International Holdings Limited v Tibaijuka (Civil Appeal 16 of 2021) [2024] UGHCCD 69 (15 March 2024)

#### THE REPUBLIC OF UGANDA

#### IN THE HIGH COURT OF UGAND AT KAMPALA

### [CIVIL DIVISION]

### **CIVIL APPEAL NO. 16 OF 2021**

[Arising out of Civil Suit No. 256 of 2014]

INTERNATIONAL HOLDINGS LTD ================== APPELLANT

VERSUS

TIBAIJUKA NORAH =========================== RESPONDENT

# **BEFORE: HON. JUSTICE EMMANUEL BAGUMA**

### **JUDGMENT.**

This appeal arises from Civil Suit No. 16 of 2021 wherein the Appellant/Plaintiff sued the Respondent/Defendant for recovery of 6,337,389/= (Six million, three hundred thirty seven thousand, three hundred eighty nine shillings) interest and costs of the suit. The suit was heard and judgment entered in favour of the Respondent/Defendant by the trial Magistrate hence this appeal. The memorandum of appeal has three grounds of appeal to wit; -

- *1. The learned trial Magistrate erred in law and fact when she held that the Appellant is not the Respondent's Landlord despite receiving rent from the Respondent.* - *2. The learned trial Magistrate erred in law and fact when she held that the Respondent was right to cancel the payment for rent arrears having already consumed the services.* - *3. The learned trial Magistrate erred in law and fact when she refused to be bound by the law on issuance of cheques as payment for services consumed.*

### **Legal Representation.**

Counsel Byamugisha Moses represented the Appellant while counsel Arinaitwe Peter represented the Respondent.

At the hearing parties agreed to file written submissions and their details are on record

# **Duty of first Appellant Court**.

The duty of the first appellate court was stated in the case of **Kifamunte Henry Vs Uganda SC, (Cr) Appeal No. 10 of 2007,** where it was held that;

*''…the first appellate court has a duty to review the evidence of the case, to reconsider the materials before the trial judge and makeup its own mind not disregarding the judgment appealed from but carefully weighing and considering it…''*

This Court therefore has a duty to re-evaluate the evidence to avoid a miscarriage of justice as it mindfully arrives at its own conclusion. I will therefore bear these principles in mind as I resolve the grounds of appeal in this case.

Counsel for the appellant argued ground 3 first and argued ground 1 and 2 jointly.

### **Submissions by counsel for the Appellant.**

### **Ground 3**

# *The learned trial Magistrate erred in law and fact when she refused to be bound by the law on issuance of cheques as payment for services consumed.*

Counsel submitted that evidence was led by both parties that a cheque was issued by the Respondent to the Appellant worth the amount of rent in arrears Ug Shs 6,337,389/= and this is not disputed. Counsel submitted that the law on issuance of a cheque has been spelt out in several cases including the case of **Sembule**

**Investments Limited Vs Uganda Baati Limited MA 0664 of 2009** which defined a cheque as; -

*"an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determined future time a sum certain in money to or the order of a specified person or to bearer"*

Counsel submitted that the Respondent/Defendant stated in her statement under paragraph 11 that the cheque was issued as security for payment to the plaintiff. This is a void argument since a cheque is supposed to be unconditional.

Counsel referred to the case of **Dembe Trading Enterprises Ltd Vs BIDCO (U) LTD MA 152 OF 2008** where it was held that; -

*"it is the duty of this court to protect the integrity of cheques. This is so because increasingly cheques have become the grease that facilitates the efficient running of the world of commerce. The business practice in Uganda of issuing cheques as security for payment with the intention that they should not be banked or negotiated should be strongly discouraged, because it goes against the very nature of such instruments. I think that businessmen and women have come to take this as a valid practice/custom because they have no clue about the legal implications and the gravity of issuing and accepting cheques. They therefore carelessly issue cheques in spite of the provisions of s.385 (1) (b) of the Penal Code Act which makes it an offence to issue a cheque, well knowing that one does not have the funds to meet the payment ordered in their account. But ignorance of the law is not a defence. The person who draws a cheque is presumed to know the implications of his/her action and should be held to it. The person who accepts the cheque becomes a holder in due course; he/she should hold the bill in good faith and for value, if he has no notice of any defect in the title of the person who drew or negotiated it. He/she should be able to negotiate it for value, or bank it, with no fear that it will not be honoured by the drawer or other person against whom it is drawn".*

Counsel also referred to the case **Kotecha Vs Mohamman 2002 EA 112** where it was held that; -

*"a bill of exchange is normally treated as cash and the holder is entitled in the ordinary course to judgment".*

Counsel contended that the appellant was entitled to payment by virtual of being issued with the cheque and holding contrary was wrong.

