RUMANYIKA ET AL v. RUZINDANA

# RUMANYIKA ET AL v. RUZINDANA

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2011-04-15 - Case/document no.: RCOMA 0017/10/CS - Collection: Supreme Court

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RUMANYIKA ET AL v. RUZINDANA [Rwanda SUPREME COURT – 2011SC – RCOMA 0017/10/CS (Kayitesi R, P.J., Mukandamage na Munyangeri, J.) 15 April, 2011] Commercial Laws – Agreement on ordinary Loan – Rate of interest arising for agreement made by parties- No one can rely on the fact that the agreement has a defect based on interests provided in but not charged by the bank–– the law of July 30,1888 instituting the book of civil law related to contracts and contractual obligations, art.478 and 480. Commercial Laws – The validity of a contract that was not signed by one of the spouses –When one of the married requests the invalidation of a contact that has been made by its partner, no merit may be assigned to that request, it does not means that all shall be considered for the implementation of that agreements made with others, the one that had signed is bound alone – Law nº 22/99 of 12/11/1999Implementing the book one of the civil code and to instituting part five regarding matrimonial regimes, liberalities and successions, Art 17. Commercial Laws –Not paying the loan due to unpredicted causes –The closing of the vehicle move elsewhere – Not an alibi while in loan agreement, it is agreed that the payment will not result only from the «transport», Procedural Laws––Filing a cross appeal – Penalty forcing the execution – procedural fees and counsel fees–Interests arising from the capital can generate gains resulting from a case or special agreement,this has to be into claim or in the agreement, or at least an annual interest – When court finds that procedural fees and counsel fees requested by a party are excessive, the court shall determine them by its own the discretion. –– the law of July 30,1888 instituting the book of civil law related to contracts and contractual obligations, art.478. Facts: The appellant and the respondent signed different contracts within the framework of doing together business, with a partnership project (projet de partenariat). It came to a conflict relating to bad management of property. They made up a contract on 19/09/2008, showing the way that the plaintiff will pay the debt to the other party equal to 814.716 USD which was his share capital including interests. The plaintiff did not honour the contract and acused into the high commercial court asked to to pay the above said debt, interests, civil damages, property seizure, morgage, money for renting. The appellant has been ordered by the court to pay. He decided to appeal against that decision into the Supreme Court, saying that their contract was signed with an error because he’s not a bank in order to ask for penalities, which is contrary to the law. He also said that all problems he encountered were independent of his will (cas de force majeur), because the parking for vehicles that ware helping him to transport people and get money to pay was closed. Regarding the appellant’s spouse appealed into the court asking the cancellation of that contract signed by her husband because she didn’t participated.

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Held: 1. The appellant can’t say that the contract was signed with an error and is contrary to the law following the fact that all related interests were not for bank, since the contract was “contrat de remboursement des apports”, for loan of 814.716 US Dollars, supposed to be paid within 10 years. The fact that he considers that non-financial institution cannot be taken as reason. The law stipulates that in the contract interest are allowed. 2. The fact that he’s legally married with the appellant following the universal community of property regime doesn’t mean that he cannot be in contract with other people. It is evident that when the contract was signed on 19/09/2008, the law nº 10/2009 of 14/05/2009 relating to the morgage (hypothèque) was not entered into force. So, the spouse cannot support her side with this law. 3. The fact that the parking for vehicles was closed cannot be taken as challenge that is independent of his will (force majeur) because this could be prevented and look for another parking. There is no evidence that the money to pay was from that transport only. 4. The total amount of money to be paid by the appellant equal to 814.716 USD of debt, interest of 99.666.92USD, delay interest of 11.960.03USD, and 12.000USD of penalities, the total is 938.342.95 USD. Regarding the court fees are to be paid by the appellant as stated in the following terms in judge’s appreciation: rwf 500.000 and rwf 1.500.000 with total of rwf 2.000.000. The appeal is not received The appeal of the appeallant’s spouse is not received. The appeal done from another appeal is received on one part of it. Court fees have to be paid by the appellant and his wife. Statutes and statutory instruments referred to: Law nº 22/99 of 12/11/1999 Implementing the book one of the civil code and to instituting part five regarding matrimonial regimes, liberalities and successions, Art 17. Law of July 30,1888 instituting the book of civil law related to contracts and contractual obligations, art 52,478 and 480 . No Cases referred to: Judgment I. BRIEF BACKGROUND OF THE CASE [1] RUZINDANA and RUMANYIKA made up a contract within the framework of doing a business. RUZINDANA gave him 5 vehicles to do a business of transport, and then after they made up partnership contract where they were sharing the same company with

