KAGARAGU V. BANQUE POPULARE DU RWANDA

# KAGARAGU V. BANQUE POPULARE DU RWANDA

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2014-10-17 - Case/document no.: RCOMA 0129/12/CS - Collection: Supreme Court

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KAGARAGU V. BANQUE POPULARE DU RWANDA [Rwanda SUPREME COURT – RCOMA 0129/12/CS (Mutashya, P.J., Nyirinkwaya and Gakwaya, J.) October 17, 2014] Banking law – Withdrawing cash from client bank account – The bank withdraws cash from client bank account upon an authorization of the latter – In case it withdrew cash and neither shows on which account it was deposited nor which activity was performed in the interest of the client, it pays it back – Law n° 15/2004 of 12/06/2004 relating to evidence and its production, article 3 par. 1. Commercial procedure – Damages – Economic damages –They are not awarded in case the claimant does not justify their computation. Commercial procedure – Moral damages – They are awarded in case its claimant referred the case to the court because of the prejudice inflicted by the bank as a result of mismanagement of his/ her cash – Follow up on the claim – Damages for procedural expenses – In case its claimant is the winner of the case, the court in its discretion orders the refund of the totality of the expenses he/ she incurred – Claiming for procedural and advocate fees in cross- appeal – They are not awarded in case such a cross- appeal is lacking merit. Facts: PIUS KAGARAGU concluded a contract of collecting taxes with Nyamasheke District from Mutongo market. They agreed that that he must depost 14, 000, 000,00 Frw on District bank account n° 511218701 open in .BPR Kagano. The latter as a loan granted him 16,000, 000,00Frw and immediately paid 14, 000, 000, 00Frw on February 5, 2007. Subsequently, he realized that the bank had made a payement while he had not issued an orders authorizing it to do so on his behalf. KAGARAGU filed a claim in Commercial High Court. Against BPR so as to refund him with 14, 000, 000,00Frw, 500, 000 Frw he deposited in BPR but which it did credit on his account. Furthermore he requested to be granted with economic damages, moral damages, procedural and advocate expenses. The the Court held that 14, 000, 000, 00Frw which was paid by BPR after withdrawing it from KAGARAGU account while the District did not declare that it had been already paid 28, 000, 000, 00Frw. As for the issue of whether KAGARAGU had deposited 500, 000, 00Frw which was not credited on his account, the Court found out that it has no bearing on the truthfulness as long as the deposit slip is sheet of paper which does not bear his signature as it usually done. In addition, three years prior to his case filing within the court, he had never notified the bank with 500, 000, 00 Rwf that he deposited but with no credit being made on his account. KAGARAGU appealed to the Supreme Court for the grounds that: (i) the court disregarded the submitted evidence justifying that he had personally paid 14, 000, 000, 00 Frw ( ii) holding invalid that the deposit slip of 500, 000, 00 Frw because it was a duplicate paper( simple sheet of paper) without taking into account that the bank did not challenge it ( iii) he requested to be granted with economic damages, moral damages and advocate fees. BPR presented the defence that( i) KAGARAGU confirmed that the District was paid twice while at this level he pleads that the bank made a transfer of 14, 000, 000, 00 Frw on the bank

