Lwanga v Centenary Rural Development Bank (Civil Appeal No. 30 of 1999) [1999] UGCA 62 (1 January 1999)

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

#### HON. MR. JUSTICE G. M. OKELLO, JA. HON. LADY JUSTICE A. E. M BAHIGEINE, JA. HON. MR. JUSTICE A. TWINOMUJUNI, JA. CORA]VI:

# CI\IIL APPE,AL NO.30 OF 1999.

### BI'TWEEN

# CHARLES LWANGA:: APPELLANT AND CENTENARY RURAL DEVELOPMENT BANK::::RESPONDENT

(Appeal from the Judgmenl and Orders of the High Court (Byamugisha J.) given on 12/5/98 in HCCS No. 887/96)

### JUDGN,IENT OF G. M. OKELLO JA,

This appeal is against the judgment and orders of the High Court (Byarnugisha J.) given on l2l5l98 in High Court Civil Suit No. 887 of 1996

The appellant had sued the respondent in High Court Civil Suit No. 887 of I 996 seeking general damages, special damages of 2l million shillings and exemplary damages for wrongful dismissal, false arrest, unlawful detention and malicious prosecution. He also sought interest on the alnount claimed and costs of the suit.

ln its written statement of Defence, the respondent filed a counter claim in which it sought to recover Shs. 5,576,987 being principal and interest allegedly loaned to the appellant. At the beginning of the trial, the respondent admitted liability and offered to pay a sum of shillings


15,535,2651= as special damages. Upon that admission, an interlocutory decree was entered in favour of the appellant for that amount. Hearing proceeded to determine the balance of the special damages and to assess the quantum of general and exemplary damages.

At the close of the trial, the trial judge rrade the following orders:-

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- The appellant did not prove any further special damages beyond that admitted. t. - Sh. 15,535,265l: to carry interest of60lo per annum from date of filing the suit till payment in full. 2 - Two million shillings as exemplary damages against the the respondent. 3 - Five million shillings as general damages against the respondent. 4 - 5. Taxed costs ofthe suit in favour ofthe appellant

There was no ruling on the counter claim. The appellant was aggrieved by orders Nos. I , 2 (as regards the rate of interest) and failure of the trial court to rule on the counter-claim. Hence this appeal.

There are three grounds ofthe appeal, namely:-

(l) The learned trial judge erred in law and fact when she wrongly held that the appellant was not entitled to

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special damages because he had no basis for his calculation.

- (2) The learned trial judge further erred in law when she failed to dismiss the counter-claim. - (3) The learned trial Judge erred in law when she failed to award interest from the date of dismissal to the date of institution of the suit.

The appellant sought from this court orders that:-

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- (D the order of the High Court for special damages be varied to include a higher award of 13,544,200 (Shillings thirteen million, five hundred forty four thousand two hundred only). - (ii) The counter claim be dismissed with costs in favour of the appellant. - (iii) This court makes an award of interest on the principal sum for the period prior to the institution of the suit. - (iv) Costs ofthe appeal be provided

The appellant's complaint in ground 1 above is that the trial judge erred in holding that the appellant did not prove any further special damages beyond that admitted Mr. John Matovu, learned Counsel for the appellant, adopted his argument in the trial court. The gist of that


ilgument is that the appellant testified on his own behalf as (PW). called the evidence of Masaba William PW2, also a former employee of the respondent and adduced exhibit P4, supposedly the respondent's salary schedule showing the salary scale and allowances for each member of staff. In counsel's view, the above evidence was not controverted as the respondent called no evidence. He dismissed Exhibit D2, the respondent's salaries scales, admitted in evidence by consent of both parties for comparison with Exhibit P4, as forged.

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Mr. Kakuba, learned counsel for the respondent, also adopted his arguments at the trial. The substance of his said arguments is that exhibit P4 on which the appellant based the calculation of his special damages was not authentic as its source was not certain. In his view, the trial judge was right to have believed exhibit D4 instead of the unauthenticated exhibit P4

The trial judge dealt with this issue in her judgment in this way:

Kasekende Musuz.i Vs. Centenorv Rural Development Bqnk, HCCS No. 812/95 where the court used exhibit P4 and disregarded the schedule of the bank. He therefore claimed that there is good reason for the defendant to "ln their submissions both counsel persuaded court to rely on their respective documents. I have had opportunity to look at both documents that is exhibit D2 and exhibit P4. At the time both documents were issued, the plaintiff was no longer an employee of the bank. In his testimony, he stated that he got tlre scales from his friends in the bank. Counsel for the plaintiff in his submission referred court to the case of

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prepare forged documents and he invited court to treat exhibit D2 as useless. Counsel for the defendant however urged court to ffeat exhibit D2 as authentic. He submitted that it is highly unlikely that an organisation like the defendant bank would give verbal instructions to PW2 to effect payment of salaries without putting those instructions in writing.

