Court name
Commercial Court of Uganda
Judgment date
29 September 2016

Bigirwenkya & Anor v Centenary Bank Ltd (Civil Suit-2010/328) [2016] UGCommC 90 (29 September 2016);

Cite this case
[2016] UGCommC 90

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMERCIAL DIVISION]

CIVIL SUIT No. 328 OF 2010

  1. SUNNY BIGIRWENKYA 
  2. JOHN BIGIRWENKYA         :::::::::::::::::::::::::::::::::::::     PLAINTIFFS

VERSUS

    CENTENARY BANK LTD    ::::::::::::::::::::::::::::::::::::::::::    DEFENDANT

BEFORE: HON. MR. JUSTICE B. KAINAMURA

JUDGMENT

The plaintiffs brought this suit against the defendant for recovery of a Certificate of Title to land comprised in LRV 1393 Folio 11, Plot 39 Block 4, land at Kisita Masindi District, special damages, general damages and aggravated damages arising from breach of contract, breach of duty, professional negligence, fraud, defamation and misrepresentation.

The facts giving rise to the plaintiff’s claim are that on the 21st November, 1996, the 1st plaintiff opened an account with the defendant Bank, Hoima Branch. On the 7th May, 1997, the 2nd plaintiff appointed the 1st plaintiff as his lawful attorney to use his Certificate of Title comprised in LRV 1393 Folio 11 Plot 39 at Kasita, Block 4, Buruli, Masindi District for purposes of securing a loan or any financial facility from any Bank or Financial Institution. On the 6th February, 1997, the 1st plaintiff secured from the defendant a loan of UGX 1,000,000/, on 14th May, 1997, she secured a loan of UGX 2,000,000/= and on 9th September, 1997, she secured a loan of UGX 3,000,000/=. All the above loans were secured by the Certificate of Title stated above to which the 1st plaintiff held powers of attorney.

The defendant also claimed a loan of UGX 3,000,000/= under an agreement dated 23rd January, 1998, which the plaintiffs denied knowledge of. On the 17th November, 1999, the defendant registered a caveat on the Certificate of Title and on 19th October, 1999, the defendant issued a notice to sell the property on the Title unless the 1st plaintiff paid a claimed balance of UGX 2,500,000/= which apparently was still due to the defendant on the loan facilities extended to her. On 21st December, 2000, the defendant wrote to the 1st plaintiff and stated that UGX 2,300,000/= had been recovered and the loan balance was UGX 700,000/=. On 29th June, 2001, the defendant wrote to the 1st plaintiff and indicated that the principal balance outstanding was UGX 312,400/=. The defendant later wrote off the sum of UGX 312, 400/=.

The plaintiff subsequently filed this suit against the defendant on allegations that the defendant had fraudulently recovered the loans in excess of the actual loans/sums obtained and that the interest recovered was excessive and illegal, that the defendant had unlawfully held the Certificate of Title and that the defendant had made utterances which were defamatory to the 2nd plaintiff.

On the other hand, the defendant denied the above allegations and stated in its written statement of defence that the caveat lodged, although erroneous, was not defamatory considering that the loans had been advanced under a power of attorney. Further, that upon default in repayment of the loans, the defendant recovered the outstanding amounts from the sale of the stock pledged as security.

At the scheduling conference, the following issues were agreed upon for determination:

  1. Whether the interest charged was excessive and illegal.
  2. Whether the defendant fraudulently recovered sums in excess of the loans.
  3. Whether the holding of the 2nd defendant’s Certificate of Title by the defendant is lawful.
  4. Whether the defendant created separate fictitious accounts for the plaintiffs.
  5. Whether the defendant defamed the 2nd plaintiff as alleged.
  6. Whether the plaintiff’s are entitled to the remedies sought.

However, during submissions, Counsel for the plaintiff rearranged and rephrased the issues and Counsel for the defendant adopted the same approach. The issues were re arranged as follows:

  1. Whether the defendant fraudulently recovered sums in excess of the actual loans obtained from the 1st plaintiff.
  2. Whether the holding of the 2nd plaintiff’s Certificate of Title by the defendant is/was lawful.
  3. Whether the interest recovered was excessive and illegal.
  4. Whether the utterances by the defendant to the second plaintiff were defamatory.
  5. Whether the plaintiff’s are entitled to the remedies sought.

The plaintiff was represented by Mr. Patrick Kasumba and the defendant was represented by Mr. James Katono and Mr. Nelson Nerima.

At the hearing, Counsel for the defendant raised a preliminary objection that the suit was time barred. Court advised that the objection would be raised at submissions and the same was raised then. I shall address this point of law that was raised by Counsel for the defendant first.

In his submissions, Counsel for the defendant cited Order 7 rule 11 of the Civil Procedure rules where it is stated that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred in law. Counsel submitted that in the present case, the cause of action stated in the plaint was based on allegations of breach of contract, breach of duty, professional negligence, fraud, defamation and misrepresentation, and that the plaint was filed in September, 2010, after expiry of the limitation period for those causes of action.

Counsel submitted that the plaintiffs alleged in their plaint that the loan agreements of 1997 were never explained to the plaintiff and that the defendant had recovered the loans within three months in total breach of contract. Further, that it was the plaintiff’s case that the 1st plaintiff had fully paid the loans in cash by 21st January, 1998 but the defendant had refused to return the certificate of title and that in 1999, the defendant, through its Advocate, had issued a notice to sell the land. Further, that the alleged defamatory caveat was lodged in 1999. In that regard, Counsel contended that the causes of action all arose in 1997, 1998 and 1999.

It was the further submission of Counsel that under the Limitation Act, an action founded on contract or tort could not be brought after six years from the date on which the cause of action arose. Counsel contended that the plaintiffs did not plead grounds of exemption from limitation yet the suit had been instituted more that 6 years after the alleged causes of action arose.

It was Counsel’s further contention that the plaintiff’s evidence also indicated that the plaintiff became aware of the alleged breaches between 1997 and 1999.

Counsel was of the view that the plaint ought to be rejected for the above reasons.

