Uganda Commercial Bank v Sanyu and Another (Civil Appeal 46 of 1998) [1999] UGCA 54 (16 September 1999)

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA

## AT KAMPALA

HON. MR. JUSTICE C. M. KATO, J. A. CORAM: HON. LADY JUSTICE A. E. MPAGI-BAHIGEINE, J. A. HON. LADY JUSTICE C. N. B. KITUMBA, J. A.

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# CIVIL APPEAL NO. 46 OF 199

#### **BETWEEN**

#### UGANDA COMMERCIAL BANK..... $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$ $\ldots$

AND

$\mathcal{L}$ 1. SILVANO SANYU

$2.$ BEATRICE KOBUSINGYE )....................................

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[Appeal from a judgment and orders of the High Court of Uganda at Kampala (Mr. Justice P. P. K. Onega) dated 18<sup>th</sup> September 1998.1

## JUDGMENT OF C. N. B. KITUMBA, J. A.

This is an appeal against the decision of the High Court ordering the appellant to pay Ug. Shs.15,000,000/= general damages and Ug. Shs.140,129,000/ $=$ special damages. The appellant was also to pay interest of 24% p.a. on special damages from 14<sup>th</sup> May 1994 till payment in full and the same rate of interest on general damages from the date of judgment till payment in full. The appellant is appealing only against the award of Ug. Shs.15,000,000/= general damages and interest of 24% p.a. on general and on special damages.

The facts giving rise to this appeal are briefly as follows;

The respondents operated a current account No. 563 at the appellant's branch at Kilembe between 1990 and $17^{\text{th}}$ May 1994. After the death of the manager of the branch, the respondents demanded and received bank statements from the appellant. Then they realised that their account had not been properly handled by the appellant. According to the first bank statement a substantial loss of Uq. Shs. $152,779,000/=$ had

been caused to the respondents. They complained to the appellant and two other statements were issued to them. The third and final statement showed a loss of Uq. Shs. $149,129,000/=$ .

respondents sued the appellant for The and general damages for breach of special loss of credit, reputation, contract, inconvenience, costs of the suit and interest from $17^{th}$ May 1994 till payment in full.

Judgment was entered in favour of the respondents in the above terms. The appellant appealed.

The memorandum of appeal contains two grounds namely:

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$\bullet$

$\sim$ $\overline{1}$

> $"1.$ That the learned trial Judge erroneously arrived at the quantum of general damages ordered to be paid by the Appellant to the Respondents"

$"2.$ That. the learned trial judge erroneously arrived at the interest $on$ $decretal$ $\texttt{amount}$ $\quad\text{and}\quad$ quantum of the damages to be paid by the appellant to the respondent".

I will deal with them in the order they were presented. 30

Counsel for both parties filed written submissions.

On ground 1, Mr. Mugimba learned counsel for the appellant, made the following points. That the figure of Ug. Shs. $15,000,000/=$ general damages was too high in the circumstances as the irregularities on their account occurred for two years and the respondents did not complain. That it is therefore untrue and academic that the respondents suffered any inconvenience or indignity when they were not aware of those irregularities. That there was a special

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relationship between the deceased manager of the appellant and the first respondent. That the learned trial judge based the assessment of special damages on the wrong figure of Ug. Shs. $140,000,000/$ because that figure was merely inflated by irregularities on the respondents' account. The respondents had a deposit of only Uq. Shs.21,800,000/= $(21.8m/=)$ which was deposited and not credited on their account. The learned trial judge was simply influenced by the $10$ respondents' counsel's suggestion of Ug. Shs. 20,000,000/= as general damages. The learned trial judge based his award of general damages on a wrong principle of law, as general damages are compensatory. When the learned trial judge awarded the respondents general damages for loss of profit in addition to special damages, he put them in a position greater than what they had been in before the appellant's breach, which was contrary to the law. For that contention counsel $20$ relied on Kimani V Attorney General 1969 E. A. 507.

