KANYWABAHIZI v. MICROFINANCE INKINGI Ltd

KANYWABAHIZI v. MICROFINANCE INKINGI Ltd

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2014-12-05 - Case/document no.: RCOMAA 0019/12/CS - Collection: Supreme Court

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KANYWABAHIZI v. MICROFINANCE INKINGI Ltd [Rwanda SUPREME COURT – RCOMAA 0019/12/CS (Mutashya, P.J., Mukanyundo and Munyangeri, J.) 5 December 2014] Contract Law –The loan contract – Loan contract – Admissibility of claim in case all parties agreed that if the debtor fails to pay, his/her guaranty will be auctioned without a judgment – Seizing the courts in case there is the contract of selling the guaranty without the judgment –No party may argue for inadmissibility of the claim of his/her adverse party by basing on the fact that they have made a contract of selling the guaranty without judgment and be considered in case the debtor did not pay in due time, and requested and granted for extension of period, it implies that the principal contract has been renewed. Contract Law – Calculation of interests – The renewed loan contract which extended the period of payment, the debtor cannot argue that no interests may be calculated against him/her in case he himself request the period of extension – Law no 45/2011 of 25/11/2011 governing contracts, article 64. Facts: On 05/03/2009, Microfinance INKINGI Ltd gave to KANYWABAHIZI the loan worth to 14,390,000 Frw which he had to pay within the period of 6 months. KANYWABAHIZI says that he has paid the loan and exceeded it but Microfinance INKINGI Ltd says that he did not pay as agreed upon in the contract. This made KANYWABAHIZI to sue

Microfinance INKINGI Ltd before Nyarugenge Commercial Court claiming for the titled deeds of his house which he has guaranteed to be given back the balance of money which exceeded to the one he had to pay to Microfinance INKINGI Ltd which also sued KANYWABAHIZI before the Commercial High Court requesting to be paid the main debt and its interests. The cases were combined in the Commercial Court since they were connected and it decided that KANYWABAHIZI’s claim has basis on some grounds since Microfinance INKINGI Ltd continued to calculate the interests while it had to sell the guaranty immediately after KANYWABAHIZI did not pay within the period agreed upon. And it decided that the claim of Microfinance INKINGI Ltd has basis on some grounds since KANYWABAHIZI did not pay within the period agreed upon and that the interests would continue to be calculated that’s why the debt went on increasing. KANYWABAHIZI appealed before the Supreme Court arguing that the claim of Microfinance INKINGI Ltd would not be admitted since in case it realised that it was not paid it had the right of auctioning the guaranty given to it, while it didn’t do it and be opposed instead of going on calculating the interests. On this ground Microfinance INKINGI Ltd says that selling the guaranty without seizing the courts does not disqualify the court from being seized, more importantly that KANYWABAHIZI lodged a claim arguing that he has paid much money while Microfinance INKINGI Ltd argues that he did not pay accordingly; which means that there is no agreement. Microfinance INKINGI Ltd for its side appealed arguing that the court calculated the interests of delay basing on inexact period and the fact that it denied to provide the procedural fees.

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KANYWABAHIZI for him says that the fact that the interests were calculated for the period of 6 months was correct since Microfinance INKINGI Ltd does not prove the main debt which remains. He says again that the fact that Microfinance INKINGI Ltd if it goes on calculating the interests may be injustice since Microfinance INKINGI Ltd would have sold the guaranty issued; thus it cannot claim the interests upon its faults. He went on saying that Microfinance INKINGI Ltd caused him to get a loss; instead it is this one which has to pay 5,000,000 Frw to him for two Advocates who pleaded for his behalf before the Supreme Court. Held: 1. The arguments of KANYWABAHIZI which say that the claim of Microfinance INKINGI Ltd would not have been admitted have no basis since after the date of payment (05/09/2009)he did not respect it and it is him who requested the renewal and the period of paying was granted to him and extended to 31/03/2011, so he continued to request for being tolerated, it shows that the initial contract was no longer as it was and it was instead renewed upon the agreement of parties basing on their behaviours in their dealings.