In reply, Counsel for the plaintiff submitted that when the dispute ensued, the plaintiff’s instantaneously started engaging the defendant seeking to know the account details and there were several correspondences in that regard. Further, that the issue of limitation could not arise considering that at some point during the hearing, the defendant admitted mistakes on its part. Counsel further contended that the plaintiff’s wrote several letters to the defendant demanding for bank statements to no avail. In that regard, Counsel contended that the plaintiff got to know of the fraud in 2007 and this suit was filed in 2010.

Counsel contended that the matter came to light in 2007 when the alleged loan of UGX 2,500,000/= could not be traced from the documents surrendered by the defendant.

I have considered the submissions of Counsel for either side and looked at the pleadings filed by the plaintiffs.

The purpose of the law of limitation is to put an end to litigation and this law is applied strictly. The court in Mohammad B. Kasasa Vs Jasphar Buyonga Sirasi Bwogi, Court of Appeal Civil Appeal No. 42 of 2008, cited Re Application by Mustapha Ramathan for Orders of Certiorari, Prohibition and Injunction, Civil Appeal No.25 of 1996, where Barko, JA, as he then was stated –

The application was in fact made on 25th day of April 1996.  That was obviously more than six months after the Minister’s order or decision.  We are not persuaded by learned Counsel’s argument that the judge ought to have based his calculation on the time the Minister’s decision was communicated to the appellant.

Statutes of limitations are in their nature strict and inflexible enactments.  Their overriding purpose is interest reipublicae ut sit finis litum, meaning that litigation shall be automatically stifled after fixed length of time, irrespective of the merits of the particular case.  A good illustration can be found in the following statement of Lord Greene M. R in Hilton Vs Sutton Steam Laundry [1946] 1 KB 61 at page 81 where he said-

“But the statute of limitations is not concerned with merits.  Once the axe falls, it falls, and a defendant who is fortunate enough to have acquired the benefit of the statute of limitation is entitled, of course, to insist on his strict rights”   

It is not in dispute that the time of limitation for instituting this action was six years. Section 3 of the Limitation Act provides that actions founded on contract or tort shall not be brought after the expiration of six years from the date on which the cause of action arose. However, Section 25 of the Limitation Act provides for the postponement of the limitation period in cases of fraud and states that the time of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake or could with reasonable diligence have discovered the fraud or mistake.

In the present case, from the pleadings, it is apparent that the plaintiffs’ cause of action arose between 1997 and 1999. However, the plaintiffs also pleaded fraud against the defendant. In such a case, it is paramount that the time when the fraud was discovered is pleaded in order for the time of limitation to be postponed as stated in Section 5 of the Limitation Act. It is also apparent that no specific date was stated in the pleadings as to when the fraud was discovered or when the plaintiffs got to learn of the fraud.      

However, a reasonable interpretation of the pleadings indicates that the alleged fraud came to the knowledge of the plaintiffs in 2007. The particulars of fraud as pleaded in the plaintiff’s pleadings were stated as follows:

  1. Charging monitoring fee of 2% on all loans advanced to the 1st plaintiff outside the professional procedure of making a proposal which should include an Activity work plan, budget, and accountability;
  2. Giving to the 1st plaintiff only the undated 2nd page and other loan documents for her signature while keeping away from her the 1st page which contained the material terms of the loan agreements;
  3. Refusal of the defendant to issue periodic statement of account to the 1st plaintiff as and when she requested for the same;
  4. Recovering the loan installments within periods of 3 months instead of the agreed 6 months.
  5. Charging the 1st plaintiff an aggregate interest of 3 months instead of the agreed 6 months;
  6. Deliberate refusal to return the post dated cheques to the 1st plaintiff upon full payment of the 1st, 2nd and 3rd loan installments in cash.
  7. Refusal to return the title to the suit land to the 1st plaintiff upon full payment of the 1st, 2nd and 3rd loans installments in cash by 21st January, 1998.

Paragraphs 13 to 15 of the plaintiff’s plaint state as follows:

13(a). That by letter dated 19th day of October 1999 from Kabanza & Co. Advocates and hereto attached and marked as Annexture “I”, the plaintiff received a notice to sell land comprised in LRV 1383 Folio 11 in which it was alleged that the 1st plaintiff had defaulted on a loan she obtained on 23rd January 1998 and that her balance was ug. shs. 2,500,000/= (Uganda Shillings Two Million Five Hundred Thousand only). This notice relied on a fictitious loan agreement purported to have been executed with the 1st plaintiff. A copy of the said fictitious loan which was not duly executed by the parties is hereto attached and marked as Annexture “J”

(b) Subsequently, the plaintiffs visited the Defendant bank management seeking for further particulars of the alleged loan and a statement of her account but the defendant did not furnish her with the relevant information. Copies of the correspondences to this effect dated 13th May, 2002, 14th July 2004 and the plaintiff’s lawyer’s letter in reply dated 19th July 2004 are attached hereto and marked as Annexture “K”, “L” and “M”.

14. That the plaintiff’s reported of the matter to the Criminal Investigations Directorate who tried to inspect and obtain some information pertaining to the 1st plaintiff’s account but despite the Court Order of 22nd October 2007, the bank persistently denied the Police Officer accessibility to some vital documents as required by Court…

15. that it was out of the Police investigations and the effort in October 2007 that the plaintiff’s obtained copies of the Loan Agreements (Annexture D, E and F hereto) and the 1st plaintiff’s Statement of Account a copy of which is hereto attached and marked as Annexture “T” and after its scrutiny, the 1st plaintiff discovered a lot of fictitious and unauthorized entries and overzealous charges on her account which she never authorized and agreed upon”.      

I find that the above indicates that the plaintiff got to know of the alleged entries and charges on her account upon being availed with loan agreements and Statement of account in 2007. With regard to the allegations of defamation, it was pleaded that the plaintiff’s got to know of the allegations of defamation in the year 2007. Paragraph 21 of the plaint reads as follows:

“That in the course of the plaintiffs trying to put right the 1st plaintiff’s relationship with the Defendant but after the year 2007, the Plaintiff’s discovered that by a caveat and accompanying Affidavit dated 08th November 1999 copies of which are already hereto attached and marked as Annexture “W”, the Defendant Bank negligently, falsely and maliciously wrote of and concerning the 2nd Plaintiff, the words following, that is to say:- …“    

It is trite law that in determining whether a suit is time barred or not, the Court has to look at only the pleadings and the attachments thereto, without necessarily taking into account the evidence. In the peculiar circumstances of this case, the time when the alleged fraud was discovered can be inferred from the facts and the documents attached to the pleadings, as being 2007.