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account he does not know the owner while it is the account of Nyamasheke District as well (ii) the slip should not be considered since in BPR operating system every transaction is recorded in the client booklet while he does not indicate in his booklet where 500, 000, 00 Frw had been recorded, furthermore, the writing is as simple duplicate paper which does not bear his signature and those of the bank officers who were supposed to put their signature thereon., (iii) KAGARAGU does not deserve any damage since it is him who dragged BPR in unfounded litigation, rather, damages should succumb on him. Held: 1. In case the bank withdraws cash from the client account without his authorization and fails either where the cash had been deposited, it should pay it back to the owner. Hence BPR should pay back the money debited from KAGARAGU account since it did not justify its use nor it indicate that it did it upon his request and in his interests. 2. In case KAGARAGU used the document issued by the BPR, the latter should indicate that it did what it was supposed to do and the time it was done. Therefore, the fact that it did not produce evidence of justification, it causes it to lose the case and hence it should pay back the plaintiff the money which had not been traced. 3. In case the claimant of economic damages did neither figure out in his submissions nor mention in his pleading the manner of their computation, the court cannot fails to not have the landmark for their assessment. 4. In case the bank failed to respects its duties of managing the property of its shareholder and therefore feels prejudiced, and then make him refer the case to the court, such a reference implied the grant of damages in case of request. 5. In case the plaintiff wins the case, he/ she should be, in discretion of the court, refunded of all expenses for the follow up on the case including advocate fee. 6. Damages for procedural and advocate fees filed in cross appeal are granted in case such an appeal has merit, otherwise, they are not granted. Appeal has merit in parts; Cross appeal has no merit; The respondent is orders to pay the appellant the withdrawn, the untraced money, moral, damages and advocate fee; Court fees to the respondent. Statutes and statutory instruments referred to: Law n° 15/2004 of 12/06/2004 relating to evidence and its production, article 3 par. 1. No cases were referred to: Judgment I .BRIEF BACKGROUND OF THE CASE

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[1] Pius Karangwa filed a claim against BPR in Commercial High Court stating that he applied for a loan in BPR Kagano based on the contract he entered into with Nyamasheke District of tax collection from Mutongo market whereby they agreed a prior deposit of the sum of 14, 000, 000, 00Frw on its account n° 511218701, which is referred to in simplified figures as 2187, no later than January 16, 2007. He was granted a loan of 16, 000, 000, 00Frw. He had personally paid 14, 000, 000, 00Frw on February 5, 2007. However, short time later, he found that the bank had executed another payment on his behalf without his authorization. He request to be refunded of that money. [2] In his claim, Pius Karegeya requested to be refunded of 500, 000, 00Frw which he claimed to have been deposited on his account n° 51126801 open in BPR ON December 5, 2008 which the bank did not credit on his account. Furthermore, he requested the economic damages of 10, 000,000, 00Frw, procedural expenses and advocate fee totalling 1, 000, 000, 00Frw. [3] The Commercial High Court adjudicated the case RCOM 0169/11/HCC on July 13, 2012 and held that his claim lacks merit. [4] On whether Pius Kagaragu had really personally deposited 14, 000, 000, 00 Frw on the bank account of Nyamasheke District, the Court foujd out that such a sum was deposited by BPR on February 5, 2007 on account of the District 2187 as it is evidenced by the copy of bank statement of the account of the District as submitted to court. Such money was withdrawn by the bank from the account of Pius Kagaragu at that date. However, because of value date ( date valeur) such a transaction was recorded on February 6, 2007. [5] Furthermore, the court came up with the finding that such a sum was deposited by Pius Kagaragu as he pleads since at that time he would have had a deposit bank slip bearing his signature as it is in practice. However, he brought a duplicate paper. [6] It found further illogic the deposit of 14, 000, 000, 00 Frw on the Nyamasheke District bank account directly from his pocket while he requested the bank to give him a loan to help him in that bidding, especially that the District did not claim it received 28, 000, 000, 00 Frw as a payment. [7] On the issue of whether there had been 500, 000, 00Frw which Pius Kagaragu might have deposited on his acount on May 5, 2008 but without being cridited on his account, the court found that it has no bearing on the truthfulness since the deposit bank slip was a simple duplicate paper which does not bear his signature as it is a practice and even 5years prior to the filing of the claim to the court, he did not notify the BPR that 500, 000, 00 Frw had not been credited to his account. [8] Pius Kagaragu appealed to the Supreme Court on August 7, 20012. The case was heard in open session on May 27, 2014 Pius Kagaragu assisted by counsel Donath Mutunzi, BPR assisted by counsel Alberto Basomingera alongside Albert Muhayeyezu. That very day the hearing was not closed since there was evidence that court had ordered parties to present. The hearing was reopened on September 9, 2014 Pius Kagaragu assisted again by Mutunzi Donath again while the BPR was represented by Isaie Muhayimana in conjunction with Basomingera.

