Ziruntusa v Mbabazi and 3 Others (Civil Suit 352 of 2020) [2024] UGHCCD 158 (11 October 2024)

## **THE REPUBLIC OF UGANDA**

#### **IN THE HIGHCOURT OF UGANDA AT KAMPALA**

# **(CIVIL DIVISION)**

## **CIVIL SUIT NO 352 OF 2020**

## **PETER ZIRUNTUSA Alias PETER CAMPBELL**∷∷∷∷∷∷∷∷∷**: PLAINTIFF**

# **VERSUS**

#### **1. MBABAZI MERIBEL RESTY**

### **2. DESIRE MWESIGWA LUTABAIRE**

# **3. JOHNSON ASABA BYARUHANGA aka FAISAL WAISSWA**

# **4. MUSITWA JACKSON MUGWANYA** ∷∷∷∷∷∷∷∷∷∷∷ **DEFENDANTS**

# **BEFORE: Hon. Justice SSEKAANA MUSA**

## **JUDGMENT**

The Plaintiff filed this suit seeking declarations and orders that money amounting to approximately UGX 422,210,865 or more was deposited by the plaintiff on to the defendants by using mobile money sent through Send Wave and MT, Salabed in the UK and seeking to recover it as money had and received or for breach of agreement/trust, fraud, special damages, properties using the plaintiff's money, general damages, punitive and exemplary damages.

The plaintiff is a Ugandan Immigration Lawyer based in the United Kingdom since 2004 and sometime November 2015, he met (made contact with) the 1st Defendant via the social media platform of Facebook. Later in 2016, he and the 1st defendant got in an oral agreement for investing in Uganda, with the 1st defendant overseeing the investments. He contended that he ordered for an audit which was carried out however he was not satisfied with the report. The plaintiff had between 17th November 2016 to 31st January 2019, the plaintiff contended that he had sent a total of 137,045,203/= through MT. He further sent 145,805,802/= through Sendwave and 36,709,080/= through the UK Salabed Upton Lane.

The plaintiff subsequently filed a criminal complaint in November 2019, and investigations confirmed the 1st defendant's involvement in fraudulent activities by way of an alleged case of forgery and obtaining money by false pretences.

The defendants denied the plaintiff's allegations contending that they have never entered in an oral agreement or borrowed money from the plaintiff and they are not indebted to him for a sum of UGX400, 000,000 save for the oral partnership to construct a medical center at Mukono, were the plaintiff was to contribute financial support towards the project for 40% Shares which obligation he failed to meet.

The 1st defendant contended that the plaintiff in September 2015 approached her on her Facebook account and he expressed interest in establishing a romantic relationship to which she did not respond until November 2015 after the persistent messages and courting that she accepted the plaintiff's advances. The plaintiff informed her that he is a Ugandan Lawyer based in the United Kingdom.

The 1st defendant contended that after establishing a romantic relationship with her, the plaintiff picked interest in her activities and projects during

which the 1st defendant shared her plans to set up a clinic with her brother but was facing financial constraints.

The defendant pleaded further that the money sent over time to her was through MTN lines and the reason was always "family support" and she used the money for that purpose and also to jointly acquire some property with the plaintiff.

The plaintiff misrepresented to the 1st defendant that he was a passionate immigration lawyer called Peter Campbell interested in protecting and providing for vulnerable children since the 1st defendant was already engaged in Philanthropist activities. They incorporated Hopeland Mercy Ministries and the plaintiff was included as fellow guarantor/member. He used this organization to send property as donations and would later sell it off to make profit and was only using the organization to evade taxes.

The parties filed a joint scheduling memorandum where the following issues were agreed upon.

