KAYITESHONGA v. BRD

KAYITESHONGA v. BRD

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2012-07-06 - Case/document no.: RCOMA 0102/10/CS - Collection: Supreme Court

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KAYITESHONGA v. BRD [Rwanda URUKIKO RW’IKIRENGA – RCOMA 0102/10/CS (Mukanyundo, P.J., Rugabirwa na Kanyange, J.) 06/07/2012] Contracts Laws – Contract loan – Value of contract – The fact that the one who get a loan when his company is illegitimate does not devalue representation contract as long as that contract is lawful – Law no 45/2011 of 25/11/2011 governing contract , article 560. Facts: BRD says that it made a loan contract of 45.000.000 Rfr with Kayiteshonga as the president of COPROVAB and his governing commitee. Later the coperative was taken to High Commercial Court for failing to pay the loan. Wives of the governing committee rose thier concerned saying that their property could not be touched in paying the loan as their husband did not infrom them ot the loan. The court decided that the case went against the cooperative and that means that they had to pay 51.024.299 Rfr The representative and their wives appealed to supreme court but their claims were not considerd as it eas too late to do so. So the court considered only Kayiteshonga’s appeal. In response to this case, Kayiteshonga said that he could not pay the loan which is equivalent to 51.024.299 Rwf as it was decided by court of first instance arguing that the contract has no value because the COPROVAB had not had legitimacy while signing the contract. BRD asked that Kayiteshonga and his committee to pay the

loan of 45.000.000 Rfr they had signed for as members of COVIBAR. Furthermore, BRD made it clear that the men had to pay the loan because it was signed by people who were capable of using that money. It further argued that the cooperative took the loan knowing fully that it was illegitimate and that that was not the best time to mention it. In the case therefore, BRD asks compensation of involving in this case. It also demanding a lawyer fees. Kayiteshonga on the other hand, reacts that nothing is willing to give out. Held:1.The fact that the cooperative which took loan was illegitimate does not mean that the contract loan is not valuable as long as the contract is lawful. Thus, the BRD must track the cooperative committee because they took the loan and signed that they would pay it. Appeal is no merit. Court charges to the defendant. Statutes and statutory instrument referred to: Law no 45/2011 of 25/11/2011 governing contract , article 560. No cases was referred to.

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Judgment I.BRIEF BACKGROUND OF THE CASE [1] On 10/01/ 2006, BRD( Rwanda Development Bank) signed loan contract no 007/2006/UJ/KF/KF with Kayeshishonga as te president of COPROVAB. BRD creditted it 45.000.000 for using in a project of cultivating and selling wheat. The contract was signed by the governing commitee which is composed of Kayiteshonga Callixte, Birete Guillame, Ndimubanzi Martin and Butunge Ndamiyabera Pascal. They signed for the cooperative (Cautions Solidaire et invisible) as it is shown by the contact of 31/01/2005. [2] COPROVAB did not pay the loan as the contract states. This caused BRD to take it to High Commercial Court stating that those who signed the contract for COPROVAB had to pay. Int he case were wives of some of the men who signed the cotract. These are Birete, Ndimubanzi and Butunge whose names are: Nyiranzage, Kanakuze and Byukusenge. These women asked the court not to involve their properties in their husband’s failure to pay the loan they never infrmed the of. The court decision went against Kayeyishonga, his teammates and some of their wives presented in the court trial. The court ordered Kayiteshonga Callixte, Birete Guillaume, Ndimubanzi Martin and Ndamiyabera to pay BRD 51. 024. 299 Rwf. [3] Kayiteshonga, Birete, Ndimubandi, Nyiranzage, Kanakuze na Byukusenge advanced the case to Supreme Court. Their appeal was examined and the lawyer who was

assigned to work on it and in the assessement n0 RCOM 0030/11/ Pre-ex/CS of 23/03/2011, the judge concluded that Kayiteshonga Callixte’s appeal was received because it was in lawful manner. In the assessment of nº RCOM 0023/12/Pré-ex/CS of 12/03/2012, the judge concluded that Birete, Ndimubanzi, Butunge, Nyiranzage, Kanakuze na Byukusenge’s appeal due to the facr that it came to late. [4] Birete and her colleagues were informed of their case assessment no RCOM 0023/Pre- ex/CS but they did not appeal for that. In trial of 05/06/2012 the court tried only Kayiteshonga who was aided by lawyer Murekatete Marguerite. On the side of BRD was lawyer Mafaranga Athanase. II. LEGAL ISSUE OF THE CASE 1. Assessment of 31/01/2005 contract [5] Kayiteshonga’s lawyer says that the previous court based on article 33 CCLIII and contract of presenting the coperative and ordered Kayiteshonga and his teammates to pay BRD 51.024.299 Rwf. The court would not have done so becuase the coperative which signed the loan contract was illigitimate. Therefore, the loan contract had no value. He says that another ground