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II. ANALYSIS OF LEGAL ISSUES. Whether 14, 000, 000, 00Frw deposited on the Nyamasheke District on February 5, 2007 was deposited personally by Pius Kagaragu. [9] The Counsel for Pius Kagaragu states pleads that the Commercial High Court disregarded evidence presented including the bank statment of the bank account 2187 of Nyamasheke District open in BPR, bank diposit slip and the certificate n°1041/sec.ex/2011 issued by the Executive Secretary of MMucuba Sector in Nyamasheke District which all evidence that Pius Kagaragu has deposited 14, 000, 000, 00Frw personally on the bank account of Nyamasheke District. [10] He states further that the judge has confirmed invalid the deposit bank slip of 14, 000, 000, 00Frw presented by Pius Kagaragu since i twas duplicate paper as it does not bear his signature without apying attention to the fact that the bank does not deny to be the author of that document. Furthermore, the fact that such a document does not bear his signature did not mean that the bank had an authorization to withdraw the money from his account without his order to do so. [11] He states further that the transfer is executed in the interest of the client and upon his request. Hence, he states, the bank should justify whether Pius Kagaragu had ever requested it to withdraw 14, 000, 000, 00Frw from his account to what wherever. [12] He states that an other evidence that such a sum had been deposited by Pius Kgaragu persopnally is the fact that i twas deposited on February 5, 2007 and the bank could not have paid on such a date from the loan it granted him on February 6, 2007. [13] He adds that BPR had no evidence which justify that it paid it had paid on his behalf and even that it presents solely demonstrates that it deposited 14, 000, 000, 00Frw on account 2287 which he does not know the owner. [14] Counsels for BPR contends that in his pleading before the Commercial High Court, Pius Kagaragu recognize that the District had been paid twice but at this level he states that the bank made a transfer of 14, 000, 000, 00Frw on the account 2287 which he does not know the owner while it of the Nyamasheke District as well as it is evidenced by the bank statment of that account that they had presented. [15] They states that BPR Kagano had granted to Iups Kagaragu of 16, 000, 000, 00 Frw so as to execute the the contract he had entered into with Nyamasheke District. He contunues arguing that on that amount the bank deducted 14, 000, 000, 00Frw which was deposited on the District account since it was the purpose of such an application of loan by Pius Nyakagaragu and its grant. Since it was the instruction he had he had given since he he had to deposit such amount prior to the beginning of his activities. [16] They further plead that the bank statements indicate that 16, 000, 000, 00Frw was depoisted to the bank account n° 5110262801 of Pius Kagaragu and Mututampunzi on February 2, 2007 ( transaction n° 148) and that very day it executed a transfer of fund( transfer de fond) of

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14, 000, 000, 00Frw from his account (transaction 150) to the account n° 2187 of Nyamasheke District called ( Recettes Districte Nyamashelke) transaction n° 157. [17] They argue further that even though the bank officer had recorded in the bank booklet of Pius Nyakagaragu that 14, 000, 000, 00Frw was deposited on account 2287, Pius Kgaragu cannot pretend it since there is no deposit of such an amount is indicated in transactions executed on that account from JANUARY 30, 2007 till February 13, 2007. Rather, the present transfer was executed on account 2187, transaction 157 which matches transaction 150 which was executed on Pius Kagaragu account. [18] They adds that Pius Kagaragu had never lamented about the transaction that the bank had recorded in his booklet without his knowledge or without his request especially that the saving booklet is filled only when it is presented by the account owner before the bank officer in case he/ she needs any transction to be done on his account. They articulated that such a booklet is not kept by the bank to fill in whatever. Again, it wouldnot be understandable the way in which Pius Kagaragu and his co-owner of the bank account has brought such a booklet to the bank for it to execute a transaction and record it in their booklet and subsequently continue to make other transctions which were recorded by the bank and then after the months Pius Kgaragu alleges that he does not know the manner in which the bank had given away his money and to whom it was given while the transaction is recorded in the booklet that he personaly keeps. [19] Regarding that fact that the loan is recorded February 6, 2007 while the transaction 157 performed on the District account was recorded on February 5, 2007, they plead that it may be the the result of the way the banks records the transactions or else the error committed by the bank officer or otherwise occasioned by the favoritism of the one who was the manager of the bank who knew about the problems Pius Kagaragu was facing concerning the exceeding the due date on which he would have paid to the District. [20] As for thedeposit bank slip which Pius Kagaragu had presented as evidence, they plead that such a document is invalid because it is a simple duplicate paper which does not bear his signature as a person who deposits money. In addition, they kept on arguing, the signatures of bank officers in charge of that task were put on different dates and years ( on February 5, and 2007 and on December 5, 2008) while they concern the same transaction. [21] They add that such transction was performed illegally by the former manager of BPR- Kagano when Pius Kgaragu was indicted and which occasioned his imprisonment as a result embezzlement of taxes he used to collect for the District. [22] As for the certificate issued by the Executive Secretary of the Sector which Pius Kgaragu presented as evidence as well, they state that it is based on the bank statement of the account n° 2187 which indicates that a transfer of 14, 000, 000, ,00 Frw was executed( transaction 157). Therefore, the fact that it has been recorded that the deposit was executed by Pius Kagaragu, is logic because since it was not the bank which had to pay the District given it did not owe it a debt, it implies that the transfer is executed upon request and in the interests of the client. THE VIEW OF THE COURT

