Active Automobile Spares Limited v Crane Bank Limited and Another (Civil Appeal 63 of 2000) [2001] UGCA 29 (18 September 2001)

Full Case Text

### THE REPUBLIC OF UGANDA

## IN THE COT]RT OF APPEAL OF UGANDA AT KAMPALA

## CORAM: HON. JUSTICE G. M. OKELLO, J. A HON. JUSTICE A. TWINOMUJUNI. J. A HON. JUSTICE C. N. B. KITUMBA, J. A

## CIVIL APPEAL NO.63 OF 2OOO

#### Is ACTIVE AUTOMOBILE SPARES LTD APPELLANT

## VERSUS

# CRANE BANK LTD & ANOTHER .... RESPONDENTS

I t

### (Appeal from the judgment of the High Court of [Jganda at Kampala (Okumu Wengi, J) dated 3'd July 2000 in HCCS No.288 of 1999)

## JUDGMENT OF TWINOMUJUNI, J. A

This is an appeal from the decision of the High Court in which the appellant's claim for US\$97,000 or its equivalent in Uganda shillings against

30 the respondent's was dismissed in respect of the first respondent but allowed in respect of the second respondent.

### THE FACTS:

The appellant's case was that on 18/6/98 an employee of the appellant (PW2) took to the respondent bank Gold Trust Bank draft No. GTB 867/98 35

(045277) for shs. 120,764,5621: and left it with the second respondent, an employee of the 1't respondent, with instructions to transfer UK f60,382= by Telegraphic Transfer (TT) or by draft to M/s Agric Link Company in London, which the respondents accepted to do. On 1916198 PW2 returned to the l't respondent and was told that they did not have enough pound sterling to send to London but they suggested that the appellant receives United States dollars instead. PW2 agreed and received US\$97,000: which he took to the appellant's premises at Plot 25 Nakivubo Road, Kampala. In the aftemoon of the same day, PW2 rang the second respondent and informed him that he had been instructed by his boss who was then in London to send only pounds and to retum the dollars to the bank and asked him to collect the dollars and retum them to the bank. The second respondent collected the dollars and acknowledged receipt thereof on a piece of paper bearing letterheads of the frrst respondent bank. He also issued his personal cheque as an added guarantee. Eventually, the appellant learnt that no pound sterling were sent to London and the dollars or their equivalent in Uganda shillings have never been returned to the appellant. 5 l0 I5

The second respondent accepted this version of what happened as true but added that when he collected the dollars he sold them to some dealers in Kikubo and deposited shs.120,000,000/: with the l't respondent. He claimed that at all times he was acting as the Manager, Forex lnternational Division of the respondent. 20

The case for the l" respondent was that the bank received the gold Trust Bank draft on 18/6/98 from the employee of the appellant who wanted to purchase dollars. After verification of the genuiness of the draft, it, on 2i

o 1916198gave PW2 US\$97,000= which he took away. According to the I't respondent PW2 did not return to the bank till some days later after the second respondent was arrested by the police on charges of fraud. It denies knowledge of the second respondent's dealings with PW2 after he took away the US\$97,000= from the Bank.

> The High Court decided that the Bank was not liable to ref-und the money but ruled that the second respondent was liable. The appellant was not happy with this decision, hence this appeal. The second respondent also cross-appealed against the decision of the trial couft.

### THE APPF,AI-

The appellant filed twelve grounds of appeal as follows: -

- l. The learned trial Judge erred in law and in fact in ignoring the issues as framed at the commencement of the trial because they did "not sound eloquent". - 2. The learned trial Judge erred in law and in fact in holding that the "only issue thus would be whether at the time or thereabouts there was integral and accompanying request and order therefore by the plaintiff to Crane Bank to transfer Sterling on plaintifls behalf to a U. K. beneficiary." - 3. The leamed trial Judge erred in law and in fact in not answering that issue, as he framed it, in favour of the plaintiff. - 4. The learned trial Judge erred in law and in fact in his admission and evaluation of the evidence and thus failing to hold in favour of the plaintiff. l5

5. The learned trial Judge erred in law and fact when he failed to determine whether it was Rajesh or Kalan who handled the transaction with the plaintiff thereby reaching a wrong conclusion that the plaintiffpurchased and took cash of \$97,000= on the 191611998 from the Crane Bank and that the transaction from a banking point of view was complete.