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50%, RUZINDANA received shares equal to 50% of capital share in the company called OKAPI Hotels & Resorts constituted with RUMANYIKA and his two sons. [2] The company came to encounter an obstacle of mismanagement of its property, and decided to sign a contract on 19/09/2008 called reimbursement contrat of apports showing the way that RUMANYIKA will pay to RUZINDANA 814.716 USD of shares including interest. [3] RUMANYIKA did not honor the contract, which caused RUZINDANA to submit his request in the high commercial court, asking the court to order RUMANYIKA to pay him the debt that he has including interests, civil damages, and to order the seizure the property of OKAPI Hotels & Resorts, mortgage that has been given to him and money for rent. Into this case, came another third party RUSEKAMPUNZI RUMANYIKA Agathe (RUMANYIKA’s wife) who asked the protection of family property. [4] The court rendered a judgment ordering RUMANYIKA to pay to RUZINDANA amount of 814.716 USD of total debt, 5.500 USD of penalities as agreed in contract, 6.428,93 USD of delay interests and rwf1.500.000 of lawyer’s honorary and court fees. The court ordered him also to pay 500 USD each month in case of unexecution of this judgment, but that money will not exceed 10.000 USD (astreinte). [5] RUMANYIKA decided to appeal against that decision into the Supreme Court saying that the contract signed with RUZINDANA has been done with error, and the court considered RUZINDANA as a bank. So, interests and penalities could be ordered since they are contrary to the law. [6] Also the court did not consider his allegations and explainations that he encountered problems (cas de force majeure), because the parking of vehicles which could benerate money was closed. [7] RUSEKAMPUNZI also appealed saying that the court did not consider her request saying that she hasn’t participated in signing that contract signed by her husband RUMANYIKA and RUZINDANA; she asked the court to order the cancellation of the contract and to consider his family’s property shared with the husband. [8] The substantial hearing was held in different dates which the last was on 17/03/2011; RUMANYIKA assisted by Me NDUWAMUNGU Jean Vianney, RUZINDANA assisted by Me KAYIGANWA Auréa, and RUSEKAMPUNZI assisted by Me BIZIMANA SHOSHI. II. LEGAL ISSUE OF THE CASE AND THEIR ANALYSIS a) To know the value of contract signed between RUMANYIKA and RUZINDANA.

