jaet ltd vs fbme bank ltd 2012 tzhccomd 30 31 may 2012

IN THE HIGH COURT OF TANZANIA a COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL CASE NO 98 OF 2010 JAET LIMITED.................................................... PLAINTIFF. VERSUS FEME BANK LIMITED......................................... DEFENDANT. JUDGMENT. BUKUKU, J. The plaintiff sued the defendant for the following; a) Payment of the sum of USD 88,500. b) Interest of 10% on (a) above from September 2009 until the date of judgment. c) Interest on (a) and (b) above at court rate from the date of judgment until payment in full. d) Costs. e) Any other reliefs this Honourable Court may deem fit to grant. i In this suit the Plaintiff was represented by Mr. Kilindu, learned Advocate and the Defendant is represented by Mr. Weiwei, learned Advocate. The Plaintiff called two witnesses Mr. Elibariki Ndesario Mmari (PW1), who is the Managing Director for the Plaintiff's Company and Mr. Jackson Reuben Mwaikanda as PW2, and tendered seven documentary exhibits( Exhibit P1-P7), while the Defendant called one witness, Mr. Joseph Elias Gwalugano who is the Branch Manager at the Defendant's Bank in Mwanza as DW1. At the close of the defendant's case, Counsels were scheduled to submit final written submissions, to which they duly complied. A substantial part of the facts in this matter stands undisputed and it is as follows. Sometimes in August 2009, the Plaintiff entered into a contract with a Company known as West Domain Inc. based in the United States of America, in which the Plaintiff was to supply the said Company with 3000 pairs of shoes at a price of USD 29.50, at a total price of USD 88,500. The parties to the contract agreed that, payment should be made by the company upfront. In compliance, the company issued a cheque to the Plaintiff in the sum of USD 88,500 and in September 2009, the plaintiff deposited the said cheque in his US Dollar Account No. 020540 at the Defendant's bank at Mwanza Branch. After the expiry of 21 days from the date the said cheque was deposited and upon inquiry, the Defendant made 2 a representation to the Plaintiff to the effect that the proceeds of the cheque must have been cleared, otherwise the cheque would have been returned to the defendant. Acting on the representation of the Defendant, the Plaintiff requested the Defendant to draw part of the sum of USD 88,500 in order to enable him to commence manufacture of the 3,000 pairs of shoes. The defendant obliged by allowing the Plaintiff to draw the sum of USD 15,000. Later, as it transpired, the defendant informed the Plaintiff that the cheque in question has been returned, allegedly because the Defendant had not endorsed the cheque as is required. Subsequently, believing that the Defendant had effected the necessary endorsement on the said cheque and as advised by the Defendant, the Plaintiff re banked the said cheque in the Defendant's bank. Surprisingly, the Plaintiff's Account has not been credited with the proceeds of the said cheque, up to the date of filing the suit, and the whereabouts of the cheque are currently unknown. Although the Plaintiff has honoured its obligation under the contract with the US Company by manufacturing the 3,000 pairs of shoes, the defendant has failed/neglected to honour the cheque of USD 88,500, deposited by the Plaintiff. It is averred in the plaint that, as a result of the Defendant's gross negligence, the plaintiff has suffered damages in the sum of USD 88,500 which he is now claiming from the defendant. 3 The defendant on his part vehemently disputes the claim. He avers that the claim is fictitious at best and that the Plaintiff is not entitled to any compensation from the Defendant. Issues which were framed during the final pre trial and scheduling conference are: 1. Whether the Plaintiff operates Account No. 020540 in US Dollars with the Defendant's Bank at its Branch in Mwanza. 2. Whether the Plaintiff deposited cheque No. 94997 on 31st August 2009 issued by Wild West Domains Inc. in the sum of US$ 88,500. 3. Whether thereafter the Defendant made a representation to the Plaintiff that the said cheque had been cleared. 4. Whether the Defendant credited the Plaintiff's account with the said sum of US$ 88,500. 5. Whether the Plaintiff was allowed to draw to the sum of US$ 15,000 from the said Account out of the deposited amount of US$ 88,500. 6. Whether the said cheque No. 94997 was returned to the Defendant Bank by the Drawee for lack of endorsement by the Defendant Bank. 4 7. Whether upon endorsement by the Defendant Bank, the Plaintiff was asked to re bank the said cheque in his Account. 8. Whether the Plaintiff re banked the said cheque on 23rd November 2009. 9. Whether the Defendant subsequently debited the Plaintiff's Account with the sum of US$ 88,500. 