Fred Kamanda v Uganda Commercial Bank (Civil Appeal-1995/17) [1996] UGSC 10 (15 August 1996);
THE REPUBLIC OF UGANDA
THE SUPREME COURT OF UGANDA
AT MENGO
(CORAM: WANBUZI, C.J., ODOKI, J.S.C., ODER, J.S.C.)
CIVIL APPEAL NO. 17 OF 1995 BETWEEN
FRED KAMANDA……………………………………………………APPELLANT
AND
UGANDA COMMERCIAL BANK…………………………………RESPONDENT
(Appeal from the judgment of the High Court
of Uganda (Kireju J.) dated 6th February,
IN
Civil Suit No. 434 of 1992)
JUDGMENT OF ODOKI J.S.C.
The appellant was employed by the respondent as a Banking Officer at Masaka. During his employment he obtained a loan from the respondent which was secured by a mortgage of land at Masindi. While he was Acting Manager of Group B UCB Masaka Branch, the appellant recommended one of the customers, Henry Male, for a loan of Shs. 5,000,000/= which was granted by the respondent. The loan was also secured. Male did not pay the loan and the respondent suspected foul play as Male could not be found. The appellant was summoned to the respondents Chief Prosecutor’s Office at Kampala and questioned about the two loans. He was asked to write an undertaking that he would repay his own and Male’s loan.
In the undertaking, the appellant pledged his vehicle as security and deposited the registration card of the vehicle with the respondent. Both loans were not paid and the respondent impounded the vehicle.
The appellant brought an action in the High Court claiming special and general damages for conversion and detinue arising out of the wrongful seizure of the vehicle. The respondent admitted impounding the vehicle but pleaded that the seizure was lawful as the appellant had failed to abide by his pledge whereby he had pledged the vehicle as security for repayment of his loan from the respondent. The respondent counter-claimed from the appellant that t be allowed to sell the vehicle and transfer it to the purchaser and also that the appellant pays to the respondent the sums of money stated in the pledge.
At the hearing of the suit the following issues were framed:
3. Whether the plaintiff pledged his motor vehicle to the defendant;
5. Whether the plaintiff was negligent in recommending to the defendant to grant a loan to Male and if so whether he is liable to the defendant for the loss.
The appellant has appealed against that decision on six grounds. The 1st ground is that the trial Judge erred in fact when she found that the Document Exhibit D1 was signed voluntarily by the appellant. This ground was argued together with the second ground which is that the trial Judge erred in law and in fact when she found that the Exhibit D1 constituted an undertaking by the appellant which was affirmed by his subsequent actions.
Mr. Kakuru, learned Counsel for the appellant, submitted that the undertaking was not made voluntarily because the appellant was threatened with imprisonment and loss of his job if he did not sign it. It was contended that undertaking was made under undue influence and therefore voidable. It was argued that the appellant had avoided the undertaking when he refused to hand over the vehicle.
For the respondent, Mr. Angaret submitted that the Judge had considered all the evidence and found that the appellant was not truthful. In coming to that conclusion the learned Judge took into account the fact that the appellant admitted writing the whole document, he did not raise the defence of duress in the plaint, he wrote two friendly letters to a person whom he alleges forced him to sign the undertaking, he was so highly educated and experienced that he would not agree to sign a document committing himself to pay 15 million shillings.
It was contended by Mr. Angaret that even if the undertaking was made under duress, the appellant affirmed it by his subsequent conduct. This conduct consisted of:-
(b) doing nothing to disown the undertaking for a long time till replying the defence;
(c) writing two letters Exh.D.5 and Exh.D.6 which tended to affirm the undertaking.
“I acknowledge that I have two loans with Masaka “B” in the names of
FREDERICK KAMANDA……………………….….8,277,403 HENRY MALE………………………………………7,323,810
I undertake to pay within a period of one month effective from today. Security for full payment I pledge,
1. Vehicle No.UXI 644 Toyota Hiace Minibus whose Card I will surrender to the Regional Manager, Masaka on 10th May,1991;
2. Land situated at Masaka Speke Drive, the mortgage forms for which I have executed.
FRED KAMANDA”
I shall now deal with the third and fourth grounds of appeal. The third ground is that the trial Judge erred in law in holding that the impounding of the appellants vehicle by the respondent was lawful. In the fourth ground the complaint is that the trial Judge erred in law in holding that the appellant had legally pledged his motor vehicle to the respondent.
It was submitted for the appellant that the impounding of his vehicle was unlawful because the undertaking did not amount to a pledge. It was the contention of the appellant Chat the undertaking was not a pledge because was no physical possession of the vehicle given to the respondent. Counsel for the appellant further submitted that the learned Judge erred in holding that the delivery of a registration card to the respondent amounted to constructive possession of the vehicle and that only a bill of lading could give constructive possession.
For the respondent, it was argued that there was possession of the vehicle by delivery of the registration card, and therefore there was a pledge. It was the respondents contention that the seizure of the vehicle was lawful because there was an implied power of sale in the undertaking.
