Ssenyonjo and Another v Stanbic Bank Uganda Limited (civil suit no. 4/2015) [2015] UGCommC 298 (22 June 2015)

Full Case Text

# *THE REPUBLIC OF* UE/ANPA

# *IN THE HIGH COURT OF UGANDA AT KAMPALA*

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### *COMMERCIAL DIVISION*

*SSENYONJO MOSES AND NAKIBUUKA NUSULA. PLAINTIFFS*

*VERSUS*

*STANBIC BANK UGANDA LTD DEFENDANT*

*BEFORE THE HON. MR. JUSTICE HENRY PETER. ADONYO:*

#### *JUDGMENT:*

## *1. Background:*

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*formal* 2-0% *Th. Plaintiffs in th. gear zooq t0 buy for pUrp0S.S. They did not at th. tim. hav. sufficient funds for th. parchas. of th. buses and that sought financial assistance* frow fA *th. Pefendant. Th. pedant intimated through its agents/employees to th. Plaintiffs that such financial assistance could be provided upon th. parties entering into a agreement wherein th. Plaintiffs would be repaired to contribute of the purchase price and then the Defendant would* |5 *advance 8O7o to the Plaintiffs which they would be required to repay off from the proceeds from the operation of the buses As a result of the assurance, the Plaintiffs made the formal 1:Illiterates Judgment Protection on a leaseActfacility beforesecured the Hon.through Mr. Justice falsehood HenrytoPeter the detriment Adonyo; June ofpersons 2015. o t the / J*

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*application for the facility as is evident from the Plaintiffs-Exhibit PE* 3 *and. a formal lease letter Exhibit PE4 was then i^aed and the parties signed it as an agreement to that effect. The Plaintiffs proceeded to pay their* 2.0% *contribution and the Defendant made available the* 80% *advance which enabled the two buses to be bought and were handed over to the Plaintiffs on the 17th day of February 2-010. The Plaintiffs then started operating the two buses for transport and regularly made cash deposits into the bank, account held at the Defendant bank, in with a view to reducing the 807° advance by the Defendant |0 bank. However time came when the Plaintiffs were unable tomake the monthly remittances into the said account forcing the Defendant to impound the buses. This act led the parties into negotiations with eventual conditional release of the buses to the Plaintiffs. However, this situation was reversed again upon the allegation that the Plaintiffs had once more failed to comply with the conditions set by the Defendant and Defendant then later sold off the buses, a process which made the Plaintiffs aggrieved thus this suit in which they brought jointly against the Defendant for orders that the leasing agreement and all other 2jO related documents executed between themselves and the Defendant be declared unenforceable for being a nullity on the*

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basis that the they were illegal and thus entitling them to a refund of all the monies paid arising from the unfair, oppressive and unenforceable leasing agreement.

The Plaintiffs in the alternative but without prejudice sought the court's declaration that by the Defendant impounding the buses $5$ which formed the subject matter in regards to the lease. agreement and then proceeding to sell them without notice as illegal, null and void and if so then the court should orders that the Defendant pay them general damages, interest at the commercial rate of 28% per annum as from the date of 10 impounding the buses till payment in full in addition to the Defendant being ordered to produce account statements in respect of those buses as well as made to pay the Plaintiffs the loss of anticipated earnings from the same date and costs of the suit.

2. Issues for determination:

**Call Control**

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- a) Whether there was a valid contract between the parties. - b) If so, whether the plaintiffs breached the contract - c) Whether the impounding and sale of the buses by the defendant was lawful - d) What remedies are available to the parties

3: Judgment on a lease facility secured through falsehood to the detriment of persons protected by the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

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# 3' *Whether* tfx&re. *was a valid, contract between the, parties:*

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*Pwl Senyonjo Moses told coart that some time in 2.00% the staff of the Defendant travelled to and passed through Jinja town in van which had a public address sgstem and went around informing* . *the public that the Defendant had developed a product in form of a credit facility which could be granted to potential borrowers to purchase buses, lorries and tractors. That he got interested as result of the advert and thus approached the Defendants' Jinja branch seeking to learn more about the facility and there he was orally informed by the Defendants officials who )O thereafter gave him application forms to fid but since he could not do so the same Defendant's officials themselves filled them and he was asked to sign the forms which he did and thereafter informed that the forms would be sent to the head office of the Defendant in Kampala for consideration. The witness state that after sometime, the Defendant officials went to his shop and informed him that the application was successful and invited him to their Jinja branch to sign other papers relevant to the project which were all in the English language, a language was alien to and was not even given a copy of the same neither did the bank* 2(9 *officials translate them into Luganda, the language he was well versed in but only informed him that the papers he was signing*

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were in regards to obtaining buses through the bank's credit scheme of which he was advised to pay 20% of the cost of the two buses which he did and even obtained receipts and he was told the Defendant would pay 80% cost for the buses which money he would repay in accordance from the proceeds of $5$ operating the buses. That the bank gave him a lease offer written in English which he signed upon advice by the bank staff which however was not translated into the Luganda, a local language which he was well versed with but that the loan process was then finalized by the bank who paid a supplier the 80% and he 10 was eventually handed the two buses again after signing another set of documents all drawn in English which documents were retained by the bank. This witness state that he signed the documents on the understanding that the said documents were authority for him to obtain the buses and indeed on the $17^{th}$ is February the Defendant handed to him two buses and thereafter he embarked on the business of transport immediately and even started repaying to the bank the 80% loan from the income generated out of the operation of the two buses with the Defendant raising no issues until August 2010 when it 20 impounded the two buses and on his inquiring as to why the buses were impounded he was informed that his repayments had