## **Issues**

- *1. Whether there was breach of trust by the defendants and if so who is responsible?* - *2. Whether there was a valid contract between the plaintiff and the 1st and 2nd defendants?* - *3. What remedies are available to the parties?*

**(I find issues 1 and 2 can be resolved together.)**

The plaintiff was represented by *Matovu Akram* while the 1st, 2nd,4th and 5th defendants were represented by *Kasirye Patrick* while the 6th defendant was represented by *Irumba Patrick and Jotham Asiimwe.*

The parties led evidence in support of their respective case and thereafter filed their written submissions that were considered by this court

# **DETERMINATION**

*Whether there was a breach of trust by the defendants and if so who is responsible / whether there was a valid contract between the plaintiff and the 1st and 2nd defendants?*

The plaintiff claimed that they entered in to an oral agreement between him and the 1st defendant whose purpose was to invest in Uganda and her being the supervisor and overseer of all the projects. He claimed that he invested varying sums of money in the said ventures through the 1st defendant and her associates, namely the 2nd, 3rd and 4th defendants by using mobile money sent through send wave and MT, Salabed in the UK as well as through relatives and friends.

The plaintiff also claimed that the 1 st defendant, claimed to have purchased six plots of land in Buvuma and Mukono Districts for forestry, cattle, and goat keeping, including the acquisition of 200 goats and 30 high-breed Friesian heifers.

Counsel for the plaintiff submitted that according to section 1(r) of the Trustees Act "trust" "trustee" extended to implied and constructive trusts and to cases where the trustee has beneficial interest in the trust property, citing the Case of *Mpeirwe v Alsaco International Ltd & 2 others Commercial Court Civil Suit No. 440 of 2014*

Counsel for the plaintiff also argued that the 1st defendant dishonestly registered her name on the certificate of title and the sale agreements bearing forged stamps this is also seen at in the investigative report carried out by D/SP. Birungi B Milton at page 63 hence amounting to fraud.

Lastly, counsel submitted that the 2nd defendant and 4th defendant received money as seen in annexures J1-J4 and then at "P" at page 58 of the plaintiffs' trial bundle purposes of buying construction materials to construct hospital at Mbalala however the hospital project was incomplete hence amounting to fraud and breach of trust causing the plaintiff pain and financial losses, of which the defendants are liable and responsible for breach of trust.

Whereas counsel for the 1 st , 2 nd and 4 th defendants in his submission relied on the case of *Kabagambe v Kabagambe Civil Suit No.44 of 2011 Justice Bashaija K Andrew* where it was held that for a valid trust to be valid, it must involve specific property, reflect the settlor's intent and a lawful purpose and court must carefully transcend the narrow interpretation of the evidence and infer existence of a trust and pronounce on it accordingly. Therefore, there was no breach of trust relation relationship between the plaintiff and the 1 st, 2nd and 4th defendants.

Counsel further submitted that an oral contract that exceeds 25 currency points does not amount to a contract per the case of *Karangwa Joseph v Kulanju Willis Civil Appeal No 3 of 2016.*

Counsel argued that the evidence of the 1st defendant also shows that the parties were in a romantic relationship, the plaintiff advanced a romantic interest which the 1st defendant later accepted and the plaintiff started sending her money. He claims that the monies were deposited with a purpose of investing in Uganda

*Analysis*

A trust will arise in connection with legal title to property whenever one party has so conducted himself in a way that would be inequitable to allow him to deny the other party a beneficial interest in the property acquired.

A trust is defined to mean; The right, enforceable solely in equity, to the beneficial enjoyment to which another person holds the legal title; a property interest held by one person *(the trustee)* at the request of another *(settlor)* for the benefit of a third party *(the beneficiary)*. For a trust to be valid, it must involve specific property, reflect the settlor's intent, and be created for a lawful purpose. A trust arises as a result of a manifestation of an intention to create it. See *Black's Law Dictionary 11th Edition by Bryan A. Garner-Thomson Reuters 2019 at pg 1817*

A constructive trust is a remedy by which a court recognizes that a claimant has a better right to certain property than the person who has legal title to it. This remedy is commonly used when the person holding property acquired it by fraud, or theft (as with embezzled money) is exchanged for other property obtained to which a wrongdoer gains title. The court declares a constructive trust in favour of the victim of the wrong, who is given a right to the property rather than a claim for damages.

