Muyanja Mbabali v Kato (Civil Suit No. 091 of 2008) [2014] UGCommC 229 (4 July 2014)


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**THE REPUBLIC OF UGANDA**

### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

### **(COMMERCIAL DIVISION)**

# **CIVIL SUIT NO. 091 OF 2008**

# **MUYANJA MBABALI PLAINTIFF**

#### **VERSUS**

**EMMANUEL KATO DEFENDANT**

## BEFORE THE HON. MR. JUSTICE HENRY PETER ADONYO

#### JUDGMENT

# 1. Background *10*

**/**

The Plaintiffs claim is brought under the provisions of **Order 36 Rules 2 of the Civil Procedure Rules (CPR),** These rules provide for initiating liquidated suits where general damages not being claimed to be done by way of summary are procedure'. The suit was filed in this court on the 10th day of ' ApriT2008: This easels ^classical one in that whereas Order

believe that this type of situation discourages to come to court yet they could have hoped for earlier settlement. 36 of the of CPR is over Six (6) long years to conclude. It appears that due several changes of advocates and judicial officers, the case lost its position and hence could not be concluded sooner than later. <sup>I</sup> intended to expedite proceedings in court, ;*...\* this particular suit turned out to be a serious backlog case as

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it may, the perusal of the pleadings in this mater show that the Plaintiffs claim as against the Defendant is set out in paragraph 4 of the plaint wherein the Plaintiff is alleging **10** that the Defendant borrowed a total sum of **United States Dollars Four Hundred Thousand Only (U. S. \$ 400,000)** from him the Plaintiff and has to date only partly repaid the loan remaining with a substantial amount. The plaintiff alludes that he tried all means to recover the said balance from the defendant in vain and thus he had to resort to court action. Be that as

## 2. Facts

From the record, it is the Plaintiffs claim that he lent the Defendant United **States Dollars Two Hundred and Twenty** Thousand (US \$ **220,000.00)** sometime during the month of


February 2007. *1/* pleadings was for the sum **United States Dollars Two Hundred and Fifty Thousand (US \$ 250,000.00).** The Plaintiff adds that this amount has so far been reduced leaving a total amount of United **States Dollars Two Hundred and Twenty Thousand (US \$ 220,000.00)** being owed and due from the Defendant. The original claim as gathered from the

The Defendant denies owing any money to the Plaintiff and contends that the Plaintiffs claim was not supported by any consideration, was illegal and contrary to public policy. The **1(9** Defendant adds that the Plaintiff was only gratuitously promised to be paid by the Defendant, some money by a disclosed principal called Ascot Associates ltd. And since the said payment was made, then the Defendant had discharged his obligation. **IS**

### Procedure.

matter, parties filed a Joint Upon the defendant being allowed to file his defence in this eventually filed a Scheduling Memorandum and proposed three issues for resolution which ' • was adopted by this Honourable Court..

firstly that the Plaintiff and Defendant previous to this suit were involved in a business transaction and secondly that the 2007 and 2008. The parties also agreed to two facts summarised to the effect Defendant paid some money to the Plaintiff between period

### **3. Issues**

The issues which were formulated for resolutions were;

a. Whether the Defendant borrowed money from the plaintiff?

b. Whether the Defendant is indebted to the Plaintiff? , and

c. What remedies available to the parties? **/o**

They are discussed individually and appropriate findings made thereat.

# **4. Issue No. <sup>1</sup> of whethertheDefendant borrowed**

### **money from the Plaintiff?**

Defendant. This is as found in Paragraph 4(i) of the of the plaint where it is shown that the Plaintiff, a Mr. Muyanja Mbabaali lent to the Defendant Mr. Emmanuel Kato **United** States Dollars'Foiik' Hu: It is the Plaintiffs case arising from his pleadings that the <sup>I</sup> Plaintiff lent money in United States currency to the

aforesaid amount of money, the Defendant issued to the Plaintiff a cheque. The cheque in question for the value of **United States Dollars Two Hundred Three Thousand only** part to both the Plaintiffs and Defendant's witness' statements and is dated 5th February, 2007. It is marked **Annexture <sup>A</sup>** in both instances. *\O* to enable the Defendant carry out business. The Plaintiff further adds that on the day when the Defendant was give the **(US** \$ **203,000.00)** originating from the Crane Bank Ltd. It is on record as he said amount was said to have been given to the Defendant