In view of the above, I do not find merit with the preliminary objection raised by Counsel for the defendant that the suit was time barred.

ISSUE 1:                    Whether the defendant fraudulently recovered sums in excess of the actual loans obtained from the 1st plaintiff.

 

The plaintiff led a number of witnesses in regard to this issue.

The 1st plaintiff (PW1) testified that the defendant extended to her three loan facilities, to wit; loan of UGX 1,000,000/= advanced on 6th February, 1997, loan of UGX 2,000,000/= advanced on 14th May, 2007 and a loan of UGX 3,000,000/= advanced on 9th September, 1997. It was her testimony that the above loans were to be paid concurrently although she was never given copies of the loan agreements for her keeping. Further, that loan recoveries were carried out by the defendant without her prior knowledge and that she was never given recovery advises for all the transactions. It was her further testimony that the defendant did not avail her with a copy of her Statement of Account until 2007 when she applied to court and it was ordered that the defendant’s Hoima offices be inspected and that documents relating to the plaintiff’s account be released.

It was PW1’s further testimony that while the loan agreement she signed stated that interest was to be charged at the rate of 22% per annum and the repayment period agreed upon was 6 months, however, the defendant recovered the entire loaned amount in a period of 3 months, thus doubling the interest to 44% per annum.

It was her further testimony that on 21st October, 1999, she received a letter from the defendant’s Advocates (Kabanza & Co. Advocates) notifying her that the defendant intended to sell the land comprised in LRV 1383 Folio 11 known as Block 4 Plot No.39 at Buruli Masandi, and attached to the latter was a loan agreement dated 23rd January, 1998. Further, that the land as described above was not known to her and she had no knowledge about the loan agreement that was attached and that the signature on the loan agreement was different from the one she had signed on the specimen signature card, upon which she concluded that the same was fake.

The 2nd plaintiff (PW2) testified that on the 21st October, 1999, he received a letter from the defendant’s Advocates notifying him of the intended sale of his land, together with a copy of a loan agreement which was not signed and sealed by the bank. That he arranged a meeting with the defendant’s Advocate and he agreed to pay UGX 500,000/= considering that he was aware that his wife, the 1st plaintiff, had acquired a loan of UGX 3,000,000/=. He contended that on 25 November, 1999, he paid UGX 500,000/= and offered to the defendant 5 popcorn machines valued at UGX 250,000/= each, all totaling to UGX 1,250,000/=. In December, 2000, he received a letter from the defendant stating that the loan outstanding with consolidated balance was UGX 700,000/= (EXH P9). It was his testimony that on 29th June, 2001, the defendant’s loans officer informed him that the outstanding balance was UGX 312,400/= and upon going to the bank, he was satisfied when he was informed that the loan had been fully recovered by the 21st January, 1998.

It was his testimony that on 31st January, 2002, and 22, April, 2002, the 1st plaintiff’s Advocates requested the defendant’s General Manager, Kampala, for information regarding the loans but the defendant declined to avail the same. That by letter dated 14th July, 2004, (EXH P10), from the defendant, it was ascertained that the loan of UGX 3,000,000/= had fully been recovered by the defendant as of 21st January, 1998. However, that upon the plaintiffs going to the defendant’s offices, they were informed that the 1st plaintiff had another outstanding loan of UGX 3,000,000/=, and the matter was then reported to police.

Further, that in 2007, the plaintiffs received photocopies of sets of documents which had been passed on by the police during the investigation of the matter. It was then discovered that the 1st plaintiff had two different bank account numbers on one specimen signature card, the first page of the loan agreement in issue was dated but did not have space for signature of all the parties, the physical address was incorrect, there was no provision for the date on the 2nd page of the agreement and that the loan was recoverable in 3 months instead of six months. In that regard, it was his testimony that the defendant claimed for a loan which was fictitious. He contended that the loan agreement dated 23rd January, 1998, was a forgery since it was not signed by the bank official and that the defendant had failed to avail the original copy of the document.

PW3, Elianu Joseph, who was the police officer that investigated the alleged fraud against the plaintiffs, testified that upon going to the defendant’s Hoima Branch, the bank official he found forwarded to him the following documents in relation to this matter: a specimen signature card, Bank Statement of the 1st plaintiff for account No.1014492 that was hand written dated 22nd November, 1998 to 26th February, 1999, Bank Statement of the 1st plaintiff for account No.00149-0 that was machine written dated from 15th March, 1998 to 1st July, 2003, Loan agreement of 6th February, 1997 for UGX 1,000,000/=, Loan agreement of 14th May, 1997, for UGX 2,000,000, Loan agreement of 9th September, 1997, for  UGX 3,000,000/=.

It was his testimony that the bank did not give him any document in respect of the purported loan of 23rd January, 1998, no clear mention was made about it and the bank official refused to make a statement in relation to that loan. He testified that the authentic document which was given to him by the bank indicated that the 1st plaintiff had only obtained 3 loans of UGX 1,000,000/=, 2,000,000/= and 3,000,000/= respectively.

On the other hand, Mwebesa Sabei (DW1), who was the head of loan recovery with the defendant bank testified that by various loan agreements dated 6th February, 1997, 14th May, 1997, 9th September, 1997 and 23rd January, 1998, the defendant advanced to the 1st plaintiff as attorney of the 2nd plaintiff loan facilities. It was his further testimony that neither of the loan agreements was fictitious or a forgery.

DW1 further testified that the loan of UGX 3,000,000/= disbursed on 23rd January, 1998, was credited to the 1st plaintiff’s account less UGX 40,000/= which was the agreed commission of 2%. Further, that on 23rd January, 1998, UGX 500,000/= was withdrawn by cheque, on 28th January, 1998, UGX 300,000/= was withdrawn by cheque, on 30th January, 1998, UGX 900,000/= and UGX 1,000,000/= was withdrawn, on 2nd February, 1998, UGX 150,000/= was withdrawn and on 6th February, 1998, UGX 120,000/= was withdrawn. Further, that the account was charged ledger fees of     UGX 2,000/= and it remained with a balance of UGX 10,950/=.