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[23] The Commercial High Court denied consodering the bank deposit slip that Pius Kagaragu presented as evidence of the adeposit of 14, 000, 000, 00 Frw he executed personally on the account of the District on February 5, 2007 while the bank did not file a criminal case for forgery or declared that the documentwas not signed by its employee. Hence, the Court finds that it should have been considered alongside other evidence presented before the court. [24] The court finds that the content of that bank slip matches the content of the bank statment of the District account 2187 which indicates that on February 5, 2007 Pius Kagaragu had paid 14, 000, 000, 00Frw( transaction 157). [25] The court finds out that the pleading of the bank that it is it which had personallymade that transaction and in the name of Pius Kgaeagu since i twas paying on his behalf, and that the transaction 157 on the District bank statement matches the debit transaction 150 which is on the bank statement and recorded in his booklete has no bear of truthfulness since it is on the account of the District on which the money was deposited on February 5, 2007 while the account of Pius Kgaragu was debited on February 6, 2007 and the bank does not demonstrate how both transaction which were executed on different dates are matching. Hence all its pleadings about what would have occasioned such transaction are hypothesis that the court cannot follow. [26] Therefor, the court finds that on one shand the case file contains documents whcih demonstrate that Pius Kagaragu had paid in person 14, 000, 000, 00Frw by depositing it on the account 2187 and on the other hand there are documents which demonstrate that BPR withdrew 14, 000, 000, 00 Frw from his account which was not traced since it was neither credited on account 2187 nor on 2287 which is recored in the booklet of Pius Kagaragu since it does not appear on the bank statement of that account which is in the possession of the bank. Furthermore, the counsels for the bank declare that its employee committed an orror and record that account 2287 instead of 2187 which means that the bank had not paid on behalf of Kagaragu as it pleads since it does not justify where it deposited 14, 000, 000, 00 which it withdrew from the bank account of Kagaragu. [27] Regarding the pleading of counsels for BPR that there would be no way for the bank to record transaction Pius Kgaragu had no nowledge in the booklet in his possision, the court finds that the corestone is to assess whether Pius Kagaragu referred the case to the court in the times prescribed by the law, which the bank does not find otherwise. With regard to the fact that he kept on using the account, it is his right. [28] Basing on all those holdings, the court is convinced that BPR should refund Pius Kagaragu of 14, 000, 000, 00 which was withdrwan from his accont since it does not indicate the act performed in the interests of its client upon his request. However, Kagaragu demonstrates, as provided for by article 3 par. 3 of the law n° 15/2004 of 12/06/2004 relating to evidence and its production which stipulates that a party must argue the case, hence he had had paid that amount of money on the District bank account. Whether Pius Kagaragu had deposited 500, 000, 00Frw on December 5, 2008 but not credited on his account by BPR Ltd.