# **Ground 1 and 2**

# *The learned trial Magistrate erred in law and fact when she held that the Appellant is not the Respondent's Landlord despite receiving rent from the Respondent.*

*The learned trial Magistrate erred in law and fact when she held that the Respondent was right to cancel the payment for rent arrears having already consumed the services.*

Counsel submitted that the tenancy agreement in the main suit between the Appellant and Akandonda prohibited subletting and upon demand for rent by the appellant's agent the Respondent issued a cheque worth the outstanding rent from her personal account to the appellant. This caused the appellant to act upon such payment to allow the respondent to continue occupying the premises.

Counsel contended that by issuing a cheque, the Respondent accepted that she was a tenant of the appellant. The Respondent would be precluded from denying such facts under the doctrine of estoppel provided for under section 144 of the Evidence Act.

Counsel submitted that even when the shops were closed in June 2013, the Respondent approached the appellant to negotiate for the re-opening of the shop. How then did she approach the appellant for negotiations if she was not a tenant? DW3 in her evidence also admitted being a tenant to the appellant.

Counsel submitted that the Respondent cannot be allowed to approbate and reprobate. He referred to the case of **Cottifield East Africa (U) Ltd Vs Uganda Ginner and Cotton Exporters Association Ltd HCC No. 19 of 2013** where it was held that; -

**"The principle is well laid out in common law. According to** *Versclures Creameries Ltd versus Hull and Netherlands Steamship Co. Ltd (1921) KB 608 at P.612* **Per Scrutton L. J, stated that:**

> **"***It is a well known principle of equity that one cannot approbate and reprobate at the same time. This principle is based on the doctrine of election which postulates that no*

*party can accept and reject the same instrument and that; a person cannot say at one time that a transaction is valid and thereby obtain some advantage to which he could only be entitled on the footing that it is valid and then turn round and say it is void for the purpose of scoring some other advantage***."**

Counsel concluded that once the defendant accepted that there was consideration and issued the cheque, she had no right to cancel the same.

# **Submissions by counsel for the Respondent.**

# **Ground 3**

# *The learned trial Magistrate erred in law and fact when she refused to be bound by the law on issuance of cheques as payment for services consumed.*

Counsel defined a cheque as per section 2 of the Bill of Exchange Act and also referred to the case of **Sembule Investments Ltd Vs Uganda Baati Ltd MA No. 664 of 2009**.

Counsel submitted that whether or not the cheque is conditional depends on the circumstances under which it arises either where it is issued as a mode of performing payment obligation for goods supplied and services rendered or as a security. It is the position of the law that a cheque is as good as having cash as held in the case of **Sembule Investments Ltd supra**.

Counsel submitted that since there was no landlord tenant relationship, the cheque and receipt for the money received were issued in the names of Queen Shiba, the Appellant cannot enforce it against the Respondent. Since the Appellant recognized Akandonda as his landlord, no obligation arose in the issuance of the cheque by the Respondent.

### **Ground 1 and 2**

*The learned trial Magistrate erred in law and fact when she held that the Appellant is not the Respondent's Landlord despite receiving rent from the Respondent.*

*The learned trial Magistrate erred in law and fact when she held that the Respondent was right to cancel the payment for rent arrears having already consumed the services.*

Counsel submitted that a tenancy can be express or implied and where it is implied, the circumstances must be clear. He referred to the case of **Kyomukama Salome Vs Katushabe Juliet CA No. 61 of 2018.**

Counsel submitted that in the instant case, during cross examination the Appellant admitted having an express agreement with the Respondent yet when he was tasked to produce the said agreement he produced an agreement between the Appellant and Akandonda.

