MUKAKABANDA et al.v. BPR

MUKAKABANDA et al.v. BPR

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2013-10-01 - Case/document no.: RCOMA 0112/13/HCC - Collection: Commercial High Court

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MUKAKABANDA et al.v. BPR [Rwanda COMMERCIAL HIGH COURT – RCOMA 0112/13/HCC (Rwanyindo, P.J.) 1 October 2013] Commercial procedure – Filing a new claim looking like the strucked off the Court – Striking off a case does not waive a claim because is not yet heard on merit – Struck off a case is a Court decision in case parties fail to appear before the court or are not represented but does not waive a claim because when the plaintiff fails to appear before the court, the case is strucked off not the claim – Law n°21/2012 of 14/06/2012 relating to the civil, commercial, labour and administrative procedure, article 57 paragraph 2. Commercial procedure – Filing a new claim looking like the strucked off the Court – None can prevent a party to file a new claim pretending that the case was strucked off while it was not be analysed on merit because it is considered as to prevent him/her the rights to justice. Contracts or obligations law – Termination of the contract – The debtor who does not pay when the creditor has right to sell the mortgage without a court decision – When the debtor does not pay and the contract he/she made with the creditor provided that the morgage will be sold without a court decision, it does not mean that the creditor must file a claim for having right to sell the mortgage but rather he/she may files a claim to be reimbursed the remaining balance after the sell

of mortgage. Contracts or obligations law – Termination of the contract – When the performance of obligations under the contract is due, the non-performance shall be a breach – When the contract is breached because one party did not perform his/her obligations, the non perfoming contract party cannot extinguish his/her obligations – Law n°45/2011 of 25/11/2011 governing contracts, article 80. Contracts or obligations law – The loan – Calculation of the remaining balance – The calculation of the loan to be paid by debitor in case he/she has compliled with the terms of payment, ordinary and interests late are deducted in loan paid before deducting the principal debt. Contracts or obligations law – Moral damages – No moral damages can be awarded for someone who alleges that the bank disclosed and qualified him as unfaithful to public in case he/she does not demonstrate the harm it caused to him. Facts: Mukakabanda and her husband Mugereka, the surety, concluded a loan contract with Banque Populaire du Rwanda of 8,000,000Rwfs. The debtors have been sued by Banque Populaire du Rwanda to the Commercial Court of Musanze requesting them to pay the remaining principal debts, ordinary interests, interests of late, procedural fees, advocate fees and Court bailiff fees. The Commercial Court of Musanze ordered Mukakabanda and her husband to pay Banque Populaire du Rwanda 5,363,587Rwf of principal debt, 603,205 of ordinary interests, 37,577Rwf of interest of late and 250,000Rwf of procedural and advocate fees.

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Mukakabanda and her husband appealed to the Commercial High Court stating that instead of Banque Populaire du Rwanda re-introducing an already struck off case, it filed a new claim and the Commercial Court of Musanze admitted it. They stated that the claim was filed basing on a non existing contract, that the principal loan was not well calculated and that there is money paid which was not written on bank slip. They also requested to be awarded to moaral damages of being qualified as unfaithful to public while they have already paid. Banque Populaire du Rwanda stated that struck off a case is a court decision in context of administration of justice but cannot erase the claim because of not being heard in merit. Concerning the breach of contract, it stated that in case of termination of the contract, things remain statu quo. Therefore, the appellants must reimburse it the money because the contract was terminated without paying the loan they requested. Regarding the principal loan which does not reflect the reality, Banque Populaire accepted an error but it stated that the money that Mukakabanda and her husband were paid, should be deducted interest of penality on principal loan. For the money paid without being written on bank slip, it accepted that there is 320,000Rwf paid which was not cashed. For damages qualifying them unfaithful person to public, Banque Populaire du Rwanda stated that they have no merit because also their appeal lacks merit. Held: 1. Struck off a case does not waive the claim because of not being heard in merit. When the plaintiff fails to appear before the court without a valid reason, the struck off the case not the claim.

2. Preventing a party to file a new claim because of the already case struck off but without a hearing in merit, is considered as preventing him/her the right to justice because his/claim is let aside while it was not analysed as to see if he/she is right or not.