It is, I think, well settled that a pledge is a bailment of personal property as security for some debt or obligation. It is essential to the contract of a pledge that the property pledged should be actually or constructively delivered to the pledgee. See Halsburys Laws of England 3rd Edn. Vol. 29 para 389, page 210. As it is explained in the Law and Practice of Banking by J.M. Holden, 7th Edn., Vol. 2 page 261,
In her judgment, the learned trial Judge said,
property on default by the plaintiff. The plaintiff himself in Exh. P.6 admitted that the defendant would be justified in impounding the vehicle if he defaulted.”
A document of title is defined in Securities over Personal Chattels by LA Sheridan at P. 151, as follows:-
In Uganda, the Traffic and Road Safety Act 1970 appears to give a different status to a registration card. Section 49 of the Act provides,
I would accordingly uphold the learned Judges finding that the delivery of the registration card to the respondent amounted to constructive possession of the vehicle and that therefore there was a valid pledge executed by the appellant. As the appellant pledged to repay the loans within one month and failed was entitled to seize vehicle pledged. The power of seizure was implied in the pledge and was duly exercised upon default of payment of the loan. The learned Judge therefore came to the correct conclusion that the seizure was lawful. The third and fourth grounds of appeal must therefore fail.
In the fifth ground of appeal, the appellant complains that the trial judge erred in law and fact in holding that the procedure followed by the respondent in recovering the loan from the appellant was immaterial. In her judgment the learned Judge said,
In view of what I have held above I find it unnecessary to deal with the final ground of appeal which was that the learned Judge erred in law and in fact by not awarding damages to the appellant.
In the result I would dismiss this appeal with costs.
Delivered at Mengo this 5th day of August., 1996.
JUSTICE OF THE SUPREME COURT
JUDGMENT OF WAMBUZI, C.J.
I have had the benefit of reading the draft judgment prepared by Odoki, J.S.C., and I agree that this appeal should fail.
I must, however, say that I find it rather odd that the appellant agreed in Exh. D.1 to repay the loan in the names of Henry Male together with his own loan within month and also to secure both loans by pledging a vehicle and land at Masaka. Both loans had been previously secured by mortgages. in the circumstances I doubt whether the trial Court was told the whole story.
As to whether the appellant pledged his motor vehicle, learned Counsel for the appellant, Mr. Kakuru submitted that there was no pledge and relied on the British authority of Joblin vs Watkins and Rosevearet (Motors) Ltd (1946) 4 TLR 464.
The Fact of that case were that on November 4th, 1995 the plaintiff and a certain Mr. smith signed documents whereby the plaintiff purported to buy from Mr. Smith for $275, a second hand Austin 12HP motor car, but Mr. Smith was given the option of repurchasing the car for $300 on or before December 6, 1945. Mr. Smith handed the plaintiff the registration book of the car and a cheque post-dated December 6, 1945 for $300. According to the registration book the last owner of the car was a Mr. Adams. The plaintiff never saw the car and never took delivery of it.
The car had, in fact, been bought from Mr. Adams by the defendants and was their property at the material time. It was, however, Still in the Possession or Mr. Adams, who was repairing it for the defendants. Earlier in 1945, the defendants had employed Mr. Smith as an agent to buy cars in their name, but had ceased to do so in April 1945.
The plaintiff, in due course, presented the post-dated cheque for payment, but it was dishonoured. He was unable to obtain any money, or the car, from Mr. Smith and he, therefore, brought this action against the defendants relying on the factors Act, 1889, Section 2(1) of which provides:-
First, I am not sure that Mr. Smith was ever a mercantile agent at all. If he had ac sometime been a mercantile agent, he was not Purporting to sell the car in the ordinary course of business of mercantile agent within the meaning of Section 2(1).
And further, what he handed to the plaintiff was not, in my judgment, a document of title at all, but the ordinary registration book for a motor-vehicle. Though one reason for the book is to make known who is the owner of the vehicle, to which it refers its primary purpose is to show who is the person liable to pay the road fund licence tax in respect of the vehicle. I do not think it is anything more than that. Considering the definition of ‘document of title’ in Section 1(4) I must construe “any other document” as a ejusdem generis with the documents there mentioned. No doubt, when anyone in the trade is going to sell a motor vehicle, a wise purchaser asks, as evidence of bona fides, that the registration book may be handed over too, not to show the title to the motor vehicle, but in order (i) to indicate what right the seller has to be
dealing with that motor vehicle (ii) to snow when its licence fell due and what the position is, generally, about it; and (iii) to show that it is a registered vehicle, because to put a vehicle on the road which is not registered is, generally speaking, a criminal offence. That being so I do not think that the registration book was a document of title within the definition in section 1(4). “Document of title must mean a document by which the person who puts it forward is entitled to dispose of the goods; its objective is to dispose of goods.”
