Bank of Uganda v Kabuye (Civil Appeal 6 of 2020) [2023] UGSC 51 (6 December 2023)

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA AT KAMPALA

# Coram: Owiny-Dollo, CJ, Mwondha, Tibatemwa-Ekirikubinza, Tuhaise, Chibita, JJ. SC

## CIVIL APPEAL NO. 06 OF 2020

BANK OF UGANDA:::::::::::::::::::::::::::::::::::

#### **VERSUS**

# J. B KABUYE::::::::::::::::::::::::::::::::::::

(Appeal arising from the judgment of the Court of Appeal at Kampala in Civil Appeal No. 48 of 2010 before Kasule, Kakuru & Kiryabwire, JJA dated 31<sup>st</sup> July 2018)

### JUDGMENT OF MWONDHA, JSC

This is a second appeal, by the appellant who was dissatisfied with the decision of the Court of Appeal and appealed to this Court. The memorandum of appeal had three grounds as follows:

- 1. The learned Justices of the Court of Appeal erred in law when they failed to properly evaluate the evidence and thereby arrived at the wrong conclusion that the appellant breached its contract obligations with the respondent by deducting the respondent's housing loan without a hearing. - 2. The learned Justices of the Court of Appeal erred in law when they held that it was the appellant's duty to renew or extend the respondent's leasehold title upon expiry. - 3. The learned Justices of the Court of Appeal erred in law when they awarded the respondent general damages in the sum of Ug. Shs. 20,000,000/= with interest of 20% p.a from the date of retrenchment.

The appellant prayed that: -

- (1) The appeal be allowed, - (2) Set aside the judgment of the Court of Appeal - (3) Restores the judgment of the High Court - (4) Costs of this court and the courts below be provided for.

## Background.

The background of this appeal as accepted by the Court of Appeal was that the respondent was employed by the appellant from 13/11/1987 up to 30/04/1995 when he was retired at the level of Principal Banking Officer, Building Section, under the appellant's involuntarily retirement scheme, where an employee would be compulsorily retired by the appellant.

The appellant represented to the respondent that, pursuant to the resolution of the appellant's Board, he as a pensionable staff retired under the involuntary retirement scheme, was to receive a severance package, similar in all respects, to that awarded to staff retired under the voluntary termination scheme, (VTS) in December 1994. Under the VTS an employee voluntarily chose to retire or to remain in employment and if the employee had been advanced a housing loan, then it would not be deducted from the retirement package but would continue to be settled under the original terms.

The respondent by 30/04/1995, the retirement date, had taken up a housing loan and another personal loan from the appellant. On retirement the appellant deducted all his loan amounts from the retirement package, which consumed all the money and left the respondent still indebted to the appellant.

The respondent lodged HCCS No. 93 of 2001 against the appellant seeking to be re-paid the sum deducted as housing loan from his retirement package and to be awarded general and special damages. The High Court dismissed the suit with costs on 27/03/2009 so the respondent appealed to the Court of Appeal. The Court of Appeal set aside the judgment of the High Court and entered judgment in favour of the Respondent. The appellant was dissatisfied with the decision of the Court of Appeal hence this appeal.

### Representation.

At the hearing of the appeal, Mr. Emmanuel Kakenga represented the respondent while Mr. Eria Mikka represented the appellant. Both counsel filed and adopted their written submissions.

## Appellant submissions.

Learned counsel for the appellant abandoned grounds 1 and 2 of the appeal and conceded to the findings of the Court of Appeal upon application of Clause 5 of Exhibit D1, titled Early Retirement Voluntary Termination of Service.

Counsel also conceded to the award of Ug. Shs. 20 million damages however, contested the interest rate of 20% awarded as well and the time when that interest would start running.

Counsel submitted that the learned Justices of the Court Appeal misdirected themselves on the principle of law that interest on general damages accrues from the date of assessment of the damages as opposed to the date or time of the wrong doing whether tortious or contractual. He added that the rate on general damages is at a Court rate and not on Commercial rate as found by the Court of Appeal. For this argument counsel cited **Hope** Mukankusi v. Uganda Revenue Authority, CACA No. 6 of 2011 which cited this Court's decision in Omunyakol Akol Johnson v. Attorney General, SCCA No. 6 of 2012. Counsel also cited earlier cases of Prem Lata v. Peter Musa Mbiyu, [1965] 1 E. A. 592 and Sietco v. Noble Builders (U) Ltd, SCCA No. 31 of 1995.