2. In case the contract was renewed upon KANYWABAHIZI’s request nothing would prevent the interests from going on being calculated. No other procedure which Microfinance INKINGI Ltd would follow without seizing the court for it to get paid for the main debt and its interests.

3. KANYWABAHIZI’s arguments saying that he finished paying instead he had to be given back the exceeding balance may not be considered since it is not clear how he has paid the whole debt and exceeded it and no receipt was given to him or otherwise among the letters he has written, he responded saying that he has finished paying and requested to be given back that exceeding balance. Thus the debt which has to be based on to calculate the ordinary interests and those of delay is that one which is on bank statement which is equal to 6,880,521 Frw.

4. The fact that the interests were agreed upon by both parties, nothing may prevent the calculation of the interests after the expiration of the period of payment since KANYWABAHIZI proves no ground for his failure to pay on the date agreed upon by both parties to pay the debt. However Microfinance Inkingi Ltd may not be provided with 18,526,923 Frw calculated on 30% relating to the recovery of the debt since it may not be provided with it and again requests for the procedural and lawyer’s fees. Thus KANYWABAHIZI has to pay to Microfinance Inkingi Ltd 6,880,521 Frw for the main debt, 32,687,200 Frw for the ordinary interests and 22,188,690 Frw for the interests of delay, which all make 61,756,411 Frw. Appeal has merit in part. Kanywabahizi’s appeal has no basis. Court fees to Kanywabahizi. Statutes or statutory instruments referred to: Law no 45/2011 of 25/11/2011 regulating the contract, article 64. No case referred to.

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Judgment I. BRIEF BACKGROUND OF THE CASE [1] This case originates from the loan that MICROFINANCE Inkingi Ltd gave to KANYWABAHIZI Charles on 05/03/2009 equal to 14,390,000 Frw which had to be paid within 6 months, KANYWABAHIZI says that he had to pay the monthly interests which are equal to 2,973,933 Frw, for his side he argues that he has paid accordingly with provisions of the contract and even he has exceeded the money which he had to pay while MICROFINANCE Inkingi Ltd says that the money was not paid as agreed upon in the contract. [2] KANYWABAHIZI Charles sued MICROFINANCE Inkingi Ltd before Nyarugenge Commercial Court under nº RC0M 427/11/TC/NYGE requesting that the title deeds of the house he has issued for guaranty and the balance of the money which exceeded to that he had to pay. MICROFINANCE Inkingi Ltd also sued KANYWABAHIZI before the Commercial High Court requesting to be paid the main debt and its interests and the case was registered under nº RCOM 0192/11/HCC. [3] Both cases were combined before the Commercial High Court since they were connected and they were decided together. The Commercial High Court has heard the case and decided that KANYWABAHIZI Charles’s has basis on some grounds and that the claim of MICROFINANCE Inkingi Ltd has basis on some grounds, it condemned KANYWABAHIZI Charles to pay to MICROFINANCE Inkingi Ltd 6,680,521 Frw for the main debt,

ordinary interests equal to 1,603,325 Frw and the interests of delay equal to 3,206,650 Frw. [4] In deciding, the court based on the grounds that it has realized that with regard to the debt, there was the money which KANYWABAHIZI has not paid yet and he has paid in periods different to what they have agreed upon since they have agreed that he would be paying 2,398,333 Frw monthly for 6 months from 06/04/2009 until 06/09/2009, because they have agreed that the interests would continue to be calculated, that’s why the debt kept on increasing. [5] With regard to the fact that MICROFINANCE Inkingi Ltd went on calculating the interests while it had to sell in auction the guaranty given, the court realized that MICROFINANCE Inkingi Ltd would not have to wait more than 6 months after realizing that KANYWABAHIZI Charles was not paying for it to seize the court, it is this delay which caused this considerable increase of the interests. [6] The court realized that the fact that MICROFINANCE Inkingi Ltd seized the court on 24/08/2011 while the debt would have been paid on 06/09/2009, it was a fault because it would have seized the guaranty it was given, thus the ordinary interests have to be calculated on 4% per month for the period of 6 months and the interests for delay to be calculated on 8 % for the

