Standard Chartered Bank (U) Limited v Kanzira (Civil Suit 626 of 2022) [2023] UGCommC 245 (6 June 2023)

# THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION]

### **CIVIL SUIT 626 OF 2022**

# STANDARD CHARTERED BANK (U) LTD::::::::::::: PLAINTIFF

#### **VERSUS**

# MILTON KANZIRA RWARI:::::::::::::::::::::::::::::::::::

### **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI**

#### **JUDGMENT**

#### PLAINTIFF'S CASE

The plaintiff brought this action seeking orders that the defendant pays Ugx 71,451,566/- being the total outstanding principal loan and interest thereon, interest of 18.5% per annum on the total sum from the date of breach until payment in full, general damages and costs of the suit.

The plaintiff contends that by loan application dated 10/5/2016, the defendant applied for a loan facility in the sum of Ugx 100,000,000/- from the plaintiff bank and upon its assessment of the defendant's application, the plaintiff approved the grant of the said loan amount which was deposited on the defendant's loan account No. 20105950717529 on 18/5/2016. The loan was to be repaid over a period of 58 monthly instalments with interest of 18.5 % per annum by the defendant making a monthly instalment of Ugx 2.935,132/ $=$ .

The defendant irregularly serviced his loan and subsequently defaulted on his payment obligations and arrears as well as interest which continued to accrue on his account. Despite repeated reminders and demands the defendant failed/ refused to regularize his account resulting in the plaintiff recalling the facility and demanding the payment of all monies due under the loan. The plaintiff contends further that as a result of the defendant's account the plaintiff suffered financial loss and inconvenience wherein it has provisioned for the defendant's non-performing loan facility and for which it seeks general damages.

The plaintiff also contends that the loan facility obtained by the defendant was a regular personal loan which he undertook to pay and defaulted; and that whereas the insurance cover provided by the plaintiff's insurer in favour of the plaintiff covers default on account of death, permanent disability and redundancy, the expiry and non-renewal of the defendant's contract of employment disqualified the defendant from cover.

# **DEFENDANT'S CASE**

$\textbf{1}$

The defendant denied the liability and contends that the loan facility was a salary loan contingent on receiving a salary from the defendant's employer and that the said loan was insured and the insurance policy covered retrenchment among other things. He contends further that the loan was advanced in 2016 and was properly serviced as long as the job lasted and loan instalments went on up to 20/7/2019 when he run out of means.

The defendant states that the plaintiff took a risk and was negligent to advance a loan to the defendant when his employment contract was about to expire on 30/6/2018; and that he is indemnified by insurance as insurance premium was duly paid prior to disbursement of the loan.

# **REPRESENTATION**

The plaintiff was represented by M/s Ligomarc Advocates while the defendant was represented by M/s Byamugisha Gabriel & Co. Advocates.

# **JUDGMENT**

I have read the pleadings and listened to the testimony of the plaintiff's witness in this matter as well as considered the written submissions of counsel for the plaintiff. According to the joint scheduling memorandum filed in Court by the parties, the Issues for determination as agreed are:

- 1. Whether the defendant breached the terms of the loan agreement - 2. Whether the defendant is indebted to the plaintiff to the tune of Ugx $71,451,566/=$ - 3. Whether the plaintiff is entitled to the remedies sought

When this matter was called up for hearing on 20/3/2023, the defendant and his counsel did not attend Court despite having endorsed a consent wherein counsel for both parties agreed that the suit be adjourned to 20/3/2023 for hearing at 9 am. Upon an application by counsel for the plaintiff to proceed exparte, the same was granted and the suit proceeded in the absence of the defendant and his counsel.

# Issues 1 and 2

$\mathbf{r}$

This Court shall proceed to address Issues 1 and 2 together since they are intertwined.

PW1 averred that on 10/5/2016, the defendant applied for an unsecured term loan facility of Ugx 100,000,000/= which was duly approved and disbursed by the plaintiff. A copy of the loan application form was adduced and marked PEX 1 in the plaintiff's trial bundle. The said loan was to be paid by the defendant with an interest of 18.5% per annum over a period of 58 months and with equal instalments of Ugx 2,935,132/-. On 18/5/2016 the plaintiff disbursed the loan amount of Ugx 100,000,000/- to the defendant's loan account No. 20105950717529 as seen in his loan account statement marked as PEX 3.

PW1 further averred that the defendant breached the loan agreement entered with the plaintiff by failing to pay his monthly instalments when they fell due; and that due to the said breach the plaintiff recalled the loan facility and demanded payment of Ugx 71,451,566/- which was the total outstanding principal and accrued interest at the time. The plaintiff referred to the demand letter dated 9/3/2022 annexed to the plaintiff's trial bundle and marked PEX2. PW1 stated that the defendant's indebtedness to the plaintiff is currently Ugx 71,451,566 /- and that the monies held by the defendant belong to depositors and his actions have crippled the plaintiff's operations.

The defendant did not bother to attend Court to defend himself and according to the written statement of defence on court record, he did not dispute the existence of the loan agreement wherein he was advanced a loan of Ugx 100,000,000/- by the plaintiff on 18/5/2016 and indeed confirmed advancement of the said loan to himself by the plaintiff. It is therefore not in dispute that a valid contract for the loan facility in issue was entered into by the plaintiff and the defendant wherein the parties were bound by the terms therein.

The defendant did not dispute the fact that he failed to pay his monthly instalments and in paragraph 7 of his written statement of defence, he stated that the loan was advanced in 2016 and was properly serviced as long as the job lasted and loan instalments went on up to 20/7/2019 when he run out of means. The defendant further confirmed in his defence that there was a balance of the loan and that the same was catered for by insurance for which insurance premium was duly paid prior to disbursement of the loan. In other words, the defendant conceded that indeed there is a balance of the loan monies as claimed by the plaintiff but the same are payable by insurance and not him.

The plaintiff in its reply to the written statement of defence contended that the loan facility obtained by the defendant was a regular personal loan as reflected in the loan facility agreement; and that the expiry and non-renewal of the defendant's contract of employment was not covered by insurance provided by the plaintiff's insurer.

The defendant did not attend Court to testify to his claims or dispute the plaintiff's assertions/ claims. Neither did he adduce any evidence or documentation to prove that the expiry and non-renewal of his contract was covered by insurance as claimed. The said allegations by the defendant are merely an attempt to escape liability for repayment of sums of monies due and owing from him to the plaintiff.

All in all, and from the fore going, the plaintiff has demonstrated on a balance of probabilities that the defendant breached the terms of the loan agreement entered with the plaintiff on 10/5/2016 and that the defendant is indebted to the plaintiff to the tune of Ugx $71,451,566/=$ .

# Issue 3

'Ł

Counsel for the plaintiff prayed for judgment against the defendant for Ugx 71,451,566/- being the total outstanding principal loan and interest thereon, interest of 18.5% per annum on the total sum from the date of breach until payment in full and costs of the suit.

Having held as I did in Issues 1 and 2 above, the defendant is indebted to the plaintiff in the sum of Ugx 71,451,566 and is ordered to pay the said sum to the plaintiff.

The prayer for interest of 18.5% per annum on the total sum from the date of breach until payment in full is no granted because it was not an agreed term by the parties. However, interest at court rate is awarded from the time of judgment till payment in full.

It is trite law that costs follow the event and having no reason to deprive the plaintiff of costs of this suit, the same are awarded to it accordingly.

Ambitatie

HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................