3. In case the loan contract provides that the creditor has right of selling mortgage without filing a claim against the debtor, the bank has right of selling the mortgage without necessarly filing a claim for selling it. When the contract is terminated because one party did not perform his/her obligations, the non perfoming contract party cannot extinguish his/her obligations.

4. When the debtor did not respect the terms of payment, it leads the increase of ordinary and late interests. The money paid should be deducted from ordinary and interest of late before deducting principal debt from it.

5. Banque Populaire du Rwanda accepts that 320,000Rwfs was paid even if they do not appear on bank slip on the date they should be paid. Thus, they must be deducted from the debt all debt to be paid.

6. No moral damages can be awarded to party who alleges that the bank disclosed and qualified him as unfaithful to public in case he/she does not demonstrate the harm it caused to him. Appeal has merit in part. Case appealed changed on amount of loan to be paid. Court fees to the defendant.

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Statutes and statutory instruments referred to: Law n°21/2012 of 14/06/2012 relating to the civil, commercial, labour and administrative procedure, article 57 paragraph 2. Law n°45/2011 of 25/11/2011 governing contracts, article 80. Case referred to: R.COM A 0397/12/HCC between MULTITECH UPDATE COMPANY Ltd and FINA BANK Ltd rended on 8 March 2013. Authors cited: CORNU, G., Vocabulaire juridique, Association Henri Capitant, PUF, 8e édition., Paris, 2007, p.

756. DANIEL, D., NDE TAWEMBE, ‘‟L'extinction de l'instance en justice’’, Université de Yaoundé II- Soa/Cameroun, 2005, Disponible sur: http://www.memoireonline.com/04/10/3314/m_l’extinction-de-l’instance-en justice1.html. SERGE, B., Dictionnaire du Droit Privé (Conseiller honoraire à la Cour d’Appel de Versailles). Disponible sur http://www.dictionnaire-juridique.com/definition/instance.php. Judgment I. BRIEF BACKGROUND OF THE CASE [1] On 22 July 2008 MUKAKABANDA Spéciose concluded a loan contract with Banque Populaire du Rwanda of 8,000,000Rwf which should be ended on 25 August 2013. [2] MUGEREKA Prosper, the husband of MUKAKABANDA Spéciose, signed that contract of his wife as surety. [3] On 23 January 2013 Banque Populaire du Rwanda Ltd filed a claim against MUKAKABANDA Spéciose and MUGEREKA Prosper to the Commercial Court of Musanze requesting them to pay 5,636,587Rwf of principal debt, 603,205Rwf of ordinary interest, 553.773Rwf of interest of late, 676,390Rwf of procedural and advocate fees and 250,000 Rwf of court bailiff fees. [4] On 14 March 2013, the Commercial Court of Musanze ordered to MUKAKABANDA Spéciose and MUGEREKA Prosper to pay Banque Populaire du Rwanda Ltd 5,363,587Rwf of principal debt, 603,205 of ordinary interest, 37,577 of interest of late and 250,000Rwf of procedural and advocate fees. [5] On 11 April 2013, MUKAKABANDA Spéciose and MUGEREKA Prosper appead that case on the following reasons: 1. If the case is struck off; instead of re-introducing it, it may be filed a new claim and be admitted.

2. The fact that the claim was subjected to a non existing contract

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3. The fact that the principal debt doe not reflect the reality and errors in figures.

4. The fact that there is money paid but which was not appeared to the bank slip. [6] MUKAKABANDA Spéciose and MUGEREKA Prosper also requested the Court to order to Banque Populaire du Rwanda to pay them 5,000,000Rwf of moral damages which includes procedural and advocate fees because of qualifying them unfaithful persons to the public while they have paid. [7] Legal issues to be analysed in this case are follows: - Is it illegally to file a new case instead of re-introducing it? - Do effects of the contract derives from it non existence? - To know the exact principal debt to be paid. - Whether the money paid figurated on bank slip. - Whethet MUKAKABANDA Spéciose and MUGEREKA Prosper can be awarded to requested damages. II. ANALYSIS OF LEGAL ISSUES A- Is it illegally to file a new case instead of re-introducing it? [8] YATURAGIYE, the counsel for MUKAKABANDA Spéciose and MUGEREKA Prosper states that Banque Populaire du Rwanda filed a claim to the Commercial Court of Musanze on R.COM 0374/12/TC/MUS but at the day of hearing, it faild to appear before the Court and the case was struck off. Thereafter, instead of re-introducing it, the bank filed a new claim and the Commercial Court admitted it. [9] RUKUNDO Emile, the counsel for Banque Populaire du Rwanda replies that to struck off a case is a decision for administration of justice which implies the existence of the claim because

