plaintiff in the Plaint prayed for recovery of Ugx: $500,000,000/=$ and costs of the suit. - 35. The law and the authorities cited guides that a party at fault must compensate the affected party. From the court record, the loan was issued to the Defendant in 2021 and it was supposed to be fully paid by June, 2023 but she failed to fulfil as agreed. - 36. Clause 2 of the memorandum of understanding (PEXH.3) states that- "In the event of default in payment, Musiwa Hasifa shall be liable for any additional costs incurred by Muhamed Mukasa Yusuf, including but not limited to legal fees, collection charges, and interest on the outstanding amount at the prevailing market rate." - 37. The above clause is clearly in line with law regarding the issue of compensation. In the circumstance, the Plaintiff is awarded 10% interest per annum from the month of default to payment in full. - 38. In addition, the Defendant shall compensate the Plaintiff I damages to a value of Ugx: $10,000,000/$ = (Ten million shillings) for the inconveniences caused. - 39. In the premises, judgment is entered in favor of the Plaintiff against the Defendant on the following terms: - (a) The Defendant is ordered to refund the Plaintiff Ugx: $500,000,000/$ = (Five hundred million shillings) within 30 days from the date of this judgment. - (b) The Plaintiff is awarded 10% interest on (a) above to be paid per annum. - (c) The Plaintiff is awarded general damages of Ugx: $10,000,000/$ = (Ten million shillings). - (d) Costs are awarded to the Plaintiff.

I so order.

**AROUQ** Ag. JUDGE

Judgment delivered via the email of the advocate of the party on $22^{nd}$ day of January, 2025