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period of 6 months since it is the reasonable period within which MICROFINANCE Inkingi Ltd would have seized the court. [7] The fact that the mortgage was not registered as provided for by the law, the court has realized that it cannot be the ground for not seizing the guaranty and be sold since the law nº10/2009 of 07/05/2009 providing for the procedures in which the mortgage may be registered, it does not provide for that unregistered guaranty may not be sold that instead what it provides in case the mortgage is not registered, the mortgagee cannot prevail over others (privileged creditor) to whom it may be given, that in case it happens that the guaranteed creditors are ordered, he comes after other creditors who registered that guaranty, this law does not prevent the creditor secured by the unregistered guaranty to seize the court requesting to be paid for the debt it has given. [8] The court realized, with regard to the restitution of the title deeds of the house as KANYWABAHIZI requests has no basis because it was realized that he has not finished to pay the whole debt he owes to MICROFINANCE Inkingi Ltd. [9] KANYWABAHIZI Charles was not satisfied by that decision and appealed against it before the Supreme Court arguing that the claim of MICROFINANCE Inkingi Ltd may not be admitted basing on the contract he has made with it and the fact that the judge has decided that he

pay the interests for delay while no main debt was revealed. [10] MICROFINANCE Inkingi Ltd has also appealed against this judgment arguing that the court has calculated the interests for delay basing on inexact time and the fact that the court denied to provide the procedural fees, both appeals were joined under the case nº RCOMA 0019/12/CS and the hearing was set to be held on 11/11/2014. [11] On that date, KANYWABAHIZI Charles attended and he was assisted by both Me NGEZEHAYO Emmanuel and Me MBONYIMPAYE Elias while Me MUVUNYI Jean Pascal pleaded on behalf of MICROFINANCE Inkingi Ltd II. ANALYSIS OF LEGAL ISSUES ►Knowing whether MICROFINANCE Inkingi Ltd might seize the courts for the issue originating from the loan contract in case it got no hindrance in the sale of the guaranty. [12] NGEZAHAYO Emmanuel, the counsel, states that the Commercial High Court would not have admitted the claim of MICROFINANCE Inkingi Ltd basing on the provisions the article 4 of the contract made by both parties, that in case it realized that it was not paid it had the right of immediately auctioning the guaranty it was given, it did not do it and be hindered instead of going on calculating the interests, that its claim would not have been admitted.

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[13] MBONYIMPAYE Elie, the counsel, also who pleads on behalf of KANYWABAHIZI Charles says that the loan contract is clear, MICROFINANCE Inkingi Ltd did not start the procedure of auctioning the guaranty it was give and be hindered by KANYWABAHIZI Charles for it to be the reason to seize the court. He says that the contract which is made by both parties is the law between them, that arguing that the debt was still disputed; it was not the ground which prevents MICROFINANCE Inkingi Ltd from respecting the contract, that at least it could start and if it got a problem it seize the court. [14] MUVUNYI Jean Pascal, the counsel for MICROFINANCE Inkingi Ltd says that selling without seizing the court as it was provided for in the contract made by both parties, it is one among the ways the ways which may be followed to get paid but it does not disqualify the courts as those who plead on behalf of KANYWABAHIZI Charles ague it. He says that KANYWABAHIZI Charles lodged a claim saying that he has paid a lot of money, and MICROFINANCE Inkingi Ltd argues that he did not accordingly and it evident that there is a disagreement, that’s why MICROFINANCE Inkingi Ltd seized the courts. [15] He goes on saying that until 2011 KANYWABAHIZI Charles has requested for the extension of the period for the payment after 6 months, until he seized the court he went on requesting for extending the time for paying, the fact that he has requested for it and it was extended it is not the fault of MICROFINANCE Inkingi Ltd, instead of paying he sold the guaranty and MICROFINANCE Inkingi Ltd after realizing it they made another new contract.