Could prayed that this court allows ground 3 in relation to the high interest rate on general damages and the date when such rate should accrue. He also prayed for costs.

### **Respondent submissions.**

Counsel for the respondent submitted that awards of interest rate are discretionary. Could relied on Section 26(2) of the Civil Procedure Act to the effect that court may order an interest rate as it deems fit. Counsel cited Sieto v. Noble Builders, supra and Premchandra Shenoi & Another v. Maximor, SCCA No. 31 of 2003 to emphasized that an award of interest rate is discretionary and that in this case, the learned Justices of the Court of Appeal exercised their discretion and warded the same at a rate of 20%.

On the issue of when the interest should accrue, counsel argued that the learned Justices of the Court of Appeal were aware of the date when the interest should accrue but, after considering the circumstances of the instant case, court saw it prudent to award the interest from the date when the respondent was retrenched. Counsel submitted that the Omunyakol case is distinguishable from the instant case because in that case the learned trial Judge had awarded omnibus interest rate on the aggregate sum of general, special and aggravated damages from the date of dismissal until payment in full unlike in the instant case where the interest awarded was only on general damages considering the fact that the respondent's retirement package was subjected to arbitrary deductions by the appellant and also taking into account the inflation trends in the economy.

Counsel prayed that the appeal be dismissed with costs and uphold the judgment of the Court of Appeal.

#### Consideration of the appeal.

This is a second appeal and the duty of a second appellate Court was long settled in various cases in this Court. In the case of Tito Buhingiro v. Uganda, SCCA No. 8 of 2014, it was stated, "it is trite law that as a second appellate court, we are not expected to re-evaluate

the evidence or question the concurrent findings of fact by the High Court and Court of *Appeal. However, where it is shown that they did not evaluate or re-evaluate the evidence* or where they are proved to be manifestly wrong on findings of fact, the court is obliged to do so and to ensure that justice is properly and timely served". See also **Kifamunte** Henry v. Uganda, SCCA No. 10 of 1997.

I shall be guided by the above principles in resolving this appeal.

The appellant appealed on three grounds as stated in the memorandum of appeal, however, in his written submissions, Counsel abandoned grounds 1 and 2 and conceded to the findings of the Court of Appeal. Counsel also abandoned part of ground three and argued only the part in relation to the rate of interest and when such interest would accrue. This meant that he was not appealing against the award of 20m in general damages to the respondent and I will therefore proceed to resolve the appeal only on the part of ground 3 of interest and when it was to start.

S. 26 of the **Civil Procedure Act, Cap 71** provides as follows:

- "S. 26 Interest. - (1) Where an agreement for the payment of interest is sought to be enforced, and the court is of opinion that the rate agreed to be paid is harsh and unconscionable and ought not to be enforced by legal process, the court may give judgment for the payment of interest at such rate as it may think just. - (2) Where and insofar as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit. - (3) Where such a decree is silent with respect to the payment of further interest on the aggregate sum specified in subsection (2) from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 percent per year."

The issues that arise out of the partial ground number 3 are as follows: -

1) Whether the Court of Appeal exercised its discretion judicially to award the 20% interest on the 20m awarded as damages

2) Whcther lhc Court ol'Appcal u as .lustilicd in la\\ to ordcr the intcrcsl to run liom lhc dalc ()l' rctrcnchmcnt.

Iror clarill' I w'ill reproduce lhc part ol- qround 3 s'hich is bcing contcstcd. "'l he lcarned Justiccs ol'thc Court Ol'Appcal crrcd in lau,rvhen they arvarded intcrcst of207o p.a payablc lrorn the diltc () l' rclrcnchrncnl. "

When the Court ol'Appeal considered and au,arded the 20oh interest they reappraised the evidence on record as at page 43 of thc Record of- Appeal. The case of Mot v. Chanchalbhai (1915/1916) 6 E. A. L. R.l was citcd.