10. Whether the Defendant was required to return to the Plaintiff the cheque in question if the same had not been cleared by the Drawee Bank. 11. Whether the Defendant had a duty to provide prior endorsement guarantee on the said cheque. 12. Whether the Defendant has acted negligently in handling the said cheque. 13. What reliefs are the parties entitled to. However, regard being had to the final submissions made by the Advocates, together with what was disclosed during the trial, I find issues 5 No. 1,2,7,8 and 10 to be totally superfluous as they are not contested. I will therefore disregard them in this judgment. The parties in this case are agreed that, the plaintiff operates a USD account No. 020540 with the defendant bank at its branch in Mwanza. It is also not disputed that, indeed, the plaintiff deposited cheque No. 94997 issued by a company known as Wild West Domains Inc. in the sum of USD. 88,500. Again, the parties are in agreement that, when the cheque was returned by the drawee bank for want of an endorsement, the defendant requested the plaintiff to re bank the same and the plaintiff complied after the cheque was endorsed by the defendant bank. However, the witnesses stand on diametrically two opposed camps regarding the crediting, withdrawal and the subsequent loss of the said cheque. Let us now delve into the respective testimonies. Testifying, PW1 told this Court that, he is the Managing Director of the Plaintiff's Company based in Mwanza and that he knows the Defendant because their company has a bank account number 020540 with the defendant Bank Mwanza Branch. PW1 stated further that, in August 2009 the plaintiff got a purchase order from an American Company known as West Domain Inc requiring them to supply 3,000 pairs of shoes at a sum of USD 29.50 per pair which gave a total of USD 88,500. PW1 tendered in court the purchasing order which was admitted as Exhibit Pl. It is the 6 further testimony of PW1 that, based on the contract for the supply of shoes, he received a cheque for the sum of USD 88,500, which was then banked into their bank account at the defendants bank. PW1 tendered in court a copy of the deposit form which copy was admitted as Exhibit P2. Testifying further, PW1 stated that, after banking the cheque, and upon inquiry, they were informed by their banker (defendant) that the cheque will take a minimum of 21 days before they could be allowed to draw any amount from the cheque. Upon the expiry of 21 days, they went to the bank to ask if they can be allowed to draw money. The bank allowed the plaintiff to draw the money inferring that the 21 days had passed and the cheque has not been returned which implies that it has been cleared. PW1 tendered in court a bank statement showing the transaction, which took place. The bank statement was admitted as Exhibit P3. The statement shows that, the amounts drawn on various dates as evidenced by Exhibit P3, makes a total of USD 15,000 leaving a balance of 73,425.15 out of USD 88, 500. PW1 further informed the court that, on November 2009, he was informed by the bank that the cheque has been returned unprocessed for want of endorsement from the bank. PW1 tendered in court a photocopy of the said returned cheque together with all documents which were attached to it, and the same was admitted by court as Exhibit P4. It is the testimony of PW1 that he was then told by the bank to re bank the cheque again so that they endorse it and send it for collection. Acting on that information, 7 PW1 re banked the cheque and was issued with a bank deposit form which he tendered in court and the same was admitted by court as Exhibit P5. Testifying further, PW1 said that, having re banked the cheque, he made several inquiries with the banker just to be told that the cheque is yet to be cleared. PW1 testified that, on January. 2010 he registered an official inquiry by sending a letter to the bank inquiring why it too long, for the cheque to be cleared. PW1 tendered a copy of the letter which the court admitted as Exhibit P6. Apart from the letter, PW1 made a follow up by with the bank and in the process, he was shown a fax message which the bank transmitted to the Bank in USA to show that follow up of the case is being made, PW1 tendered a copy of the fax dated 30th January and was admitted as Exhibit P7. PW1 told the court that despite the delay in the clearing of the cheque, they decided to deliver the goods to their customer after the complain and thereafter they continued to pursue the cheque in the bank so that they could send it back to their client. As it transpired, the cheque could not be traced and the amount was never credited back in their account. It is PWl's complaint that the defendant acted negligently in endorsing the cheque before sending it for collection bank to the USA and it is PWl's prayer that the bank should pay him USD 88,500, interests from the date when he banked the cheque, that is August 2009 and costs of the