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gone into arrears which arrears he was required to pay before the buses could be then be released to him. That it was at this point that he was showed the lease letter of offer which. contained the terms of repayments and this is Exhibit P.4 which. shocked him for this was first time that the Defendant was $5$ showing him the copy of the same but nevertheless he complied and paid all the arrears in question and thus on the 24th day of August 2010, the Defendant released the two buses to him by way of a release letter Exhibit P8 but the defendant again impounded the buses on the $2^{nd}$ day of February 2011 and $7^{th}$ 10 March 2011 respectively without notice or warning which made. the plaintiffs to incur difficulties in repaying back the due sums to the bank and was only shocked to learn from the Defendant wrote informing them that the buses had been auctioned at Shs. 190 million and Shs. 120 million respectively and at the same $15$ notifying them of the obligation to pay a sum of Ug. Shs. 113, $108,802/-$ as the balance on the loan account for the two buses yet according to PW1 the two buses were sold at below their market values to his disadvantage for he had proof as shown by Exhibit PE 11 that their values were to the tune of over Ug. Shs. 20 225 million per bus adding that the Defendant clearly took advantage of his illiteracy to mislead him into a venture which

6: Judgment on a lease facility secured through falsehood to the detriment of persons protected by the 6: Juayment of Bernment of Person. Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

was not profitable to him at all leading to his suffering substantial loss due to non earnings as a result of the impounding of the said buses. He insisted that he was not well acquainted with the English language which language the bank documents. were written in made and stated that at the time when he $5$ signed the said documents it never occurred to the Defendant to get somebody to interpret those documents for him but that the Defendant officials merely asked him to sign the said documents making him to fail to appreciate the transaction he was involved. in with the Defendant only to realise the facade at the time $10$ when the buses were impounded forcing him to instruct his legal. counsel to write to the bank to query its conduct for even during the filling of the relevant forms, it was the Defendant's officials who filled in the forms for him and merely told him to sign the same without appropriate explanation to him. This witness 15 confirmed that he only operated the buses for a period of six months and during that period he repaid a total amount of Ug. Shs. 167 million which money he would wish refunded to him for the Defendant interfered with his business when it took away the buses before the period for which the lease facility was 20 granted had not yet expired.

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In re-examination, this witness confirmed to the court that he did sign many documents but the same were not read back to him in the language he understood and that clarified that before the buses were impounded he was not in the know that he had defaulted on any of the agreed lease repayment installment $5$ even if he used to write letters to the bank in English but he would dictate the same in the Luganda language first translated before they could be translated into English by whoever was a typing him the letters vowing that had he been made aware that the buses belonged to the bank then he would not have signed jo the loan agreement from the very beginning.

The second plaintiff's witness Nakibuuka Nusula (Pw2) informed the court that PW1 contacted the Defendant for technical advice on the possibility of taking a lease facility for the purchase of buses as the Defendant was his bankers and the Defendant 15 through its employees advised PW1 to raise 20% of the purchase price with the remainder of 80% to be topped up by itself with the repayment of the top up to depend on the operations and earnings accruing from the operation of the said buses. This witness affirmed that on 6th August 2009 the Defendant issued 20 to the Plaintiffs lease offers written in English which she also participated in signing upon being advised by the Defendant's 8: Judgment on a lease facility secured through falsehood to the detriment of persons protected by the $\zeta$ 8: Juagment on a security of person. Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonya; June 2015.

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sit faw**fe#** *and confirmed that those, documents* were *not translated to ^&r into the Luganda , a language which she understood well hut that she merely signed the documents on the understanding thatthe Defendant was authorizing the Plaintiffs to obtain the buses ^d indeed on the 17tk day of February, 2.009 the buses wereS~ handed to the Plaintiffs and were immediately put on the road for passenger transport business and even repayment for the loan back to the bank began according to the income generated from the buses and that this state of affairs continued until August 201-0 when the two buses were impounded without the Defendant raising any alarm but when PW1 when to the Defendant to inquire what was amiss he was informed that he was in arrears in terms of repaying for the buses based on the documents containing the terms and conditions regarding the loan scheme which matter shocked the Plaintiffs for they getting to know of that status quo then but nevertheless PVJl- paid the arrears in question and the Defendant thus released the buses to him and he began re operating them until the Defendant impounded the buses again and it is from then on that PW-l found difficulties in re paying the loan only to be consternated D-V with the news that the Defendant had since sold the buses at \$hs million shillings and Shs. 1-2-0 million respectively and*

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PW1 being notified that he had an obligation to pay a sum of. shs.113,108,802/- as the balance on his loan account.

This news shocked PW2 also and she further corroborated the fact as stated by PW1 that the two buses were sold at belowtheir actual values to the detriment of PW1 since the buses had $5$ values of Shs. 225 million each and this witness was certain that. the Defendant took advantage of PW1'S illiteracy into misleading him to get into a venture which resulted to great losses to him due to lost earnings. When asked as to her status of education, this witness confirmed to the court that she stopped in Primary 10 three and that she was together with PW1 when PW1 went to borrow money from the Defendant with the Defendant's officials pulling out several documents with some explanation and asking them to sign them for the intended acquisition of the buses on loan for which they were to repay and that that was exactly is what they did for she was involved in the operations of the buses but never was not involved in the negotiations with the bank after the buses were impounded.

That was the Plaintiff's case.

