BUHIRE ET AL v. BRD

BUHIRE ET AL v. BRD

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2011-05-06 - Case/document no.: RCOMA 0024/09/CS - Collection: Supreme Court

Text

Page 1

BUHIRE ET AL v. BRD [Rwanda SUPREME COURT – 2011SC – RCOMA 0024/09/CS (Mutashya, P.J., Hatangimbabazi and Rugabirwa, J.) May, 6th 2011] Commercial law – Loan and suretyship contract– Suretyship contract cannot lose it value when some of cooperative members declare that they have been definitely expulsed into the cooperative – This cannot be taken as a truth for not paying the loan that was given by the bank since they have signed and mortgage given, and did not show the value of that laon paid. Law of July 30,1888 instituting the book of civil law related to contracts and contractual obligations, art 33 and 132, loan and suretyship contract existed from 18/01/2007... Facts: Members of COCAF cooperative signed a loan contract of rwf100.000.000 constituted by rwf65.000.000 of long-term loan to build a factory in order to be able to produce coffee and to buy equipment (machines), and a short-term loan of rwf34.000.000 to buy coffee. After that they failed to pay the loan as agreed into that contract, which appellants was given rwf62.302.700 instead of rwf100.000.000. The plaintiff accused the members who had received a loan into the Commercial High Court, and this ordered the appellants to pay the loan, related interest and damages. The appellant also decided to appeal against that decision into the Supreme Court, regarding to the fact of parties into this case. The court took

decision that all members of cooperative have to be invited to the case a part from one who did not sign to guarantee the loan. The appellant said that they sholdn’t pay the loan including related interests because other members expulsed them from the cooperative with their entire mortgage. Held: 1. Doctrines in law explains that the contract to guarantee the loan loses the value from the date of its payement. When the plaintiffs are not able to show reasons for not pying that loan, they have to pay jointly the entire amount of loan.

2. Contract has to be executed since it has become a law between them. Since members have agreed to the bank that admitted to guarantee the loan they have to be accountable to their agreements in the contract of loan for their cooperative, they don’t any right to say that they have been expulsed from cooperative and their entire mortgage. The appeal received. The appeal has no merit. Appealed judgment remains unchanged. The court fees paid by the appellant. Statutes and statutory instruments referred to: Law of July 30,1888 instituting the book of civil law related to contracts and contractual obligations, art 33 and 132, Loan and suretyship contract between BRD and COCAF-AMIZERO on January, 18th 2007. No Cases referred to:

Page 2

Judgment I.THE BRIEF BACKGROUND OF THE CASE [1] On 03/01/2007, Rwanda development Bank (BRD) signed a loan contract n◦ 002/2007/UJ/MM/mm with coffee farmers cooperative (COCAF-AMIZERO) where BRD has agreed to offer rwf 100.000.000 constituted of rwf 65.600.000 for long-term loan to build a coffee factory and materials of rwf 34.400.000 short-term loan of buying coffee, where it was agreed that the above said short-term loan will start to be paid by 31/01/2008. [2] On 18/01/2007, BRD signed a contract of solidarity guarantee with COCAF-AMIZERO (cautions solidaires et indivisibles), where NDEMEZO Ephrem, BUHIRE Etienne, MBUNGIRA Frédéric, MVUKIYEHE Juvénal, KIMENYI Evariste, UWAMURERA Alphonsine, YANKURIJE M. Goretti and NIYONSENGA Marie Chantal agreed to execute in good conditions the above mentioned contract of loan and mortgage stated in paragraph 6 of the above said contract was given. [3] As it said by BRD, COCAF - AMIZERO did not pay the loan as it has been agreed in the contract where the reason to offer rwf 62.302.700 instead of rwf 100.000.000. Then after BRD accused COCAF-AMIZERO in the name of its all members into the Commercial High Court , the hearing was held on 01/04/2009, and court decided that COCAF-AMIZERO has to pay to BRD the amount of rwf 72.304.325 of loan, including interest and court fees and rwf 2.558.705 civil damages. [4] BUHIRE Etienne and KIMENYI