THE VIEW OF THE COURT [16] The court realizes that within the documents of the case there is the loan contract which KANYWABAHIZI Charles made with MICROFINANCE Inkingi Ltd on 05/03/2009 equivalent to 14,390,000 Frw, within that contract KANYWABAHIZI Charles agreed to pay within 6 months, it means that he could have finished to pay that loan on 05/09/2009 and pay 2,398,333 Frw, and the interests calculated on 4% per month, it is understood that in case he delays paying that money, he will pay the interests calculated the rate of 8% per month. [17] The court realizes within that contract in its article 4 provides for that in case KANYWABAHIZI Charles does not pay, the guaranty he has given on the house worth to 63,000,000 Frw will be seized and be sold without referring it to the procedure of the courts. [18] The court realizes that on 06/06/2009 MICROFINANCE Inkingi Ltd wrote a letter to KANYWABAHIZI Charles reminding him that he has to perform the contract they have made. [19] The court realizes that on 27/08/2009 KANYWABAHIZI Charles wrote a letter to MICROFINANCE Inkingi Ltd notifying to it the difficulties he had got and requesting to extend the period for paying.

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[20] The court realizes that on 09/11/2010 MICROFINANCE Inkingi Ltd again wrote to him reminding him that he has not paid the debt he was provided with and notifying to him its amount at that date. [21] The court realizes that on 31/03/2011 KANYWABAHIZI Charles he also wrote again to MICROFINANCE Inkingi Ltd requesting it to tolerate him and stop on going on calculating the interests since he got a problem. [22] The court realizes that the article 4 of the loan contract of 05/03/2009 on which KANYWABAHIZI Charles bases saying that the claim of MICROFINANCE Inkingi Ltd would not be admitted, this arguments has no basis since he, himself clearly knows that on 05/09/2009 the date on which he would have finished to pay he did not respected it and it is him who has himself requested that the contract be renewed and the period for paying be extended and it was admitted, until on 31/03/2011 he went on requesting for being tolerated which shows that the initial contract was no longer as it was instead it has been renewed upon the agreement of the parties to it basing on the behaviors which characterized them in their dealings. [23] The court realizes that in case the contract made by both parties was renewed at the request of KANYWABAHIZI Charles, nothing would prevent the interests from going on to be calculated, and for MICROFINANCE Inkingi Ltd to be paid its principal debt and its

interests, no other procedure it has to follow than of seizing the courts for the remaining debt, the ordinary interests and those of delay be decided by the court basing on the procedure of paying. [24] The court realizes that the article 4 of the loan contract had to be respected as it was in case none of the parties to it requested that some of the articles of the contract be amended as it happened, thus the fact that the Commercial High Court has admitted the claim of MICROFINANCE Inkingi Ltd the former committed no fault. ►Knowing the amount of the debt and the interest that KANYWABAHIZI Charles has to pay MICROFINANCE Inkingi Ltd to basing on the contract made by both parties. [25] NGEZAHAYO, the counsel for KANYWABAHIZI Charles says that the judge decided that he has to pay the interests of delay basing on the principal debt of 6,680,521Frw while in lodging the claim, this debt was not revealed the way it was found, that that money is what MICROFINANCE Inkingi Ltd imagined without basis, that KANYWABAHIZI Charles has paid 18,889,000 Frw but MICROFINANCE Inkingi Ltd requests him to pay the money it cannot prove its origin. [26] He goes on saying that before the court they have revealed the form showing how the money got paid, but the court did not consider it, that therefore basing on the contract, he had to pay 17,843, 600 Frw, these interest were calculated against him before the period which was given to him for paying expires, it is evident that all he has paid, he paid it without interests, he

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could not pay the interests within the period of 6 months except in case he exceeds the period he was given. [27] He concludes saying that MICROFINANCE Inkingi Ltd itself admit that it was paid 18,889,000 Frw which is evident that KANYWABAHIZI has exceeded on the money he had to pay, and that if you take 2,973,943 Frw for 6 six months makes 17,843,600 Frw, he has exceeded on around 1,045,400 Frw. [28] MUVUNYI Pascal, the counsel for MICROFINANCE Inkingi Ltd says that what the one who plead on behalf KANYWABAHIZI Charles say, it has no basis since the money he is requested to paid, it is proven, since among the documents of this case there is the form which demonstrates the debt to be paid, and it shows how the debt was calculated by considering what has been paid and nonpaid, and that the form demonstrates it, it was submitted before the courts the case has been heard, and that the case has been lodged after he has paid 7,509,479 Frw, the remaining amount is the one over which the ordinary interests and those of delay have to be calculated. [29] He goes on saying that to argue that the interests had to be paid only in case there is delay it is not true, because the amount that KANYABAHIZI Charles has paid before, the interests were firstly to be charged basing on the article 153 of the third book of civil code, that therefore on the remaining amount the interests for delay and