case. Upon being cross examined by Mr. Weiwei, PW1 re affirmed his statement that he was told by the bank that the cheque will clear within 21 8 days and that the cheque shows that it needed to be endorsed by bank prior sending for collection. PW1 admitted that he is not conversant with the issue of endorsement of cheques. As for the payment of USD 88,500, PW1 surmised that the bank statement shows that USD 15,000 was deducted in his account, so that means if he is being paid USD 88,500, automatically USD 15,000 will be substituted as an amount which he has drawn from the bank. In re examination PW1 said that, the cheque was returned to him by the FBME Branch Manager and after going through the document, he found that he had nothing to do with it so he returned the document and he was told that the bank will do the endorsement. Mr. Jackson Reuben Mwaikanda testifying as PW2 stated that, throughout his carrier he has been working in banking boundaries from 1968 to 2003 when he retired. Talking from his experience, PW2 told this court that when the cheque is issued to the bank by drawee for collection, the bank will examine the cheque and if everything on the face of it is okay, the bank will receive it with the deposit slip which the drawee has to prepare and sign, the bank will endorse a copy of the slip give it to the drawee and the cheque which is deposited will be left with the bank, the bank will then endorse the cheque and send it to the drawers bank for collection. 9 Upon being shown Exhibit P3, PW2 corroborated the testimony of PW1 and told the court that, the bank statement shows on 31.08.2009 there was a credit balance of 88,401, and that there are several withdraws made made from 22ne September, 2009 to 11th of November, 2009 of which all relate to the balance of 88,425.15. He further testified that, there is also a debit of USD.88,500 which indicated as "account transfer by order of Jaet Limited" which according to PW2, it means that Jaet Tanzania Limited ordered the bank to transfer 88,500. PW1 surmised that normally the bank will debit an account with instructions from the client and that, such instruction must always be in writing either by letter or cheque. Moreover, the bank can only debit the customer's account if it was wrongly credited and this has to be within 24 hours from the time the error was done. It is PW2's testimony that, it was not proper to reverse a credit entry to a debit entry after a period of a month without seeking the permission of the account holder. During cross examination by Mr. Weiwei, PW2 told this court that, an endorsement of the cheque is normally done at the back of the cheque, by stamping and signing to indicate that the banker has received the cheque. PW1 stated further that, looking at the cheque in question it does not seem that it was endorsed since an endorsement is done at the back of the cheque and the cheque in question has been endorsed at the front and it bears no signatures and therefore, in his opinion, there was no endorsement. io On being cross examined about the reverse of an error by the bank PW2 stated that the best practice is for the bank to reverse an entry within 24 hours and if it is more than that, the bank has a duty to consult the account holder before debiting the account. Detailing their side of the story, Mr. Steven Kagomba, testifying as DWi deposed that, he works at FBME bank headquarters since 2008, as a Card Service Manager, and that he knows JAET Limited because the company is their customer. And he is aware of the claim of the cheque of USD 88,500. Detailing further, DWI stated that he was the one who sent the cheque to the paying bank and had some communication with the Dutch Bank in New York. DWI testified that the cheque was not honoured because there was no endorsement by the payee, and admitted that it was a puzzle to him because they did endorse the cheque as they normally do. Asked about exhibit P7, DWI told this court that Exhibit P7 relates to a request for information that was sent regarding the collection sent to New York. DWI testified further that, the cheque was returned because it required endorsement, and upon enquiry, for its return from their agent, he was told that, the cheque was mailed to the bank (FBME) but it was not received by the bank. It was lost. DWI stated that, further that on 14th January 2010 he was officially informed by the bank that the cheque is lost and they asked JAET to communicate with the drawer of the cheque so that they issue another ii cheque. Testifying on Exhibit P2, DW1 stated that, a foreign cheque cannot be available for withdrawing until the paying bank deposits money, and before that, it cannot be paid. He admitted that, it can only be paid if there is a good customer -banking relationship. On being cross examined by Mr. Kilindu, DW1 told this court that, it was the duty of the bank to