Court name
Supreme Court of Uganda
Judgment date
20 April 2004

Hajj Bumali Kadjingo v Non Performing Assets Recovery Trust (Civil Appeal-2002/19) [2004] UGSC 14 (20 April 2004);

Cite this case
[2004] UGSC 14

THE REPUBLIC OF UGANDA

IN THE SUPREME COURT OF UGANDA

AT MENGO

CORAM: ODER, TSEKOOKO, KAROKORA, KANYEIHAMBA, KATO
JJ.SC.

CIVIL APPEAL NO. 19 OF 2002

BETWEEN
HAJJ BUMALI KADJINGO
:::::::::::::::::::::::::::::: APPELLANT

AND

THE NON PERFORMING ASSETS

RECOVERY TRUST ::::::::::::::::::::::::::::::::::::::
RESPONDENT


(Appeal from the judgment of the Court of Appeal (Berko, Engwau,Kitumba
JJ.A) at Kampala in civil appeal number 62 of 2000 dated 10th.
July
2002).


REASONS FOR JUDGMENT OF THE COURT.

This is a second appeal. The appeal is against the decision of the Court of
Appeal which heard the first appeal and dismissed it. The first appeal
was against the ruling of the Non-Performing Assets Recovery Tribunal. On
17/11/2003 we heard the appeal and dismissed it reserving our reasons for doing
so. We now give them.

The appellant together with two other defendants: Kapeeka Coffee Works Ltd
and Abu Kasozi Kadjingo, were sued by the respondent for recovery of a
sum of 839,030,585/= being part of the money advanced to Kapeeka
Coffee Works
Ltd. The appellant was sued in his capacity as one of the two directors of the
company. When the suit came up for hearing
before the Tribunal on 15/2/2000,
learned counsel for the appellant and the other defendants, who are not
appellants in this appeal,
raised preliminary objections. The appellant's
objection was that the plaint did not disclose a cause of action against him.
The
objection was rejected by the Tribunal and the Court of Appeal. Hence this
appeal.





A total of 12 grounds of appeal were framed, namely
:-

1. The Hon.
Justice of Court of Appeal erred in law when they summarily dismissed the
Appellant's appeal having been unfairly biased
that the Appellant was dishonest
without taking into account the grounds of appeal that had been presented in
memorandum of appeal.
2. The Hon. Justice of
Court of Appeal erred when they came to a finding that the appellant signed the
loan agreement on behalf of Kapeeka
Coffee works
Ltd.
3. The Hon. Justices of the Court of
Appeal erred when they came to a finding that the Appellant mortgaged his
property Mailo Register
Block 269, Plot 36 and
37.
4. The Hon. Justices erred when they came
to a finding that the Appellant covenanted to pay on demand to the Uganda
Commercial Bank the
loan granted to Kapeeka Coffee Works
Ltd.
5. The Honourable Justices of the Court of
Appeal erred when they came to a conclusion that the names Kapeeka Coffee
Hulleries were inadvertently
put on some
documents.
6. The Honourable Justices of the Court of appeal further erred when they came
to a conclusion that the appearance of the names of
Kapeeka Coffee Hulleries on
some documents does not change the reality of the situation

7. The Honourable Justices of the Court of appeal further erred when they held
that the Appellant knew that the loan was obtained
by Kapeeka Coffee Works Ltd
for the rehabilitation of Kapeeka Coffee Hulleries and that he was the
guarantor.

8. The Honourable Justices of the Court of Appeal erred when they held that the
Appellant was dishonest.

9. The Honourable Justices of Court of Appeal further erred when they came to a
conclusion that the appellant was jointly and severely(sic)
liable with Kapeeka
Coffee Works Ltd for the debt.
10. The Honourable Justices of the Court of Appeal further erred in law when
they held that the preliminary objection was a mere
technicality without any
merit.

11. The Honourable Justices of the Court of Appeal further erred in law when
they concluded that the Appellant's objection had been
prompted by a dishonest
motive.

12. The Honourable Justices of the Court of Appeal erred when they awarded the
Respondent the costs of the appeal.


Before we proceeded to hear the submissions in respect of the grounds of
appeal, Mr. Ruhindi counsel for the appellant, invited the
court to strike out a
notice for affirmation of the decision of the Court of Appeal. The notice had
been filed by Mr.Kalibala counsel
for the respondent. Mr. Ruhindi's argument was
that the notice offended rule 88(1) of the Rules of this court which requires
such
a copy of the notice to be served within 7 days. According to him, he was
served later than the prescribed time.


After hearing both counsel, we
upheld Mr. Ruhindi's contention and struck out the notice for affirmation, as
Mr. Kalibala conceded
that a copy of the notice had been served on the
appellant's counsel out of time.


The respondent's counsel having
conceded grounds 2, 3 and 4 and after ground 12 had been abandoned by
appellant's counsel, the remaining
grounds were argued in the following order:
grounds 1,7,8 and 11 together, grounds 5 and 6 also together but grounds 9 and
10 separately.
As for the three grounds which were conceded, we considered
them and came to the conclusion that the issues raised in those grounds
in fact
support the respondent's contention that this case can only be properly decided
after hearing evidence from both sides.
On grounds 1,7,8, and 11 Mr. Ruhindi
submitted that the Court of Appeal was wrong to hold that the appellant was
liable to repay the
loan and that he was a dishonest person when there was no
evidence to that effect. He also argued that the Justices of Appeal failed
to
consider the issue of whether or not there was a cause of action.