In Uganda we have some what similar provisions to regulation 9(1)of the British Road Vehicles (Registration and Licensing) Regulations in Section 50 of the Traffic and Road Safety Act, 1970. The registration Book has to be surrendered on change of ownership of a vehicle to which it relates and certain particulars have to be given to a licensing officer. However, the Act provides in Section 49 as follows:-
entitled to dispose of the motor-vehicle to which it relates. I would accordingly be inclined to the view that in Uganda a registration book is a document of title unless the contrary is proved. In these circumstances I would hold that by handing over of the registration book to the respondent by the appellant the respondent had constructive possession of the vehicle.
I would accordingly also uphold the learned Judges findings that there was a pledge of the vehicle and that as a result the respondent was entitled to seize the vehicle. The 3rd and 4th grounds of appeal would therefore fail.
I would, however, hasten to add that I would not without more support the trial judge’s findings that:-
Be that as it may, Section 1 of the Chattels Transfer Decree, 1975 provides in so far as is relevant as follows:-
It appears the document, Exh. D.1. was neither attested nor registered under the Chattels Transfer Decree which would make it void except against the grantor.
As the appellant was the grantor, the document, Exh. D.1 would be valid against him and the respondent could have been entitled to seize the vehicle on its strength.
I do not consider, it necessary to deal with grounds 5 and 6. As Oder, J.S.C., agrees with the judgment of Odoki, J.S.C., there will be orders in the terms proposed by the learned Odoki, J.S.C.
Delivered at Mengo this 15th day of August, 1996.
CHIEF JUSTICE
JUDGMENT OF ODER, J.S.C.
I have had the benefit of reading, in draft, the judgments of Wambuzi, C.J., and Odoki, J.S.C.
It is the grounds relating to the pledge and seizure of the appellant’s motor vehicle that are not so straight forward. The two grounds are inter-related. The impounding by the respondent of the appellant’s vehicle would be lawful only if the pledge was valid, as only a valid pledge would authorise the respondent to lawfully seize the motor vehicle. A valid pledge had to precede a lawful seizure.
A pledge is a type of security founded on physical possession or constructive possession. The simplest example is that of a man who is broke delivering his valuable wrist watch to a pawnbroker. The mere fact of delivery provides the pawnbroker with all the security he needs, provided, of course, the watch belongs to the man; he can retain it until the loan is repaid, and sell it if the loan is not paid, and there is no risk of anyone acquiring a prior right to the watch as long as he retains it.
A pledge of goods is not complete unless and until there has been actual or constructive possession. Constructive delivery of possession consists either of a valid document of title which represents the goods such as a bill of lading, a bill of sale or an acknowledgment by the ware-house keeper that he holds the goods to the order or at the disposition of the bank.
In the instant case the appellant did not deliver to the respondent his motor vehicle, but the Registration Book for the motor vehicle. The question to be answered, therefore, is whether the Registration Book was a document of title. if the answer is in the positive then it follows that the appellant had validity pledged his motor vehicle by delivery of constructive possession to the respondent. if it is not then there was no pledge by constructive possession.
In the case of Joblin vs. Watkins and Rosevearet (Motors) Ltd. (1948) 64 TLR, on which the appellant in the instant case relied, it was held that the Registration Book of a Motor vehicle was not a document of title.
I think that that decision, based as it was, on the definition of documents of title as provided under Section 1{4) of the Factors Act, 1889 of England, should be understood in its context, which is that a Registration Book was considered not to be a “document of title” as defined in the Factors Act.
In our jurisdiction the Traffic and Road Safety Act 1970, provides for registration of motor vehicles. In Section 50 it is provided that when a motor vehicle changes ownership the previous Owner must pass on the Registration book to the new owner. The Act does not define a registration book, nor does it specify what particulars it should contain.
Section 49, however, states that, unless the contrary is proved, the person in whose name a motor vehicle is registered shall be presumed to be the owner of the motor vehicle. In View of the provision of this Section can a person who holds a Registration Book be said to be a holder of a document of title to the motor vehicle in respect of which he has been registered owner? In so far as the person so registered as owner cannot transfer title to the vehicle simply by delivering or endorsing the Registration Book to another person, I think that a Registration Book is not a document of title in the same way a bill of lading or a bill of sale is. This is because the owner of the Registration Book can only transfer title or ownership by completing transfer forms as the appellant said he did in the instant case, but withheld delivery of the forms to the respondent. The Registration Book has to be accompanied by completed transfer forms in order for the transfer of the motor vehicle to be complete.
Subject to that limitation or qualification, I would say that the Registration Book of a motor vehicle is a document of title and that its delivery of possession creates constructive possession of the motor Vehicle. This is because it is presumed to be evidence of ownership of the motor vehicle to which it relates.
In the circumstances, I would say that in the instant case, the appellants motor vehicle was validly pledged to the respondent, and that its seizure was also lawful.
The third and fourth grounds of appeal should, therefore, fail.
Dated at Mengo this 15th day of August 1996.
JUSTICE OF THE SUPREME COURT.
I CERTIFY THAT THIS IS A
TRUE COPY OF THE ORIGINAL
MASALU MUSENE REGISTRAR SUPREME COURT.