The obligation of the constructive trustee is simply to turn the property over to the constructive beneficiary; the device does not create a "trust" in any usual sense of that word. See *Black's Law Dictionary 11th Edition* pg 1819. A constructive trust is a formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. See *Beatty v Guggenheim Exploration Co. 122 N. E 378, 380 (N. Y 1919); Black's Law Dictionary pg 1819* Whether it is possible and appropriate to infer an intention to create a trust by looking at the evidence not only of the alleged settlor's words and conduct, but also the surrounding circumstances and interpretation of any agreements that might have been entered into. In some circumstances, it may be held that on the true analysis of the facts, there is no trust and the matter is one of contract. *See Conservative and Unionist Central Office v Burrell [1982] 2 All ER 1, [1982] 1 WLR 522; Guy Neal v Nine Squares Pty Ltd [2015] 1 SLR 1097*

The plaintiff witness PW1 in his witness statement testified that he had deposited monies on to the defendant's mobile money accounts and the purpose was to invest in business projects in Uganda. The plaintiff did not produce an agreement to that effect or any other evidence to prove that he and the defendant had agreed as alleged but contended that it was oral.

In Uganda, the 'lack of intention' analysis may potentially provide more sensible basis for the principled yet pragmatic development of this equitable doctrine. The courts should tread carefully in this area of law because an unduly wide doctrine resulting trusts or constructive trusts and potential blurring of the distinction between claims based on unjust enrichment and claims based on resulting trusts which might have unsettling effects on rights of third parties and security of genuine commercial transactions.

The court may not infer a common intention to the parties where one did not in fact exist. The presumption of a constructive trust or resulting trust may be displaced if there is no sufficient evidence of an express or inferred common intention that the parties should hold their interest in the property in a different proportion to their contributions.

If there is evidence that one party intended to benefit another party with the amount which he or she paid, then the presumption of constructive trust or resulting trust would not apply. In such cases, the party who paid the money would be regarded as making a gift to the other person. In the present case, the trust claim was simply incompatible with the facts of the case and evidence on record.

The defendant DW1 and DW2 testified and denied the plaintiff's claim that they had never entered in to any oral contract with the plaintiff and they are not indebted to him in the sum of Ugx400, 000,000/= and they are surprised by the purported claim, save for the Oral partnership to construct a medical center at mukono where the plaintiff was to contribute financial support towards the project for 40% shares which obligation he failed to meet and the project up to date.

The 1 st defendant DW1 also testified that she used to receive upkeep, and the only lump sum monies was UGX 8,000,000/= via Airtel and Sendwave which was to purchase the land in Mirembe-Mukono which she did, and the title was registered in her names well as the land sale agreement because the Plaintiff was a British citizen. The above property would therefore be held by the parties as joint tenants both in law and equity but not as a trust. It is understandable why the land was registered in 1st defendant's names alone because a non-citizen cannot hold Mailo interest in land.

The circumstances surrounding this case are interesting based on the fact that the plaintiff got to know the 1st defendant via Facebook and they got into a romantic relationship which later translated into a sexual relationship whenever the plaintiff travelled to Uganda. In the course of the relationship, the couple discussed ideas of investment in both the 1st defendant's activities and other projects. The 1 st defendant testified that *"upon the plaintiff* *establishing a romantic relationship with me, after a few months picked interest in my activities and projects during which is when i shared my plans with the plaintiff about the intention to construct and develop a clinic with my young brother…."*.

The plaintiff also in his testimony confirms chatting with 1st defendant for some time and contends that 1st defendant assured him to invest in business like real estate, farming and fishing in Buvuma islands and she promised to help in supervision of the said investments. The plaintiff claims that he was lured by the plaintiff to invest and that she failed to account for the monies sent to her for the said projects. The plaintiff denied posting anything social media-facebook, he denied being romantically involved with the 1st defendant, he denied ever giving gifts to the 1st respondent's relatives - Desire Mwesigwa and Mukisa Jackson; he denied ever sending any money as upkeep.