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that makes him not to pay that money, is that he does not replace BRD within its rights as provided for by the article 576 CCB III. [6] The lawyer went on stressing that BRD must sue the whole members of the cooperative since it still exists and it has a new governing committee which replaced that of Kayiteshonga. [7] BRD lawyer says that Kayiteshonga must work together with his teammate and pay the loan of 51.024. 299 Rwf of the loan as the previous court decision concluded. This is because they the one who presented the COPROVAB when BRD was giving it a loan. This is make clear by the loan agreement of 31/01/2005. [8] The lawyer went on saying that the agreement is valuable since Kayiteshonga and his governing team were in a position of signing any agreement for the cooperative (Capacite de contrateur.) Besides, these men said they would pay the loan in case the cooperative failed. They said that they would not pay the loan for whatever case and that the contract agreement was clear. These are the reason upon which BRD built while giving them the loan. The lawyer stressed that there was no point in suing the whole cooperative since they did not sign the contract. [9] The lawyer further said that Kayiteshonga should not bring illegitimacy of the cooperative in the court. This is because by the time BRD was giving the cooperative the loan, Kateyishnga knew of the illegitimacy. BRD even decided to help COPROVAB in getting illegitimacy according to minister who has commerce in his attribution.

VIEW OF THE COURT [10] On the regard of value of agreement in article 33 CCL III, which was used that time stated, ‘’ Agreement that are done in lawful manner becomes a law for the two parties must be followed without ant dishonesty.’’ [11] The case document shows that BRD shows that Kayiteshonga and his teamates presenting COPROVAB on 31/01/2005 signed a loan contract which is equivalent to 45.000.000 Rwf. They agreed that the coperative would pay the loan without using the coperative’s properties. [12] In the court observation, it found out that the agreement between BRD an Kayiteshonga and his team is lawful as those who signed are rightful persons to do so. They signed it without any force or dishonsty. With this therefore the agreement must be applied because the two partie agreed upon it. [13] On regard of knowing if BRD can sue the coperative representatives or the whole coperative, article 560 CCLIII states About knowing whether BRD can sue the cooperative representatives or the whole cooperative as provided for by the article 560 CC B III which states that “the guarantor is obliged towards the creditor to pay him/her in case of debtor’s default, who the payment has to be taken from the debtor’s patrimony except his/her guarantor has committed to pay immediately without getting the payment from the debtor’s patrimony”.

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[14] In the agreement that Kayiteshonga and his collegue signed, it is clear that they agreed to pay the lon without using the cooperative properties. Thus, BRD has right to sue the one who signed the agreement for the entire COPROVAB Aaccording to the agreement and the article above. [15] The fact that Kayiteshonga says that the loan contract has not value (nullite absolue) because the cooperative had no ligitimacy while their representantive took the loan is illogical. Kayiteshonga continue saying that representativenss also is senseless because the coopreative was illigally fuctioning. The court ruled that this is lame excuse for tha fact that COPROVAB is illigally working does not render the loan agreement useless (nullite absolue.) Even those who use this point in the court does not show how the loan agreement is unlawful( illicite.) or immoral. Now that COPROVAB has no legal ducument, it does not mean that it is not working or being represented. The ony a challenge which is here is that it is not widely known in the country or to the public ( le tier) [16] The fact that the one pleading on behalf of KAYITASHONGA argues that he will not subrogate BRD within its right, mortgage and its privilege as provided for by article 576 CCL III, the court finds this ground also to be baseless, since he does not prove the fault that has been committed by BRD for him not to subrogate it within its right, the fact of having given the loan to COPROVAB while it has no legal personality it is considered as a fault as provided for by the mentioned article.

2. ASSESSING IF BRD DESERVES COMPANSETION [17] BRD sued Kayiteshonga and his colleagues Birete, Ndimubanzi and Butunge asking compensation of 5.000.000 Rfr for having been involved in unnecessary courting. It also asks its lawyer’s fee which is equivalent to 3.000.000. [18] Kayiteshonga’s lawyer says that BRD canot be given compansention becuase Kayiteshonga is planning to appeal. Besides, the lawyer says that the mount is exorbitant. [19] The court observed that BRD should not be given the any compansation since it cannot prove tha way it was dragged into the case yet it the one which sued Kayeyishonga for the loan it had given to him. Also this compansation is not understandable since poeple who are asking it are no longer in the case. III. DECISION OF THE COURT [20] The court ruled that Kayiteshonga appeal is no merit; [21] It stated that claim of BRD for reacting is no merit; [22] It stated that the case RCOM 0252/09/HCC conducted by High Commercial Court remains the same;

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[23] It ordered Kayiteshonga Callixte to pay court charges in 8 days and failing to do so will result into evict him out of his property by the force of the government.