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The Defendant through its witnesses especially DW3 informed 20 the court that the it offered a finance lease facility and insurance

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$264$ PW1 being notified that he had an obligation to pay a sum of. shs.113,108,802/- as the balance on his loan account.

This news shocked PW2 also and she further corroborated the fact as stated by PW1 that the two buses were sold at below. their actual values to the detriment of PW1 since the buses had $5$ values of Shs. 225 million each and this witness was certain that. the Defendant took advantage of PW1'S illiteracy into misleading him to get into a venture which resulted to great losses to him due to lost earnings. When asked as to her status of education, this witness confirmed to the court that she stopped in Primary ID three and that she was together with PW1 when PW1 went to borrow money from the Defendant with the Defendant's officials pulling out several documents with some explanation and asking them to sign them for the intended acquisition of the buses on loan for which they were to repay and that that was exactly $15$ what they did for she was involved in the operations of the buses but never was not involved in the negotiations with the bank after the buses were impounded.

That was the Plaintiff's case.

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The Defendant through its witnesses especially DW3 informed 20 the court that the it offered a finance lease facility and insurance

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*they did /* P^ekvnuhA *facility to the Plaintiffs for the purchase of two brand* new *Scania* F114 47 *s&ater bases and indicated that throughout the said transaction the Plaintiffs never informed or intimated to it that they were illiterate in English and did not know the contents of the lease letter with the buses being bought and//' handed to the Plaintiffs on 3.7th day of February 2-03-0 but they defaulted in payment of the facility and were accordingly informed of this default in order to remedy it but when the they failed to remedy the situation., the Defendant instructed M/s Armstrong Auctioneers to impound the same buses inlQ accordance with the lease agreement with this taken action accordingly relayed to the Plaintiffs as seen from Exhibit DEX* 8 *and after that the Plaintiffs wrote to the Defendant's Manager Collections in English admitting knowledge of the default and agreeing to deposit Ug. Shs. 22,000,000/- immediately which as per Exhibit DEX* 7 *and at the same the buses were released to them but yet again they defaulted with the buses once again being impounded on 3-^ day of December 203-0 waiting resale but that on the ^th day of February 2O3-3-, the Plaintiff wrote to the Defendant in English as per Exhibit DEX seeking the restructuring of the loan in order to meet their payment obligations and thereafter meetings were held by the*

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parties on how the outstanding amounts could be recovered. which proved fruitless and thus the buses were auctioned. following an advert in the New vision Newspaper of the 1st dayof March 2011 and the 14th day of March 2011 as shown by Exhibits DEX 4 and DEX 5 and that the Plaintiffs were 5 informed that the buses had been auctioned as per Exhibit DEX. 3 accordingly. This witness confirmed, however, to the court that he was not present when the facility was being made into an agreement but insisted that PW1 never informed the Defendant that he did not know English though that he IO conceded that under the Bank of Uganda issued Customer Charter it was a requirement that all facilities provided by banks supervised by it had to be translated and also simplified to intended beneficiaries of such bank facilities before execution this was never done in the case of the Plaintiffs as their file in respect $5$ of the impugned transaction showed and even when the buses were impounded the letter written by PW1 DEX 7 was though written on his behalf was never signed by him. This witness also confessed that at he himself never gave any notices to the Plaintiffs in relations to the transactions but that other unnamed 20 Defendant's officials did. Witness further admitted that though the Defendant's exhibit DEX 12 showed all the repayments made

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by the Plaintiffs in regards to the buses Ug. Shs. 22 million admittedly repaid by the Plaintiffs was not shown on it proving that indeed the defendant's exhibit DEX 12 was not complete thus not having all the transactions made in regards to the buses and thus could not prove the actual balance in respect to that $5$ account.

That was majorly the defendant's case.

The issue here is therefore whether the Plaintiffs understood the $\mathcal{L}$ documents they signed and thus are bound by them. There is disagreement on each side in respect to this point with the 10 Plaintiffs stating that because the documents they signed were in. the English language not binding on them while the Defendant insisting that firstly the Plaintiffs never indicated to it that they were well versed in the English language and more so communicated with the Defendant in the same language making 15 it presumable that they did and were well versed with the said language and thus were bound by the terms of the lease facility agreement.

Since the Plaintiffs plead illiteracy, I will have to revert to the position of the Law in regards to illiterates. Section 3 of the $20$ Illiterates' Protection Act provides and I quote;

13: Judgment on a lease facility secured through falsehood to the detriment of persons protected by $\frac{1}{2}$ : Judgment on a lease facility secured the Hop. Mr. Justice Hope is $\frac{1}{2}$ . 15. Junymont of Peter Adonyo; June 2015. the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

*Any person who shall write any document for on at the request, on behalf on in the name of any illiterate shall also write on the document his on hen own tnue and full nanne os the wniten of the document and his on hen tnue and full oddness, and his on hen so doing shall imply a statement that he on she was instnucted to write the document by the*. *person fon whom itpunponts to have been written and that it fully and connectty nepnesents his on hen instructions and was nead oven and explained to him on hen. "*

**o** *This position of the taw was clarified further by Supreme court in jb> tri case of Kasaala Growers Co-Operative Society versus Kakooza and another SCCA No. 1A of 2010 where the held that an illiterate person cannot own tri contents of a document when it is not shown that they were explained to him or her and he/she understood them.*