of default of not be heard in merit as stated by law scholars like Gérard Cornu in his book entitled “Vocabulaire Juridique” in which he explains the meaning of struck off a case in these words: the struck off a case, a sanction for failure to diligence of the parties (or their representatives) resulting from a decision of administration justice which leads withdraw from the order of pending cases and stay of proceedings, without being an obstacle to the pursuit thereof after restoring the case. [10] Regarding this point of appeal, the Court finds that as was explained by the counsel for Banque Populaire du Rwanda, srtuck off a case does not waive the claim because of not being heard in merit. [11] It finds that there is a diffence between a case and a claim. Law scholars support this idea by stating that: In contrast to the claim, which is the right that belongs to a person to assert a

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claim by seizing competent jurisdiction, a case is is the name given to procedural development resulting from the application to the judge by the person who took the initiative.1. [12] It finds that article 57 paragraph 2 of the Law n°21/2012 of 14 June 2012relating to civil, commercial, labour and administrative procedure clearly explains that If the plaintiff fails to appear before the court without a justified reason, the court struck off case not a claim. The article provides that If the case is struck off from the court register, it shall cease to be and all court fees already incurred shall be borne by the plaintiff. [13] The Court finds that law scholars say that struck off a case is a measure of administration of justice but does not imply that the case is closed. Those scholars state that struck off a case is a measure of administration of justice2 that can be taken by the Judge presiding a hearing in case the parties fail to appear before the Court or are not represented or when, although they appear at at the hearing the judge finds that despite the injunction that they made to fulfill a formality he had prescribed to them, the parties have failed to fulfill the procedural diligence incumbent on them. The struck off a case does not make an end to the case. [14] The also finds that the law relating to civil, commercial, labour and administrative procedure does prevent

the party whom his/her case was srtuck off, to file for another new claim but rather it provides that he/she may re-introduce his/her case and it determines modalities to be used in case he/she re-introduces a case. [15] It finds that the fact of preventing a party to file for a new claim because the previous was struck off without being examined on merit is to infringe his/her right to justice because his/her case is left aside while it was not examined to see if he/she is right or not3. It finds that law scholars say that The right to sue or free access to justice is now recognized as a fundamental freedom, a kind of obligation which the citizen is creditor vis-à-vis the State which is the debtor. State authorities must indeed make every effort to provide citizens with effective judicial remedy to obtain justice, when necessary, the recognition and enforcement of their rights. As a direct result of the recognition of the right to sue as a fundamental freedom, the citizen has a choice that is an extension. This ability reflects legal authority to be heard by a judge by presenting a claim and get him a decision on the merits with respect to this claim4. B- Do effects of the contract derives from it non existence? [16] The counsel for MUKAKABANDA Spéciose and MUGEREKA Prosper states that Banque Populaire terminated the contract and sold the mortgage. Thus it should not file a

claim for a terminated contract which does not exist. 1 Définition de l’instance dans le Dictionnaire du Droit Privé de Serge Braudo (Conseiller honoraire à la Cour d’Appel de Versailles). Disponible sur http://www.dictionnaire-juridique.com/definition/instance.php. 2 Définition de la radiation dans le Dictionnaire du Droit Privé de Serge Braudo (Conseiller honoraire à la Cour d’Appel de Versailles). Disponible sur : http://www.dictionnaire-juridique.com/definition/radiation-du-role.php. 3 See the case R.COM A 0397/12/HCC (MULTITECH UPDATE COMPANY Ltd C/FINA BANK Ltd) rendered on 8 March 2013. 4 Daniel Duplex NDE TAWEMBE, ‘‟L'extinction de l'instance en justice’’, Université de Yaoundé II- Soa/Cameroun, 2005. Disponible sur: http://www.memoireonline.com/04/10/3314/m_l’extinction-de-l’instance-en justice1.html.