ensure that the cheque was endorsed. He said that, presumably, the bank stamp was not properly endorsed and that it is the responsibility of the bank to ask the drawer to issue another cheque, and still maintained that, maybe that is why they wrote to the drawer but did not respond. It is the testimony of DW1 that he was surprised the plaintiff brought the matter to the court while they were in the course of finding a solution. As to the issue whether the money was credited, DW1 told this court that the money was credited in the account on 31st August, 2009 but plaintiff was not allowed to withdraw. He also said that, the bank did not give the customer an impression that the money was available for withdrawal. Regarding reversal of the account, DW1 said that, the account of JAET was reversed because the cheque was not paid since it got lost in the hands of FBME Bank and by then it was stale. Finally, Mr. Joseph Elias Gwalugano, testified as DW2. He stated that, he works with FBME Bank Mwanza as a Branch Manager and that he knows JAET Limited because it is their customer. DW2 and it operates near 12 their office. That he knows JAET has sued their bank because it had deposited a cheque in the past year and didn't get the money as expected. Testifying why the plaintiff did not get the money as expected, DW2 told this court that cheque got lost. DW2 stated further that, the cheque in question was endorsed and sent to the drawer bank but it was not cleared because the cheque got lost in the process before it was cleared. Upon being shown Exhibits. Pl and P5 respectively, DW2 agreed that they are cheque deposit forms from his bank and that they are in respect of JAET Limited, and also admitted that, the cheque was returned for reasons that it was not endorsed, though it is his understanding the cheque was endorsed. DW2 further testified that, exhibit P3 shows that on 31st August, 2009, the bank received the cheque and posted it in the JAET Limited (T) account and the account was credited. However DW2 rebutted that the money was available for operation by the customer. He said that it was only until it is cleared or collected. Testifying on how long it takes for an international cheque to be honoured, DW2 confirmed that, it takes at least 21 days depending on the distance from the drawer's account and the drawee's account, and the mode of sending the cheque. DW2 further stated that there were debits made from 22nd September to 28th September, 2009 the debits were approved, and that JAET Was allowed by the bank to withdraw the money as temporary overdraft. With regard to the endorsement, it is the testimony of DW2 that, the cheque was endorsed and that is why the 13 instructions by the drawer bank to provide prior endorsement guarantee was confusing because there is no other way of endorsing a cheque other than stamping behind it, and according to DW2, that was done. On being cross examined by Mr. Kilindu, DW2 averred that, the to the best of his knowledge, the cheque was endorsed. Regarding the overdraft, DW2 stated that, the procedure for applying for an overdraft depends on the good customer/banker relationship such that, a customer who is known by the bank very well, can access the overdraft easily. DW2 admitted that, the plaintiff withdrew up to USD 15,000 from his account, and all this was debited to the account of the customer. According to DW2, since the cheque got lost and the process was not complete, the account had to be reversed, and to date the whereabouts of the cheque are unknown. In re examination DW2 told this court that, because the cheque was not honoured, automatically the system debited the account to net off the customer account, and that the reason for reversing the account was that the cheque was not honoured by the drawer's bank. That is all about the testimonies of the witnesses. Let us now turn to the issues framed and recorded by this court at first hearing, for the determination of this suit. 14 In his final submission, counsel for the defendant strongly attacked the credibility of the plaintiff. He submitted that, failure by PWi to identify the bank officer who transacted with the Plaintiff, failure to remember the company which traded with the defendant, and failure by the defendant to request the company to draw and issue another cheque to replace the lost one, raises eyebrows as to the genuineness of the defendant's claim. He thus surmised that, the plaintiff has failed to prove its case and therefore, the suit be dismissed with cost. The Plaintiff's counsel on his part, countered by arguing that, the Defendant showed a degree of negligence I handling the Plaintiffs cheque which got lost in the hands of the Defendant. I should out-rightly state that, it is trite law that submissions by counsels are not evidence. They simply assist to clarify the evidence or points of law. Under such