)

- 6. The learned trial Judge, having determined that the issue of whether it was Rajesh or Kalan who handled the transaction was relevant to the issue of credibility he erred in law and in fact in failing to resolve that issue in favour of Rajesh thereby reaching a wrong decision. - t0 7. The learned trial Judge erred in law and in fact in holding that the second transaction in the plaintifls premises outside Crane Bank was not in the course of banking but an aberration of it at the floric of Rajesh. - 8. The learned trial Judge erred in law and in fact in holding that the acknowledgement on Crane Bank letter heads was ineffective to hold Crane Bank liable as there was no deposit of money in Crane Bank on account of it or at all. - 9. That leamed trial Judge erred in law and in fact in holding that no evidence was adduced of any deposit of money in Crane Bank by or on behalf of the plaintiff to hold Crane Bank liable, - 20 l0. The leamed trial Judge erred in law and in fact in holding that the ICB cheque that Rajesh gave to the plaintiff s sister company CPTD removed Crane Bank's liability as a different transaction complete in itself occurred. - 1l. The learned trial Judge erred in law and in fact in holding that the 2nd - l5 defendant "did not satisfu court that in his conduct of the plaintiffs transaction in the latter's premises he did so in the course of his employment, as agent or seryant of the first defendant" and, instead of

o holding that the 2nd defendant's evidence corroborated that of plaintiffs witnesses, the trial Judge held that 2nd defendant's evidence "tendered to depict him rather as a complainant or co-plaintiff acting in concert with the plaintiffin this case to pin liability on the first defendant".

l2. The learned trial Judge erred in law and fact when, after ordering the second defendant to find and retum the plaintifls money, he failed to order all costs of the suit to be paid by the second defendant including those payable by the plaintiff to the first defendant upon disrnissal of the suit as against the first defendant. 5

The second respondent cross-appealed on the following grounds: -

- l. The leamed trial judge erred in law and in fact in not properly evaluating the evidence regarding the deposit of the amount claimed on the I " respondent's account by the second respondent and thereby arrived at a wrong decision occasioning a miscarriage ofjustice. - 2. The leamed trial judgment erred in law and in fact in failing to find that throughout the whole transaction, the second respondent acted in the scope of his duties with the first respondent and thereby arrived at a wrong decision occasioning a miscarriage ofjustice. - 3. The leamed judge erred in law and in fact in dismissing the suit against the 1'1 respondent and yet the evidence of the first respondent was full of material contradictions and was wanting, and thereby at a wrong conclusion occasioning a miscarriage ofjustice. - 25 4. The learned trial judge erred in law and in fact in holding that the second respondent must find the appellant's money and return it to him.

o Ihave had the benefit of perusing the record of proceedings in the High Court and the written submissions filed in this appeal. It is the duty of this court, as a first appellate court to re-appraise all the evidence on record and to come to its own conclusion as to whether the conclusion arrived at by the leamed trial judge can be suppofted - See Peters vs. Sundav Post Ltd (l958) E. A. 424. In doing this, I do not propose to deal individually with each of the sixteen grounds of appeal because many of these overlap and others are repetitive. Instead, I shall deal with all the grounds of appeal by providing answers to the following five issues which I think will be enough to dispose ofthe appeal and the cross-appeal.

- 1. Whether the appellant ever requested the l'r respondent to transfer pound sterling on appellant's behalf to a U. K. beneficiary. - 2. Whether the appellant received US\$97,000: in consideration of a bank

draft of shs.120,,764,5621: deposited with the 1'1 respondent.

- 3. Whether the transactions between the 2'd respondent and the appellant after the appellant received US\$97,000: from the bank were binding on the bank. - 4. Whetherthe 2nd respondent incurred any liability. - 5. Whether the trial court's order on costs was correct. 20

### ISSUE NO. I:

This is whether the appellant ever requested the 1" respondent to transfer pound sterling to a London based beneficiary. There is no dispute that the appellant deposited a draft of shs. 120,?'64,562 with the l't respondent and that on the next day he collected US\$97,000: the equivalent of the money

o on the draft. The appellant was issued with a document acknowledging the transaction. Evidence was led on behalf of the l" respondent that the appellant requested for dollars and the transaction was treated as a request to purchase dollars. Rezakalan, DWl,who handled the transaction on behalf of

