BANK OF AFRICA RWANDA LTD v. KARANGWA

# BANK OF AFRICA RWANDA LTD v. KARANGWA

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2016-10-22 - Case/document no.: RCOMA 00383/2016/CHC/HCC - Collection: Commercial High Court

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BANK OF AFRICA RWANDA LTD v. KARANGWA [Rwanda URUKIKO RUKURU RW’UBUCURUZI – RCOMA 00383/2016/CHC/HCC (MUTAJIRI, P.J.) 14 Ukwakira2016] Contract law – deposit – Unlawful withdrawal of the money from the client’s account – The bank cannot withdraw money from the client account in case he/ she is not indebted to it or while it does not authorize it – Law of 30/07/1888 regulating contract or obligations, article 503. Damages – Damages for advocate fees – Advocate fees are founded since the Bank unlawfully withdrew the money from his account and denied refund it and it led him to hiring a legal advocate – Law of 30/07/1888 regulating contract or obligations, article 258. Facts: This case originates from the loan contract that took effects between Karangwa Albert and Bank of Africa Rwanda Ltd which became Agaseke Bank Ltd. In paying this loan, Karangwa had made double payment of interests of the debt on the same month after it was discovered by the Bank employee. Held: The fact that the bank concedes that it is the one which commptted an error in its transaction while those errors must not impact Karangwa Albert and the fcat that this amount of money was withdrawn from the client account while he was not indebted to it since it had taken possession two years after he had perfectly paid the debt as evidenced by loan clearance certificate that this was given by the bank, the fact that the bank would have identified the error from its daily reporting or annual financial statement by remarking the deficit or surplus and the fact that the bank cannot win the case over the client based on its internal documents and that the bank was under obligation of keeping his money and give it to him upon his wish demonstrates that it unlawfully withdrew from money from the account of Karangwa Albert. Hence, it must make the restitution. 2. The requested advocate fees has merit because the Bank has unlawfully withdrawn the money from his account and denied to make the restitution until he referred the case to court; hence it must pay to him the advocate fees. Appeal has no merit. Appealed judgment not changed apart from advocate fees. Court fees to public treasury. Statutes and statutory instruments referred to: Law of 30/07/1888 regulating contract or obligations, articles 258 and 258. No case was referred to Judgment I. BRIEF BACKGROUND OF THE CASE

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[1] Kayiranga Cyrille, Counsel for BANK OF AFRICA Rwanda Ltd formerly known as AGASEKE BANK Ltd states that on September 5, 2012 offered to Karangwa Albert the loan of 35,000,000 Frw. They come to the agreement that the payment would be executed by a monthly payment of 1,270,006 Frw, which also includes interests for three years. [2] As they had contracted, Karangwa had been perfectly paying for three months. However, things escalated on April 5, 2013 when Karangwa paid 1,102,983 Frw. This amount was segmented into three, 470,928.71 Frw for interests on the remainder of the main debt and 632,054.3 Frw for the man debt. [3] On May 2, 2013, Karangwa Albert had made another payment of 1,280,078 Frw which was also divided into the following two segments namely, 470,928.71 Frw and 798,518 Frw for the payment of principal debt. [4] As it is clear, this amount has decreased the debt for debt that Karangwa owed to the Bank but subsequently there was an identification of the fault whereby the Bank of Africa Rwanda Ltd found that Karangwa Albert had paid twice interests on the debt on the same month. [5] Instead of making the adjustments and refund Karangwa Albert with the interest erroneously paid equivalent to 470,928 Frw, the bank staff, on May 20,2013 the Bank made restitution of 470,928 Frw as well as the payment he had done in the principal debt 632,054 Frw the totality being 1,102,983 Frw. [6] After the error was identified as Karangwa Albert was refunded with excessive money, the Bank harried to notify him and made immediate recovery in the context of adjusting errors. [7] After Karangwa Albert became aware and not contented of those adjustments, some negotiations followed, the Bank tried to negotiate him but no concursus was reached, it made recourse to the National Bank of Rwanda. The issue was dealt by the National Bank of Rwanda and this staff tried to convince Karangwa Albert that it was an error but which was adjusted by the Bank and that he could not litigate for the recovery of that amount. [8] This staff of BNR also tried to convince Karangwa Albert to pay to Bank of Africa Rwanda Ltd the balance for the remainder of the debt equivalent to 119,752 Frw =(632,054 Frw-512,302 Frw). [9] Not satisfied by the mediation, Karangwa Albert filed the claim to Nyarugenge Commercial Court and the latter June 10, 2016, it ordered Bank of Africa Rwanda Ltd to pay to Karangwa Abert his money and its interest equivalent to 1,234,868.23 Frw. [10] Not satisfied of the ruling Bank of Africa appealed requesting examination of grounds and pieces of evidence submitted at the first instance which indicates that which prove the manner under which it withdrew 512,302 from the account of Karangwa Albert. [11] To this ground, he explained that the Court has disregarded submitted pieces of evidence proving the reason of the withdrawal of that amount of money from the account of Karangwa Albert. He cleared that it may happen that in the normal course of the banking operation, errors may be committed whereby machines may release much or less money from the account of the client.