circumstances, it will not be discourtesy on my side if I limitedy dwell on the otherwise unnecessary lengthy submission by both counsels. On the evidence available, which has aptly unearthed what I have deduced above, I will not address the issue of the behavior of the plaintiff. As clearly intimated, issues No. 1, 2, 7, 8 and 10 are not disputed and therefore, I will not task my mind in addressing them. With this, I will start with issue No 3 and 5 respectively, on whether the defendant made a 15 presentation to the plaintiff that the said cheque has been cleared. In his testimony, DWt refuted the claim that defendant gave an impression to the Plaintiff that the money was available for withdrawal. On his part, DW2 admitted that, there were debits made from the account from 22nd September, to 28th September, which were approved by the bank but they were over draft facilities. Going by the evidence adduced in court, it is clear that, exhibit P3 which is a statement of account shows that, on 21st September, 2009 the Plaintiff's account was credited with an amount of 88,401.44 through a cheque from Wild West Domains Inc. Exhibit P3 also shows that, on 22nd September, 2009, the Plaintiff debited USD 5,000; on 24th September, 2009 an amount of USD 4,000 and 1,000 respectively were debited from the account and also on 28th September, 2009 an amount of USD 1,000 was debited. This therefore goes to show that, after the value date of the cheque on 21st September, the Plaintiff was allowed to draw from his account a total sum of USD 15,000. While the defendant contends that the payment was an overdraft facility granted to plaintiff, the Plaintiff refutes such claim. With due respect, I am at one with the plaintiff on this. The reasons being that, one, the allegation of the overdraft is not supported by any tangible evidence. The defendant has not even bothered to inform this court how much was advanced to the Plaintiff as overdraft, what were the terms, and when that overdraft was advanced. One can even ask, how come the amount of the deposited cheque is used as an overdraft, because all withdrawals made 16 amounting to USD. 15,000were from the proceeds of the cheque in issue. Clearly, such a bare assertion is not enough to prove that there was an overdraft. Secondly, as correctly testified by DW2, in order for one to apply for an overdraft, the account of that person must be in the negative or an amount lesser than what is required. In this particular case, it is absurd for the plaintiff to be granted an overdraft facility of USD 15,000 when he has a credit balance of USD 88,425 in his account. It is my considered view therefore that, the issue of there being an overdraft is sheer lies concocted by the defendant after allowing the Plaintiff to withdraw money in his account even before the cheque has been cleared. This is clearly supported by paragraph 3 of the defendant's written statement of defence whereby the defendant maintained that the plaintiff withdrew USD 15,000 on the basis of its savings in its account and not on the basis of any other ground. Indeed, if at all there was an overdraft, why then did they not plead it in their Written Statement of Defence? Upon weighting the evidence before me, I find the evidence given by PWi is convincing. PWt told this court that, upon enquiry from the defendant bank, he was told that normally cheques would be cleared within 21 days from the date it was presented from collection. The cheque was presented on 31st August, 2009 as per Exhibit P2 and P3 respectively. And according to PWI upon expiry of the 21 days, he went to enquire about the cheque and asked if he could be allowed to draw money. It is the narration of PWt that, the bank allowed him to withdraw some money. 17 I find the testimony of PWt tallies with the bank statement (Exhibit P3) in that, plaintiff was able to withdraw his money from 22nd September, 2009 one day after the expiry of the 21 days. This therefore, implies that, the plaintiff was allowed to withdraw the money from his account on the strength of the word of the bank that since, the cheque was not returned, then it has been cleared. This to me, is nothing other than a representation. Black's, laws dictionary Eighth Edition at Pg. 1414 defines representation as: "A presentation of fact - either by words or by conduct - made to induce someone to act, especially to enter into a contract.............. a manifestation to another that a fact including a state of mind, exists." In this particular case, having made the representation to the plaintiff that proceeds of the cheque exist in the plaintiff's account for him to encash, and in actual fact, by allowing the plaintiff to withdraw monies from his account, the defendant made the plaintiff believe that his cheque had been cleared. Under such circumstances, the defendant was estopped in law from contending otherwise