Counsel submitted that the Respondent and other subtennants simply negotiated with the Appellant when the shop was closed to clear the rent due to redeem their businesses but never intended to create a landlord tenancy relationship.

### **Analysis of court**.

### **Issue 3**

*The learned trial Magistrate erred in law and fact when she refused to be bound by the law on issuance of a cheque as payment for services consumed.*

In the case of **Jonel Limited Vs Kiboko Enterprises Ltd MA No. 27 of 2016** court held that; -

*"As to the legal consequences of issuing payment by cheques which bounce, sections 72, 2, and 26 of the Bills of Exchange Act Cap 68 are relevant. A cheque as defined there under is a bill of exchange payable on demand as an "unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand*

# *or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer".*

A cheque is said to be dishonoured under section 46 of the Bills of Exchange Act when it is duly presented for payment and payment is refused or cannot be obtained.

In the case of **Sembule Investments Ltd vs. Uganda Baati Ltd MA 0664 of 2009** it was held that it is implied from the definition of a bill of exchange and therefore that a cheque is by its nature unconditional. **A cheque cannot be issued on any conditions unless those conditions are notified to the banker.**

In the instant case, from the evidence on record shows that the appellant initially had a tenancy agreement with Akandonda trading as Queen Sheeba for a shop at Luwumu street. Akandonda sub rented part of the shop space to the Respondent and other subtenants who used to pay rent to Akanonda and in turn Akandonda would pay directly to the Appellant. In June 2016 the shop was locked due to none payment of rent and when the Respondent and other subtenants contacted Akandonda the owner of the shop Akandonda was elusive and didn't help them. Seeing that they were losing business, the Respondent and other subtenants approached the manager of the Appellant to directly pay rent and remain in the shop.

On further scrutiny of the evidence on record, the Respondent admitted that she issued a cheque as security for payment of rent. This is evidence by the receipt showing payment of 900,000/= (nine hundred thousand shillings) DEX 3 issued by the appellant's manager on the very day the cheque was written. The cheque was simply to guarantee that the Respondent and other subtenants were to raise the rent for June in the time agreed upon otherwise why would the Respondent and other subtenants pay the 900,000/=?

From the above evidence therefore, the trial court was correct to conclude that the defendant was never recognised as a tenant of the plaintiff. I agree with the finding of the trial court that court had a mandate to investigate the circumstances of any transaction leading to the payment by cheque. This helps court to reach to a fair and just decision.

The facts and evidence in this instant case point to the fact that for most part of the month of June 2013, the shop was illegally closed by the appellant forcing the Respondents and other subtenants to commit themselves and issue the cheque.

This evidence was not shaken in cross examination and when PW1 the appellant's manager was confronted with such information in cross examination, he pretended that he did not remember and court noted his demeanour as one of an aversive witness.

Seeing that the shop was taken a fact that the Appellant's manager knew but chose to defraud the Respondent and other subtenants, the Respondent recalled the cheque issued and ordered her bankers not to pay it.

In my view, given the evidence above, it was proper for the trial Magistrate to hold that the Respondent was justified in cancelling the cheque given that there was no value for money. There was a condition in this cheque and the same was communicated to the bank before the cheque was presented.

Ground 3 fails.

### **Ground 1 and 2**

*The learned trial Magistrate erred in law and fact when she held that the Appellant is not the Respondent's Landlord despite receiving rent from the Respondent.*

*The learned trial Magistrate erred in law and fact when she held that the Respondent was right to cancel the payment for rent arrears having already consumed the services.*

It is my considered view that ground 1 and 2 have been considered and resolved in ground 3 above. Court has already pronounced itself in ground 3 that there was no land lord tenant relationship and the cheque was issued as security that the Respondent and other subtenants would raise the rent due in the agreed time and evidnce by DEXH 3 which payment of 900,000/= on the very day of negotiations.

In the view of the above I agree with the finding of the trial court that there was no land lord tenant relationship and the Respondent rightly recalled the cheque.

Ground 1 and 2 fail.

### **Conclusion.**

On the whole, this appeal fails with the following orders; -

- 1. The appeal is hereby dismissed - 2. The Respondent is awarded costs of this appeal.

Dated signed, sealed and delivered by email on this **15th** day of **March** 2024

Emmanuel Baguma

Judge.