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[12] This ommission of evidence, to him, is identified from paragraph 4 of the copy of the judgment whereby the the bank requested that Karangwa present to the Court the source of 1,102,983.01 Frw. However, apart from verbal declaration, no response was given so that the source would be known. [13] Furthermore, to him, the Court has never examined the issues about both account statement and ‘’Cedule de remboursement’’ that was provided by Bank of Africa Rwanda Ltd. These pieces of evidence would otherwisehave established with no slightest error about the facts and that there is no single rights of Karangwa Albert which have been violated as he states. [14] In conclusion, he concluded that given the manner under which Karangwa has unceasingly dragging Bank of Africa Ltd into proceedings, this Bank requests moral damage of 1,000,000 Frw and advocate fees at appeal level equivalent to 1,000,000 Frw. [15] In response to these grounds of appeal, Karangwa Albert states that this case rose from the claim that Karangwa filed against Bank of Africa Ltd requesting a court order forcing it to make the restitution of his amount of money, 512,302 Frw, that was unlawfully withdrawn from his account, interests of 10% every month from the time the withdrawal was done, moral damages of 5,000,000Frw damages for procedural and advocate fees both equivalent to 1,500,000 Frw. [16] He sued Bank of Africa Ltd based on the fact that AGASEKE BANK LTD had in April 6, 2016 changed the name to Bank of Africa Rwanda Ltd whereby in August 12, 2012 it had concluded with Karangwa Albert the loan contract of 35,000,000Frw. The payment of the debt was supposed to be done in two months. [17] On August 18, 2014 Karangwa desired to be the client of COGEBAQUE Ltd in regard to the redemption of his debt that he had in Bank of Africa RWANDA Ltd. On November 12, 2013 Bank of Africa RWANDA Ltd demonstrated to Karangwa that he still had its debt amounting to 23,734,705.51 Frw which COGEBAQUE Ltd had to pay in order to redeem the whole debt. [18] With regard the account statement provided by Bank of Africa Ltd to Karangwa on November 11, it is clear that though it offered the loan and subsequently paid, he continued to be the client of the with the Bank of Africa Rwanda Ltd and he had neither been indebted again nor he was late to pay. [19] On November 29,2013 COGEBANQUE redeemed that debt and it paid 23,734,704 Frw and the whole debt was cleared vis-à-vis Bank of Africa RWANDA Ltd and the latter issued to him certificate of non-credit and his account was still active in a such a way that he continued using it without any problem. [20] To him, the surprise is that on September 14, 2015, Bank of Africa Rwanda Ltd withdrew 515,302.23 Frw from the account of Karangwa without his consent and that they qualify this unlawful withdrawal correction of transaction of May 20, 2013 and that they faled to give important explanations to Karangwa of this correction which is not identifiable on May 20, 2015 more than two years after without any debt to the Bank but rather saving his money as usual.