$\mathbf{r} = \mathbf{k}$

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Counsel further quoted *Ecta (U)* Ltd v Geraldine S. C. Civil appeal No. 29 of 1994 in Namubiru which the principles when an appellate court may interfere with the award of damages were stated.

Counsel prayed that the general damages were too high and should be reduced, though he did not 30 suggest any figure.

In his submissions, Mr. Tibaijuka learned counsel for the respondents, supported the learned trial judge's award of Uq. Shs. 15,000,000/= as general damages. He submitted that his clients were entitled to general damages for breach of contract as the appellant wrongfully withheld their money which they would have used to make profit. In addition, the appellant was liable to them in general damages because of dishonour of their cheques which resulted into the respondents' loss of credit and reputation.

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Counsel submitted that there was no reason to justify the reduction of the general damages. He relied on Matiya Byabalema & others v Uganda Transport Co. (1975) Ltd. (Supra) where Odoki JSC in the leading judgement stated as follows:

"It is now a well established principle that an appellate court may only interfere with an award of damages when it is so ordinately high or low as to represent an entirely erroneous estimate. It must be shown that the Judge proceeded on a wrong principle or that he misapprehended the evidence in some material respect, and so arrived at a figure which was either inordinately high or low".

He quoted numerous authorities in which the above principles have been applied: For example: Sarah The Editor - in - Chief Ngabo News Kanabo v $20$ Paper & 3 others S. C. Civil Appeal No. 39 of 1993 (unreported) Motor Marts (U) Ltd v Lugazi General Contractors C. A. Civil Appeal No. 27 of 1997.

He further contended that the appellant should pay substantial general damages because instead of admitting liability for the actions of its manager it alleged that fraud, which is a crime, was committed by the first respondent.

I have considered the submissions of both counsel and I agree with them on the legal principles when the appellate court may interfere with the award of damages:

In Ecta (U) Ltd v Geraldine Namubiru (Supra) -Odoki AG. DCJ (as he then was) said that he agreed with Flint v Lovell (1931) KB 360 where Greer LJ said

> "In order to justify reversing the trial judge on the question of the amount of damages it will generally be necessary

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$\bullet$

$\cdots \qquad \vdots$ $\mathbf{v}_1 = \mathbf{v}_2$

that this Court should be convinced either that the judge acted upon some wrong principle of law or that the amount awarded was so extremely high or so very small as to make it in the judgment of this Court, an entirely erroneous estimate of the damage to which the plaintiff is entitled".

In the same judgment he also approved of the $10$ holding in Associated Architects v Nazziwa (1985) H. C. B. 25, where it was stated

> "that an appellate Court was $\verb"not"$ entitled to interfere with an award of damages merely because it was probable that if it had tried the case, it would have awarded a different figure."

In his judgment the learned trial judge found 20 that collusion, connivance or personal relationship between the first respondent and the deceased manager was a mere allegation and no evidence was brought by the appellant to prove it. I am unable to fault him on that finding.

In awarding damages to the respondents the learned trial judge in his judgment said:

"On general damages court (sic) has asked $20,000,000/=$ . He said $for$ the Plaintiffs have suffered injury to their credit and reputation. In some cases cheques issued by the plaintiffs were wrongly dishonoured. He said it was not disputed that the Plaintiffs account was a business account. He cited PAGET'S LAW OF BANKING $10^{TH}$ EDN. Pp 227 - 228 where it is said there is a presumption of injury to the credit and reputation of a trading customer whose cheque is wrongfully dishonoured and there is no In our need to prove actual damage. case the Plaintiffs' Account stopped

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operating in May 1994 and since then the Plaintiffs have been denied use of their money due to the irregularities caused defendants $\boldsymbol{b}\boldsymbol{v}$ the servant. The Plaintiffs would have used such money for business and generated more money from it. However I feel general damages of 20,000,000/= is a bit too high. In ${\tt circumstances}$ think the $\boldsymbol{I}$ general $15,000,000/=$ damages of Shs. would suffice. accordingly award the $I$ $of$ Shs. Plaintiffs general damages 15,000,000/=. Counsel for the defendant has argued against general damages but I feel this is a proper case where such damages should be awarded."