- the bank denied that any request was made to transfer money abroad. He contended that if such a request had been made, then the law prescribed a procedure which included filling of Form E of the Bank of Uganda Foreign Exchange Regulations. This evidence was neither contradicted nor did the appellant prove in any other way that he ever requested for a transfer of any moneys to London. PW2, the main witness of the appellant changed his story so many times in the witness box and it is clear why the learned trial judge could not believe him, neither would I. 5 l0 - Another puzzle connected with this point is why, if PW2 requested for transfer ofmoney to London, he had to take US97,000: at great security risk to the appellant's premises in Nakivubo. I would have thought that after being told that the bank did not have enough pounds to transfer, he would have first contacted his boss in London to see if dollars would be acceptable and either request the bank to transfer dollars or collect the bank draft he had deposited or its Uganda shillings equivalent in order to try to obtain pound sterling else where. Having opted to carry the dollars to his prernises, did he hope to retum them to the bank if his boss in London had told him that dollars would be acceptable? In my judgment, this behaviour on the part of PW2 is not consistent with what a resonable person would do if he had requested for any money transfer. It is more consistent with that of a person who requested to purchase dollars and was indeed sold dollars which he took to his premises. I would therefore, hotd that the appellant never requested I5 l0 2.i a the bank to transfer on his behalf any money to a London based beneficiary. I would answer this issue in the negative.

#### ISSUE NO.2

This is whether the appellant received US\$97,000= in consideration of a bank draft of shs.120,764,5621= deposited with the l'r respondent. It was common ground that on 1916198 PW2 accepted and collected US\$97,000: from the I't respondent and took it to his premises in Nakivubo. Dansoor Patel (PW2) acknowledges receipt of the dollars on receipt No.008844 which was annex B to the plaint and is not disputed. I would therefore, answer this issue in the affirmative that the appellant received US\$97,000: as full consideration for a bank draft of shs. 120,764,562=.

## rs ISSLIE NO.3

This is whether the transactions between the 2nd respondent and the appellant after the appellant received and took away US\$97,000: from the bank were binding on the bank.

The evidence before the trial court from DWI and the 2"d respondent was that the transaction whereby PW2 received US\$97,000: was handled by DWI on behalf of the bank. But that afternoon, and without reference to DWI or anyone else in the bank, PW2 claims that he called the 2nd respondent and asked him to collect the dollars which the London beneficiary had allegedly rejected and to issue pound sterling instead. Earlier that day he had been told that the bank did not have sufficient

a pounds. It is not explained whether, at the time he called the 2"d respondent to collect the dollars, the bank had accumulated enough pound sterling. However, the events that followed that day seem to indicate that PW2 had lost interest in pound sterling, if he ever had any such interest at all. It will be recalled that early that day he did not seek bank security or any other security at all to carry the dollars from the bank to his shop premises. When asked why he could not return the dollars to the bank hirnsell, he claimed that it was not safe to do so because his area in Nakivubo was insecure so he called the 2nd respondent to collect the dollars. Despite the insecurity, he did not bother to see or ask what security measures the 2"d respondent had put in place to ensure the security of such a large amount of dollars. It is also significant to note that the second respondent did not tell the l't respondent of this transaction at all.

The second troublesome aspect of that afternoon's transaction was that the PW2 decided to trust the 2"d respondent to the extent that he was prepared to surrender the dollars to him without any form of acknowledgement from him. His testimony was that it was the 2nd respondent who volunteered to give him a letter headed document of the bank acknowledging receipt of the dollars and a personal quarantee postdated cheque drawable on his cousin's account. This to me is indeed very strange. Why did the second respondent have to give his personal guarantee for the money when PW2 could have travelled with him to the bank and obtained authentic documentation for the dollars? Was PW2 all that foolish? Did he have to accept a post-dated cheque for such a large sum of money? After handing the money to the second respondent on Friday l9'h June 1998 at 2.30 p.m, why did he not ring the bank later that aftemoon to find out whether the money had arrived in the l5 2(',) 25

-5

o bank? According to PW2 himsell he did not make any inquiry at the bank until after 6.00 p.m. on Monday 2216198 when he heard that the 2nd respondent had been arrested and was at Central Police Station in Kampala. To me this evidence clearly shows that on the aftemoon of 1916198 PW2 had no intention of sending any money to London and when he released the dollars to the second respondent, he clearly knew that it was not destined to the l't respondent bank.

I now know, on the admission of the 2n'l respondent that he took the dollars to Kikubo where he sold it. There is evidence showing that at this point in time, he was in financial trouble with his employer. He had given away foreign exchange worth shs.346 million without accounting for the proceeds. Though he claimed that he deposited shs.73 million in the bank on behalf of the appellant, he may have deposited it on the bank account to try to reduce the money he owed the bank. It is no wonder that he was arrested for fraud a few days later. The remaining shs.47 million that he obtained from the sales of the dollars vanished and cannot be accounted for. There is no evidence on record to suggest that until after the arrest of the 2nd respondent, anyone in the bank, other than the 2nd respondent himself was aware of the transaction that started on the aftemoon of l916/98 involving PW2, the 2"d respondent and the US\$97,000:. In the circumstances, I cannot see how the I't respondent could be held responsible for that transaction. This issue is answered in the negative. t0 l5 l0