later on. As correctly submitted by Counsel for the plaintiff, this case fits squarely with the case of National bank of Commerce V. Saidi Ally Yakut (1989) TLR 119, whereby this court observed that, there is need for the banks to display vigilance when handling their customer's financial matters. In this particular case, not only was the Plaintiff told, but indeed he was allowed to withdraw monies from 18 his account three times, on the strength of the word of the bank manager, who was not even called to controvert the testimony of PW1. In the circumstances, I hold that, the defendant did indeed make a representation to the plaintiff that the said cheque had been cleared and that is why the plaintiff was allowed to withdraw monies from his account out of the deposited amount of USD 88,500 in his account. I therefore answer issues No. 3 and 5 in the affirmative. I now turn to issues No 4 and 9 which I will dispose them together. In his submission, counsel for the defendant has argues that, the credit entry made on 31st August, 2009 did not mean a credit balance for which the credit sum was available for collection. He said that, it was mere pasting to be confirmed if the cheques is cleared or reversed if the cheque is dishonored. In the same vein he said that, the debit entry appearing on 11th November, 2009 does not represent any actual monetary transaction. It is a mere recording for purposes of balancing entries. With due respect, I take the issues of debit and credit raised as issue No. 4 and 9 respectively to be of academic nature. Looking at Exhibit. P3 - it is clear that, on 31st August, 2009 the defendant bank made a credit - —1 ■ ■ - entry of USD 88,401.44 and the description given was "clearing 15 days", and on the 11th November, 2009, there was a debit entry in Plaintiffs account of USD 88,500.00. As said, these are accounting principles. My understanding is that, funds become available for collection when actually 19 received from the drawers account. That notwithstanding, it is common ground that, banks have discretion whether or not to credit the customers account with the amount of uncleared cheques, especially for a good customer, the bank will credit the account straight away on depositing the cheque. Having said so, I am given to understand that, according to Exhibit P3, the plaintiff's account was credited with the sum of USD 88,401.44 on 31st August, 2009 awaiting clarity for 15 days up to 21st September, 2009 and the same account was debited with an amount of USD 88,000 on 11th November, 2009. What I can say is that, according to Exh.3 those postings were made in plaintiff's account on those dates. The sixth issue is whether the said cheque No. 94997 was returned to the Defendant Bank by the Drawee Bank for lack of endorsement by the Defendant Bank. Mr. Kilindu submitted that the cheque was returned to the defendant by its own correspondent bank, Deustche Bank Trust Company Americas vide email dated 30th September 2009 hence the contention that the cheque was not returned for lack of prior endorsement on the part of the defendant bank is unreasonable. Learned counsel for the defendant submitted that, the collecting bank has no duty in law to endorse and that the law protects banks when a bank pays a cheque missing endorsement or having irregular endorsement, supporting his notion by citing Section 82 (1) of Cap 215 R.E 2002. 20 Furthermore, he submitted that it is an established practice that banks when receiving cheques for payment they sign/stamp the cheque signifying that they have received the same from its customer and guaranteeing that they will pay the same to the depositing customer. Therefore, looking at the cheque, it was endorsed by the defendant as required by law. Also, in paragraph 4 of defendants' written statement of defence, the defendant averred that the cheque was returned not because the defendant had not endorsed the cheque, but it was returned because it had no prior endorsement guarantee. During cross examination, DW2 said that, endorsement of the cheque means writing at the back of the cheque, stamping and signing it to indicate that the banker has received the cheque. The bills of Exchange Cap 215 does not say much on this, but going by the definition of the Black's laws dictionary can we say the defendant bank endorsed the cheque as required? Looking at Exhibit P4 there is only a stamp of the defendant's bank. There is neither signature nor date to show when the cheque was endorsed. Worse still, the stamp is at the front page. Also, the communication contained therein, did not come from the drawee bank, but from the defendant's own correspondent bank. If at all the defendant's bank had endorsed the cheque, how come it is their correspondent bank that required the defendant's endorsement. This pre supposes one thing; if indeed the defendant bank had endorsed the cheque