Further, that on 26th February, 1998, the account was debited with UGX 442,500/= being the monthly installment payable on the said loan of 23rd January, 1998. He contended that the 1st plaintiff subsequently defaulted on the loan repayment and the defendant only made partial recoveries from the different amounts that were credited on the account and also sold the stock (popcorn machines) pledged as security in order to recover the loan.

DW1 testified that the defendant later wrote off the loan with an outstanding amount of UGX 321,400/=.     

In his submissions, Counsel for the plaintiff cited Kampala Bottlers Ltd Versus Damanico (U) Ltd Civil Appeal No.22 of 1992, where fraud was defined as actual or some act of dishonesty. In regard to the above, Counsel made reference to the evidence of PW1 that she had obtained a total of three loans which were all fully paid as of 21st January, 1998. However, that on 23rd January, 1998, the defendant created a loan of UGX 3,000,000/= and imposed it on the 1st plaintiff. Further, that the amount which was credited to the 1st plaintiff’s account on the said date was UGX 2,960,000/= which was done without her knowledge or consent. Counsel further submitted that there was no evidence of the committee loan approval report in regard to the above loan and that there were no documents of acceptance of disbursement of the loan authorizing the bank to credit her account as it had been with the first three loans.

Counsel further submitted that while the 1st plaintiff had applied for signature verification from the handwriting expert using photocopied documents because the original documents were in the defendant’s possession, the result was not fruitful since the expert wanted original documents. Counsel was of the view that the defendant ought to have applied for the verification exercise of which the result would have been useful to court. Counsel contended that the defendant’s failure to avail information with the view of hiding material facts was an act of dishonesty.

Counsel further submitted that the defendant had adduced two loan agreements with similar wording and signatures but one of the agreements had a question mark on the space for signature and the second agreement had a signature of the bank manager on top of the question mark. Counsel was of the view that the officer who had signed should have come to give clarity to court because the document had been signed in 2014 when this case was already in court.

Counsel further submitted that the creation of the fictitious loan of                      UGX 3,000,000/= and keeping it on record as outstanding in the bank books despite the several communications from the plaintiff was an intended fraud for which the defendant ought to be condemned. Counsel relied on Fredrick J.K Zaabwe Vs Orient Bank Ltd & Ors, SCCA No.4 of 2006, to support the above submission. Counsel further contended that the creation of the factious loan against the 1st plaintiff and the deliberate failure to rectify the position, coupled with the illegal recovery of the loans, refusal to execute a mortgage deed, denying the 1st plaintiff vital information concerning her account were all elements of fraud.

In reply, Counsel for the defendant submitted that the burden was upon the plaintiff to prove that the defendant fraudulently recovered excess sums of money. It was the submission of Counsel that the plaintiffs had not adduced evidence to prove that the loan agreement was a forgery and there was no expert evidence to prove the allegation.

Counsel further submitted that the plaintiffs conduct corroborated the defendant’s case that the loan agreement was genuine. First, that upon the plaintiffs receiving a letter and a copy of the loan agreement with a repayment schedule from the defendant’s Advocates, the 2nd plaintiff responded by letters dated 22nd October, 1999, and 7th November, 1999 and the 1st plaintiff wrote a letter requesting for a rescheduling of the loan into monthly installments from UGX 442,500/= to UGX 200,000/=. Further, that it was an agreed fact that the plaintiff made partial payment on the loan. It was Counsel’s view that the plaintiffs could not have undertaken to repay a fictitious loan. Counsel further submitted that while it was an agreed fact that the defendant wrote off a sum of UGX 312,400/=, it could not have been written off unless there was a debt owing. In this regard, Counsel stated that the plaintiff’s were estopped from denying the loan of 23rd January, 1998.

Counsel concluded that the plaintiffs did not point out any evidence of fiction or fraud against the defendant.

In rejoinder, Counsel for the plaintiffs submitted that the plaintiffs had proved that the defendant had obtained money from the 1st plaintiff using fraudulent means.

Counsel further submitted that while the defendant had taken five popcorn bursting machines from the 1st plaintiff to sell and pay off a loan of                       UGX 2,500,000/= allegedly obtained by the 2nd plaintiff, there was no evidence to show that this loan was ever obtained.

I have considered the pleadings, the evidence and the submissions of Counsel in regard to this issue.

It is not in dispute that the defendant had on several occasions advanced loan facilities to the 1st plaintiff; loan of UGX 1,000,000/= advanced on 6th February, 1997, loan of UGX 2,000,000/= advanced on 14th May, 2007 and a loan of          UGX 3,000,000/= advanced on 9th September, 1997. However, it was contended by the defendant that on the 23rd January, 1998, the 1st plaintiff acquired a 4th loan of UGX 3,000,000/= and the amount was credited to her account, less of UGX 40,000/= which was the agreed commission of 2%. It is also apparent from the 1st plaintiff’s statement of account that the defendant made recoveries from the 1st plaintiff’s account in regard to the above loan. On the other hand, the plaintiff’s deny that the 1st plaintiff ever applied for or was advanced with the above loan. It is the plaintiffs’ claim that the actions of the defendant in regard to the above alleged transaction were fraudulent.

The plaintiffs tendered in evidence a copy of the loan agreement dated 23rd January, 1998, which was apparently forwarded to them by the defendant’s Advocates while demanding for the repayment of the amounts owing arising from the said agreement. The agreement is not sighed or sealed by the defendant. It bears a signature which the 1st plaintiff avers is not hers and that it was not exactly the same that appeared on the specimen card signed by the 1st plaintiff. In regard to the absence of a signature on the part of the defendant on the said agreement, DW1 testified as follows during cross examination:

“Kasumba:                  Look at the signatures on the two documents, certified copy 32 and uncertified document on page 31. Do you see any problem there?

DW1:                 I can see a signature of Sunny Bigirwenkya on page 31, signature of Sunny Bigirwenkya on page 32, two signatures on behalf of the bank on 32, then on 31 only one signature on behalf of the bank and this is the credit officer.