Evariste decided to appeal into the Supreme Court, the substantial hearing was held on 27/07/2010, BUHIRE Etiennne and KIMENYI assisted by Me MUHOZA Janvier, BRD assisted by Me UMUBYEYI Béatrice, and Me BARINABO Idrissa assisting COCAF–AMIZERO and members who requested the loan, apart from KIMENYI. on 27/08/2010, the court decided that COCAF and members, apart from KIMENYI Evariste, should not be summoned into this case because they didn’t appeal. [5] The public substantial hearing was held on 29/03/2011, BUHIRE Etiennne and KIMENYI Evariste assisted by Me MUHOZA Janvier, and BRD by Me UMUBYEYI Béatrice. The advocate of BUHIRE and KIMENYI said that they shouldn’t pay the loan and interests because other members expulsed them from the company COCAF, and Me UMUBYEYI Béatrice assisting BRD said that they have to pay with other members the loan and its interests. II. THE LEGAL ISSUES OF THE CASE AND ITS ANALYSIS The fact that BUHIRE Etiennne and KIMENYI Evariste were expulsed into COCAF– AMIZERO protects them to not pay the loan they have guaranteed to BRD? [6] The advocate of BUHIRE and KIMENYI said that other members expulsed them into COCAF with all their parts of mortgage BRD and they didn’t have chances to pursue the management of the above said loan, and they found that the loan has to be paid by COCAF and its members equal almost to two hundreds.

Page 3

[7] The advocate of BRD says that BUHIRE and KIMENYI guaranteed with their mortgage (a forest) the loan of COCAF–AMIZERO, a farm and business house, for those reasons they have to pay the loan and all its interest with COCAF and other members signed a contract with BRD, but not with COCAF, and that contract cannot be removed by the death of guaranteed members or a letter they wrote to minister of commercial. [8] Into the contract n◦ 002/2007/UJ/MM/mm of 03/01/2007, BRD offered to COCAF- AMIZERO of rwf 100.000.000 for building a factory, and to buy equipment and coffee. In its article 6 of the contract, members of COCAF–AMIZERO constituted by BUHIRE Etienne and KIMENYI Evariste given a mortgage of farm, a forest and a house for business and BRD offered to COCAF – AMIZERO a loan of rwf 62.302.700. [9] Article 2 of the caution contract of 18/01/2007 states that: 1. All owners of mortgage given to the bank as it has been agreed into the contract of loan and its guarantee are without any reason to escape responsibility relating to that contract.

2. All members of cooperative have agreed to pay directly the loan without this to affecting the property of the cooperative.

3. All members guaranteed the loan have agreed to pay the loan but did not honor the contract. [10] The loan contract above mentioned shows well that BUHIRE Etienne and KIMENYI Evariste and other members of COCAF–AMIZERO guaranteed the loan and admitted to pay the whole amount of loan that offered by BRD, the court found that BUHIRE and KIMENYI have to honor the contract signed between them and the BRD following the 33 of civil codes of law apart from when the contract could be cancelled by one reasons stated by the article 132 of the above mentioned code, to show if that loan was paid or modified, abandoned, compensation or mixture of property. If the article states that responsibility ends by payment, modification of debt, abandonment of debt, compensation or property mixture etc” . [11] Also regarding the reason ending responsibility, doctrines of law explains that guarantee contract expires by the payment of debt (le cautionnement est éteint à titre accessoire lorsque la dette cautionnée est payée)1. [12] The court found that even in the Commercial Hight Court and into the substantial hearing into the Supreme Court, BUHIRE Etienne and KIMENYI Evariste did not show that BRD has been paid its loan offered to COCAF– AMIZERO, so both with COCAF – AMIZERO and all members as guaranteed have to pay the loan as it stated into the Commercial Hight Court decision. [13] The Court found that reason presented by BUHIRE Etienne and KIMENYI Evariste that COCAF – AMIZERO expulsed them from the company has no merit because this is not a BRD’s 1 NTEZIRYAYO Faustin, LE CAUTIONNEMENT, Etude comparative des Droits belges, français et rwandais, Imprimerie Pallotti – Presse, 1994, p 94.

Page 4

business, but a private issue with COCAF – AMIZERO. The reason also has relation with the contents of the above mentioned article of laws. III.THE DECISION OF THE COURT [14] Decide to receive the appeal of BUHIRE Etienne and KIMENYI Evariste because it was submitted in conformity with law; [15] Decide that is no merit; [16] Says that the judgment RCOM 0408/08/HCC rendered by the Commercial High Court on 01/04/2009 is confirmed; [17] Orders BUHIRE Etienne and KIMENYI Evariste to pay other members of the company COCAF – AMIZERO court fees equal to rwf 39.100.