the ordinary interests have firstly to be charged, MICROFINANCE Inkingi Ltd admits that for the first round it committed a mistake on interests of delay equal to 66,000 Frw. [30] He concludes saying that with regard to the interests there is a law nº04/2008 of 26/08/2008 relating to the organization of the microfinance which is applied in determining the rate of the interests, and it was set up on the agreement made between KANYWABAHIZI Charles and MICROFINANCE Inkingi Ltd, the fact that he has agreed it, he has to pay basing on that rate, because he could go somewhere else if he found that it was too expensive for him.

THE VIEW OF THE COURT [31] The court realizes that as the Commercial High Court has decided it, it is evident that on the debt that KANYWABAHIZI Charles had to pay to MICROFINANCE Inkingi Ltd, he has paid and there remained 6,880,521 Frw as demonstrated on the document of 05/10/2014 which is the bank statement that MICROFINANCE Inkingi Ltd provided with the court and KANYWABAHIZI Charles failed to disprove the calculation of the debt. [32] The court realizes that what he argues that he has paid 18,889,000 Frw while he had to pay around 17,843,600 Frw, he reveals no proof except what he says only which is not reasonable how he paid the whole debt and exceeded it and no receipt was given to him or in the letters which were written to him, he responded that he has finished paying instead he has to get

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back the excess1, this arguments have no basis basing on what is provided for by the article 3 of the law nº 15/2004 of 12/06/2004 regulating the evidence and its production2. [33] The court realizes that, as the calculation of the debt that KANYWABAHIZI Charles owes to MICROFINANCE Inkingi Ltd (bank statement) demonstrates it, on 05/10/2014 that debt was equivalent to 6,880,521 Frw, the basis of which the calculation of the ordinary interests and the interests for delay have to be calculated. ►Knowing whether MICROFINANCE Inkingi Ltd even after six months which the debt was supposed to be finished to be paid, the later had to continue charging the interests. [34] MUVUNYI Pascal, the counsel for MICROFINANCE Inkingi Ltd says that the court has calculated the interests basing on six months because it was the period by which he would have lodged the claim ignoring the period agreed up on in the contract was extended, that therefore the Supreme Court has to calculate both the ordinary interests and the interests for delay until the pronunciation of the court verdict because he still has the money which it may be generating interests since it is the mission that is performed by MICROFINANCE Inkingi Ltd. [35] He concludes saying that the ground which made MICROFINANCE Inkingi Ltd to lodge an appeal is that the court refused to provide the procedural fees. [36] NGEZAHAYO, the counsel

for KANYWABAHIZI Charles says that the fact that the judge has calculated on six months, it is reasonable because MICROFINANCE Inkingi Ltd does not prove the main debt which remains, that therefore the court has to consider the exact calculations and ignore what is said by MICROFINANCE Inkingi Ltd. He says that going on calculating the interests would be injustice since because MICROFINANCE Inkingi Ltd would have sold the guaranty it was provided with, it has not to request the interests up on its own faults. [37] He goes on saying that MICROFINANCE Inkingi Ltd caused the loss to KANYWABAHIZI Charles since his house had the value of 60,000,000 Frw on the debt of 14,000,000 Frw which has been paid, due to this ground MICROFINANCE Inkingi Ltd has to 1 -See the letter which has been written on 27/08/2009 where he requested the extension of the period of paying which is equal to two months because of the difficulties he has got. -Se the letter of 09/11/2010 that MICROFINANCE Inkingi Ltd wrote to him notifying him that he has not respected the contract and notifying him the debt at that date (the main debt together with the interests for delay and ordinary ones). -See the letter of 31/03/2011 that KANYWABAHIZI Charles wrote to MICROFINANCE Inkingi Ltd requesting it to tolerate him and stop on going on calculating the interests. -See the letter of 21/07/2011 that Microfinance wrote to him warning him and notifying him which was the amount of the debt. 2 Each party to the case has to prove the veracity of what he /she claims.