Kasumba:          What about on top of Sunny Bigiwenkya?

DW1:                There is no signature of Sunny Bigirwenkya because the system is when we are giving out loans we first give the client to go through the contract and in most cases they make a copy to understand better, there are people to guide them and this was a photocopy before manager endorsement.”

I am not satisfied by the above evidence. First, the testimony of PW1 which was not challenged indicates that the above agreement was attached to the communication from the defendant’s Advocate dated 19th October, 1999, notifying her that if the said loan was not repaid, the land comprised in LRV 1383 Folio 11 would be sold in accordance with the loan agreement. This was more than a year after the loan agreement in issue had been executed. In that regard, I find the above explanation by DW1 that the agreement was a copy given to the 1st plaintiff for purposes of reading it before its execution unreasonable.

Further, I have also carefully looked at the certified copy of the agreement tendered in evidence by the defendant as being the true copy of the agreement and which bears a signature, contrary to the agreement tendered in evidence by the plaintiffs. It appears to me that the said signature was affixed on the copy of the agreement bearing the question mark that appears on the agreement that is contended by the defendant as having been a reading copy before the actual execution of the agreement. I accept the evidence of the plaintiffs that the said agreement was not initially signed or sealed on behalf of the defendant.

With regard to the signature that appears on the document as having been affixed by the 1st plaintiff, it appears to me that the plaintiffs made an attempt to verify the same from an expert, but the report is not of help. The forensic examiner stated the following findings in his report (EXH P42):

“Findings.

I have examined and compared the questioned and specimen signatures and found the following.

1.The question signatures and the specimens are in photocopy form therefore some of the fine qualities cannot be examined. However the general features are readable and comparable.

I have observed some differences in the manner of execution of letters B, w, spelling in B2, w-e combination and general combinations. The letter U in B2 after letter g is not seen in the specimen signatures. However, I have also observed similarities in some of the characters e.g k, y, g, general slant and skill. The specimen signatures marked S1 to S4 have 10 specimens which show a very wide range of variations. In the circumstances where there are both similarities and differences and the samples have wide range of variations among themselves evidence of suspected simulation or forgery can best be detected by looking at the original ink lines. Therefore a conclusive opinion cannot be expressed until the original documents are very closely examined”

In view of the above, it is quite difficult to make a finding as to whether the signature on the document was indeed a forgery as alleged by the plaintiffs. However, the circumstances surrounding the matter are of help in determining whether the loan in issue was actually advanced to the 1st plaintiff.

The evidence of PW2 was that on 21st October, 1999, he received a letter dated 19th October from the defendant’s Advocates notifying him of the intention to sell his land and the agreement in issue was attached. It was his evidence that being aware that the 1st plaintiff had acquired a loan of UGX 3,000,000/=, he wrote a letter promising to pay UGX 500,000/= and also offered to the defendant 5 popcorn bursting machines, which all totaled to UGX 1,250,000/=, whereupon he demanded for a loan recovering statement, followed by a reminder dated 2nd January, 2000. From the evidence on record (EXH P43), the 1st plaintiff also wrote to the defendant requesting for a rescheduling of the monthly installments from UGX 442,500/= to UGX 200,000/=. In Counsel for the defendant’s opinion, the above conduct on the part of the plaintiffs was evidence that the 1st plaintiff had obtained the loan in issue.

In reference to the above, PW1 and PW2 testified that they made the above communications thinking that the loan which was being made reference to was the loan of UGX 3,000,000/= advanced to the 1st plaintiff on 9th September, 1997.

However, from the loan repayment schedule attached to the agreement in issue, the 1st plaintiff had the obligation of paying the loan in installments of                UGX 442,500/= per month, which is the same amount the plaintiff mentioned in her request for the reschedule to the defendant. I have looked at the repayment schedule of the UGX 3,000,000/= advanced to the 1st plaintiff on 9th September, 1997, and the amount of UGX 442,500/= is not stated anywhere on the agreement. During cross examination PW1 testified that in regard to the loan of UGX 3,000,000/= advanced on 9th September, 1997, she was paying                     UGX 270,000/= and not 442,500/= which was stated in her letter to the defendant.

I have taken into consideration the fact that on several occasions the plaintiffs requested the defendant for the Loan recovery statements which the defendant did not avail, and which was unfair to the plaintiffs. However, I find that from the conduct of the plaintiff’s they were at all material times aware of the outstanding loan of UGX 3,000,000/= advanced to the 1st plaintiff on 23rd January, 1998.

The 1st plaintiff’s account statement indicated that the amount of UGX 2,940,000/= was credited to the 1st plaintiff’s account on 23rd January, 1998. DW1 indicated that an amount of UGX 40,000/= which was the agreed commission of 2% was deducted off the UGX 3,000,000/=. Counsel for the plaintiffs contended that there was no document of disbursement of the loan authorizing the bank to credit the 1st plaintiff’s account. However, in my opinion, by the 1st plaintiff signing the loan agreement, she agreed that her account would be credited with the said amount of money.

The account statement further indicates that the said amount was withdrawn from the account on different dates by cheque and by transfer to another account from 23rd January, 1998, to 6th February, 1998. It was the submission of Counsel for the plaintiff that PW3, during his investigations had requested for cheques in regard to the above withdraws and additional documents which were all not availed to him. Counsel contended that the above documents were not tendered in evidence by the defendant. First, it is an established principle of law that he who alleges must prove. (See Section 101, 102 and 103 of the Evidence Act. The burden to prove that the withdraws indicated on the statement were fictitious was upon the plaintiffs and not the defendant. Further, the plaintiffs were represented by Counsel who is presumed to known the procedure for obtaining documents in the possession of another party. In that regard, I find that it is not fair to blame the defendant’s for failure to tender documents in its possession considering that there is no evidence that it was ordered to do so but did not heed.