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- regarding the error of the contract as it stated by RUMANYIKA [9] The lawyer of RUMANYIKA says that the contract signed between him and RUZINDANA on 19/09/2008 has an error because it states the interest of 12% and penalities RUZINDANA since it is not a financial institution legally registered in Rwanda to offer loans, which is contrary to the law. He founds that RUZINDANA could not be granted interests, and penalities for delay on 814.716 USD of the debt, because the contract signed was not for loan as stated by the court but a reimbursement of apports. [10] the lawyer of RUZINDANA says that into the appealed judgment the court had confirmed the agreements between parties following the article 478 of civil codes of law book III stipulating that the contract relating to loan either for money or materials are allowed to account on them the interests, and article 480 of the above mentioned law says that the value of interest generated by the contract are allowed upon agreement of parties. He founds that the interest of 12% are equal to what the law says and the agreement of parties who wants to settle issues of mismanagement of money that RUZINDANA had putted into the shares of the company. [11] The article 478 of the above mentioned law states that the contract relating to loan either for foods or other materials are allowed to account interests. Regarding the loan that generates interest, the article 480 of the above said law stipulates that “the value of interest from the contract can be accounted upon agreement of parties to the contract”. [12] As it stated by the high commercial court, the court founds that the contract signed on 19/09/2008 between RUMANYIKA and RUZINDANA has been called “reimbursement contract of apports” was for loan of 814.716USD which was supposed to be paid within 10 years, and RUZINDANA did not consider him-self as a bank. The fact that the contract states an interest of 12% is not contrary to the law which makes the court to decide that the contract has no error. - The fact that RUSEKAMPUNZI was not aware of the contract signed between RUMANYIKA and RUZINDANA can be a reason for its cancellation? [13] The lawyer of RUSEKAMPUNZI says that didn’t respond to her request asking the court to order the cancellation of contract signed between her husband RUMANYIKA and RUZINDANA because she didn’t not about it and she did not sign. The contract is contrary to the law protecting the property of family, especially the law nº 22/11/2009 of 12/11/1999 completing book I of civil code of law putting in place book V regarding the management of spouses property, donation and succession in the article 29, organic law nº 08/2005 of 14/07/2005 regarding land use in Rwanda in article 35 and the law nº10/2009 of 14/05/2009 regarding morgage (hypothèques) in article 5. [14] The lawyer of RUMANYIKA on his side founds that the RUZINDANA’s request had an objective of seizuring property of RUMANYIKA because it’s totally defferent of the contract signed. He admitted that RUMANYIKA ysigned the contract on his own willing.

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[15] The lawyer of RUZINDANA says that RUSEKAMPUNZI was well aware about the contract of business that RUMANYIKA was sharing with RUZINDANA, and the contract has to affect her as his husband and children. Even if RUSEKAMPUNZI was not member of OKAPI Hotels & Resorts, she admits that the debt has been used for the benefits of their family. [16] the law nº 22/11/2009 of 12/11/1999 in its article 17 above said “spouse legally married agreed upon management of their property and have equal rights of pursuing and representing it” they agreed that everyone has rights to request the court to return back their property for family, but it doesn’t mean that one of them can be confused by another one regarding activities of contract signed with people, because the party signed has to execute on his side without affecting his partner even if its relates to the interest of family. [17] In this case the object of the problem was not RUMANYIKA’s property and RUSEKAMPUNZI (land or others), but the unexecution of contract RUMANYIKA signed with RUZINDANA regarding the way he will pay the debt of 814.716USD that RUZINDANA gave to the OKAPI Hotels & Resorts shared with both, interest and penalities. [18] The fact that RUSEKAMPUNZI says that the contract has to be cancelled with reason that she didn’t know its signature, the court found this without any reason and legal basis since she’s legally married upon community of property regime with RUMANYIKA and this cannot be an obstacle for RUMANYIKA to contract with other people. It is evident that when that contract signed on 19/09/2008, the law nº 10/2009 of 14/05/2009 regarding morgage (hypothèques) wasn’t yet entered into force; RUSEKAMPUNZI has no reason to base her request on property given as mortgage by her husband RUMANYIKA. [19] Regarding this contract, it is evident that it has been signed by parties sharing the same company (OKAPI Hotels & Resorts) constituted by RUZINDANA, RUMANYIKA and his two children, RUSEKAMPUNZI excluded because she entered into the contract 1/09/2009, which could not be possible for her to sign because she wasn’t a shareholder, her appeal has legal foundation. b) Are the matters that RUMANYIKA says reasons for unexecution of the contract signed with RUZINDANA are independent of his willing? [20] The lawyer of RUMANYIKA he do not denie the debt that RUMANYIKA has with RUZINDANA, as he said the unexecution of the contract was caused by closing of parking of SOTRA, where he entered into the case with RWANDA PAINT the owner of the parking. He explains that the closing of the parking was not caused by him. He continue saying that he couldn’t prevent that risk since he was having a contract with the owner of the parking and money for 12 months renting was paid and surprised by the that closing. RUMANYIKA could not do anything since the decision was taken by the nyarugenge district who expulsed them from that parking.

