Kyagulanyi Nassanga v Non - Performing Assets Recovery Trust (Civil Appeal 56 of 1999) [2001] UGCA 25 (22 February 2001)

Full Case Text

# THE REPUBLIC OF UGANDA

## !N THE COURT OF APPEAL OF UGANDA AT KAMPALA

## CORAM: HON. MR. JUSTICE G. M. OKELLO, JA. HON. LADY JUSTICE A. E. N. MPAGI-BAHIGEINE, JA. HON. MR. JUSTICE A. TWINOMUJUN!, JA.

## CIVIL APPEAT NO. 56 OF 1999

## GERTRUDE KYAGU LANYI NASSANGA APPELLANT

## VERSUS

# NON. PERFORMING ASSETS RECOVERY TRUST....... ... RESPONDENT

20 (Appeal from the Judgment of NPART Tribunal (Ouma, Lule & O'Bokk) at Kampala dated 14rh May, 1999 in Tribunal Civil Case No. 56 of 1997.)

## JUDGMENT OF HON. A. TWINOMUJUNI, J. A.

This is an appeal from the judgment and orders of the Non-Performing Assets Recovery Tribunal (NPART) in which the tribunal made the following decree:-

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- "(a) That all moneys repaid to the defendant in the plaintiffs part pertormance of the Loan Agreement be refunded to her without interest thereon. - (b) Materials or their equivalent in value in Uganda shillings be returned or paid by the plaintiff to the defendant. - (c) The mortgaged property be redeemed.

# (d) Money advanced or given to the plaintiff by the defendant be ref u nded, w ith o ut i nte re st th e reo n.

# (e) Each party to meet its own costs."

The background to this dispute is as follows:-

On 13th March'1998, the appellant entered into a loan agreement with Uganda Commercial Bank (UCB) for U. S. Dollars 32,562 and Uganda shillings '1 ,951,000/= (One Million, nine hundred fifty one thousand only). The parties agreed that UCB would apply the loan to supply to the appellant farm items or materials, motor vehicles, ten Fresian in-calf heifers and one Fresian bull. The loan agreement stipulated that the appellant would enjoy a period of grace of 12 months from the debt the heifers and the bull would be received and thereafter she would repay the loan in 48 equal monthly instalments. The appellant, as part of the agreement, executed a mortgage deed, which was registered on 291411989. Thereafter UCB supplied to the appellant farm materials and a pickup but did not supply the 10 heifers and one bull.

l0 Sometime in early 1992 the UCB started demanding for repayment of the loan but the appellant resisted the demand on the grounds that they had not yet received the cows and the bull and that UCB was not justified to demand for repayment of the loan until after 12 months of the delivery of the cows and the bull. Under pressure, however, the appellants made some payments and the pick-up was impounded by NPART, which sold it to recover part of the loan. When NPART threatened to sell the land, which was mortgaged as security for the loan, the appellant filed action in NPART against the successor in title to UCB.

.r0 ln the tribunal, three issues were framed and agreed to by both parties, na mely:-

- (a) Which of the parties to the loan agreement defaulted in the performance thereof and whether the loan became non-performing. - Whether some money given to the plaintiff by Uganda Commercial Bank is recoverable in terms of the loan agreement. (b) - (c) Whether the plaintiff is entitled to the reliefs claimed.

The tribunal decreed as already stated at the beginning of this judgment, hence this appeal.

There are three grounds of appeal as follows:-

- ',1 The learned members of the Tribunal erred in law and in fact in holding that the loan agreement is incomplete and therefore, unenforceable, thereby denying the appellant the remedies prayed for. - The learned members of the Tribunal erred in law and in fact in ordering that the materials or their equivalent in value in Uganda shillings and money advanced to her be returned or paid by the appellant to the respondent when the said money or materials were incapable of being realised for return or refund. 2 - 3 The learned members of the Tribunal erred in fact and in law in failing to order for costs of the suit in favour of the appellant without furnishing any reason when the respondent was responsible for the suit being filed against them because they tried to enforce the loan agreement against her."