The evidence from the record indicates that with effect from 26th February, 1998, the defendant started recovering the loan from the 1st plaintiff’s account. On 26th February, 1998, the defendant made a loan recovery of UGX 442,500/=, on 23rd March, 1998, UGX 118,000 was recovered, on 26th March, 1998, UGX 200,000/= was recovered, on 27th March, 1998, UGX 80,000/= was recovered, on 27th March, 1998, UGX 50,000/= was recovered, on 27th April, 1998, UGX 90,000/= was recovered, on 6th May, 1998, UGX 200,000/= was recovered, on 27th July, 1998, UGX 25,000/= was recovered, on 27th July, 1998, 25,000/= was recovered, on 21st August, 1998, UGX 70,000/= was recovered, on 29th October, 1998,                     UGX 290,000/= was recovered, on 15th December, 1998, UGX 91,400/= was recovered and on 25th January, 1999, UGX 46,400/= was recovered, on 29th January, 1999, UGX 50,000/= was recovered, on 17th March, 1999, UGX 42,800/= was recovered, on 23rd March, 1999, UGX 60,000/= was recovered, on 26th November, 1999, UGX 490,800/= was recovered, on 30th December, 1999,        UGX 47,400/= was recovered, on 14th March, 2000, UGX 228,400/= was recovered by the defendant. It appears from the statement that subsequently, the loan was written off by the defendant.  

From the testimony of PW2, he later paid UGX 500,000/= and offered the defendant popcorn machines from which the bank further made recoveries to settle the plaintiff’s outstanding balance on the loan. The amount of                   UGX 500,000/= appears on the bank statement as having been credited to the account on 26th November, 1999, and then debited in loan recovery on the same date. With regard to the value of the popcorn machines or how many were given to the defendant by the 2nd plaintiff cannot be ascertained. However, i also note that the amount recovered was short of the amount owing to the defendant under the agreement.

I have taken into consideration the fact that the agreement was not signed by the bank official. However, I am convinced that the defendant advanced to the 1st plaintiff a loan of UGX 3000,000/= upon which the defendant was in default. I find that the defendant did not make any fraudulent recoveries in excess of the loans advanced to the 1st plaintiff.

In view of the above, issue one is answered in the negative.

ISSUE 2:                    Whether the holding of the 2nd plaintiff’s Certificate of Title by the defendant is/was lawful.

 

Both PW1 and PW2 testified that the 2nd plaintiff (PW2) granted powers of Attorney to the 1st plaintiff (PW1) to use his Certificate of Title for land comprised in LRV 1393 Folio 11, for purposes of obtaining a loan from the defendant, which was so used to obtain loans from the defendant. PW1 testified that even after the loan recoveries had been fully carried out, the defendant lodged a caveat on the Land Title a year later.

PW2 (2nd plaintiff) testified that on 8th November, 1999, the defendant lodged a caveat on his land described above while alleging that he had obtained a loan of UGX 2,500,000/=. It was his testimony that the defendant had unlawfully retained his title for a period of 15 years on allegations that he owed the bank. Further, that the defendant lost his Certificate of Title and replaced the same with Special Certificate of Title.

On the other hand, DW1 testified that the defendant could not hand over the title pledged as security while the loan obligation remained unpaid. It was his testimony that the title was handed back to the plaintiffs when the outstanding amount was written off.

In regard to this issue, Counsel for the plaintiff submitted that despite having recovered all the loan sums, the defendant went ahead to illegally lodge a caveat on the 2nd plaintiff’s Certificate of Title. It was Counsel’s submission that the defendant should not have lodged a caveat on the said title because the loan was attached to land comprised in LRV 1383 and yet the 2nd plaintiff’s land was comprised in LRV 1393.

Counsel contended that the prolonged holding of title was illegal and unlawful considering that the 1st plaintiff’s loan had been duly paid off, PW2 had never obtained a loan of UGX 2,500,000/= and that the defendant had admitted that the title had been held in error.

In reply, Counsel for the defendant submitted that for as long as the loan owing to the defendant had not been paid in full, the defendant had a right to retain the Certificate of Title as security. Counsel further submitted that upon the defendant making recoveries and a balance of UGX 321,400/= being written off, the Certificate of Title was returned to the 2nd plaintiff.

Counsel admitted that indeed the Certificate of Title was lost while in the possession of the defendant, whereupon a Special Certificate of Title was applied for and obtained. Counsel relied on Section 70 of the Registration of Titles Act, and submitted that a special certificate of title was valid and could no put the 2nd defendant to shame as had been alleged.  

In rejoinder, Counsel for the plaintiff submitted that the allegations of losing the certificate of title were suspect considering that the certificate of title got lost in 1999 but the plaintiffs were only informed about its loss after 10 years, and after the plaintiffs had petitioned Bank of Uganda in regard to the same.

It is not in dispute that by Powers of Attorney dated 7th May, 1997, the 2nd defendant appointed the 1st plaintiff to use his Certificate of Title for land comprised in LRV 1393 Folio 11, Plot 39 at Kasita, Block 4, Masindi. It is also an agreed fact that the 1st plaintiff obtained three loans, which were secured by the said Certificate of Title; it appears that the said loans were fully paid off by the plaintiffs.

It appears that the said Certificate of Title was further held by the defendant in regard to the loan obtained on 23rd January, 1998. I have looked at the loan agreement dated 23rd January, 1998, and the land held as security for the loan was described as Land at Kasita Bukuli Plot 39 Block 4, Masindi, which is apparent was the 2nd plaintiffs land. In the letter dated 19th October, 1999, written by the defendant’s Advocates to the 1st plaintiff notifying her of the intention to sell the land, it was described as LRV 1383 Folio 11. I am convinced by the evidence of DW1 that this was just an error where the land was described as LRV 1383 instead of 1393. In that regard, I do not accept the submission of Counsel for the defendant that the loan was attached to land comprised in LRV 1383 and not 1398.

The Court in Fredrick J.K Zaabwe Vs Orient Bank & 5 others, Supreme Court Civil Appeal No.04 of 2006, cited Black’s Law Dictionary, where power of attorney was defined as an instrument in writing whereby one person, as principal, appoints another as his agent and confers authority to perform certain specified acts or kinds of acts on behalf of the principal. (Also see Section 146 of the Registration of Titles Act).