On
his part, Mr. Kalibala, argued that the Court of appeal did not base its
decision on the appellant's dishonesty. In his view, the
court considered all
the issues presented before it before it dismissed the appeal.

The substance of the judgment of Berko, JA (as he then was) which was the
lead judgment of the court reads as follows:



"The loan agreement was between the Uganda Commercial Bank and Kapeeka Coffee
Works Ltd. The loan was to be used exclusively in the
financing and carrying out
of the investment project at Kapeeka coffee factory which is known as Kapeeka
Coffee Hulleries. The appellant
signed the agreement on behalf of Kapeeka Coffee
Works Ltd. It is clear from the agreement that Kapeeka Coffee Hulleries is the
project
for which funding was required.






As a security for the loan the appellant mortgaged his property Mailo
Register Block 269 Plot 26 and 37 measuring 0.20 and 0.20 acres
respectively at
NamaagaBulemezi and covenanted to pay on demand to the Uganda Commercial Bank
the loan granted to Kapeeka Coffee
Works Ltd. Therefore the mere fact that the
names "Kapeeka Coffee Hulleries" have inadvertently been put on some documents
does not
change the reality of the situation. The appellant knows that the loan
was obtained by Kapeeka Coffee Works Ltd for the rehabilitation
of Kapeeka
Coffee Hulleries and that he was the guarantor. This is a fact which the
appellant cannot deny and it would be a dishonesty
on his part if attempts to do
so (sic). The Tribunal correctly saw through the facade of the falsehood and
dishonesty. Therefore
the appellant is jointly and severely (sic) liable with
Kapeeka Coffee Works Ltd for the debt.




In my view, the preliminary objection was a mere technicality without any
merit. The Non-Performing assets Recovery Trust Tribunal
was right in rejecting
it.




Technical objections prompted by a dishonest motive should not be
countenanced by the Courts".

It is true that in that judgment
his Lordship did not expressly state that there was a cause of action against
the appellant. His
holding that the Non- Performing assets Recovery Trust
Tribunal was right in rejecting the preliminary objection, however, clearly
shows that he was dealing with the issue of cause of action which was the
subject of the tribunal's decision. It is not therefore
correct to say that the
Court of Appeal did not address its mind to the issue of whether or not there
was cause of action.


On the question of whether or not the Court of
Appeal was justified in holding that the appellant was a dishonest man, we agree
with
Mr. Kalibala's contention that the decision of the court was not based on
the appellant's conduct only but also on some documents
presented before the
court and the tribunal. It has all along been the contention of the respondent
that during the trial the respondent
will adduce evidence to prove the
appellant's liability. This cannot be done at this stage of a preliminary
objection. We agreed
with that contention and found no merit in grounds 1,7,8
and 11. They failed.

Regarding grounds 5 and 6, Mr. Ruhindi submitted that the Court of Appeal was
wrong to find that the name "Kapeeka Coffee Hulleries"
was inadvertently put on
some documents when there was no evidence supporting that finding. On the other
hand, Mr. Kalibala submitted
that the finding did not prejudice the appellant's
position since all the documents were indicating that it was Kapeeka Coffee
Works
Ltd which borrowed the money and the appellant was one of the
directors of the company.


This is another point which can be properly
decided by the tribunal after examining all the available evidence. The issue as
to whether
Kapeeka Coffee Hulleries exists as an independent body different from
Kapeeka Coffee Works Ltd and which of them borrowed the money
is a matter of
fact which can only be proved by calling evidence. It cannot be conclusively
decided under a preliminary objection.
We found no merit in these two grounds
which failed.

On ground 9 Mr. Ruhindi submitted that it was premature for the Court
of appeal to hold that the appellant was jointly and severally liable with
the
other defendants to pay the debt. Mr.Kalibala, supported the finding of the
court because, in his view, paragraph 2 of the amended plaint shows that
the appellant is one of the directors of the first defendant company and
therefore liable to be sued.


This ground of appeal is based on the
following sentence in the judgment of the Court of Appeal.





"Therefore the appellant is jointly and severely (sic) liable with Kapeeka
Coffee Works Ltd for the debt".

On the face of it that
sentence may be taken to mean that the court declared the appellant liable to
pay the debt. When the passage
is read in the context of the whole judgment and
the reason why the appeal was lodged, the passage can only mean and must be
understood
to mean that the appellant was liable to be sued for the debt and
that there was cause of action against him. The Court of Appeal
could not
reasonably have found the appellant liable to pay a debt which had not yet been
proved against him. Ground nine also failed.

In the tenth ground of appeal, the appellant's counsel complained that the
Court of Appeal erred when it held that the preliminary
objection was a mere
technicality without any merit.


Considering the history of this case,
we are satisfied that the Court of Appeal was justified in treating the
preliminary objection
as a mere technicality. The arguments by Mr.Ruhindi
concerning the issue of a mere technicality, were based on his contention that
Kapeeka Coffee Works Ltd and Kapeeka Coffee Hulleries were not the same company
and that the word 'Kapeka' and 'Kapeeka' were entirely
different. In our view
the matters complained of did not affect the respondent's claim against the
appellant and the Court of Appeal
rightly referred to them as a mere
technicality. There was no merit in this ground, it failed.





It was for those reasons that we dismissed the
appeal.




Dated at Mengo this 20th day of April 2004





A.H.O. Oder,

Justice of the Supreme Court

J.N.W. Tsekooko
Justice of the Supreme
Court

J. N. Karokora
Justice of the Supreme
Court

G.W. Kanyeihamba
Justice of the Supreme
Court

C.M. Kato
Justice of the Supreme Court