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My reading of the pleadings and interpretation and indeed the submissions made by the parties in this matter show that fact of the Defendant issuing to the Plaintiff of the said cheque as matter rely on the same document in support of their case. *1\$* The record, however, do not only disagree on the fact of lending of the money but also disagree on. the purpose for which money was paid by the Defendant to the Plaintiff. The analysis of each piece of evidence on record is therefore non contested matter. Indeed, the two parties before me in this

important. **. Tr hr . -.o**

*<sup>o</sup>fthe Laws <sup>o</sup>f Uganda,* **Section <sup>26</sup>** of which states that; / The first piece of evidence which is relied upon by each of the / party before me is the cheque. It is an undisputed fact that the defendant issued the Plaintiff the cheque. The legal position of <sup>a</sup> cheque is provided by *The Bills <sup>o</sup>f Exchange Act Cap <sup>68</sup>*

**3**

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*"A holder of a bill is a holderfor value and a cheque is sufficient consideration for a simple contract, debt or liability."*

satisfy one or all of the ingredients stated above. This could be to pay a debt, make a simple contract or extinguish a liability. The account of each party relating to the issuance of the said The defendant on the other hand states that the cheque was who had entered a business transaction with that company after business hac. failed. cheque differs. The plaintiff states that von the date he gave the Defendant the loan, the defendant gave him the cheque. /J5 Arising from the legal provision above, the presumption would be that the Defendant issued the said cheque to the Plaintiff to <sup>I</sup> *0* given to the Plaintiff on behalf of the Company which is named on the cheque to fulfill a gratuitous payment to the Plaintiff

Muyanja Mbabaali, the Plaintiff testified to the fact that Mr. Emmanuel Kato, the Defendant gave him the cheque on the date when on the date when the loan was given. Emmanuel Kato concedes on issuing the cheque but adds that the cheque was issued to the Plaintiff by the Defendant on behalf of a company called M/s Ascot Associates Ltd. and that the purpose for issuing the cheque was to gratuitously ameliorate the losses Mbabaali had incurred in a botched business transaction with the said company. *10* **/ <4.0** / The facts <sup>a</sup> garnered from the evidence on record is that Mr.

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Mr. Kato further denies any wrong doing at the time he issued if he signed and issued the cheque to the Plaintiff, it was done on behalf of M/s the Plaintiff conceded fact in cross examination when the Plaintiff conceded not have ever received a personal cheque from the Defendant. legal personality from him who is company. This very fact, Mr. Kato states was even conceded by the cheque to the Plaintiff arguing that even Ascot Associates Ltd which is company which had a separate a shareholder in that /J3\*

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burden of proof to the Plaintiff to show to court that that when the Defendant issued the cheque it was for repayment of a loan and not otherwise. **Sections 101 - 103 of Evidence Act.** Provides and <sup>I</sup> quote; / From this denial it is clear that the Defendant shifted the

# *Section 101. Burden ofproof.*

**/**

*right or liability dependent on the existence offacts which he or she asserts must prove that those facts exist?" "(1) whoever desires any court to give judgment as to any legal*

*10 "(2) When a person is bound to prove the existence ofany fact. It is said that the burden ofprooflies on that person."*

*Section 102. On who burden ofproof lies.*

*"The burden ofproofin a suit or proceedings lies on that person who would fail ifno evidence at all were given on eitherside."*

*Section 103. Burden ofproof as to particularfact.* **/r**

*who wishes that court to believe in its existence, unless it is "The burden ofproofas to any particularfact lies on that person provided by any law that the proof of that fact shall lie on any< particularperson"*

why he personally paid cash amounting to **(United States** company payment documents or even stamp impressions that those payments were cheque which is in the names of the Ascot Associates Ltd, all behalf of M/s Ascot Associates Ltd since he never produced any power of attorney nor even explain to the court defendant failed to rebut the plaintiff's contention that when he received the said amount of money from the Plaintiff he did his testimony urged court to find that the Defendant had no defence the Plaintiff's claim since the Plaintiff without mentioning at any one payments to the Plaintiff were made by the Defendant in his no where he states that he was so on so, the Defendant gave various acknowledgements to the time either through / *Q* find this argument of the Plaintiff very convincing. From the evidence, it is true that all the documents, apart from the *\\$* **Dollars, One Hundred and Eighty Thousand)** and in doing being made by ' and on behalf of a The Plaintiff in company called Ascot Associates Ltd and not by himself. <sup>I</sup> personal capacity. I find making those payments on behalf of Ascot Associates Ltd. The repayment's to "the Plaintiff where either made by Mr. Kato ^<5^

*/* himself or through his known associates such as a one Bob Kasango or a Godfrey Mwesigwa. The association of Mr. Kato with these persons was never rebutted at all.