In the present case, the 2nd plaintiff gave a power of attorney to the 1st plaintiff upon which she based to pledge the Certificate of Title in issue as security. I have already made a finding above that the 1st plaintiff still owed the defendant sums of money arising from the loan extended to the 1st plaintiff by agreement dated 23rd January, 1998. In that regard, the defendant had a right to retain the Certificate of Title until the loan was fully paid.

While it is true that the original Certificate of Title was lost, it is apparent that the defendant obtained a Special Certificate of Title which was handed back to the 2nd defendant.

DW1 admitted that it was erroneous to lodge the caveat while indicating that the 2nd plaintiff had obtained a loan of UGX 2,500,000/=. However, I find that it was not wrongful to lodge the caveat considering that the 2nd plaintiff as a donee of a power of attorney had authorized the 1st plaintiff to pledge the title of the land as security and indeed the loan had not been fully paid. Therefore, the caveat that was lodged on the title was lawful.

In view of the above, this issue is answered in the negative.

ISSUE 3:      Whether the interest recovered was excessive and illegal.

 

In her testimony, the 1st plaintiff testified that upon obtaining the loan facilities from the defendant bank, loan recoveries were carried out by the defendant without her knowledge and that she was never given loan recovery advises. Further, that for every loan agreement she signed, the interest to be charged was at the rate of 22% per annum and the repayment period agreed was 6 months according to the loan approval documents. It was her testimony that the defendant, however, recovered all their loaned money in a period of 3 months, which would double the interest to 44% per annum.

It was the 1st plaintiff’s further testimony that the defendant charged a monitoring fee at the rate of 2% per annum and because the loans were recovered in a period of 3 months, this would come to 48% per annum.

It was her testimony that in view of the above, she paid an additional fee of    UGX 138,200/= in respect of the first loan and UGX 276,400/= in respect of the second loan. With regard to the 3rd loan of UGX 3,000,000/=, the 1st plaintiff contended that while it had been agreed that she would repay the loan in a period of 6 months, however, it was altered and changed to 3 months on some documents.

On the other hand, DW1 testified that the loan of UGX 1,000,000/= was repayable in 6 monthly installments with an interest of 1.8% per month and a monitoring fee of UGX 2% per month. The second loan of UGX 2,000,000/= was repayable in 6 monthly installments with an interest of 1.83% per month and a monitoring fee of 2% per month. The 3rd loan of UGX 3,000,000/= was repayable in 3 monthly installments with an interest of 1.83% per month plus a monitoring fee of 2% per month. The 4th loan of UGX 3,000,000/= was repayable in 8 monthly installments with an interest of 1.83% per month and a monitoring fee of 2% per month. It was his testimony that the interest and monitoring fees charged were on a reducing balance and not on the original principal sum.

It was DW1’s testimony that the bank’s policy was that a borrower would be allowed to complete payment of a loan before expiry of the loan period so as to be able to take another loan. In that regard, that the 1st loan of UGX 1,000,000/= was taken on 6th February, 1997, and was supposed to run up to August, 1997. However, it was paid off on 9th May, 1997, when the borrower paid                       UGX 599,150/= instead of UGX 189,700/=. Further, that the loan of                       UGX 2,000,000/= obtained on 14th May, 1997, was supposed to run up to November, 1997. However, that on 9th September, 1997, the 1st plaintiff paid    UGX 1,090,300/= and cleared of the loan. The loan of UGX 3,000,000/= obtained on 9th September, 1997, was supposed to run up to February, 1998, but the 1st plaintiff paid it off in January, 1998.

Counsel for the plaintiffs submitted that the defendant made recoveries for each of the above stated loans in a period shorter than the agreed time and thereby violating the agreement. In Counsel’s view, the above was a calculated transaction designed to extort money from the 1st plaintiff in the form of interest. Counsel relied on Ronald Kasibante Vs Shell Uganda Ltd [2008] HCB 162, and submitted that the above actions amounted to breach of contract.

Counsel further submitted that there was no evidence to the effect that the 1st plaintiff was aware of the bank policy that the amounts could be recovered before the date for payment was due. Counsel contended that the bank had acted on a frolic of its own and recovered interest for a period of three months which was a violation of banking regulations. Counsel submitted that the banking regulations were to the effect that if a borrower wishes to terminate his/her loan obligation earlier than the agreed period, the borrower would inform the bank in writing and that the bank would stop charging interest in full range on the date it received the communication. Counsel contended that the usual practice was that the borrower would apply for and get as many loans in the same bank on different dates and months in the same year provided that his/her security and repayment record was good.

Counsel further contended that the monitoring fee of 2% per month was a disguised way of acquiring income for the defendant and in order for such a fee to be levied, there must have been a deed detailing its purpose which would be beneficial to the borrower.

In reply, Counsel for the defendant submitted that DW1 had testified on how the interest was computed and his evidence was not challenged in cross examination. Further, that while Counsel for the plaintiffs made reference to acceptable normal procedures, he did not indicate any legal basis of the same or even factual basis.

Counsel contended that the loans advanced to the 1st plaintiff were short term loans and the amounts repayable were not excessive or illegal.

I have carefully considered the evidence on record and the submissions of Counsel in regard to this issue.

First, while Counsel for plaintiffs makes reference to the Regulations which should have been applied in recovering the loans in a shorter time than had been agreed upon, I have not come across such Regulations, neither did Counsel avail them to Court so as to make a decision basing on the same. It is also apparent that this matter did not fall under guideline 6 of the Bank of Uganda Financial Consumer Protection Guidelines, 2011, which provides for the cooling off period, considering that recoveries were done more than 10 working days after the loan agreements were signed.

It is apparent that indeed the defendant recovered the loans in a shorter period than what had initially been agreed between the parties. I also note that indeed the 1st plaintiff would be given a further loan in very little time after the initial loan would be recovered. I find that there is no law or practice that restrained the 1st plaintiff to pay off the loans earlier than the time that had been agreed between the parties. I believe the testimony of DW1 that the 1st plaintiff would pay off the loans earlier that was agreed in order to be able to obtain further loans considering that she was using the same security.