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[17] The counsel for Banque Populaire du Rwanda Ltd replied that in case the contract is terminated, things remain statu quo. Thus, the appellants should reimburse the money of the bank because the contract was terminated without they finish to pay their loan. [18] The Court finds that article 13 of the contract signed by both parties provides that in case the debtor does not comply with terms of contract, the bank has rights of selling the mortgage without necessarly filing a claim for selling it. [19] It finds that the provision does not provide that the fact that the contract has terminated and the mortgage was sold, the bank cannot file a claim for remaining debt, Bank shall not file a claim for the remaining debt; but that article provides that if the debtor does not pay the loan as provided by the contract, it is not necessary for the bank for file a case for selling the mortgage. It has the the right of selling without a claim. In addition, if the contract is terminated because one party did not perfom the obligation, someone who violates cannot extinguish its obligation and he/she can never be liberated from damges of violating the obligations of the contract as provided in article 80 and 81 of the Law n°45/2011 25 November 2011 governing contracts which provide that Full performance of obligations under the contract extinguishes the obligations. When the performance of

obligations under the contract is due, the non-performance shall be a breach. Total breach of the contract gives right to damages based on the non performed obligations. Partial breach of the contract gives right to damages based on only part of remaining obligations to perform. C- To know the exact principal debt to be paid [20] The counsel for MUKAKABANDA Spéciose and MUGEREKA Prosper states that as it figurates on bank slip given by the bank on which MUKAKABANDA Spéciose get from the loan of 8,000,000Rwf and show payment methods; it is clear that the remaining debt to be paid before 29 September 2010 was 6,857,500Rwf. On 29 September 2010, MUKAKABANDA Spéciose paid 151,000Rwf and other amount of 50,000Rwf and the total is 201,000Rwf and the remaining debt is 6,857,500Rwf – 201,000Rwf = 6,656,500Rwf, but on bank slip it was written 6,807,500Rwf. On 30 December 2010 MUKAKABANDA Spéciose paid 439,000Rwf. So, it must remain 6,656,500Rwf – 439,000Rwf = 6,217,500Rwf,but on date date the bank was counting 6,609,400Rwf. From 29 September 2010 to 30 December 2010, it is clear that above the bank slip, the bank was totaling 640,000Rwf, the money to be paid. If you take 6,857,500Rwf minus 640,000Rwf, it remain 6,217,500Rwf instead of being 6,609,400Rwf which was postponed in 2011, and the difference is 391,900Rwf. [21] The counsel for MUKAKABANDA Spéciose and MUGEREKA Prosper also

state that on 31 March 2011 MUKAKABANDA Spéciose paid 164,000Rwf but the bank did not withraw them in loan. On 14 November 2012, she paid 1,418,775Rwf, on 26 July 2012, she paid 320,000Rwf. If you make a total of the all debt which should be figurated on bank slip is 6,217,500Rwf – 1,418,775Rwf – 164,000Rwf – 320,000Rwf = 4,314,725Rwf. [22] The counsel for Banque Populaire du Rwanda Ltd states that even if there are errors the money that the appellants are alleging that they paid, they must be deducted penality interests on principal debt.

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[23] Regarding on that issue, The Court finds that the money that MUKAKABANDA Spéciose is stating that she paid, was not paid at the same time but rather she paid after a period of payment and it lead to the increase of ordinary and interest late. It finds that the ordinary and interest late used to be deducted from the money paid before being deducted from principal debt. Therefore, the principal debt to be paid is 5,636,587Rwf as was calculated by Banque Populaire du Rwanda. D- Whether the money paid figurated on bank slip [24] The counsel for MUKAKABANDA Spéciose and MUGEREKA Prosper states that on 10 December 2010 MUKAKABANDA Spéciose paid 2,800,000Rwf after selling a car which was given as security. But that money was not written on bank slip which the bank was having. [25] He also states that on 26 July 2011 MUKAKABANDA Spéciose paid 320,000Rwf after selling a grind machine which was security of the bank. On 10 November 2011, she also paid 1.420,000Rwf after selling a mortgage of the bank but that money was not written on loan bank slip which worth to 4,540,000. [26] He states that MUKAKABANDA Spéciose paid exceeding of 225,275Rwf because she paid 4,540,000Rwf whis her debt was 4,314,725Rwf. [27] The counsel for Banque Populaire Rwanda Ltd states that 1,420,000Rwf from selling of the house was deposited on account on 14 November 2012 as it is demonstrated on bank

