Court name
High Court of Uganda
Judgment date
30 October 2020

Kitgum Co-Operative Savings and Credit Society Limited v Okonya (Civil Appeal-2018/85) [2020] UGHC 162 (30 October 2020);

Cite this case
[2020] UGHC 162
Short summary:

Civil Procedure —Order 8 rule 3 of The Civil Procedure Rules

Evidence — section 28 of The Evidence Act

Headnote and holding:

Civil Procedure —Order 8 rule 3 of The Civil Procedure Rules—Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the opposite party, is taken to be admitted.

Evidence — section 28 of The Evidence Act— admissions are not conclusive proof, but may estop. An allegation of fact admitted expressly or constructively by the opponent, need not be proved. The effect of the defendant admitting facts pleaded in the plaint is that there is no issue between the parties on that part of the case which is concerned with those matters of fact. — Parol Evidence Rule — sections 91 and 92 of the Evidence Act — When the terms of a contract have been reduced to the form of a document, no evidence of any oral agreement or statement for the purpose of contradicting, varying, adding to or subtracting from its terms may be admitted or given in proof of the terms of that contract except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible.

 
Coram
Mubiru, J

IN THE HIGH COURT OF UGANDA SITTING AT GULU

Reportable

Civil Appeal No. 0085 of 2018

In the matter between

KITGUM CO-OPERATIVE SAVINGS                                                APPELLANT

AND CREDIT SOCIETY LIMITED

And

OKONYA JOHN CALVIN                                                                 RESPONDENT

Heard: 23 June, 2020

Delivered: 30 October, 2020.

JUDGMENT

STEPHEN MUBIRU, J.

Introduction:

  1. The appellant sued the respondent for the recovery of a sum of shs. 2,670,000/= interest and costs. The appellant’s claim was that by an agreement signed on or around 3rd August, 2007 the appellant advanced to the respondent a loan in the sum of shs. 5,428,000/= inclusive of interest. The money was repayable within one year with a 3% surcharge on default. The respondent made part payment in the sum of shs. 5,428,000/= but defaulted in the amount claimed, being the principal sum of shs. 1,448,000/= and a surcharge of shs. 1,222,000/= hence the suit.
  2. The respondent refuted the appellant’s claim. He acknowledged having received a loan in the sum of shs 4,600,000/= on 3rd August, 2007 but stated that by payment of a total sum of shs. 5,428,000/= to the appellant, he had paid the loan in full, inclusive of accumulated interest. He prayed that the suit be dismissed.

The appellant's evidence in the court below:

  1. P.W.1 Bob Odongpiny the appellant’s Credit Supervisor testified that on 26th July, 2007 the respondent borrowed a sum of shs. 4,600,000/= repayable in six months at 3% interest, hence shs. 5,428,000/= (loan repayment schedule tendered as exhibit P. Ex.1). The respondent was to pay shs. 904,667/= per month. Upon default, he was to pay a surcharge of shs. 500/= per day, hence shs. 13,000/= per month. The respondent paid the first instalment on 25th August, 2008. On 16th February, 2009 he paid shs. 1,000,000/= but inadvertently a figure of shs. 130,000/= was entered in the ledger. On 20th March, 2009 he paid shs. 2,500,000/= but inadvertently a figure of shs. 200,000/= was entered in the ledger. The figures were reconciled following the respondent’s production of deposit slips dated 16th February, 2009 and 20th March, 2009 (the two deposit slips tendered as exhibits P. Ex.3 (A) and P. Ex.3 (B), which had inadvertently not been reflected on the repayment ledger. He thus had an outstanding balance of shs. 1,448,000/= at the end of the loan period (loan repayment ledger tendered as exhibit P. Ex.2). Having defaulted for 94 months, that sum attracted a surcharge of shs. 1,222,000/=

The respondent's evidence in the court below:

  1. D.W.1 Okoya John Calvin testified that on 26th July, 2007 he borrowed a sum of shs. 4,600,000/= from the appellant repayable in six months at 3% interest, hence shs. 5,428,000/= in instalments of shs. 904,667/= per month. He made the first payment in the sum of shs. 1,000,000/= on 7th August, 2007 for the instalment due on 3rd September, 2007 (account statement tendered as exhibit D. Ex.1). He withdrew that amount from his account on 3rd September, 2007 and paid it to the appellant’s Credit Officer in cash but he lost the receipt that was issued to him. His business having experienced a set-back, he wrote to the appellant on 24th September, 2007 requesting for an extension of the loan period (exhibit D. Ex.2). He resumed payment on 25th August, 2008 with a deposit of shs. 300,000/= (exhibit D. Ex.3). On 17th November, 2008 he made a further payment of shs. 630,000/= (exhibit D. Ex.4). On 16th February, 2009 he made a further payment of shs. 1,000,000/= (exhibit D. Ex.5). On 20th March, 2009 he made a further payment of shs. 2,500,000/= (exhibit D. Ex.6). He therefore paid the loan in full. Although he has no receipt to show that on 3rd September, 2007 he paid shs. 1,000,000/= to the appellant’s Credit Officer in cash, he stated so in his letter of 24th September, 2007 requesting for an extension of the loan period (exhibit D. Ex.2).

Judgment of the court below:

  1. In his judgment delivered on 18th October, 2018 the trial Magistrate found that there was no evidence to support the claim that the respondent defaulted on the loan repayment. The documentary evidence presented to the court showed that the respondent paid the first instalment on 3rd September, 2007. Evidence of payment of the subsequent instalments is supported by receipts. When the figures are totalled, it was clear that the respondent paid the outstanding balance in full, inclusive of interest. The suit was accordingly dismissed.

The grounds of appeal:

  1. The appellant was dissatisfied with the decision and appealed to this court on the following grounds, namely;
  1. The trial Magistrate erred in law and fact when he failed to properly evaluate the documentary evidence before him, and relied on hearsay and contradictory evidence presented by the respondent thereby coming to a wrong decision.
  2. The trial Magistrate erred in law and fact when he relied on the evidence of the respondent which was incredible and unbelievable and a pack of lies, and rejected the appellant’s evidence which was more credible.

Arguments of Counsel for the appellant:

  1. Counsel for the appellant did not file submissions.

Arguments of Counsel for the respondents:

  1. However, counsel for the respondent, submitted that the respondent adduced documentary evidence which was not objected to during the trial. The content of that evidence speaks for itself and the respondent required no further proof of payment. The trial Magistrate did not misdirect himself when he relied on that evidence and therefore came to the right conclusion. The appeal ought to be dismissed.

Duties of a first appellate court:

  1. It is the duty of this court as a first appellate court to re-hear the case by subjecting the evidence presented to the trial court to a fresh and exhaustive scrutiny and re-appraisal before coming to its own conclusion (see Father Nanensio Begumisa and three Others v. Eric Tiberaga SCCA 17of 2000\ [2004] KALR 236). In a case of conflicting evidence, the appeal court has to make due allowance for the fact that it has neither seen nor heard the witnesses, it must weigh the conflicting evidence and draw its own inference and conclusions (see Lovinsa Nankya v. Nsibambi [1980] HOB 81).
  2. In its appellate jurisdiction, this court may interfere with a finding of fact if the trial court is shown to have overlooked any material feature in the evidence of a witness or if the balance of probabilities as to the credibility of the witness is inclined against the opinion of the trial court. In particular, this court is not bound necessarily to follow the trial magistrate’s findings of fact if it appears either that he or she has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on demeanour of a witness is inconsistent with the evidence in the case generally.

Grounds one and two: failure to properly evaluate evidence.