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Exhibit Dl and D2 are both certified copies of the original. They were tendered by consent for purposes of comparison with exhibit P4. When both scales are looked at, it becomes apparent that exhibit D2 was accompanied with instructions to all branch managers to effect payment of the revised emoluments for the staff of the bank. Therefore I do not accept the testimony of PW2 that he used to get verbal instructions. All correspondence in exhibit D2 appear to have emanated from the Personnel Manager, Principal Accountant and the General Manager all Principal Officers ofthe Bank. I am not persuaded that they forged the salary scales in order to defeat the plaintiff s claim. Admittedly the plaintiff was at a disadvantage in that when salaries were being revised, he was no longer an ernployee of the defendant and therefore had no access to official information of the bank but that alone does not entitle him to use documents and get damages that he would not otherwise get. Exhibit P4 shows that the figures contained therein were proposed emoluments for management staff. It therefore reasonable to conclude that the proposals were later made official in exhibit D2. The plaintiff in his testimony


admitted that some figures are similar and others are This might be an indication that the proposed different. emoluments were adjusted before being officially published by the defendant. Further more, the plaintiff's original plaint filed on $28/9/96$ contained a claim of over 19 million shillings as special damages. This figure was amended to over 30 million on $7/3/97$ and further amended to over 21 million. In my view this shows that the plaintiff did not have reliable information on which to base his calculation. All in all, I think the plaintiff has not proved the special damages strictly as the law requires and the figure admitted by his former employer should in all fairness be the correct figure."

I can not fault the learned trial Judge in the above manner she dealt with the issue. She considered and analysed all the evidence before her and gave reasons for rejecting one side for the other.

Mr. Matovu argued that the appellant gave evidence on his behalf, called the evidence of Masaba William PW2 and adduced a documentary exhibit P4 to support his claim while the respondent did not adduce any evidence in rebuttal. He submitted that since that evidence for the appellant was not controverted, the trial judge ought to have found that the appellant had proved his special damages beyond the amount admitted. With respect to the learned counsel, I do not agree with that argument.

Firstly, it is not true that the respondent did not adduce evidence. The salary scale exhibit D2 was adduced by the respondent and was admitted in evidence by consent of counsel for both parties. This is evidence. It

was considered together with exhibit P4 and other oral evidence adduced by and for the appellant.

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Secondly, it is not true that the evidence for the appellant was not controverted. The record shows that both PWI and PW2 were crossexamined on the two documentary evidence and both admitted under cross-examination that the two documents are different. Further, the credibility of these witnesses were also tested in cross-examination. Exhibit D2 was adduced to controvert exhibit P4 that was adduced on behalf of the appellant.

Thirdly, it is generally not the quantity of evidence that proves a fact but rather the quality of the evidence that matters. (See Section 132 of the Evidence Act).

In the instant case, the trial judge carefully analysed the evidence of PWl, PW2 and exhibit P4 and D2. Of all these, she found that exhibit D2 was more credible and believed it. She was entitled to do so. Counsel for the appellant did not show us where the learnedjudge went wrong.

I find no merit in this ground and would fail.

The next is ground 2. The appellant's complaint here is against the failure of the trial judge to rule on the counter-claim. According to Mr. Matolu, the respondent had filed a counter-claim in which it sought to recover a specified sum it allegedly loaned to the appellant. The appellant responded to the claim denying it. At the trial, the respondent adduced no evidence to prove that claim. Yet the trial judge made no ruling on the counter-claim. In Mr. Matolu's view, that was an error on


the part of the trial judge. She should have dismissed the counter claim with costs in favour ofthe appellant.

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Mr. Kakuba conceded that the respondent did not prove its counter-claim

It is trite that the rules of pleadings apply to a counter-claim and to <sup>a</sup> defence thereto as though they are respectively a statement of clairn and defence. (See Precedents of Pleadings by BULLEN AND LEHCE AND JACOB I/h Etttton p.14.

It is an elementary principle that the respondent had the duty to prove its claim in the counter-claim to succeed. As it adduced no evidence in proof of the claim, the trial judge ought to have made appropriate finding thereon. Unfortunately she did not. I think this was an error. There is merit in this complaint and the ground would succeed.

