High Court Enters Judgment in Breach of Tenancy Agreement over Pioneer House Property

Brief of International Holdings Uganda Limited v Modern Coast Courier Ltd and Others (Civil Suit No. 1033 of 2023) [2025] UGCommC 91 (14 May 2025)

Area of Law: Contract Law & Civil Procedure

Topic: Application of Interlocutory Judgements

Facts

The High Court has entered an interlocutory judgment in favour of a landlord (the Plaintiff) in a suit for breach of a written tenancy agreement executed on 5th November 2021. Under the contract, the 1st and 2nd Defendants had agreed to rent part of Plot 28 Jinja Road, Kampala (Pioneer House) for a two-year term at agreed annual rates of USD 3,500 and USD 3,850 respectively.

Despite taking possession from 1st December 2021, the tenants failed to pay rent, accumulating arrears amounting to UGX 175 million. Although the 2nd Defendant later acknowledged the debt in a written undertaking and issued 18 post-dated Stanbic Bank cheques, six were dishonoured, rendering the rest invalid. Attempts to settle the arrears via RTGS also failed.

The Plaintiff sued for breach of contract, special damages, interest, and legal costs. Despite being served through substituted service (including via newspaper, email, and WhatsApp), the Defendants did not file a defence. On 22nd April 2024, the Court entered an interlocutory judgment and scheduled the matter for assessment of damages on 10th July 2024.

Holding

📌 Key Issue: Interlocutory Judgment and Its Effect

The Court addressed the effect of an interlocutory judgment under Order 9 Rule 8 of the Civil Procedure Rules S.I. 71-1, which provides:

“Where the plaint is drawn with a claim for pecuniary damages only or for detention of goods with or without a claim for pecuniary damages, and the defendant fails to file a defence..., the plaintiff may... enter an interlocutory judgment... and set down the suit for assessment...”

The Plaintiff argued that, because an interlocutory judgment had already been entered, the issue of breach of contract was no longer live. The Court, however, clarified that:

🟡 Even after an interlocutory judgment is entered, the Plaintiff must still prove their claim for damages on the balance of probabilities. This remains true whether the suit proceeds ex parte or inter partes. (See Hajji Asumani Mutekanga v Equator Growers (U) Ltd, SCCA No. 7 of 1995, [1995–1998] 2 EA 219)

💼 Special Damages Must Be Specifically Pleaded and Strictly Proved

The Plaintiff claimed UGX 175,000,000 and USD 600 as special damages arising from unpaid rent and dishonored postdated cheques under a tenancy agreement. The Court emphasized that:

✅ Special damages must be specifically pleaded and strictly proved.✅ The Plaintiff adduced evidence, including tenancy agreements, dishonored cheques, and notice of dishonor, to support the claim.

The Court was satisfied with the Plaintiff’s evidence and awarded the full amount claimed.

⚖️ General Damages: A Matter of Compensation, Not Punishment

The Plaintiff also sought general damages for financial inconvenience and embarrassment caused by the Defendants’ failure to pay rent.

Citing Stroms v Hutchinson [1905] AC 515 and UCB v Kigozi [2002] 1 EA 305, the Court restated the purpose of general damages:

💡 “Damages are compensatory in nature and seek to restore the Plaintiff to the position they would have been in but for the breach.”– Justice Bart Katureebe (CJ Emeritus), Principles Governing the Award of Damages

The Court awarded UGX 30,000,000 in general damages, considering the value of the lost rental income and the inconvenience suffered.

💰 Interest: Compensating for the Time Value of Money

While the Plaintiff proposed 22% p.a. interest on special and general damages, the Court considered this excessive. Referring to Solomon Semakula Kayinda v Auger Revival Ministries Ltd and Lwanga v Centenary Bank [1999] EA 175, the Court noted:

🧾 Interest is awarded as restitution for the deprivation of money, not as a penalty.

The Court accordingly awarded:

• 18% p.a. on the special damages from the date of breach until payment in full.

• 18% p.a. on general damages from the date of judgment until payment in full.

  
  

📚 Costs Follow the Event

In line with Section 27(1) of the Civil Procedure Act, and Uganda Development Bank v Muganga Constructions [1981] HCB 35, the Court reiterated that:

🎯 The successful party is ordinarily entitled to costs unless their conduct warrants otherwise.

As no such conduct was found on the Plaintiff’s part, costs of the suit were awarded in the Plaintiff’s favour.

✅ Takeaways for Legal Practice

1. Interlocutory judgments do not dispense with the burden of proving damages.

2. Special damages must be pleaded and proved with precision.

3. General damages are compensatory, not punitive.

4. Interest rates must reflect prevailing economic realities.