  1. The two grounds of appeal are hereby considered concurrently. It is common ground that on 26th July, 2007 the respondent borrowed a sum of shs. 4,600,000/= from the appellant repayable in six months at 3% interest, hence shs. 5,428,000/= in instalments of shs. 904,667/= per month. Upon default, he was to pay a surcharge of shs. 500/= per day, hence shs. 13,000/= per month.
  2. The underlying question in this appeal turns on who bears the burden of proof and the correlative risk of non-persuasion regarding the amount owed on a disputed claim in a debt recovery case. Whereas under section 102 of The Evidence Act the burden of proof lies upon the party who invokes the aid of the law and substantially asserts the affirmative of the issue, sections 103 and 104 of the same Act recognise that the burden of proof as to any particular fact may be cast on the person who wishes the Court to believe in its existence. Unlike the substantive burden of proof, the evidential burden (of going forward) is primarily a procedural matter pertaining to the order of presenting evidence based on the fact that “he who asserts must affirm” (see Jovelyn Barugahare v. Attorney General S.C. C.A. No 28 of 1993). The burden of proof is often outcome determinative while the evidential burden (of going forward) is not.
  3. Like in all civil suit, the burden of proof lies on the creditor. Once there is a prima facie showing of an indebtedness or obligation to pay, the burden of proving the facts regarding payment is on the party who alleges payment, ordinarily the debtor. A prima facie case of indebtedness shifts the burden of production of evidence on the question of the correct payoff amount, to the debtor. Once the facts regarding payment have been demonstrated, the creditor then has the burden of proving that the payment was not effective to extinguish the debt or to satisfy the lien. The creditor thus bears the ultimate burden of persuasion.
  4. Order 8 rule 3 of The Civil Procedure Rules provides that every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the opposite party, is taken to be admitted, while section 28 of The Evidence Act provides that no fact need be proved in any proceeding which by any rule of pleading in force at the time they are deemed to have admitted by their pleadings. However, according to section 28 of The Evidence Act, admissions are not conclusive proof, but may estop. An allegation of fact admitted expressly or constructively by the opponent, need not be proved (see Pioneer Plastic Containers Ltd v. Commissioner of Customs and Excise [1967] 1 All E R 1053). The effect of the defendant admitting facts pleaded in the plaint is that there is no issue between the parties on that part of the case which is concerned with those matters of fact.
  5. In the instant case, apart from the respondent’s admission of having borrowed that sum, the appellant also supplied the loan repayment schedule (exhibit P. Ex.1) and the loan repayment ledger (exhibit P. Ex.2) which together provided the principal balance on which the appellant had based its calculations regarding the extent of the respondent’s indebtedness. The evidential burden (of going forward) then shifted to the respondent requiring him to provide evidence proving that he made payments that were effective to extinguish that debt.
  6. One rebuts evidence with counter-evidence. The respondent proved payment of three instalments by way of deposit slips. The respondent then sought to prove payment of the 1st instalment by way of a letter and oral testimony explaining it. The respondent claimed to have withdrawn cash from his account on 3rd September, 2007 and paid it to the appellant’s Credit Officer but he lost the receipt that was issued to him. He incorporated the claim the he paid that sum in the letter he wrote to the appellant on 24th September, 2007 requesting for an extension of the loan period (exhibit D. Ex.2). However, there is no evidence that the payment was ever acknowledged by the appellant or that the extension of time he requested for was given.
  7. According to sections 91 and 92 of The Evidence Act, when the terms of a contract have been reduced to the form of a document, no evidence of any oral agreement or statement for the purpose of contradicting, varying, adding to or subtracting from its terms may be admitted or given in proof of the terms of that contract except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible. Furthermore, according to section 21 of The Evidence Act, oral admissions as to the contents of a document are not relevant, unless the party proposing to prove them shows that he or she is entitled to give secondary evidence of the contents of the document.

The respondent therefore could not rely on a photocopy of that letter or on his oral testimony explaining it to vary the express terms of the loan repayment schedule (exhibit P. Ex.1) and the loan repayment ledger (exhibit P. Ex.2).

  1. A debt is not understood to have been paid unless the outstanding sum has been completely rendered. The respondent, in this instance, did not meet or satisfy his evidential burden of proof. The trial court’s factual conclusion regarding the outstanding balance of loan was infected by clear error. It follows that the trial court misdirected itself when it dismissed the suit.

Order:

  1. In the final result, the appeal succeeds. Judgment of the court below is set aside. Instead judgment is entered for the appellant against the respondent as follows;
  1. shs. 2,670,000/=.
  2. Interest thereon at the rate of 15% per annum from the date of this judgment until payment in full.
  3. The costs of the suit and of this appeal.

Delivered electronically this 30th day of October, 2020 ........ Stephen Mubiru.....

Stephen Mubiru
Resident Judge, Gulu

Appearances

For the appellant : M/s Ocorobiya & Co. Advocates.

For the respondent : M/s Kabuzire, Mbabaali & Co. Advocates.