Finally, the appellant complained against the trial judge's failure to award interest on the principal sum from the date ofthe appellant's dismissal to the date of institution of the suit. Mr. Matolu argued that the 15,535,2651= adjudged in favour of the appellant as special damages attracted commercial interest for that period prior to the institution of the suit. In his view section 26 (2) of the Civil Procedure Act Cap. <sup>65</sup> empowers court to award such interest. He also cited Gulam Husein Vs. The French Soruali Land Shippins Co. Ltd. Il959l EA 25 nt 28 in support of that view.

In response, Mr. Kakuba contended that the issue of interest is a matter of discretion of the court. In his view, the lower court did exercise its discretion and awarded interest at the rate it deemed appropriate and

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applied it to the period it considered appropriate. He argued that in contract cases like the present one, where the parties agreed on payment of interest on the principal sum prior to institution of a suit, it should be followed. However, where there is no such agreement as it is in this case, no such award can be made.

The trial judge dealt with the issue in her judgment in this way:-

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"The question of 40% interest rate claimed in the plaint was raised by the defence. The contention here is that the interest is too high or that it is not awardable in cases of breach ofcontract. Section 26 (2) ofthe Civil Procedure Act provides:-

> 'Where and in as far 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 ofthe 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.'

The above provisions, I think gave court discretionary powers to award any rate of interest which it considers reasonable. I consider that interest of 40%o claimed in the

 plaint as unreasonable in the circumstances of this. I have not come across a case like the present one where such interest has been awarded. I consider the court rate of 60/o per annum a reasonable rate-------.

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The sum of Shs. 15,535,2651: which was admitted by the defendant will cany interest from the date of filing the suit till payment in tuII."

A proper construction of section 26 (2) would show that it empowers court to award three types ofinterests at the rate it deems reasonable:-

- (1) Interest adjudged on the principal sum from any period prior to the institution of the suit. Here, the court must first decide on the evidence, the question of awardability of this interest and then on the rate at which it is to be awarded if any. - (2) In addition to that, interest on the principal sum adjudged from the date of filing the suit to date of decree. Here, the court decides at its discretion which must be made judicially, the rate of interest to be awarded. - (3) Further to the above, interest on the aggregate sum so adjudged, from date of decree to date of payment in full.

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Gulam Husein (Supra) to which Mr. Matolu referred us does not seem supportive of his view. It seems to suggest that the question of interest prior to the institution of the suit is a matter of substantive law.

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"Ogus on the Law of Damages" at page 100 rationalises award of interest in two ways:-

- (l) that the plaintiff is thereby being compensated for being kept out ofhis money. He has been deprived of the use of his money from the time he incurred his loss. On that basis, interest is to run from that date. - (2) that the defendant wrongfully withheld the plaintiffs money. The emphasis here is on the defendant's wrongful withholding of the plaintiffs money. On that basis, interest is to run from the date when the defendant ought reasonably to have settled the plaintifPs claim. This is rather punitive.

It is clear from the above that whether or not interest is payable for the period prior to the date of the suit depends on the evidence available. That is why section 26 (2) refened to that type of interest as "interest adjudged".

In cases of wrongful dismissal, interest runs from the date of dismissal. BOLD VS BROUGH, NICHOLSON & HALL LTD. 119631 3 ALL ER 899 at 858 is a good example of this. In that case, Bold was employed by the defendant as a Managing Director. On 276, July 1962 he was summarily dismissed by the defendant. In October 1962 he sued the

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defendant for wrongful dismissal and sought inter alia damages for loss of eaming and interest thereon. Judgment was entered for the plaintiff and damages were later assessed. The rate of interest which was put at 5oh per annum was ordered by court to run from the date of dismissal.

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In the instant case, the trial Judge did not decide on the evidence before her whether interest was payable on the principal sum admitted for the period prior to the institution of the suit and if so at what rate. She only concerned herselfwith the rate ofinterest for the period from the date of the suit till payment. The evidence shows that the appellant was entitled to that amount had he not been wrongfully dismissed. He claimed a commercial interest of 40o/o because he would have invested the money if he had been paid earlier. I think that is speculative and does not justifu an award of a commercial interest. As he was denied the use of the money he was entitled to interest on it prior to the institution of the suit at <sup>a</sup> reasonable rate. I would put that at 20Yo it being the current Bank interest rate which I consider reasonable. This is to run from the date of his dismissal to the date of the suit. t/