In his evidence, DW1 indicated that the interest and monitoring fees charged on the loans were on a reducing balance, and not on the original principal sum. This essentially means that no further interest would be paid on the principal amount that had been paid up and, therefore, the 1st plaintiff did not pay interest on the sums for the money recovered in advance. There was no documentary evidence on record to prove otherwise. It would have been prudent for Counsel for the plaintiffs to apply for discovery of documents from the defendant, since the burden was upon the plaintiff to prove that the defendant had charged interest for the entire period yet the loans had been recovered in a shorter period.

With regard to the monitoring fee, I find that this term was contractual and the 1st plaintiff was aware of the same at the time she obtained the loans. There is no law that required for a deed in that regard to be in place, as Counsel for the plaintiff intended for this Court to believe.

In view of the above, I find that the plaintiffs have failed to prove that the interest recovered by the defendant was excessive and illegal.

ISSUE 4:                    Whether the utterances by the defendant to the second plaintiff were defamatory.

 

The 2nd plaintiff testified that the defendant lost his certificate of title and processed a special certificate of title. He contended that the special certificate of title reduces his credibility and puts him to shame because to whomever he produces the said document imagines that he was a careless person who could not take care of the document. Further, that the act of the defendant lodging a caveat on the land while indicating that the 2nd plaintiff had obtained and defaulted in paying off a loan of UGX 2,500,000/= was defamatory to his character.

PW4, David Byensi, who stated that he was a retired public officer, testified that he had known the 2nd plaintiff for a long time and that he had never heard of any misconduct regarding him.

In regard to this issue, Counsel for the plaintiff submitted that the plaintiff was a man of repute in society until the defendant laid false claims that he took a loan of UGX 2,500,000/=, and went ahead to sell off his popcorn machines. Counsel further stated that the 2nd plaintiff had never taken the said loan and did not have a bank account with the defendant bank.

Counsel contended that the above actions by the defendant were a calculated arrangement intended to defraud the plaintiffs and spoil their image and reputation in the eyes of the public, including their customers and colleagues. Further, that the public witnessed the unacceptable way in which the defendant harassed the plaintiffs. It was Counsel’s further contention that the defendant made false and malicious statements in the affidavit sworn for lodgment of caveat on 8th November, 1999.

Counsel submitted that since the affidavit was a public document, the information therein was accessed and read by anyone who accessed the file. Further, that people who were desirous of buying the land found a caveat and did not buy the same.

Counsel relied on Geoffrey Ssejoba Vs Rev. Patrick Rwabugonji, High Court Civil Suit No. 1 of 1976, and submitted that the utterances by the defendant lowered the 2nd plaintiff in the eyes of the right thinking members of society and many looked at him with contempt and fear.

In reply, Counsel for the defendant submitted that in the affidavit for lodgment of the caveat, the 2nd plaintiff was referred to as the borrower, but the actual borrower was the 1st plaintiff. However, that the 2nd plaintiff had given powers of attorney to the 1st plaintiff and therefore the 1st plaintiff was the 2nd plaintiff’s agent. In that regard, Counsel was of the view that referring to the 2nd plaintiff as borrower did not amount to defamation.

Counsel further submitted that the plaintiffs had not presented any evidence that the caveat was published to anyone and there cannot be defamation without publication. Further, that no witness was called to prove that the reputation of the 2nd plaintiff was injured by the said affidavit.

In rejoinder, Counsel for the plaintiffs submitted that the certificate of title was a public document and that the information stated therein must have been accessed by any person.

I have already made a finding above that the defendant had a right to lodge a caveat on the certificate of title considering that the 2nd plaintiff had given powers of attorney to the 1st plaintiff in regard to the same, who had in turn pledged the title as security to the defendant. I also do not accept the evidence of the 2nd plaintiff that a special certificate of title had reduced his credibility, pride and puts him to shame. A special certificate of title is a document recognized under the law and if presented to any right thinking member of society, they would not ridicule or think lowly of a person in possession of the same.

It is also the plaintiff’s case that the affidavit sworn by the defendant while lodging the caveat was defamatory. Counsel indicated the following phrases in the affidavit as being defamatory:

“3. THAT JOHN FRANCIS BIGIRWENKYA KATABARWA deposited in the bank a certificate of title of the above property as security for the loan.

4. THAT the said JOHN FRANCIS BIGIRWENKYA KATABARWA has failed to service the loan.

5. THAT I swear this affidavit to show that the bank has a lien over the property which should not be disposed off without the knowledge and consent of the bank

A defamatory statement was stated in Geofrey Ssejoba Vs Rev. Patrick Rwabugonji (Supra), as one which has a tendency to injure the reputation of the person to whom it refers, by lowering him in the estimation of right thinking members of society generally and in particular to cause him to be regarded with feelings of hatred, contempt, ridicule, fear, dislike and disesteem. In determining the test whether a statement is defamatory or not, the Court in Hon. Justice Peter Onega Vs John Jaramogi Oloya, High Court Civil Suit No. 114 of 2009,  cited  East African Standard Vs. Gitan [1970] 678, at page 681, where Spry, Ag. P, as he then was, stated as follows:

The test of what is defamatory is whether the words complained of would tend to lower the reputation of the plaintiff in the opinion of right-thinking persons.   I do not think this is a case where the words used would be analyzed too closely.   I think we should look at the general impression they are likely to create in the minds of reasonable persons.” Also See Lewis Vs. Dairly Telegraphy [1963] 2 All E.R. 151”.

In the present case, it is clear that in the affidavit, the defendant referred to the 2nd plaintiff had an outstanding loan with the defendant which he had failed to service. However, it is also true that the 2nd plaintiff had given powers of attorney to the 1st plaintiff to use his certificate of title for purposes of obtaining loans from the defendant. Besides, the 2nd defendant has not proved that the affidavit was ever made available to his clients so as to create ridicule or tarnish his reputation as he alleges.

The caveat lodged on the 2nd plaintiff’s certificate of title, who had given powers of attorney to the 1st plaintiff to use in obtaining loans was not defamatory in any way.

In view of the above, I answer this issue in the negative.

In conclusion, based on my findings above, I find that the plaintiffs are not entitled to any of the remedies sought. They have not proved that they are entitled to general or special damages.

I accordingly dismiss this suit with costs to the defendant.

It is so ordered.

 

 

B. Kainamura

Judge

27.09.2016