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[29] Counsel for Pius Kagaragu states that had deposited 500, 000, 00 Frw on his account n° 511262801 on December 5, 2008 while he was paying the debt but he had never known its trace since it was not credited in his account. [30] He states further that Pius Kgaragu had produced as evidence the deposit bank slip dated December 5, 2008 which justify the deposit. However the judge found it invalid since i twas a paper duplicate which does not bear his signature without considering that the bank does not chalenge it and that it bears the signature of its employee. [31] Counsels for BPR plead that the bank slip should not be considered since in the practices of BPR, every transaction is recorded in the booklet of the client while Pius Kagaragu does not indicated in his booklet where the deposit of 500, 000, 00Frw on his account on December 5, 2008. They added that such a document is a duplicate which does not indicate bear the sigature of Pius Kagaragu as the money depositor nor it those of those of all bank officers who were supposed to put sign on it. All of these entail its invalidity. THE VIEW OF THE COURT [32] As it has been indicated in paragraph 23 of this judgment, the court finds that duplicate paper of the deposit bank slip of 500, 000, 00 Frw is an evidence that Pius Kagaragu had deposited such money since the bank does not challenge that its employee had signed on that document as it does not file a claim for forgery. [33] The Courtfinds therefore that in case Pius, using the document issued to him, demonstrates that he deposited 500, 000 Frw on his account on December 5, 2008 the burden falls on BPR to indicate that it peformed its duties and the time of its performance. Hence the fact that it did not produce evidence justifying that it, implies the loss of the case. C. Regarding damages requested by Pius Nyakagaragu and those requested by BPR in cross appeal. [34] Based on article 33 and 258 CCBIII, Pius Kagaragu requests BPR to pay him economic damages totalling 10, 000, 000, 00 Frw, moral damages totalling 3, 000, 000, 00, procedural and advocate fees totalling 1, 000, 000, 00 Frw. [35] Counsels for BPR pleads that Pius Kagaragu does not deserve any damage . They added that even in Commercial High Court they requested that Pius Kagaragu who dragged them in unfounded litigation would pay them moral damages totalling 5, 000, 000, 00, Frw for procedural and aqdvocate fees totalling 2, 000, 000, 00 Frw but the court remained silent on their request and therefore raises that issue again requsting adding 1, 000, 000, 00Frw for procedural and advocate at this instance. THE VIEW OF THE COURT. [36] Regarding economic damages requested by Pius Kagaragu totalling 10, 000, 000, 00 Frw, the court views that either ijn his submission or in his pleading he had never detailed how those damages had been computed. Hence, the court would have no landscape for their assessment.

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[37] Regarding moral damages he requests totalling 3, 000, 000, 00 Frw, the court finds that the fact that it failed to manage properly the property of its member untill Pius Kagaragu referred the case to the court claiming his right, it inflicted him a prejudice and hence he should be granted damages to be determined however in the discretion of the court since the money in damages he requests is excessive. Thus, he is awardede 1, 000, 000, 00Frw. [38] The court further finds that he should be awarded procedural and advocate fees since he won the case. It is therefore logic that he spent money for the follow up on the claim and fee for advocacy. The court thus award 600, 000, 00Frw on both instances taking into account the practices of courts [39] Concering the cross appeal filed by BPR, the court finds that it lacks merit since it caused Pius Kagaragu the prejudice which occasioned this lawsuit. III. THE DECISION OF THE COURT [40] Decides that appeal filed by Pius Kagaragu has merit in parts. [41] Decides that the cross appeal filed by Banque Populaire du Rwanda is unsubstantiated. [42] Overturns the case rendered by the Commercial High Court. [43] Orders Banque Populairedu Rwanda Ltd to pay 14, 000, 000, 00 Frw which it withdrew from his account on February 6, 2007 which missed, 500, 000Frw deposited by Nyakagaragu on December 5, 2008 which missed as well, 1, 000, 000, 00Frw for moral damages and 600, 000, 00 Frw for procedural fees and the totality is 16, 100, 000, 00 Frw. [44] Orders BPR Ltd to pay the court fees.