Case Brief: Nakamya Barbra v. Kinyera Julius

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Date of Judgement: 31st May, 2024

Court: High Court (Commercial Division)

Case Number: Miscellaneous Application No. 538 of 2024

Judge: Justice Patricia Mutesi

Main Topic (s): Setting aside a default Judgement

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Summary Facts of the Case

In this case, the Applicant, Nakamya Barbra, applied to the court to have a default judgment in favor of the respondent, Kinyera Julius Wilfred set aside on the ground that she applied for leave to defend the main suit from which the default judgment arose within the required time frame but the default judgment was entered against her after the filing.

The respondent on the other hand argued against the application that it was filed out of time and that the default judgment was entered a day after the lapse of the prescribed time. The applicant did not apply for leave to appear and defend the suit out of time either, the respondent further argued.

Legal Issues Before the Court

  • Whether the default judgement should be set aside?

Decision of the Court

Justice Patricia Mutesi allowed the applicant’s application. She set aside the default judgment per Order 36 Rule 11 of the Civil Procedure Rules and granted leave to the applicant to appear and defend the main suit. The Applicant was ordered to file a Written Statement of Defence (WSD) within 10 days from the date of Judgement.

The learned Judge, agreeing with the respondent, found as a matter of fact that the applicant had neither applied to appear and defend the main suit on time nor applied to the court to appear and defend the suit out of time.

The Judge found that the applicant had been served with the main suit and therefore her application failed on the ground that service had been effective.

However, there was “good cause,” the second ground on which a default judgment can be set aside, the Judge ruled, because the interest the respondent had charged the applicant appeared to be harsh and unconscionable per Section 26 (1) of the Civil Procedure Act and therefore required examination on trial in the main suit.

The interest appeared not to be a genuine pre-estimate of the damage resulting from non-payment.

The Judge rejected the respondent’s argument that the default judgment should not be set aside since the applicant agreed to the said interest.

The Applicant bought a car from the respondent at 15,500,000/= UGX and paid 14,800,000/= UGX and a balance of 700,000/= payable in 3 days remained. Both agreed that if the balance is not paid, it would attract an interest rate of 10% per day.

A default Judgement is issued by Court in favor of a litigant who claims an ascertained liquidated sum of money against a debtor and the debtor doesn’t need to defend him or herself against the suit unless they have good cause to do so in which case they are required to apply to the court for leave to appear and defend the suit.

A good cause, according to Justice Patricia Mutesi, is a triable defense to the summary/default suit.

In this case, the liquidated sum, the respondent seeks to recover from the applicant is 55,300,000/= UGX inclusive of interest.

Key Quote: “The motor vehicle purchase contract provided for a default interest rate of 10% per day until full payment. This would culminate in to a rate of approximately 300% per month and 3,600% per annum. This explains why a debt of only UGX 700,000 grew into one of UGX 55,300,000/= in a little over three years. On the face of it, the contractual default interest rate appears to be harsh and unconscionable and there seems to be a good reason for it to be revisited and reconsidered in the main suit.” – Justice Patricia Mutesi.

Law Applied By the Court

  • Section 26 (1) of the Civil Procedure Act: on unconscionable interest
  • Geoffrey Gatete & Anor v. William Kyobe SCCA No. 7 of 2005: on Good cause.
  • Order 36 Rule 11 of the Civil Procedure Rules: The Court’s power to set aside its decrees or orders.
  • R.L Jain v. Loy Komugisha & 2 others HCCS No. 98 of 2013: definition of unconscionable interest

Counsel on Record

Applicant: Represented by Mbalire Mohammed of M/S Regalex Advocates

Respondent: Unrepresented.

Conclusion

This case illustrates the willingness of the Court to set aside a default judgment and allow a debtor to defend him or herself against a summary or default suit on the ground that the liquidated sum being claimed by the creditor appears to be harsh or unconscionable even though the sum was agreed to by both parties in their contract.



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