They reproduced the rclevant I'acts as ( l) his (appellant) rctrenchment was sudden

(2) He was Principal Banking Officer, a high rank in the respondent Bank.

(3) His retrenchment package was reduced to nothing through the respondent's arbitrary deductions

(4) He was reduced to a pauper incapable of financially supporting his family and relatives.

(5) He was rendered incapable ofinvcsting into economic venture as he was deprived of use of his money.

There are a number of decisions ofthis Courl and in East Altica which settled the principles to guide Courts on whether to interfere with the exercise of discrction of a trial Cou(/Court. 81

l'tris is from the undcrstanding that awarding interest is a rnatter of discretion. See Premchandra Shenoi & Another v. Maximor Oleg Petrovich (supra) Oder, JSC held inter alia, ... "I agree that the principle applied by this Court in Sietco v. Noble Builders (U) Ltd Supreme Court Civil Appeal No. 3l of 1995 to thc eff'ect that it is a matter of the Court's discretion is applicable. 'I'he basis of awards ol interest is that the delendant has taken and used the plaintiffs money and bcnetlted. Consequently, the defendant ought to compensate the plaintiff for the money".

In Uganda Development Bank v. National Insurance and Another, SCCA No. 28 of 1995, this court ciled the case o1'Mbogo v. Shah [968] E. A 93. rvhere Newbold a1 page 96. stated the principle to bc that "...a Court of Appcal should not interl-cre with the cxercise of discrction of a Judge unless it is satisfied that thc Judgc in cxercising his discrction has misdirectcd hirnsclf in some rnattcr and as a result has arrivcd at a wrong decision or unless it is manifest from the casc as a whole that the Judge has been clearly rvrong in the exercise of his discretion that as a result there has bcen a misjustice"

Whilc in Shah v. AIlu ll974l l4 EACA, it was hcld inter alia that, it must be shown that there u'as unjudicial excrcise of discrction at u,hich no judge could rcasonably arrive at \\tcrcb\ in.iusticc has hccn donc to thc part,r cortrplaittirtg

I notcd that in thc instant appeal apart lionr disrnissing thc suit with costs therc was no other order rnade. So interl'ercncc of the Court ol'Appcal in thc discrction ol'thc trial Judge could no1 arisc.

Ilowever. lhe principles cited are applicable to this Court as thc Court of Appcal is the firs1 appellate Court.

I have already rcproduced s.26 ofthe Civil Procedure Act which governs awards ofinterest. I have read the record ofappeal in respect of the award ol the 20%o interest and this is what the Court of Appeal said; "The appellant in this appeal wos a Principal Banking Officer, a high ronk in lhe respondenl's eslablishmenl. His retrenchment was sudden and his relrenchmenl package was reduced to nothing through lhe respondent's arbitrary deductions. He was reduced to a pauper, incapable of financially supporting his family and relatives. He was rendered incapable ofinvesting into any economic venlure as he was deprived ofuse of his money. Doing the best in the circumstances, being guided by the case authority referred to above and taking into consideralion the inJlationary lrends in lhe economy Courl awards the appellant Shs. 20 million general damages.

Though in the normal course of things interest on general damages runs from the date of judgment, in this case, the appellant has suffered being deprived of use of his retirement package money from the date of retrenchment, and since Courl has ordered that he is nol to be refunded any money of the housing loan, that was wrongly deducted from him. It is only fair andjust thal general damages awarded caty interest of20% p.afrom 24.04.1995 the date of retrenchment ". s5

According to the Record ofAppeal the Courl ofAppeal declined to order the respondent to repay back the money wrongly deducted on the housing loan on the basis (a) 1'he loan payment period had long expired.

(b) That the Court could not grant a relicfthat the respondent rcfunds the said loan amount to thc appellant.

(c) That it was money the respondent was entitled to receive from the appellant within that period up to December 2010 by way of loan repayment. though in monthly installments. So the Court denied the appcllanl that prayer.