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pay to KANYWABAHIZI Charles the damages amounting to 5,000,000 Frw for the two advocates who pleaded for him at this instance.

THE VIEW OF THE COURT [38] The court realizes, within the contract that the bank made with KANYWABAHIZI Charles was given the period of payment and he did not respect it, which is logical that the bank has the reasonable ground of going on calculating the interests in case it is KANYWABAHIZI Charles who went on requesting for extending for him the period of paying, going on calculating the ordinary interests an those of delay and they were provided for by the loan contract in its article 23 which he has signed that he admits. [39] The court realizes again with regard to going on calculating the interests after the period of paying has expired, KANYWABAHIZI Charles cannot prove the reason why the debt he was given and did not pay it in the agreed period may stop the calculation of the interests thereon in case he did not pay it and those interests have been agreed up on by both parties. It may be ignoring what is provided for by the article 64 of the Third Book of the Civil Code, it provides for that the contract becomes a law between parties to it, this idea is similar to the one which is in the judgment nº RCOM0019/09/CS rendered by the Supreme Court on 28/11/2011 between RWANGAMPUHWE vs. Bank of Kigali. [40] The court realizes with regard to 18,526,923 Frw calculated on the rate of 30% of the whole amount KANYWABAHIZI Charles is requested to pay relating to the activities

performed in the recovery of the debt he owes to MICROFINANCE Inkingi Ltd, does not deserve to be charged to him since though it is provided for in the loan contract4, MICROFINANCE Inkingi Ltd does not reveal the evidences on how they were used, therefore it cannot be provided with the money it claims and again claims the procedural fees and the lawyer’s fees. [41] The court realizes basing on the form demonstrating the amount of the debt, KANYWABAHIZI Charles has to pay to MICROFINANCE Inkingi Ltd 61,756,411Frw, that’s to mean 6,880,521 Frw of the main debt, 32,687,200Frw of the ordinary interests and 22,188,690 Frw of the interests for delay as it is demonstrated on the on the form of the debt provided with the court and KANYWABAHIZI Charles failed to disprove its calculation, therefore he has to pay the total debt amounting to 61,756,411Frw. [42] With regard to the procedural fees and the lawyer’s, the court realises the fact that KANYWABAHIZI Charles did not respect the contract he made with MICROFINANCE Inkingi Ltd which caused cases, this made MICROFINANCE Inkingi Ltd to appoint the advocate to 3 This article provides for that in case there is the delay in paying Kanywabahizi Charles commits to pay the interests for delay equal to 8% per month and goes on paying the ordinary interests 4 The article 3 of the loan contract provides for that in case there is the recovery KANYWABAHIZI Charles commits himself to pay all the amount of money spent in the activities of recovery.

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plead for it and caused it to get a loss, KANYWABAHIZI Charles has to pay 1,500,000 Frw for the procedural and lawyer’s fees from the Commercial High Court until the Supreme Court determined in discretionary power of the court since what it claims is too much. III. THE DECISION OF THE COURT [43] It decides to admit the appeal of MICROFINANCE Inkingi Ltd and that it has basis on some grounds; [44] It decides to admit KANYWABAHIZI Charles’s appeal and decided that it is baseless; [45] It condemns KANYWABAHIZI Charles to pay to MICROFINANCE Inkingi Ltd 61,756,411 Frw, that’s to mean 6,880,521 Frw of the main debt, 32,687,200Frw of the ordinary interests and 22,188,690 Frw of the interests for delay; [46] It condemns KANYWABAHIZI Charles to pay 1,500,000 Frw for the procedural and lawyer’s fees at this instance level and at the first instance level; [47] It condemns KANYWABAHIZI Charles to pay the court fees.