Accordingly I find merit in this ground

In the result, I would allow the appeal in part. Grounds 2 and3 succeed. The orders of the lower court are set aside and for them substituted the following:-

> (l) The sum of Shs. 15,535 ,2651:, special damages which the defendant admitted shall carry:-

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- Interest at 20% per annum from the date of the $(a)$ appellant's dismissal to date of filing the suit. - The principal sum adjudged shall carry interest $(b)$ at 6% per annum from the date of filing the suit to date of decree. - In addition, the aggregate sum awarded shall $(c)$ carry interest of 6% per annum from date of decree till payment in full. - Counter-claim is dismissed with costs in favour of the $(2)$ appellant. - The respondent shall pay the appellant's costs of this $(3)$ appeal.

As Mpagi-Bahigeine, JA and Twinomujuni JA, both agree, the appeal is allowed on the above term.

Dated at Kampala, this .................................... $.2600.$

G. M. OKELLO

JUSTICE OF APPEAL.


## THE REPUBLIC OF UGANDA

## IN 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. TWINOMUJUNI, JA.

CIVIL APPEAL NO.30 OF 1999

CHARLES LWANGA. APPELLANT

### VERSUS

r0 CENTINARY RURAL DEVELOPMENT BANK LTD................. RESPONDENT (Appeat arising from Judgment of the High Couft of Ugand.l at Kanlpala (Hon. Lady Byamlgisha. J.) darcd l215/98 in Original HCCS No. 887/96.)

## JUDG F A. E. N. MPAGI. BAHIGEINE JA

<sup>I</sup>have read in draft the judgment of G. M. Okello, J. A. <sup>I</sup>am of the same opinion. However I would only make a brief comment on the issue of interest. ln principle interest should run only from the date (after accrual of the cause of action) when the plaintiff incurred the loss in question, but the Court has a discretion to fix a later date especially where the plaintiff has 20 unreasonably delayed in filing suit which we have not found to be so in this case. The Court is empowered under S.26 C. P. A. to award interest at different rates in respect of different periods.

ln business context under which Mr. Matovu sought to claim for the increased rale ol 4Oo/o, the court would adopt an approach which broadly reflects and represents the rate at which the successful party would have had to borrow the amount recovered over the period in question - Cremer v General Carmers S. A. 1974 W. LR 341. The appellant's cause of action which was


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rooted in unlawful arrest, wrongful dismissal and malicious prosecution can hardly be classified as business to attract such a high rate. I would therefore agree with the rate of 20% proposed by Okello J. A., from date of dismissal to the date of filing suit.

I also concur with the other orders as made by him.

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Dated at Kampala this $\frac{1}{2}$ day of $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\$

A. E. N. Mpagi-Bahigeine

$\mathcal{L}$ $\mathcal{L}$ $\mathcal{L}$

Justice of Appeal.

rooted in unlawful arrest, wrongful dismissal and malicious prosecution can hardly be classified as business to attract such a high rate. I would therefore agree with the rate of 20% proposed by Okello J. A., from date of dismissal to the date of filing suit.

I also concur with the other orders as made by him.

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$\begin{array}{c}\n\bullet \\ \bullet \\ \bullet \\ \bullet\n\end{array}$ Dated at Kampala this ....................................

A. E. N. Mpagi-Bahigeine

$\mathcal{L} \mathcal{L} \mathcal{L}$

Justice of Appeal.

### THE REPUBLIC OF UGANDA

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

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

### CIVIL APPEAL NO.30 OF 1999

CHARTES LEANGA IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII

#### VERSUS

CENTINARY RURAL DEVELOPMENT ::::::::::::::::::::: RESPONDENT BANK. LTD.

> (Appeal arising from the judgment of the High Court (Byamugisha, J.) dated 12/8/98 in HCCS NO. $877/96$ )

### JUDGMENT OF TWINCHURTE, J. A.

I have had the benefit of reading the judgment in draft of How. G. M. Okello, JA. I agree with the reasoning and the conclusion arrived at by him. I have nothing useful to add.

$\ldots \qquad \qquad \ldots \qquad \qquad 2000.$ Dated at Kampala this ...... day of ....

> W. TWINOMIJUNE JUSTICE OF APPEAL

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$\overline{\mathbf{1}}_{\mathbf{1}}\mathbf{1}_{\mathbf{1}}\overline{\mathbf{1}}_{\mathbf{2}}\overline{\mathbf{1}}_{\mathbf{1}}$ NUL COPY OF THE ORIGINAL