I agree with the submission of counsel for the appellant on the principle of law that the learned trial judge erred to award general $20$ damages on the basis that the respondents could have used their money which was wrongly withheld to generate more money. The law is that when a plaintiff recovers property in tort or contract, he is not entitled to general damages because of the loss of profits he would have obtained from See Kimani v Attorney General (Supra), it. Imprestirling Impresit Federki (SPA) (U) Ltd. v. Haji Abdu Karim Lugemwa, Cicil Appeal No. 31 of 1993 (SC) (unreported). 30

However from the above quotation of the trial court's judgment it is evident that the learned trial judge took into consideration the fact that the respondents suffered injury to their reputation and credit in business. In law they were entitled to general damages by reason of the same without actual proof of the damages suffered.

The award of general damages of Ug. Shs. 40 15,000,000/= is neither too low nor excessive in the circumstances. I am unable to fault the learned trial Judge's conclusion and in my view ground 1 must fail.

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$\mathbf{L}$ On ground 2, learned counsel for the appellant submissions were similar to his arguments in ground 1. Counsel reiterated that the respondents did not have Uq. Shs. 140,000,000/=. The respondents balance was $Uq$ . Shs. $21,800,000/=$ only and that should have been the basis on which interest should have been awarded. In his submission however, counsel admitted that the respondents were kept out of their money, but it was not used by the appellant to make profits as the account stopped operating on $14^{th}$ May 1994.

Counsel for the respondents submitted as follows: Firstly, that the award of interest is given according to the discretion of the trial judge and the appellate court should not interfere with that discretion unless it has been used wrongly.

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Secondly, that interest is given against the appellant for having kept the respondents out of their money but not for having made profits with it.

Thirdly, that awarding interest to any successful party is not a punitive measure, but merely a compensatory one.

Fourthly, that the respondents operated a busy 30 current account and were therefore entitled to the award of commercial rates of interest.

In support of his arguments he relied on several authorities. The most relevant of them and which I will refer to are Section 26 $(2)$ $(3)$ of The Civil procedure Act and Katuramu & Company v A. Baumann (Uganda) Ltd. S. C. Civil Appeal No. 6 of 1991 (unreported)

Section 26 (2) (3) of the Civil Procedure Act provide:

$"1......$

- 2. Where and in so 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 $\boldsymbol{be}$ paid $on$ the principal sum adjudged from the date of the 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 such rate as the court deems at 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. - Where such a decree is silent with 3. respect to the payment of further interest on such aggregate sum as $of$ date the aforesaid from the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at six per centum per annum.

The above section gives a trial court wide discretion which may not be interfered with unless certain conditions are satisfied. It was 30 held in *Mboga* and *Another* v Shah 1968 EA at p. 96 G

> ".......that a Court of Appeal should not interfere with the exercise of the judge unless discretion of the it is satisfied that the Judge in exercising his discretion has misdirected himself as a result $_{\tt in}$ some matter and has arrived at a wrong decision, or unless is manifested from the case $as$ it $\overline{a}$ whole that the judge has been clearly wrong in the exercise of his discretion and that as a result there has been injustice".

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$\mathbf{R}$

$\mathbf{v}$ $\boldsymbol{A}\,.$ $_{In}$ Katuramu Baumann Uganda **Ltd. (Supra)** the guide lines which the courts should follow in awarding interest on damages were set out. The late Seaton JSC quoted with approval the following passage by Forbes J. In Tate & Lyle & Distribution Ltd v Greater London Council and Another (1981) 3 All E. R. 716, at p. 772:

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"Despite the way in which Lord Herschell L. C. in London Chatham and Doner Railway Co. v. South Eastern Railway Co. 429 477 the $(1893)$ $AC$ at stated governing the principle award of interest on damages, I do not think the modern law is that interest is awarded the defendant as a punitive against for having kept the plaintiff measure out of his money. I think the principle now recognised is that it is all part of the attempt to achieve restitutio in integuin. One looks, therefore, not at $\thinspace\ which$ the defendant the profit wrongfully made out of the money he withheld (this would indeed involve a scrutiny of the defendant's financial position) but at the cost the plaintiff would have had to borrow money to supply the place of that which was withheld. $\mathcal{T}$ am also satisfied that one should not look at any special position in which the plaintiff may have been; one should disregard, for instance, the fact that a particular plaintiff, because $of$ his personal situation, could only borrow money at a very high rate or, on the other hand, was able $\mathop{\mathtt{to}}\nolimits$ $\textit{borrow}$ at specially favourable rates. The correct thing to do is to take the rate at which plaintiffs general could borrow in This does not, however, to my money. mind, mean that you exclude entirely all

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attributes of the plaintiff other than he is plaintiff. that $\overline{a}$ There is evidence here that large public companies of the size and prestige of these plaintiffs could expect to borrow at 1% over MLR, while for smaller and less prestigious concerns the rate might be as high as 3% over MLR. I think it always be right to look at would the plaintiffs at $\qquad\textit{which}$ with the rate attributes $of$ the general actual plaintiff in the case (though not, of course, with any special or peculiar attribute) could borrow money as a quide to the appropriate interest rate......'

Although the decision in Tate & Lyle's case (above-quoted) is not binding on us, I would, with respect, suggest that it is quite useful as an indication of the way a common law court (such 20 as we have in Uganda) orders interest on the damages recovered."

I respectfully agree with those principles.

In the instant appeal when awarding interest, the learned trial judge said:

> "Next is the issue of interest. Counsel Plaintiffs has prayed for the for interest at the rate of 24% per annum from the $17^{th}$ May 1994 till payment in full. Counsel for the defendant has opposed this saying it is too high. In the case of KATURAMU & CO. VS. A BAUMANN 6 OF 1991 (UGANDA) LTD CIVIL APPEAL NO. cited $\boldsymbol{b}\boldsymbol{y}$ counsel for the Plaintiff interest rates $of$ 408 and 468 were upheld by the Supreme Court in an appeal against interest. Then in the case of **PROPERTIES** $_{LTD}$ VS. **ATTORNEY ESERIA** GENERAL (HCCS NO. 499 $OF$ $1984)$ also cited by counsel interest at 40% per annum was awarded. I therefore find

interest rate of 24% per annum on special damages from the $17^{th}$ May 1994 till payment in full and on general damages from the date of judgment till payment in full reasonable and I award the same."

I am in agreement with the submission of counsel for the respondents that in awarding interest the learned trial judge properly used his discretion. $10$ He relied on previous decisions and found that the interest of 24% per annum was right taking into account that the respondents' account was a commercial one.

In the circumstances, I would agree with the learned trial Judge's conclusion. The second ground of appeal therefore fails.

I would accordingly dismiss this appeal with 20 costs to the respondents.

Dated at Kampala this. $16^{\text{th}}$ of

CMS. Filumber C. N. B. Kitumba Justice of Appeal.

## THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA

## AT KAMPALA

#### HON. MR. JUSTICE C. M. KATO, JA. CORAM: HON. LADY JUSTICE A. N. MPAGI-BAHIGEINE,JA. HON. LADY JUSTICE C. N. B. KITUMBA, JA.

## CIVIL APPEAL NO. 46 OF 1998

#### **BETWEEN**

#### <table> UGANDA COMMERCIAL BANK APPELLANT AND 1. SILVANO SANYU $\overline{ }$ 2. BEATRICE KOBUSINGYE ).................................... (Appeal from a judgment, and orders of the High

Court of Uganda at Kampala (P. P. K. Onega, J.) dated $14/9/98$ )

### JUDGMENT OF C. M. KATO, J. A.

I have had the advantage of reading the judgment of Kitumba J. A. in draft. I agree with it. Considering all the circumstances of this case the learned trial judge was justified in awarding a sum of $Ug.15m/=$ as general damages and 24% interest on special and general damages. His decision did not offend the principles relating to such awards.

Since Mpagi-Bahigeine, J. A. also agrees, this appeal is dismissed with costs here and in the court below to the respondents.