before it was 21 transmitted, then such a thing would not have happened. The testimony of DW2 in this is very illuminating and I believe he said the truth. Section 32 (1) (a) of the Bills of Exchange, Cap 215, provides among other things how endorsement is to be done. It states:- "It must be written on the bill itself and be signed by the indorser and the simple signature of the indorser on the bill, without additional words, is sufficient” The defendant insisted that what they did was proper endorsement, looking at Exhibit P4, what appears on the cheque is only the stamp of the defendant bank, no date or signature to show when the cheque was endorsed and by who, no wonder the drawee bank returned it needing prior endorsement as there was none. DW2 has testified that, endorsement should be done at the back of the cheque, but in this case it is done at the front. The wording of the definition from Black's laws dictionary also provides endorsement to be at the back. It is therefore obvious that the cheque lacked endorsement from the defendant in the real meaning of endorsement. It is therefore my considered opinion that, the defendant bank effected the proper endorsement after being advised by the correspondent bank to do so. Both BW1 and DW2 testified that the defendant bank 22 endorsed the cheque upon its return to them for want of endorsement. This issue is also answered in the affirmative. Issues No. 7 and 8 are straight forward. They need not detain me further. It is not disputed that, after the required endorsement having effected by the defendant bank, the status of the cheque changed thus creating the need for it to be re-banked and it was indeed re banked on 23rd November, 2009. In his testimony, PWi tendered in court exhibit P5 which is a foreign currency deposit form. The deposit form shows that the plaintiff deposited an amount of U D 88,500 in defendants bank vide cheque No 94997 dated 23rd November, 2009, and the drawer being Wild West Domains Inc. This piece of evidence was not disputed by both DWX and DW2. The evidence tendered (Exhibit P5) speaks for itself. I thus conclude that, indeed, upon endorsement by the defendant bank, the plaintiff was asked to re-bank the said cheque in his account and the plaintiff indeed re-banked the same. Therefore, issues 7 and 8 are answered in the affirmative. Issue No. 10 is whether the defendant was required to return to the plaintiff the cheque in issue if the same had not been cleared by the drawee bank. As intimated earlier, this issue does not raise heat. In response to this, the defendant admitted that, a dishonoured cheque is 23 normally returned to the payee/holder who will then have the option to decide what to do with the cheque. The position as stated by the defendant is correct. Moreover, counsel for the plaintiff made a submission that, despite being asked to return the cheque the defendant neglected to return the same to the plaintiff and that both defence witnesses,DWI and DW2 conceded that the cheque has been lost in the hands of the defendant. It is the further submission of counsel for the defendant that, there is no dispute that a dishonoured cheque is to be returned to the holder/payee but it is unfortunate that the cheque in issue was lost in the mail process, and that the plaintiff ought to have asked for another cheque from the drawer, as per section 69 of the Bills of Exchange Act, Cap 215 R.E 2002. Answering the notion that the plaintiff ought to have asked for another cheque from the drawer, the counsel for the plaintiff maintains that section 69 (1) of the Bills of Exchange Act, clearly shows the responsibility was on the part of the defendant because at the time he was the holder of the bill. To support his view on the matter he cited the case of National Bank of Commerce v Perma Shoe Company (supra) the trial judge came to a conclusion that the bank was a holder of the cheque. Again as already intimated, the defendant had a duty to return the dishonoured cheque to the plaintiff so as he can make a follow up with the drawer for reissuance or for getting payment by another means. Now the 24 defendant is giving defence that the cheque got lost and never returned to them, what they have not helped this court to unveil was by not saying what they did to make sure the plaintiff is not prejudiced in any way for the loss of the cheque. I also wish to state that the findings made in the case cited are relevant to this case. The defendant ought to have asked the drawer of the cheque to issue another cheque because at the time he was the one in custody and control of the cheque so he had reasons to explain for the lost cheque, moreover even when the cheque was returned for lack of prior endorsement it was the defendant who was asked to do the needful and have it returned. Even DW1 confirmed in his evidence to court that the responsibility was with the