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[21] On September 15, 2015, presented his cheque to withdraw 500,000Fr and they said it was bouncing as they had withdrawn his money equivalent to 515,302Frw. When he requested to restitute this amount willingly, they denied. When he realized that he was undergoing injustice, he referred the case to court for the matter to be settled. [22] The Court confirmed this injustice and it ordered the restitution of the his money as well as damages thereto. Not satisfied by the decision of the court, Bank of Africa launched appeal. [23] He continued stating that the fact that concluded a loan contract with Bank of Africa Rwanda Ltd and the latter got perfectly paid until it issued to him a loan clearance certificate, then they could not in return withdraw money from his account while he owed nothing to the bank. He concluded that this contravenes the provisions of article 64 of the Law governing contracts as well as articles 508 and 482 of the Civil Code Book III. [24] The fact that Karangwa Albert demonstrated that he owes no debt to the Bank of Africa Rwanda Ltd, which the latter admitted, but two years after it comes with the statements that it committed an error and it led to them to withdrawing the money from his account under the pretext that they were rectifying those errors while he had not consented to transaction until Karangwa Albert was denied the money that he had deposited on this account is, to him, evidence to prove that they breached the contract between them of keeping his money. [25] Pieces of evidence presented by Bank of Africa Rwanda Ltd to prove errors that they committed do not concern Karangwa Albert as long as he does not know them and he was not given pertinent explanation given that they are their internal arrangements. In addition, they had admitted that those errors and it is no surprise that they had also committed the faults of releasing the statement containing flaws and does not remove their denial to restitute his money that he deposited which they misappropriated in the context of not respecting the contract between them. [26] The Bank did not manage to demonstrate that it respected its of obligation of keeping the money of Karangwa Albert. He was rather denied his right as long as they do not provide any evidence that it was entitled to withdrawing this amount of money that was deposited on the account of Karangwa and take possession of it more than two years after he had perfectly paid the debt he owed them but rather present the defense that they committed errors by crediting his account while there is no evidence in support. They have rather committed errors when they took possession of his money because his account was active whereby he performed acts of deposit and withdrawing. The Bank then could not take possession of this amount after two years while the Bank itself concedes that he had no debt for them. Then it would be wondered who authorized them to take possession of the money on his account. This is why this ground of appeal must not be considered. [27] Karangwa Albert states that the Bank continued dragging him into proceedings and it obliges him to hire an advocate and is the reason why he requests the damages equivalent to 1,500,000Frw based on article 26 of regulation on the fees of Legal Advocate in Rwanda. [28] In this proceeding, the issue of whether the Bank might have unlawfully taken possession of the money of Karangwa Albert, whether the damages requested by the Bank has merit and whether cross appeal has merit.