.10 On the first ground of appeal Mr. Eric Muhwezi for the appellant argued that the loan agreement was complete and certain in terms. The terms were set by UCB itself and accepted by the appellant. Following the agreement, UCB

supplied cash and some materials as agreed in the loan agreement but failed to supply the main items, namely the '10 heifers and one bull. The only defence advanced by the respondent that they had rescinded the loan agreement was rejected by the tribunal. There was no provision in the agreement that the price of the cows would be agreed in future and the fact that the price of the cows was agreed in dollars was not even a contentious matter at the trial. ln Mr. Muhwezi's view, on the facts found by the tribunal that UCB never supplied the cows, they should have held that the respondent was in breach of the contract of the loan agreement.

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firlr. Peter Nkuruziza learned counsel for the respondent did not support the findings of the tribunal that the loan agreement was incomplete and unenforceable. He therefore conceded that the loan agreement was complete and enforceable. He argued however that this did not automatically entitle the appellant to the remedies he was seeking because she did not prove that the respondent had breached the loan agreement. ln his view, the orders of the tribunal were justified by the fact that the tribunal did not hold the respondent to be in breach of the loan agreement.

l0 I have carefully examined the loan offer and acceptance contained in exhibit P. A. With respect to the tribunal, we agree with both counsel that the terms of that loan agreement were simple, straightforward, certain and enforceable. ln fact even looking at the issues, which were framed at the trial, the uncertainty and unenforcebility of the loan agreement, was not a contentious matter. lt was therefore wrong for the tribunal to rely on matters not in issue to dismiss the appellant's claim.

The purpose of the loan was to rehabilitate the appellant's farm and to restock it with 10 heifers and one bull. The supply of the heifers and the bull was central to the whole agreement. No payment of the loan was to be made till a period of twelve months after the supply of the animals. The tribunal found that

money for repayment of the loan was to come from the proceeds of the milk. The tribunal rejected the respondent's claims that the appellant failed to prepare the farm in readiness for the cows which led to the loan agreement being rescinded, and I think the tribunal rightly did so. The tribunal found as fact that the respondent never supplied the heifers and the bull to the appellant. ln those circumstances, and on the evidence on record, the tribunal should have held that the respondent was in breach of the loan agreement. Ground one of this appeal would in my judgment succeed.

On the second ground of appeal Mr. Muhwezi argued that the money and the materials which were given to the appellant were for the purposes of clearing bushes from the farm, fencing the same, construction of farm houses and other farm structures, labour costs and other contingencies. He argued that the money and the materials were used on these purposes and it was no longer possible to refund the money and the materials.

ln reply Mr. Nkuruziza argued that there was no evidence on record to show that money advanced to the appellant or the materials or their equivalent value in Uganda shillings were incapable of being refunded. He supported the tribunal's order for the appellant to refund the money and materials she received consequent to the loan agreement.

It is noteworthy at this stage that the respondent stated in paragraph 8 of their written statement of defence that:-

"The defendant shall aver that the plaintiff is a defaulter in terms of the loan agreement between herself and UCB and that materials and money advanced to the plaintiff to develop the farm are recoverable in money terms."

l0 The respondent did not call any evidence (except some documentary exhibits) to establish that the appellant was a defaulter or that materials and cash advanced

l{)

to her were recoverable. lt is therefore difficult to tell on what basis the tribunal acted in ordering the refund of moneys and materials, which the appellant established that she had utilised in preparing her farm to receive the 10 heifers and one bull. ln my judgment the respondent did not prove that they were recoverable. Moreover since it was the respondent who breached the loan agreement by failing to deliver the cows which were central to the agreement, it cannot now be assisted to recover the money and materials which were used to prepare the farm for the animals. ln my judgment this ground of appeal would also succeed.