The plaintiff denied ever being in a relationship with the 1st defendant or sleeping at her home in Mbalala-Mukono or Aponye hotel or Kasenge Resort. The 1st defendant and her witnesses testified about the romantic relationship between the plaintiff and the 1st defendant. DWIII testified that the 1st defendant and plaintiff came home and slept in the same room and he was introduced as a boyfriend. She testified that she used to receive money for her upkeep from the plaintiff.

The plaintiff failed to define his relationship with the 1st defendant and his denials are inconsistent with the circumstances surrounding the entire case. The plaintiff has relatives in Uganda who would have been used to supervise his projects or even facilitate his investment plans in Uganda. The plaintiff offered no explanation why he opted and trusted the 1st defendant as his investment partner who was a total stranger whom he had just met via facebook. He claims that the agreement was oral or verbal with no clear terms to guide the alleged oral contract.

There was no consideration for the alleged oral contract between the plaintiff and the 1st defendant which is quite unbelievable and inconsistent with the evidence on record. The relationship between the plaintiff and the 1st defendant was not a commercial one but rather a romantic or sexual relationship which ought not to be converted into a contract or trust. The evidence of boyfriend/girlfriend relationship is evident on record and the plaintiff and 1st defendant were sometimes holding waists and were seen going to romantic places like Kasenge Resort, Aponye hotel and Colline Hotel Mukono.

The plaintiff was using *'a sugarcane as a walking stick'* and failed to separate the romance from investment/business and this court cannot come to his aid to convert his romantic pleasures & *'pillow talk'* into contractual obligations. If his intention was strictly about investment in Uganda, then he ought to have kept in that lane instead of crossing lanes midway. The evidence adduced by the plaintiff was unreliable and lacking credibility in material respects to prove a contractual relationship or constructive trustship.

The court is not persuaded by the plaintiff's uncorroborated evidence that he was singly investing through the 1st defendant. The money sent in a romantic relationship should be clearly defined with the purpose before it is alleged to be a contractual relationship without any proof. It is plausible that the plaintiff had intended to benefit the 1st defendant with money sent partly as gifts or donations for her philanthropic activities in order to facilitate their intimate relationship. *See Kua Tee Beng v Caiyan [2015] SGHC 53*

The plaintiff has failed to prove his claims for recovery of the money sent to the 1st defendant under unclear circumstances. Unmarried or cohabitants have no right to recovery of money made or contributed in such a relationship unless it is jointly owned by registration or joint bank account or such other ownership which infers clear joint ownership.

The status of *'concubinage' or 'meretricious cohabitation'* afforded neither party any right to recover for services rendered to the other or contributions made for upkeep, unless the party seeking recovery was induced to provide services under a mistaken belief that the couple was validly married or by duress.

The recovery has generally been denied under quasi-contract or constructive trust, since the courts will not aid a wrongdoer in an illicit relationship such as non-marital cohabitation or that a donative intent motivated the services and thus justified the retention of any benefit deriving from them. *See Bigala Frediman v Lornah Namuwenge HCCS No. 98 of 2020*

The evidence led by the defendants -1 st 2 nd and 4th shows that the plaintiff and the 1st defendant engaged in a romantic relationship thus diverting from the claimed or alleged intended purpose by the plaintiff.

## **What remedies are available to the parties?**

Since I have resolved both issues in the negative the plaintiff is not entitled to any damages sought.

## **Section 27 of the Civil Procedure** Act provides that;

Costs are discretion of the Court of Judge. Subsection (2) of the Act provides that the costs of any action, cause or other matter or issue shall follow the event unless the Court or Judge shall for good reasons otherwise order. **In** **UDR vs Muganga [1981] HCB 35 Manyindo J** (as he then was) held that costs should follow the events unless the court orders otherwise.

The suit is accordingly dismissed with each party bearing its own costs due to the peculiar circumstances of the case and to avoid an escalation of the dispute or jilted relationship.

I so Order

*SSEKAANA MUSA JUDGE 11th October 2024*