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Thus *relating tris position of tri law to tri instant matter, it !\$ tri evidence of PW1 trit he is a primary four serial dropout wri was lured by tri staff of tri defendant sometime inZOOa wri called upon members of to take advantage of a credit facilities it was offering to acquire assets suck as buses, lorries <^q and tractors with that prompting making PVJ1 to go to tri defendant's JirjA branch and upon making the necessary . n a leasefacility secured through falsehood to the detriment ofpersons protected by A .s'* 14; *Ju^gme^s ^rotection Act before the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

consultations was made by the staff of the defendant to sign application forms which the very officers of the Defendant themselves filled and only asked PW1 to sign and thereafter he. was informed that the forms would be sent to the Defendant's head office in Kampala for consideration and later those very $5$ staff of the Defendant went to his shop and informed him of the success of his application and thus invited him to the Jinja branch to sign other papers relevant relating to the facility which he did and PW1 insisting throughout his extensive cross examination that since the documents were in the English IO language of which he was illiterate in, the Defendant's officials. neither translated the documents into Luganda, a language which he understood nor gave him a copy of the same but only merely assured him that those very papers were about obtaining his obtaining the buses he had applied for through the lease $\frac{1}{5}$ facility for which he had to make a down payment of 20%. The Defendant insisted that since PW1 communicated to it as shown by exhibit $EX D$ 7 in the English language which document he personally signed thus indicating that he was well versed with the English language, this position was not found worthy for 20 DW3 changed his position when he agreed that indeed EX D $7$ was signed for PW1 and not by PW1 himself though written by

15: Judgment on a lease facility secured through falsehood to the detriment of persons protected by to: Judgment of Dersons p the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

on tAe *said document as behalf of PVJ1- thus* ^jha as *indeed there* are some imprints *PP meantng that someone signed on oonftrmmg the fact that pwl did not personally sign the said document this tended to corroborate PWl'S testimony in that throughout his evidence giving , he maintained the position thatff the staff of the Defendant filled the (ease facility docaments in and he only did sign the same merely after the same Defendant's employees explaining to him the contents of the documents. However, there is no indication- that there was indeed actual translation of the said documents into the* jO *language understood by the PVJ1 for a closer look at exhibit PEX* 4 *which is the (ease letter offer and the terms and conditions attached to the it appears to be worded in such technical language that cannot be confirmed to have been understood by any ordinary person less still a primary school drop out for both* |5~ PWl *and PVJ2- assert that they were primary four and three school dropouts respectively and this assertion was not varied has and disproved by the Defendant through any evidence. In my opinion, the fact that the Plaintiffs' alleged that they were illiterates shifted the burden of proving that they were (iterates^ the Defendant, a clear burden which the Defendant did not bother to carry out for it behoved the Defendant to confirming*

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by adducing corroborative evidence that indeed the Plaintiffs signed the lease facility documents well aware of the import of the meaning of their actions and thus would be bound but short of that then there is no way the court can believe that they were sufficiently informed of the consequences of the signing of the $5$ documents and thus would be bound by the same for according to the law of contract there must be the meeting of the mind of the parties to a contract for them to be bound by the same. Here nothing as such has been shown and I am thus inclined to believe the Plaintiffs' story that indeed since they are primary school P drop outs and as such illiterates within the meaning of the Illiterates Protection Act who did not understand the English language in which the documents relating to the transaction were written then they could not be seen to have been bound by the same for even Section 3 of the Illiterates Protection Act $5$ further provides that for verification of documents written for. Illiterates by the person who writes any document for any illiterate to write on the document his or her own true and full name as the writer of the document and his or her full address and his doing so shall imply that he or she was instructed to 20 write the document by the person for whom it purports to have been written and that it fully and correctly represents his or her

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17: Judgment on a lease facility secured through falsehood to the detriment of persons protected the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

instructions and was read over and explained to him/her yet here the Plaintiffs' correctly state and which statement is not rebutted that the employees of the Defendant filled and orally. explained the documents in relation to the lease facility to the them yet nowhere is it shown that the very staff of the $5$ Defendant verified the said documents as required by Section 3 of the Illiterates Protection Act since PW1 admitted not being well versed with the transaction in the bank during cross examination and he only realised this at the time when the buses were impounded adding that had he known that the buses [D wholly belonged to the Defendant then he could have not signed. the lease facility agreement. From the evidence adduced by PW1 which was not rebutted, it is clear to me that here was lack of understanding between the parties in this transaction for while PW1 has categorically shown that he had difficulty in $15$ comprehending the transaction between himself and the bank. no lucid evidence has been adduced to show that the Defendant's officials complied with the requirements of the Illiterates protection Act in their purported completion of the transaction between themselves and the Plaintiffs. The failure of the 20 Defendant staff to establish and clearly ensure that PW1 was well aware of whatever transaction he was entering into, taking

18: Judgment on a lease facility secured through falsehood to the detriment of persons protected by to: Judgmann Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

account *his level of education is a matter which falls squarely within the ambit of the decision in the case of Kiberu Joseph Mukasa versus Butebi Investment Enterprises Ltd HCMA No. iso of 2.013 where the court considered the level of literacy of a client of a bank and held that it is a requirement for bank^ documents to be translated to an illiterate and the person who does so must indicate his or her truthful names and address that he or she did so and any failure to do so attracts a penalty for that would be an offence under Section* 4 *of the Illiterates Protection Act in as far as the contract made in that respect would be in contravention of the law and thus any endorsement of such a document would be contrary to the provisions of Sections 2- and 3 of the Illiterate Protection Act thus making any contract stated to be arising from it to be illegal.* / *into*