Resolution ol'issuc ( I ) rvhether thc Court cxerciscd its discretion .judiciously to au'ard 20oZ intercst on thc sum of'20 million as damagcs. I lind suh rule (2) ol'section 26 of thc Civil Procedure Act applicable to the above reasoning of the Court of Appeal. For clarity, I shall reproduce it, "where and in so far as a decree is for payment of money, the Court may in a decree or order of interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged from the date of the suit to full payment."

The Court of Appeal did not adjudge further interest in addition. On further perusal of the Record of Appeal, the appellant stated that he lost his 12-year-old son in 1996 for he had no money to pay for his son's medication. His sister he was supporting in school had to drop out of school. He said he would have invested the retrenchment package money into poultry and piggery.

In almost a similar case Bank of Uganda v. Masaba & 5 Others, SCCA No. 03 of 1998, the Court of Appeal cited it. The facts and parties were all from the Banking sector. Briefly the facts were that the Respondents were employees of the appellant (Bank of Uganda) and the appellant's Governor wrote to its employees offering them voluntary retirement scheme. Among the conditions in the scheme was a clause that exempted deductions on housing loans. The respondents individually applied to the appellant (Bank of Uganda) to retire on the basis of the terms and conditions specified in the Governor's letter (retirement scheme). Payments of their respective retirement packages were made to the respondent however, the appellant had made deductions of housing loan from their retirement packages. Due to the deductions, the respondents were left with little or no money to start retirement life. The respondents successfully sued the appellant in the High Court. The appellant (Bank of Uganda) unsuccessfully appealed to the Court of Appeal hence the appeal to the Supreme Court and while dismissing the appeal, Oder, JSC, cited Flint v Lowell 1935 1 kb 354 where Greer, CJ said, "In order to justify reversing the trial judge on the question of amount of damages it will generally be necessary that this court (appellate court) should be convinced either that the judge acted upon some wrong principle of law, or the amount awarded was so extremely high or so very small as to make it, in the judgement of this court, an entirely erroneous estimate of the damage to which the plaintiff is entitled."

Both the Court of Appeal and the Supreme Court left undisturbed the award.

The Court of Appeal considered the facts as already stated in this judgment. I have also perused the Court Record though there is a presumption in favour of judicial discretion being rightly exercised. I was satisfied that the facts as stated above from the Record of Appeal, the 6% interest which is a default rate cannot satisfy the ends of justice. Every case has to be determined according to its own facts and circumstances. The learned Justices

considered the circumstanccs and taking inlo account all rvhat the appcllant did to the respondent. I find that, thcy cxcrciscd their discrction judicialll .

I am unable to fault the lcamcd.lustices ol'the ('ourt o1-Appeal and I uould not intcrl'ere.

On the issue whether the learned Justices were.justified to order the interest to run liom the time ol retrenchment instcad of date of iudgment I have reproduced already in this judgmcnt the reasons why they said so and rvhat stated cannot be separated lrorr the reasoning of when it should run.

l-hc Justiccs of the Court of Appcal considered and took into account the vartous circurnstances of the case to justily the departure fiom the principle. 5.26 (2) lays the ground lor the interest ratc and I have already rcproduced it. As to when the interest would start I would rather go by that, that the interest u,ould rum from the date of suit to full payment. The guidance in that subsection is clear. I too take into account the circumstances of the case as stated above, that the interest ol' justice would demand that. This would be fair to both partics in my view.

Also I have considered the fact that the Court of Appeal did not adjudge an additional interest. The 20%o interest per annum from the date of commencement of the suit till full payment would suffice.

In the result the appcal partially succeeds and I would rnake the lbllowing orders: -

(1) Uphold the Court of Appeal decision on interest of 200% per annurn.

(2) The interest to accrue from thc commencelnent of the suit till payment in full

Dated at Kampala this ... b day of ....2023 L

Faith Mwondha Justice of the Supreme Courl

### THE REPUBLIC OF UGANDA

### IN THE SUPREME COURT OF UGANDA AT KAMPAIA

CORAM: OWINY - DOLLO CJ; MWONDIIA, TIBATEMWA-EKIRIKUBINZA, CI]IBII'A JJSC 'I tIIIAISL ANI)

### CIVIL APPEAL NO. 06 OF 2O2O

APPELLANT VERSUS BANK OF UGANDA.