The third and final ground of appeal relates to failure of the tribunal to award costs of the suit to the appellant. Mr. Muhwezi argued that the appellant was dragged in court because the respondent demanded for repayment of the loan prematurely. She succeeded in showing to the tribunal that the threatened sale of her mortgaged land was improper and as a successful party she should have been awarded the costs of the suit. Mr. Nkuruziza could not assist the court on this matter because the tribunal did not give any reasons why it declined to award costs to the appellant. He left the matter to be decided by the court.

l0 It is an established fact that costs are always in the discretion of the trial court. As a general rule however, costs follow the event unless the court thinks otherwise. ln this case the tribunal never gave any reasons as to why it exercised its discretion the way it did. From the foregoing I think the appellant should have been the successful party in the tribunal and therefore should have been awarded the costs of the suit in the tribunal. The third ground of appeal would in my view also succeed.

The consequences of this judgment would be:-

(a) The appeal is allowed and the judgment of the tribunal is set aside.

(b) The appellant's prayers in the Tribunal are allowed

What remains is what general damages the appellant is entitled to for inconvenience resulting from breach of contract.

ln her evidence the appellant stated that when she secured a loan to rehabilitate her farm, she abandoned her small business of selling second hand clothes in which she was earning Shs. 5000/= to 10,000/= per day. She went to devote all her time to the management of the farm. Towards the end of 1992 it must have been clear to her that the loan agreement had aborted and she resorted to doing business with the pick-up which she had been given as part of the items supplied under the loan agreement. I would therefore find that for about four years she suffered damage for devoting most of her time in preparing a farm, which never materialised due to the fault of the respondent. I would therefore award her Shs. 5,000/= per day for 25 days a month for a period of 4 years. (5,000 x 25 x 12 x4 = Shs. 6,000,000/=). I would award her general damages of U. Shs. 6,000,000/=.

l0 Dated at Kampala tf,is?Z.lJ .day of .. ........2001

Ll, A ce of peal.

#### THE REPUBLIC OF UGANDA IN THE COURT OF APPEL OF UGANDA AT KAMPALA

#### CORAM: HON. MR. JUSTICE G. M. OKELLO, JA HON. LADY JUSTICE A. E, MPAGI-BAHIGEINE. JA HON. MR. JUSTICE A. TWINOMUJUNI, JA

#### CIVIL APPEAL NO.56 OF I999

#### GERTRUYDE KYAGTILANYI NASSANGA APPELLANT

## VERSTlS

### NON. PERFORMING ASSETS RECOVERY TRTIST RESPONDENT

,t\_f f

[Appeal from thc Judgcmcnt of NPART Tribunal (Ouma, Lulc & O'Bokk) nt Kampala datcd l{1r'M{!, 1999 in Tribunal Civil Carc No.56 of t9971.

#### D EMENT FH N LADY TI la EINE

I entirely agree with the judgement of Twinomujuni, JA. The general damages awarded are reasonable under the circumstances ofthe case.

Dated at Kampala this ..:fl J aay or..!ela{t 200t

> JUSTICE A. E. M. BA IGEINT] JUSTICE OF APPdAL

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

## CORAM: HON. MR. JUSTICE G. M. OKELLO, J. A. HON. LADY JUSTICE A. E. M. BAHIGIENE, J. A. HON. MR. JUSTICE A. TWINOMUJUNI, J. A.

### CIVIL APPEAL NO. 56 OF 1996

#### **BETWEEN**

#### GERTRUDE KYAGULANYI NASSANGA:::::::::APPELLANT

#### AND

#### NON-PERFORMING ASSET RECOVERY TRUST:RESPONDENT

(Appeal from the judgment of NPART TRIBUNAL) (Justice Ouma, Lule and O'Bokk) at Kampala 14th May, 1999 in Tribunal Case No. 56 of 1997)

#### JUDGMENT OF G. M. OKELLO, J. A.

I have read in draft the judgment prepared by Twinomujuni, J. A and I. fully agree with his reasonings and conclusion. I have nothing useful to add. As Mpagi-Bahigiene, J. A also agrees, the appeal shall be and is hereby allowed with costs in favour of the appellant here and in the Tribunal.

Date at Kampala this. 22nd day of February 2001.

G. M. OKELLO. **JUSTICE OF APPEAL.**