slip. 1,418,775Rwf paid the loan, and the remaining money was for commission of the bank. For 320,000Rwf, RUKUNDO Emile, the counsel staes that it may be an error. [28] Regarding that issue, the Court finds that Banque Populaire Rwanda Ltd accepted that 320,000Rwf was paid but the Court finds that they do not appear on bank slip on due date. It finds that the grind machine was sold on 26 July 2011 on price of 320,000Rwf as it figurate in sale contract but on bank slip, it appears that 320,000Rwf was paid on 26 July 2012. Therefore, it finds that 320,000Rwf from the selling of grind machine was not written on bank slip because it does not appear anywhere. [29] Regarding 1,420,000Rwf paid after the selling of the house, the Court finds that that house was sold on 10 November 2012 as stated by the appellants. However, it finds that on 14 November 2012, after four days, 1,418,775 was written on bank slip. It finds that the counsel for the bank is stating that within that money was deducted commission of the bank, which it makes 1,420,775Rwf. It finds that that statement of Bank Populaire du Rwanda is true especially that MUKAKABANDA Spéciose refused to provide to Court her booklet as to see how she paid, the money she paid and period of payment. [30] Therefore, it finds that the money that MUKAKABANDA Spéciose paid without being counted is 320,000Rwf but it must be deducted from the all debt that the Commercial Court of Musanze ordered her to pay which worth to 5,363,587Rwf (principal debt) + 603,205 (ordinary interests) + 37,577Rwf (interest late) = 6,004,369Rwf – 320,000Rwf = 5,684,369Rwf.

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E- Whethet MUKAKABANDA Spéciose and MUGEREKA Prosper can be awarded to requested damages [31] MUKAKABANDA Spéciose and MUGEREKA Prosper request to Court to order Banque Populaire du Rwanda Ltd to pay them 5,000,000Rwf of moral damages because of qualifying them unfaith persons to public while they have already paid. The money requested include also procedural and advocate fees. [32] The counsel for Banque Populaire du Rwanda replied that those dameges do not have any gound because the appeal also has no merit. But he requested rathe Banque Populaire du Rwanda Ltd to be given 5,00,000Rwf of advocate fees. [33] The Court finds that the appeal of MUKAKABANDA Spéciose and MUGEREKA Prosper has merit in merit in part as regards 320,000Rwf they paid which was not written on bank slip. Therefore, they had a reason to appeal. The Court finds that they must be given 5,00,000Rwf of procedural fees. It finds that they cannot be awarded to moral damages of being qualified unfaithful person to public because they do not provide its consequences. [34] But it finds rather that the cross appeal of Banque Populaire du Rwanda intending to request 5,00,000Rwf of advocate fees lacks merit because the appellants had a reason to appeal. III. THE DECISION OF THE COMMERCIAL HIGH COURT [35] Aceepts to receive the appeal of MUKAKABANDA Spéciose and MUGEREKA Prosper. It finds that it has merit in

part. [36] Accepts to receive the cross appeal of Banque Populaire du Rwanda Ltd. It finds that it lacks merit. [37] Decides and orders that the case R.COM 0055/13/TC/MUS rendered on 14 March 2013 by Commercial Court of Musanze is changed on amount of principal loan of 5,684,369 instead of being 6,004,369Rwf to be paid by Mukakabanda Spéciose and MUGEREKA Prosper. [38] Orders Banque Populaire du Rwanda to pay 5,00,000Rwf of procedural and advocate fees to MUKAKABANDA Spéciose and MUGEREKA Prosper. [39] Orders Banque Populaire du Rwanda Ltd to pay 7,600Rwf of court fee.