*Applying the rationale of the above holding to the instant^ matter, it is evident that the conduct the of the Defendant's employees clearly contravened the provisions of the Illiterates Protection Act for nowhere is shown that PW1 showed the capability of comprehending the content of the documents which he is said to have signed but only preposterously stated that he signed the documents while later on even writing to the bank in the English language. This is not enough m my view, for the* | *19: Judgment on a leasefacility secured through falsehood to the detriment ofpersonsprotected by the Illiterates ProtectionAct before the Hon. Mr. Justice Henry PeterAdonyo; June 2015. \*

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**J** requirements of the Illiterates Act appears to be mandatory in such circumstances making the actions of the bank officials to be Illegal and an illegality once brought to the attention of court overrides all other factors as was held in the case of Makula International versus Cardinal Nsubuga [1982] HCB 11. $5$

Thus taking into consideration the above decision as well as evidence on record, I would be of the considered opinion that there was no valid contract between the Plaintiffs and the Defendant as there clearly there was no agreement and the meeting of the minds of the parties involved in the impugned 10 transaction as it is evident that not only were the parties of. unequal status in the interpretation of the undertaking they were entering into but that the law is on the side of the Plaignitffs since they have shown that they were illiterates who are protected by the Protection of Illiterates Act in as far as the $15$ said transaction was concerned for no translation were made to them in the language they understood for them to have without any interpolation enter the transaction herein.

I thus resolve this issue that there was no valid contract entered into by the parties herein. $20$

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*they this Defendant with no option Denis m his testimony informed coart that the the &ih day of September 2009 offered finance and insurance premium facility to the Plaintiffs' was to be used to finance the purchase of two brand* dVV3 Kizza *Defendant on lease facility which* Vvm:> to *oe usea to finance the purchase of two brand new* 3 *Scania* RL1-4, 67 *seater buses and that the Plaintiffs submitted a facility application letter PEX 3 which the parties signed a leaseagreement and copies of which were given to the Plaintiffs with the Defendant thereafter proceeding to buy the buses and eventually handing them over to the Plaintiffs on the 17th day of (d February 2010 but that the Plaintiffs who were required undertime lease facility agreement to remit regular repaymentinstallments however defaulted and the Defendant accordingly informed them to remedy the situation in vain leaving the but to instruct M/s Armstrong. Auctioneers to impound the buses in accordance with the lease agreement. But that after the impounding of the buses the Plaintiffs wrote to the Defendant admitting default on the lease repayment and agreed to deposit Ug. Shs. 22, 000,000/- which is indicated in a letter they sent marked Defence* Ex. P7 *in which additionally requested the release the two buses and that was done upon the Plaintiffs depositing the Shs.^ . facility secured through falsehood to the detriment ofpersons protected by 21: Judgment* ^c(. *before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.*

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on *being au U2-£>00,000/- but despite, this agreement the Plaintiffs once ^ore defaulted on repayments and as a result the Defendant did ^struct Armstrong Auctioneers to re impound the buses on 1st December 2.010 by its instruction letter marked Defence EX Dio which action was carried out accordingly with theJfT Defendant then on the 2.1st day of January 2.011 writing to the Plaintiffs informing them of their default and also demanding that they pay the repayment arrears which stood at Shs. 59, 354,907/- which resulted into several fruitless .meetings between the parties forcing the Defendant to eventually auction* [£\* *the buses to recover the outstanding amounts after an. inspection, assessment and valuation for purposes of the auction by Automobile Association of Uganda as indicated in defence documents D. ID.3 and D. ID4- on 2-9th March 2-011 which document were not proven for they were only identified and not tendered in exhibit by the purported maker thus not considered as relevant by the court though. This witness informed the court that the Defendant lost its patience with the Plaintiffs and therefore proceeded to sell buses by inviting bids from potential buyers by adverts in the New Vision newspaper of 1st and 14th March 2-011 as per EXD4 and EXD5 which resulted into their ctioned off at Ug. Shs. 190, 000,000/- and Ug. Shs.*

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120,000,000/- for bus registration number UAN 996A and UAN 998A respectively the Defendant then informing the Plaintiffs of the sale of the buses as well as requiring them to meet the outstanding balance of Ug. Shs. 133, 108,802/58 the failure of which would attract a continuous penalty interest of $5$ 5% per annum. This witness, however, admitted that he was never present at the time when the agreement was made and even went to state that a letter written supposedly by the First Plaintiff evidenced as exhibit DEX7 was not however not signed by PW1 himself and that he never himself also gave notice 10 given to the Plaintiffs but the notice was issued by some other unnamed bank officials. This witness, however, could not account for the Shs. 22,000,000/- stated to have been paid by the Plaintiffs from the re payment schedule presented in court and marked as Defence EXD12 agreeing in court that he did not 15 have all the transactions on the stated account thus disproving of the balances presented in court as not being actual and complete raising doubt as to the authenticity of the said document.