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[21] He continue saying that the court did not consider that, he was agreed with RUZINDANA that in case of risk that can affect the execution of contract « cas de force majeure » the contract will not be cancelled, but will continue to look for money and pay to RUZINDANA. [22] the lawyer of RUZINDANA on his side says that the contract which will base the court’s decision is the one of 19/09/2008 between RUMANYIKA and RUZINDANA called «contrat de remboursement des apports », and RUZINDANA has not only shares in transport the payment could also come from OKAPI Hotels & Resorts and SOTRA because they continued to operate normaly. He explained that in the contract a deadline for payment was given to RUMANYIKA, because even before the closing of the parking he was not well paying since 6months. Regarding the closing of the parking he said that the letter from the district was wrote on 06/02/2009 and executed in 2009 but RUMANYIKA didn’t show willing to pay. [23] Le «Cas de force majeure» means the surprise risk, which could not be prevented because is independent to the person’s will. [24] The court founds as the primary court explained the fact that the parking for vehicles of SOTRA was clased doesn’t mean «cas de force majeure » to have caused RUMANYIKA to not paid RUZINDANA he could prevent that risk and look for another parking for vehicles. c) Regarding the issue of interests asked by RUZINDANA and court fees [25] The lawyer of RUZINDANA submitted his appeal asking the interests 12 % each unpaid month until when the judgment will come out as they have mutually agreed. He asked also that the penalities have to be accounted of 500$ each unpaid month, lawyer’s honorary of 15% of debt. [26] RUMANYIKA’s lawyer says that RUZINDANA has no reason to ask for interests of 12% because he thought he’s a Bank. [27] As it stated above the article 478 of the above mentioned law allow everyone to ask for interests from the loan. Also the article 52 stipulates that “interest generated by the capital share can also generate interest from the judgment or particular contract. [28] The contract of «remboursement des apports» of 19/9/2008 stipulates that RUMANYIKA will pay interest of 12% per year on the debt of 814.716USD, and on delay interest. The RUZINDANA’s lawyer explains that interest were agreed upon following the personal willing of parties, but RUMANYIKA’s lawyer said that interests have to be cancelled. The court found that those interest of 12% exceed the normal range basing on the international rate of loan in dollars per year is 3.3709%. Currently those interests are account on 0.7797 %, it is evident that the dollar has come down in its value. Follow

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those above mentioned reasons, the court founds in it apprecitation that interest to be paid by RUMANYIKA have to be accounted from 6% per year, in the following way: 814.716 USD x 6 x days 734 = 99.666,92 USD 100 x days 360 [29] Delay interests 24 unpaid (1/4/2009-1/4/2011) equal to: 99.666,92 USD x 6 x days 720 = 11.960,03 USD days 360 x100 [30] Regarding the delay interest “astreinte” of 500USD each month RUMANYIKA and RUZINDANA have agreed that in case of unpayment and in due time the court founds that from the date of 1/4/2009 until now equal to 500USD x months 24 = 12.000 USD. [31] The found that the whole debt that has to be paid by RUMANYIKA to RUZINDANA equal to 814.716USD including interests of 99.666, 92USD, delay interests of 11.960, 03USD and USD12.000 of penalities, which the total equal to 938.342, 95USD. [32] Regarding the court fees and lawyer’s honorary, the court found that RUZINDANA exceeded and has to be rwf500.000 plus rwf1.500.000 with total of rwf2.000.000 III.THE DECISION OF THE COURT [33] Confirms that the appeal that submitted by RUMANYIKA Jean Marie Vianney nta has no reasons and legal basis. [34] Orders RUMANYIKA to pay to RUZINDANA Egide 938.342,95 USD and rwf2.000.000 of lawyer’s honorary, and court fees of 4% equal to 37.533,72$US. [35] Confirms that the appeal of RUSEKAMPUNZI RUMANYIKA Agathe has no legal basis. [36] Confirms that the appeal of RUZINDANA Egide has reasons on part of it. [37] Orders RUMANYIKA and RUSEKAMPUNZI Agathe to pay rwf53.400 of court fees.