The High Court has ordered Paramount Hospital to pay Medequip Shs48 million as the balance for an X-ray machine supplied in 2019.
The dispute started after Medequip supplied Paramount Hospital with a Fuji CR System, an X-ray imaging machine.
The agreed purchase price was Shs75 million and required the hospital to pay an initial deposit of Shs30 million within two weeks after delivery of the machine.
The hospital was also supposed to provide post-dated cheques, with the remaining balance payable in instalments over six months.
Medequip delivered the machine as agreed but the payment arrangement did not proceed as planned.
Paramount initially paid Shs 25 million and later made several smaller payments. The payments included Shs2.5 million on November 14, 2019, Shs800,000 on December 20, 2019, and Shs2 million on January 13, 2020.
But the figures presented by Medequip differed at various points. The company’s financial manager, Michael Sedik Youssef Abdelmotagly, testified that the total amount received was Shs33.782 million, leaving Shs41.218 million outstanding.
But an invoice history produced in court showed payments totalling Shs32.982 million and an outstanding balance of Shs42.018 million.
The dispute had reached court after Medequip said Paramount stopped making payments around June 2020.
The supplier said several demands were made to the hospital to clear the outstanding amount, but the demands did not produce payment.
Medequip then went to court seeking a declaration that Paramount had breached the contract for the sale of the Fuji CR System.
It initially claimed Shs51.261 million as the outstanding balance, including interest calculated at two per cent per month from the date payment became due until the case was filed.
Paramount Hospital did not file a written defence after being served with the court papers and the court subsequently entered interlocutory judgment against Paramount on July 6, 2023, after an application by Medequip’s lawyers.
However, Justice Simon Peter Kinobe said the failure by Paramount to file a defence did not automatically mean that every amount claimed by Medequip had to be awarded.
He said the law still required Medequip to prove its case.
“The pleadings are not evidence,” he ruled.
He said Medequip therefore had to produce evidence showing that a contract existed, that the equipment was supplied and that Paramount breached the agreement.
Medequip’s evidence came mainly from Sedik, its financial manager who told the court that company supplied Paramount Hospital with the Fuji CR system on November 2, 2019 and that the two companies signed a contract setting out the payment terms.
Justice Kinobe agreed that the document showed that Paramount bought the X-ray machine from Medequip for Shs75 million.
“The terms of the arrangement according to the contract was that Shs30 million was to be deposited as the initial deposit by Paramount Hospital within two weeks from the delivery with post-dated cheques and the balance was to be paid with post-dated cheques within 6 months thereafter,” he said.
The evidence further showed that a director at Paramount later approached Medequip’s chief financial officer in January 2020 and requested more time to pay.
According to Sedik, the companies agreed to an eight-month payment schedule but Paramount did not honour the payment schedule.
In coming up with a ruling, Justice Kinobe found that Paramount’s failure to pay had caused Medequip financial inconvenience because money that could have been used in its business remained unpaid.
Although Medequip had not produced detailed evidence specifically proving the amount of general damages it suffered, he said the circumstances justified an award.
“It is undisputed that [Medequip] was deprived of its money which greatly inconvenienced it as it could have used the funds in the course of its business,” he said adding that the actions of Paramount amounted to a fundamental breach.
In the final orders, Justice Kinobe directed Paramount to pay Medequip Shs42.018 million in special damages and Shs6 million in general damages, bringing total award to Shs48.018 million, before interest and costs.
He awarded interest at a rate of 20% per year on the Shs42.018 million from the date the suit was filed until the money is fully paid.
For the Shs6 million general damages, he ordered interest at 6% per year from August 31, 2026, until full payment.