My considered view is that first and foremost the Defendant received money from the Plaintiff but changed goalposts when it came to refunding it and then started alluding to other facts that it was the company responsible yet this is not borne by any iota of any evidence at all. In fact my view is that he intended not repay the money given to him after taking for granted his friendship with the Plaintiff and actually used the $\mathcal{L}$ company cheque as a façade.

It clear that the so called company was never involved in any of the borrowings since there is no authority or even any document to show that the company by resolution agreed to borrow or even enter into any business transaction with the $15$ Plaintiff. any borrowing must be approved by a board of such a company with a clear resolution to that effect. Even if I were to believe that indeed there existed a partnership, this appears to have been by word of mouth. No partnership deed or any document was produced in court to show the existence of any

*6* receiving money from the Plaintiff, gave the Plaintiff a cheque belonging to This is borne from the fact that matters were even referred to police. such even the cheque bounced and a company to dupe the plaintiff of his money. partnership. The record speaks for itself. It is indeed factual to deduce that the Defendant having admitted to

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Indeed what I find intriguing is that, if, as the defendant would want this court to believe, that he never took any in loan from the Plaintiff then why would the same Defendant take it upon himself to repay or even make his so called make *w* any gratuitous repayment if not only because he personally took the same.

The defendant's testimony to the fact that his company Plaintiff and made a gratuitously refund. This is unbelievable so? Partners enter into a business they do so with a view to a conducted a business with the Plaintiff and upon business collapsing and then the company sympathized with the garbage. How would a partner in a business take upon himself to ameliorate the losses of the other if really they were indeed

profit and when profits are earned they share and when losses are made each partner bear the losses

From the above it is my finding that indeed money changed hands between the Plaintiff and the Defendant who even undertook to repay the same personally and repay some and failed to pay the rest and he is personally responsible.

# 5. ISSUE No. 2 of whether the Defendant is indebted to the Plaintiff?

Having made my findings above, I now turn my attention to the next issue of whether indeed the defendant is indebted to ro the Plaintiff. This issue is clearly answered in the positive. The Defendant admitted to having issued a cheque to the value of United States Dollars Two Hundred Three Thousand during cross examination which cheque he admitted bounced and he categorically answered that since he had he had re-paid to the 15 Plaintiff, United States Dollars One Hundred and Eighty Thousand (US\$180,000) his debt to the still remained at the figure of United States Dollars, Twenty Three Thousand Only (US $$ 23,000$ )!

This clear admission of **versus** The **Open University Of Tanzania (High Court of Tanzania, Commercial Division)** cited in **(2008) <sup>1</sup> EA 81** where *the learned Justice Werema stated at page 83 that "...the acknowledgment has been made of a partial claim... the status of the acknowledgement. will entitle <sup>a</sup> party to IV* a partial claim goes to the root of this *court once it is satisfied that an a judgment on admission. "* case as once a party admits to a debt partially then that party is to be held liable to pay that debt which is admitted. This position is in synch with the holding in the case **Colorprint (T)**

In the instant matter, the Defendant did make an admission to owing the Plaintiff the sum of Twenty United States Dollars, defendant liable to pay this amount. Twenty Three Thousand only (US\$ 23,000). I would find the

The remaining contention is on the issue of whether the Hundred **and Twenty Thousand (US \$ 220,000.)** in total. In Defendant owes the plaintiff **United States Dollars, Two** this regard, the plaintiff submitted a copy of a reciept acknowlwding reciept of United States Dollars Fifty Thousand ^"3\$