2-j

## a ISSUE NO.4

IO This is whether the 2'd respondent incurred any liability. Most of what I have considered above in ISSUE NO.3 deals with this issue. I have already held that there is no evidence that the l't respondent had any knowledge of the dealings of PW2 and the 2nd respondent from the afternoon of 1916198 involving US\$97,000= till after 6 p.m. on 2216198 after the arrest of the 2''d respondent. I have no reason to believe that any bank would authorise its employee to engage in this type of transaction outside the bank. The 2nd respondent was indeed on a frolic of his own. On his own admission, he made profits from the sale of dollars at Kikubo market,He may have deposited shs.73 million ofthe proceeds in the 1'1 respondent bank but that was in an attempt to save his own neck and not on account of the appellant. Shs.47 million remains unaccounted for. Given the strange conduct of the employees of the appellant, they may have shared this rnoney with the 2nd respondent, but they were not sued with him. The 2"r respondent is wholly liable to the appellant for the money. 5

#### ISSUE NO.5

2t)

This issue arises from ground twelve of appeal which stated that the trial judge erred when after ordering the 2nd respondent to find and return the appellant's money, he failed to order all costs ofthe suit to be paid by the 2nd respondent including those payable by the appellant to the I't respondent upon dismissal of the suit against the I't respondent. It is trite that the award of costs is entirely at the discretion of the court. It is also a general rule of practice that costs follow the event. In this case, the trial court did not make

any order as to costs. It falls on this court to make the order. It is the appellant who dragged the I't respondent to court. It is the appellant who must pay costs to the l't respondent, in the High Court. As regards the costs between the appellant and the second respondent, I am of the view, that the employees of the appellant were partly responsible for the loss of the their employer's money. By not suing them, he chose not to hold them accountable for their share of the loss. I hold therefore that, as between the appellant ad the 2nd respondent, each should pay its own costs ofthe suit in the High Court.

#### CONCLUSION

I believe, I have disposed of all the issues that were necessary for the proper determination of this suit. The leamed trial judge by and large carried out proper evaluation of the evidence on record and I agree with his conclusion. I would dismiss the appeal and the cross-appeal. The appellant and the cross appellant who is also the 2nd respondent should jointly and severally pay the l't respondent's costs of this appeal.

-i-20 Dated at Kampala this 181........auy of..... 2001 .

25 Ho lce o wl nomuJ unl St STICE PEAL

#### THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA **HOLDEN AT KAMPALA**

#### CORAM: HON. G. M. OKELLO, JA. HON. A. TWINOMUJUNI, JA. HON. C. N. B KITUMBA, JA.

#### CIVIL APPEAL NO. 63 OF 2000 $10$

#### **BETWEEN**

# ACTIVE AUTOMOBILE SPARES LTD.::::::::::::::::::::APPELLANT

### AND

#### CRANE BANK LTD. AND ANOTHER::::::::::::::::::::::::::::::::::::

$20$

$15$

$5$

(Appeal from the decision of the High Court (Okumu-Wengi, J) dated 3rd July, 2000 in HCCS No. 288/99)

#### JUDGMENT OF G. M. OKELLO, JA.

$25$

I have read in draft the judgment prepared by my brother Justice Twinomujuni, JA. I fully agree with his reasoning and conclusion. I have nothing useful to add.

As Justice Kitumba, JA also agrees, the appeal and the cross-appeal shall and are hereby dismissed on the terms proposed by Twinomujuni, JA. $30$

G. M. OKELLO. **JUSTICE OF APPEAL** 18/09/01

#### THE REPUBLIC OF UGANDA

#### IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

#### **CORAM:** HON. MR. JUSTICE G. M. OKELLO, JA. HON. MR. JUSTICE A. TWINOMUJUNI, JA. HON. LADY JUSTICE C. N. B. KITUMBA, JA.

#### CIVIL APPEAL NO. 63 OF 2000

$10$

$20$

#### **ACTIVE AUTOMOBILE SPARES LTD....................................**

#### **VERSUS**

#### CRANE BANK & ANOTHER....................................

(Appeal from the judgment of the High Court of Uganda at Kampala (Okumu Wengi,J) dated 3rd July 2000 in HCCS No. 288 of 1999)

#### **JUDGMENT OF KITUMBA, JA.**

I have had the benefit of reading the judgment of Twinomujuni, JA in draft. I agree with it and have nothing useful to add.

| Dated at Kampala this | | | |-----------------------|--|--|

C. N. B. KITUMBA, **JUSTICE OF APPEAL.**