A closure examination of the lease offer agreement would be in order to determine this immediate position though. Accordingly 20 Clause 11 of the Terms and Conditions to the Lease Offer Letter

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23: Judgment on a lease facility secured through falsehood to the detriment of persons protected by 23: Judgment of Financial of Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015. the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

*&^lt with the question as to breach and specifically clause* 11.1.1 *provided as follows;*

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*T~ke. lessee will be in breach of the agreement if the lessee does not pay when due any money that is payable to the lessor1' and 11.1.2 provided, "where the lessee does not, obey any term of this agreement, or any other agreement which exists between the lessee and the lessor (all of which are agreed to be material)''.*

*Ia addition Clause* 11.2.1 *provided thus,* **1°**

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*"In the event of breaches 11.1.1 and 11.1.2, cancel this agreement and take possession of the goods upon giving 14 days written notice to the lessee and in the event of breaches 11.1.5. to 11.1.10 immediately cancel this agreement and take possession ofthe goods. The lessor shall [* £ *thereafter be entitled to dispose of the goods in any manner1'.*

*From the above clauses which relating to the breach of lease and the evidence adduced before this court in respect to compliance with the same, it is clear that while the lease agreement required that before the Defendant could take possession of the goods . e facilitysecured through falsehood to the detriment ofpersons protected by 24: Judgment^ o^^ction Mbefore the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

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ieaseci out *and dispose of the same in any manner, it had to give* a 14 *day s notice to the Plaintiffs in any event bat Exhibits EXPSj Dex (o and DEX 9 are taken into account they fail to satisfy that requirement for they are not explicit notices meant, to be given under the above clauses thus it being that no other independent evidence has been adduced by the Defendant that, such notices as required where issued out to the Plaintiffs., the conclusion of the court would be that the act of impounding the buses without giving the mandatorily required notice was ultra vires the lease agreement for were such compliance been (0 undertaken , there is the possibility that the Plaintiffs could haveremedied the situation if any had the notice been given as required.*

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*Having stated this fact of the requirement of the lease agreement in regards to notices being given within a specific time, it should be noted that the resolution of the earlier issue virtually disposed off this issue but for academic purposes it was necessary to examine and analyse the evidence on the record as a whole to put to rest the fact of the Defendant's liability for having found out in the first place that there was no valid contract the 20 plaintiffs could not therefore have breached an illegality. That h* ' *g said I fir-d that that if indeed there was any breach of the facility secured through falsehood to the detriment ofpersons protected by*

*25: Judgment on Mbefore the Hon. Mr. Justice Henry Peter Adonyo; June 2015.*

*lease did agreement in the first place it was rather the Defendant* so *for it impounded the buses without issuing out the Mandatory notice as required under the Agreement thus could rely on the same to deny the Plaintiffs their rights out of a rescinded contract.*

## • Whether *the impounding and sate of the buses by the defendant was lawful:*

occur. *The resolution of issue the above partly resolves this particular issue for from the testimony of DVJ~5 and a closer look at the terms and conditions to the lease letter offer particularly Clause* |O 11 *it is evident that for the Defendant to resort to repossessing the leased equipment; it had the duty to give the Plaintiffs a fourteen (1-4) days notice which it did not do so thus any subsequent impounding without notice and the sale of the buses are considered irregular actions by themselves inspite of the fact /^~ that the Defendant after impounding the buses had them advertised the sale in a newspaper which could have been intended to notify the Plaintiffs but such notice was a step extraneous the step which to have been taken before it could Ia addition it is clear to me that while the Defendant that it was dealing with the Plaintiffs who were not d in the English language and thus illiterate in as far as facility secured through falsehood to the detriment ofpersons protected by 26: Judgment Act before the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

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*od language was concerned, the Defendant chose to advertise hhe sale of the impounded buses in the New Vision newspaper which a daily newspaper in English which presumably would not ke read by the Plaintiffs thus creating the impression that the Defendant was all out to conceal the sale of the buses from the Plaintiffs under all circumstances for it was well aware as has been proven beyond any iota of doubt in this court that the Plaintiffs were not schooled and thus not literate in the English language rendering the circumstances of advertising the sale of the buses in such a newspaper suspect thus in the circumstances, ID I would hold that the act impounding and sale of the buses by the Defendant was in contravention of Clause* 11 *of the (ease agreement which makes it unlawful accordingly and I would hold the defendant responsible for any adverse effect of such an illegality.*

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6, Wkat remedies *are available to the parties:.*

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*Having resolved from the above issues that not only the purported contract was illegal ab initio in addition to the finding that the implementation of its very crucial term on the issue was a^o was also done in breach of its provisions, thus being illegal, ZD [ t ke comfort from the holding in the case of Active Auto . chares Ltd v Crane Bank and Rajesh Prakesh, SCCA, . facility secured through falsehood to the detriment ofpersons protected by 27: Judgment on before the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

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*°'^ 2001 where the Supreme Court clearly stated that it is trite law that the courts will rot enporce and should rot enporce illegality and as has beer, shown in the instant matter the purported contract between the parties herein was illegal owing to the Pact that the Dependant took advantage op the Plaintipps' 5 illiteracy to encircle them with a contract which was not capable op being entered into in the Pirst place Por there was not only no meeting op the mind op the parties but the parties were op un equal standing in the process leading to the impugned contract even if according to* Anson's Law *op Contracts 2-5^ Edition by ]O* A.£J *Guest at page 3^3 gives exception to situations where the parties to the illegal contract are not in pari delicto but eventually it clear that the law is such that the less guilty party would be entitled to recover any money paid or property transPerred under such a contract where it is proven so especially when this so happens where the contract is made illegal by virtue oP being barred by statute like in the instant case where the Plaintipps who Pall in the category op persons who are known to be illiterates and this would be in synch with the holding in the case Kiriri Company Ltd v Rachchodas Keshavji Dewani [USS] 1* gA *where the Court op Appeal clearly guided that the cral rule to an illegal contract is subject to several exceptions 3*

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*facility secured through falsehood to the detriment ofpersons protected by 28: Judgment before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.*

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for ' (^stance *where the parties are not in pan de/icto or where contract is made illegal by statute with the object of Protecting a particular class of persons to which the instant Plaintiffs who are evidently illiterates clearly belong and are protected by the Protection of Illiterates Act.*