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Only (US \$ 50,000) which is **Annexture "C"** dated $25^{th}$ October 2007. The said acknowledgement signed by both the Plaintiff and the Defendant states that Plaintiff recieves United States Dollars Fifty Thousand (US \$ 50,000) from the Defendant in partial fulfillment of the indebtedness bringing the amount so far paid to US \$ 150,000, the balance being United States Dollars, Two Hundred and Fifty Thousnad (US \$ 250,000). The said acknowledgement was signed and counter- signed by both parties. There is no doubt of this fact 10 since even the Defendant relies on this very **Annexture "C"** of the Plaintiff' witness statement among others to prove to court that he paid to the Plaintiff United States Dollars, One Hundred and Eighty Thousand. These payments were either made by himself or his known associates. My finding in the last Issue No. 4 above clearly make the Defendant personally $15$ liable to pay the balance out of the amount he received from the Plaintiff and that balance is indeed as stated above. This decision is clearly in line with the provisions of Section 114 of the Evidence Act which states that, "when a person by his declaration, act or omossion, intetionally causes


*permits another to believe upon that belief, neither he representatives are permitted in any suit or proceeding to deny the truth ofthat thing". a thing to be true and to act or she or her or his*

This said position was well elaborated in the case of **Yonasani Kanyomozi versus Motor Mart SCCA No. 15 of 1995,** where their Lordships, while defining the Principle of estoppel stated *litigation as in certain circumstances is prevented from denying something which he had previously asserted to 10 be true".* that; *estoppel is a rule of evidence where a party to*

My finding is that this very reliance document estops the Defendant from severing part of this very document to his own advantage by claiming that the part of it written in ink was forged. The plaintiffs clarification of the *\* examination the actual outstanding balance he was claiming as against the Defendant and while the defendant denies any debt at all, the Plaintiff brought evidence to prove the fact that on the said same error on the record is believable he clarifies in cross

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following <sup>a</sup> criminal **/** case of issuing a bounced cheque, he settled the matter by paying U. S.\$ 180,000

The payments were as below;

- on 14th September 2007 (Annexture "B" to the Plaintiffs witness statement) • U. S. \$ 80,000 - U. S.\$ 50,000 on 25th October 2007 (Annexture "C" to the plaintiffs witness statement) - plaintiffs witness statement) on 7th January 2008 (Annexture "D" to the • U. S.\$ 50,000

The total settlement was U. S. \$ 180,000. **10**

It is true that under the Penal Code Act, a signatory to a bounced cheque is criminally liable but in civil law there is no liability. It is up to the payee sue the drawer in a civil court for the value on the face of the cheque.

<sup>I</sup> find that the plaintiff has made *15* Defendant owes him money and I hold so. a clear case that the

# **6. Issue Three: What Remedies Are Available To The**

## **Parties?**

The Plaintiffs prayer is that the Defendant pays him the outstanding balance on the loan sums amounting to **United**

3. The Defendant will also meet me costs of this suit. Court of Uganda These orders are made at the High Commercial Division at Kampala this 4th day ofJuly 2014.

**Henry Peter Adonyo**

**Judge**

*CERTIFIED^ •* 30 JUL 20h REGISTRAR <sup>C</sup>OMMERCIAL *"* . RT

## THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA **COMMERCIAL DIVISION** CIVIL SUIT NO. 91 of 2008

**MUYANJA MBABALI**

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**PLAINTIFF**

#### **VERSUS**

**EMMANUEL KATTO**

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**DEFENDANT**

## DECREE

This suit coming for final disposal before His Lordship, Henry Peter Adonyo, this 4<sup>th</sup> Day of July, 2014 in the presence of James Katono of Counsel for the Defendant and in the absence of Counsel for the Plaintiff.

#### IT IS HEREBY DECREED as follows:

Judgment be and is hereby entered in favour of the Plaintiff against the Defendant for:

a) United States Dollars Two Hundred and Twenty Thousand (US\$ 220,000)

b) Interest on (a) above at the rate of 11 % p.a from date of Judgment until payment in full

**CFS**

c) The Defendant pay costs of the suit.

**SUFIED**

GIVAN al KAMPALA under my hand and the Seal of this Honourable Court this dav of 2014. RÉGIS

DRAWN & FILED BY: **M/S BITANGARO & COMPANY ADVOCATES** KISOZI COMPLEX, ANNEX BUILDING 2<sup>ND</sup> FLOOR, PLOT 6/8, NAKASERO LANE P. O. BOX 7898 KAMPALA.