J. B KABUYE RESPONDENT

(Arising from the decision of the Court of Appeal in Civil Appeal No. 48 of 2010 before Kasule, Kakuru and Kiryabwire, JJA dated 31" July 2018)

### JUDGMENT OF OWINY - DOLLO; CJ

I have had the benefit of reading, in draft, the judgment of my Iearned sister Mwondha, JSC. I concur with the reasoning, conclusions, and orders proposed therein.

Since Tibatemwa-Ekirikubinza, Tuhaise, Chibita, JJSC, also agree, orders are hereby issued in the terms proposed by Mwondha JSC in her judgment.

2023 Dated, and signed at Kampala this ..e3. day of

r\ Alfonse C. Owiny - Dollo

Chief Justice

### THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA AT KAMPALA [CORAM: OWINY-DOLLO CJ; MWONDHA, TIBATEMWA-EKIRIKUBINZA, TUHAISE; CHIBITA; JJ. SC)

### CIVIL APPEAL NO. 06 OF 2020

### **BETWEEN**

### BANK OF UGANDA:::::::::::::::::::::::::::::::::::

#### AND

**J. B. KABUYE::::::::::::::::::::::::::::::::::::**

Appeal arising from the judgment and decision of the Court of Appeal at Kampala before Hon. Justices: (Kasule, Kakuru and Kiryabwire, JJA] in Civil Appeal No. 48 of 2010 dated 31<sup>st</sup> July 2018.

#### JUDGMENT OF PROF. TIBATEMWA-EKIRIKUBINZA, JSC.

I have had the benefit of reading the judgment of my learned sister, Hon. Justice Mwondha, JSC.

I agree with her analysis and conclusion. I also agree with the order that costs in this Court and in the courts below be awarded to the Respondent.

Dated at Kampala this.... $\mathcal{G}^{\text{th}}$ day of. December 2023.

~ usaternure. JUSTICE PROF. LILLIAN TIBATEMWA-EKIRIKUBINZA

JUSTICE OF TEE SUPREME COURT.

# THE REPUBLIC OF UCANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA (CORAM: OWINY-DOLLO, CJ; MWONDHA; TIBATEMWA-EKIRIKUBINZA; TUHAISE; CHIBITA; IISC)

### CIVIL APPEAL NO. 06 OF 2O2O

BANK OF UGANDA APPELLANT

### VERSUS

I. B KABLTYE ...... ............... RESPONDENT

[Appenl ansing from the judgment of the Court of Appenl at Kampala before Kasule, Kakuru, Kiryabtoire, llA, in Cioil Appeal No. 48 of 2010, dltted 31st luly, <sup>20181</sup>

## IUDGMENT OF TUHAISE, ISC.

I have had the benefit of reading in draft the Judgment Prepared by \*y learned sister Hon. Justice Faith Mwondha, JSC.

I agree with her decision, and the orders therein.

4^ Date at Kampala, this day of... 2023.


# IUSTICE OF THE SUPREME COURT

# THE REPUBLIC OF UGANDA

### IN THE SUPREME COURT OF UGANDA

### AT KAMPALA

### (CORAM: OWINY-DOLLO, C. J; MWONDHA; TIBATEMWA; TUHAISE; CHIBITA; $JJ. SC)$

#### CIVIL APPEAL NO: 06 OF 2020

### BANK OF UGANDA ::::::::::::::::::::::::::::::::::: **VERSUS**

J. B. KABUYE ::::::::::::::::::::::::::::::::::::

[An appeal arising from the judgment of the Court of Appeal at Kampala in Civil Appeal No. 48 of 2010 before Kasule, Kakuru & Kiryabwire JJA, dated 31<sup>st</sup> July 2018]

#### **IUDGMENT OF CHIBITA, ISC**

I have had the benefit of reading in draft the judgment prepared by my learned sister, Hon. Justice Mwondha, JSC and I agree with her reasoning and her conclusion.

I also agree with the orders that she has proposed.

Dated at Kampala this ....................................

Iustice Mike Chibita **IUSTICE OF THE SUPREME COURT**