The High Court in Kampala has ordered Paramount Hospital Kampala Ltd to pay Medequip Uganda Ltd more than Shs48 million, after finding that the hospital fundamentally breached a contract for the purchase of a Fuji X-ray imaging machine.
Justice Simon Peter M. Kinobe, sitting in the Civil Division of the High Court, on August 31, 2026, awarded Medequip Shs42.018 million in special damages and Shs6 million in general damages, in addition to interest and the full costs of the suit.
The dispute arose from an equipment sales agreement signed on November 2, 2019, under which Paramount Hospital purchased a Fuji CR System, Brand New Advance Smart Full Option X-ray machine from Medequip for Shs75 million.
Under the agreement, Paramount was required to pay an initial Shs30 million within two weeks of delivery, with the remaining balance payable through post-dated cheques over six months.
But according to evidence before court, the payment arrangement quickly went off track.
Medequip told court that Paramount initially paid Shs25 million and subsequently made several smaller payments. After June 2020, however, no further payments were made, leaving the supplier chasing the hospital for the outstanding money.
The hospital did not file a defence despite being served with the court papers. The High Court consequently entered interlocutory judgment in July 2023 and proceeded to formal proof.
But Justice Kinobe stressed that Paramount’s failure to defend the case did not automatically relieve Medequip of its obligation to prove its claim.
The judge held that even in a case proceeding by formal proof, the burden remained on the plaintiff to establish its case on a balance of probabilities.
Medequip produced the equipment sales contract, a tax invoice and delivery note signed by Dr. Begumisa confirming receipt of the X-ray machine, as well as post-dated cheques issued by Paramount totalling Shs48.5 million.
The supplier’s financial records showed that payments received from Paramount were substantially below the purchase price. Although Medequip initially claimed Shs51.262 million, Justice Kinobe found that the evidence before him established an outstanding balance of Shs42.018 million.
Hospital’s failure to pay deemed a fundamental breach
The court went beyond simply ordering repayment, finding that Paramount’s conduct went to the root of the contract and amounted to a fundamental breach.
Justice Kinobe noted that Medequip had been deprived of money it could have deployed in its business and awarded the company Shs6 million in general damages for the resulting inconvenience.
The financial consequences for Paramount do not stop at the principal amount.
The court ordered that the Shs42.018 million special damages attract interest at 20% per annum from the date the suit was filed until payment in full. The Shs6 million general damages will attract 6% annual interest from the date of judgment until payment in full.
Paramount Hospital was also ordered to pay all costs of the suit.
The judgment effectively leaves the hospital facing a substantially escalating liability for as long as the awarded sums remain unpaid, given the court’s 20% annual interest order on the principal debt.
The case also sends a warning to companies that ignore commercial disputes after being served with court proceedings: failure to file a defence does not necessarily mean the claimant gets every amount it demands, but it leaves the defendant without evidence to challenge the claimant’s case.
In this case, the High Court scrutinised Medequip’s evidence despite Paramount’s absence and cut the claimed special damages from Shs51.262 million to Shs42.018 million before entering judgment.
Justice Kinobe ordered Paramount to pay the awarded sums, interest and costs, bringing the six-year-old commercial dispute to a decisive close.