As *regards the responsibility in regards to* VAT, *it was thetestimony of Johnson Semikore Pw2- that* VAT *accounting in respect of leasing begins with recognizing input tax for when an asset* is *purchased and then it is (eased out with* VAT *being charged on the monthly lease rentals paid by the bank's* |C? *customers with its accountability to Uganda Revenue Authority being done monthly upon the preparing a* VAT *return where input tax and output tax are compared to determine the amount due to Uganda Revenue Authority so that the amount paid to or claimed from URA is what is normally reflected in the taxpayers account with URA meaning that it was not therefore possible for someone to indentify details of input tax and output tax declared to URA on the tax payers account since the account Wil! only reflect the amount paid or claimed which are a net output tax and input tax as such detail could only be found in 2.0 the* VAT *returns filed with URA by each tax payer and in this ards tbis witness was clear in his mind that he could not*

*ase facility secured through falsehood to the detriment ofpersons protected 29: Judgment on Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.* \

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**"T** *^ermine the role the Plaintiffs in making such tax returns as it was not his role to know the tax ID of the supplier For when the Defendant makes a tax return, there would he indicated the file identification number of a supplier but would ^ot know whether such a TIN belonged to the Plaintiffs or not though he was well aware that banking services were* VAT *at that time exempt with a person who pags taxes through the bank may have his TIN number included or not and such was the case with defence Exhibit DEX* 16 *which is a schedule of remittances to* URA *which had no necessity to indicate the purchaser for even the TIN number* IC'C'OC'lllll *did not in particular belong to any tax payer as the same was then generated through the* URA *system. This witness , however , that PVJ1- paid* VAT *from the very first time he got the illegal lease facility which VAT was collected by the Defendant but had no e lb evidence to show that the collected* VAT was *remitted to* URA *a situation which was confirmed by Mugaba Irene'(PW3) testified to the fact that she was contacted by PVdl to study and analyze his bank loan statement with the Defendant and make a report respect to the transaction he had with the Defendant over the 2S) chase of the two buses and on analysis came to the | sion that though* VAT *deductions had been made by the*

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*facility secured through falsehood to the detriment ofpersons protected by£\^ 30: Judgment Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.*

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Defendant in respect of the purported lease transaction, it was never remitted to Uganda Revenue Authority on the PW1's account with the said Uganda Revenue Authority yet VAT deducted from a client's account like for the lease facility had to be remitted to URA and put on his account at the URA to a $5$ total of Ug. Shs. 83,000,000/ and thus concluded that VAT was not reflected on PW1's account.

The conclusion to be had from above testimony of DW2 and PW3 is that the Defendant did collect VAT from the Plaintiffs in respect of the illegal contract and yet the same was never $I^D$ remitted to URA making this act of the Defendant to be tantamount to unjust enrichment and as such having found that the original contract was illegal that amount ought to be refunded the same to the Plaintiffs for the Court of Appeal considered such a situation in the case of Nuppun Norattam $v$ Crane Bank Limited, the Civil Appeal No. 76 of 2006 where it cited with approval the speech of Justice Wright in the case of Fibrosa Spolka Akcyjna v Fairbain Lawson Combe Barbour [1943] Ac 32 at 61 that:

"It is clear that any civilized system of law is bound to 20 provide remedies for cases of what has been called unjust enrichment or unjust benefit that is, a man from retaining 31: Judgment on a lease facility secured through falsehood to the detriment of persons protected by $\mathcal{X}$ 51: Janyment of Secondary Operation Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015. the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

*33 the money or some benefit derived from another which It's against conscience that he should keep. Such remedies In English [aw are generally different from remedies in contract or In tort, and are now recognized to fall within a third category of the common law which has been called quasi contract orrestitution.*

*On citing the above , the Court of Appeal then went ahead to define restitution* as *"...an equitable remedy where courts have tony held that for money paid by mistake., or upon a consideration which happens to fait or for money got through* I'D *imposition (express or implied) or extortion or oppression or undue advantage taken of the plaintiff's situation contrary to laws made for the protection of persons under those circumstances..."* as *Lord Mansfield put it in the Moses versus Macfarlane thus indicating that a defendant would under a given circumstance of the case be obliged bg the principle of natural justice and equity to refund the money it has received illicitly which is the case here in the instant case.*

*-j counter claim by the Defendants.*

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*The Defendant herein brought a counter claim seeking to recover* 2-0 *Shs* i33Ji^>8-'2C)-2"5'8j i^terest *at from the date of LJg*

*I se facility secured through falsehood to the detriment ofpersons protected by 32: Judgment°n°^°on Act ^efore the Hon. Mr. Justice Henry Peter Adonyo; June 2015.* y"

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*3* t^e *counterclaim to the date op payment,, penalty interest °-t* S% *on the said amount From the 2.6th day op July 2O1C> to date op payment in Pull together with general damages and costs. When the evidence on record is taken into account it is clear that the First PlaintiPP had dippiculties in repaying the illegal " loan between the 24th day op August 2-01-0 and the time when the buses were impounded the second time over due to the Pact that the buses had incurred substantial damages as a result op the First impounding process and had to undergo substantial repairs and thus could not be operational and generate any [£> income as the illicit lease agreement between the parties, provided show that the Plaintipps were to repay the (ease loan-Facility depending on the operation op the buses and so since they were impounded and thus damaged in the process this particularaspect op the agreement could not be complied with worse still the Dependant impounded the buses a second time and even*. *proceeded to illegally sell them clearly disabling the Plaintipps opopportunity to comply with the terms op the lease even ipthe lease was legal in the First place thus considering that the Dependant's counter claim is based on what the Plaintipps would* 2.0 *have paid, to the Dependant to clear their indebtedness and thus (d then secure possession op the buses then the act oF*