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II. ANALYSIS OF LEGAL ISSUE A. Whether there is amount of money of Karangwa Albert that the Bank has unlawfully taken possession of. [29] Counsel Kayiranga Cyrille explains that Karangwa Albert has made a double payment of interests but in the context of adjusting errors, the bank made restitution of the interests and payment on the principal debt. He continued explain that the errors occurred when the Bank refunded 632,054 Frw for the principal debt in addition of 470,928 Frw for interests the totality being 1,102, 983 Frw. In order to adjust calculations in regard to 515,302.23 which was on the accounts of Karangwa Albert, the Bank proceeded with subtractions so that 632, 054 for the principal debt and 119,752 Frw left. [30] Counsel Ndayisabye Alex explains that in the legal context, the Bank withdraws the money from the account of the client either when the latter has a debt for the bank or he has authorized the transaction. The fact that the Bank concedes that it is the error that it found two years after he had perfectly paid the loan and became aware of that transaction after he was to withdraw some amount which is the same time the Bank notified him that there were errors that he was not initially notified of. [31] Banks are technicians who may manipulate data as they wish, hence, their acts are not allowed. In regard to the mediation, the Court deducts that it has never taken place since there is no evidence in support. [32] Counsel Kayiranga Cyrirlle thae Bank has no interests in unlawfully taking possession of the money of the client with whom it was in relation as their acts were done in good faith. He continued maintaining that the staff from BNR who tried mediation was not available for testimony as he was on official mission. THE VIEW OF THE COURT [33] Article 503 of Law of 30/07/1888 governing that the civil code provides,“The depositary shall not restore the thing deposited except to the person who entrusted it to him, or to the person in whose name the deposit was made, or to the person who has been designated to receive it.” [34] The Court views that the statement by Counsel Kayiranga Cyrille that the Bank committed no fault to take possession of the amount of money, 515,302.23 Frw, that belongs to Karangwa Albert because, according to the Bank, it was in the context of adjustment of errors that the Bank had committed must not be considered because, as the Bank concedes, it the latter which committed errors in its operations. Hence, its faults must not have impacts on Karangwa Albert; [35] Moreover, it is clear that when this amount of money was withdrawn from the account of Karangwa Albert, the latter owed the Bank nothing as this amount was withdrawn September 14, 2015 while he had perfectly paid the debt on November 29, 2013 as proved by the loan clearance certificate that the Bank itself issued. It now clear that this money was taken two years after the debt was cleared and it would not be comprehensible how the Bank had identified the error after that period while in the normal course of things, prior to the issuance of loan clearance certificate, the bank must verify whether the client is not indebted to the bank.

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[36] Likewise, this error would have let know the day of its occurrence because there is a daily bank reporting of the bank’s activities and, if it had not been possible to identify it that very day, the Bank could have identified it at the annual financial statement report because it was to be remarked the deficit or surplus in its transactions. This is the reason why, the fact that the he deposited his money in the Bank, the latter was under obligation of keeping it and return it either to him upon his wish or to any other authorized person as provided for by article 503 of Law 0f 30/07/1888 as referred to above. [37] The Court finds that the Bank cannot present the bank statement that it had itself done as evidence to prove the case of the reason it took possession of that amount of money as this statement is its own internal document which it must not be presented to win the case over its client. This is the reason why, as held by the previous court, the Bank must make the restitution of 515,302.23 Frw to Karangwa as it was unlawfully withdrawn from his account. B. On examination of damages requested by the Bank [38] The Court views that this ground must not be examined since the applicant lost the case. C. On examination of cross appeal [39] Counsel Ndayisabye Alex explains that based on article 258 of the Civil Code Book III which provides that “Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it.”, he requests damages for advocate fees because Bank of Africa Rwanda Ltd in the name of its Director General, continues to drag Karangwa Albert into proceedings and this necessitates the legal advocate to defend him. In consequence, he requests damages of 1,500,000Frw based on article 26 of regulations on the advocate fees in Rwanda. [40] Counsel Kayiranga Cyrille did not respond to this ground. [41] Article 258 of Law of 30/07/1888 relating to civil code, Book III relating to contract or obligations provides that “Every act whatever of man that causes damage to another obliges him by whose fault it happened to repair it.” [42] The Court finds that demanded damages for advocate fees have merit and must be awarded in accordance with article 258 of Law of 30/07/1888 as cited above because, the fact of the bank to withdraw the money from the account of Karangwa Albert in the manner that violates that Law and it denied to make the refund until he referred the case to the Court, and the fact that the Bank continues launching appeals dragging him into proceedings and leads him to hiring an advocate is the reason why advocate fees must be paid at the expenses of the Bank because it caused him such a loss. Hence, must pay him advocate fees equivalent to 500,000 Frw at appeal level being determined in the discretion of the court because the amount he requested is excessive. III. THE DECISION OF THE COURT [43] Accepts to receive appeal of Bank of Africa Rwanda Ltd since it was launched in accordance rules of procedure but after examination finds that it has no merit.

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[44] Upholds the ruling of the judgment RCOM 00384/2016/TC/NYGE save court fees which is increased at appeal level. [45] Orders the court fees to be charged from public treasury.