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*facility secured through falsehood to the detriment ofpersons protected 33: Judgment on before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.*

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p *unding and then the selling of the buses clearly extinguished . U obligations on the part of the Plaintiffs to meet any P sported balance on the purchase price or interests on the (ease for the end result of the lease if it had been properly followed would have made the Plaintiffs to take residual ownership of the£~ buses but not the Defendant. Thus arising from the fact that not only did the Defendant breach the very contract it had by. impounding the buses which the means for which the lease facility was to be repaid then the fact that the defendant not only received repayments on those bases in addition to the VAT component which they never remitted to URA on top of impounding those very assets is considered an act of illicit' enrichment by the Defendant making the case for any counterclaim moot as the Defendant apparently was claiming the whole sum the Plaintiffs would have paid had they remained* |5" *in possession of the buses yet the Plaintiffs not only made. deposits for the buses but lost the very means of repaying the total consideration for the purchase price of the buses as the very act of the Defendant of repossessing the buses properly' extinguished the capacity of the Plaintiffs which would have-* XD *enabled them to comply with the provisions of the loan facility to* tte m *the First place thus is not sustainable.*

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*facility secured through falsehood to the detriment ofpersons protected by 34: Judgment on before the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

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In addition, the Defendant did not even bother to lead any evidence which could entitle it to the amounts in the counter. claim apart from stating so in its written statement of defence. leading to the conclusion that it that it either had no evidence to $\cdot$ support this claim or lost interests in the same making the 5 counter claim to remain unproven even if was unjustified in the. first place.

The above notwithstanding, it is evident that the resolution. of the issue that in the first place there was no contract between the parties thus adequately dispose of the counterclaim for the $[O$ counter claim is emanating from an illegality making the Defendant even if it had proved its counterclaim to not be able to benefit from that conclusion for the same would have arisen from an illegal contract as was well summarised in the case of Jemba Soita Ali v David Salaam HCCS No. 400 of 2005 where 15 the court in its decision quoted the Latin maxim of ex turpi. causa non oritur actio in disposing the matter before it which means no claim arises from an illegal cause for such legal principle was well summarised by Lord Mansfield CJ in the 18th century case cited above when dealing with similar situation 20 when stated that, "no court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If the

35; Judgment on a lease facility secured through falsehood to the detriment of persons protected by the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

*°Faction appears to arise ex turpi causa... the courtsays he right be assisted" thus welt summarising the position of Defendants counterclaim* in *the instant matter making it to Fait accordingly.*

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*In the final analysis., the conclusion which I would in regards to. this matter is that make the Plaintiff has ably adduced evidence to prove to this court that the Defendant acted in a manner which was intended to take advantage of the Plaintiffs' who are avowed illiterates and who are protected by the Protection of \t? Illiterates Act to make them enter into an illegal contract to their detriment which would have resulted into an illicit enrichment of the Defendant yet it clear that the Defendant was in a more superior position to ensure that the Plaintiffs to properly guided within the framework to successfully undertake* [\_> *the venture from a point of knowledge and wisdom but that not being the case, I would in the circumstances find that the Defendant acted contrary to the interests of the Plaintiff thus judgment is entered for the Plaintiffs as against the Defendant the following orders made;* 'ZO

**. se** *facility secured throughfalsehood to the detriment ofpersons protected by 36: Judgment on Mbefore the Hon. Mr. Justice Henry PeterAdonyo; June 2015.*

fl) *That the (ease, letter of offer and the leasing agreements.* executed *between the parties illegal and unenforceable.*

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- *b} The Defendant refund to the Plaintiffs United States Dollars* Fifty Four *Thousand Only (US\$54,000} being their contribution for the purchase of the buses which Defendant repossessed.* - *c) The Defendant to refund to the Plaintiffs of all the monies deposited by the Plaintiffs in regards to the illegal transaction deposited by the Plaintiffs for purpose of executing the illegal transaction into the account their [(J account held by the Defendant.* - *d) The Defendant shall also refund to the Plaintiffs the amount Ug. Shs. 85,000,000/*- *being* VAT *deductions stated to have been made in respect of the said illegal transaction but' never remitted to* URA. - e) *The Defendants is ordered to pay the plaintiffs an amount of Ug. Sbs. 50,000,000/- being general damages for themental torture the Plaintiffs went through owing to the' Defendants illegal actions.* - *f) The Defendant shall pay interest of* 2.1% *p.a. on items b, c-* 5ft) *and d above from the date of the filing of this suit and .*

*37: theJudgment IlliteratesonProtection a leasefacility Act before secured the Hon. through Mr.falsehood Justice Henry to thePeter detriment Adonyo;ofnerson, June 2015nr". dby .*

interests at the court rate of 6% for item e from the date of this judgment till payment in full.

**MATERIAL STATE**

g) The Defendant is ordered to meet the reasonable costs of this suit.

The above orders are made the High Court Commercial Division, Kampala this 22nd day of June, 2015.

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HENRY PETER ADONYO

JUDGE

38: Judgment on a lease facility secured through falsehood to the detriment of persons protected by 38: Judgment on a reaso justifier section Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015. the Illiterates Protection Act before the Hon. Mr. Justice Henry Peter Adonyo; June 2015.

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