bank to ask for the drawer to issue another cheque. Issue No. 11 is whether the defendant had a duty to provide prior endorsement guarantee on the said cheque. It is a fact not disputed that the cheque was returned unprocessed for want of "prior endorsement guarantee from FBME Bank Ltd." While Mr. Kilindu for the plaintiff submitted that it was a duty of the bank to provide prior endorsement, Mr. Weiwei for the defendant submitted that the bank had no duty in law to endorse the cheque therefore the defendant cannot be held liable for issues of endorsement. Again, I find this issue to be simple. It needs no professor's mind to outline the duties of a bank, which includes among others, to endorse cheques. In this particular case, the defendant was a collecting bank so he had to provide endorsement so as his customer could 25 be paid. It is the testimony of DW1 that, the essence of endorsement is that the drawer need to be sure if the person in whose favor the cheque was drawn is know by the collecting bank to ensure that the proceeds of the cheque will be paid to an entitled person. The defendant cannot be heard now to say he was helping out. My understanding is that, an endorsement is an endorsement. There are different kinds of endorsements. These include endorsement in bank, endorsement in full, conditional endorsement, restrictive endorsement, facultative endorsement, etc.... In this particular case, the endorsement required was "endorsement guarantee" from the defendant bank. In his final submission, learned counsel for the defendant had wanted this court to believe that, it was not the duty of the defendant to provide prior endorsement guarantee on the said cheque. Arguing on this point, DW2 testified that, it was strange for the bank to be required to endorse the cheque again after it had endorsed. One would wonder, if at all the obligation to endorse the cheque was not of the defendant, why then did they end up endorsing the same. The reasons given by the Counsel for defendant is his final submission for endorsing the cheque is flimsily. He submitted that, it is because the defendant has interest of the plaintiff in mind, in its course of business, and in good faith that defendant decided to re-bank and re-sent the cheque to the drawee bank. If the obligation was a legal requirement, 26 how come the defendant willingly stepped into the shoes of the plaintiff. I have no scintilla of doubt that, the defendant knew what he was doing and therefore the issue is answered in the affirmative. I will dispose the 12th an 13th issues jointly, that is, whether the defendant has acted negligently in handling the said cheque and what reliefs are the parties entitled to. The counsel for the plaintiff maintained throughout his submissions that the defendant acted negligently in handling the cheque to the extent of it getting lost in their hands and also the defendant acted negligently by failure to endorse the cheque. Counsel for the plaintiff stressed his view on the matter by citing the case of National Bank of Commerce v Said Ally Yakut (supra) which in a nutshell stated that the collecting bank owes a duty of care to its customers such that it conducts its activities with care and circumspection. The counsel concluded by submitting that, the defendant must face the consequence of his negligence in handling the cheque. On his part counsel for the defendant maintained in his submissions that, negligence is misplaced because the pleadings did not disclose anything the defendant was required to do in law. Furthermore he emphasized that the defendant did all that was required to be done. 27 I wish to start by observing that, the issue of negligence carries the weight of the whole matter before this court. Having gone through the submissions, and the testimonies of the witnesses, it is my considered opinion that, the defendant showed siome degree of negligence in handling the cheque. Defendant being the collecting bank had a duty to to exercise reasonable care and diligence in handling it business which may affect its customers, as was stated in the case of Barclays Bank Pic and others v Bank of England (1985) 1 All ER 385, where it was held inter alia that: the duty of a banker entrusted with the cheque for collection is to take reasonable steps to obtain payment of the cheque and credit the proceeds to the customer's account or notify the customer that the payment has been refused.....reasonable steps involves presentation for payment at the drawee branch. The Defendant herein seems to avoid its duty by saying that it did the needful with the cheque but it is a fact not disputed that the cheque got lost in the hands of the defendant. So they cannot deny responsibility at this juncture. I am firmly of the view that, where, as in this case, a customer deposits a cheque with a collecting bank and the cheque gets lost, the bank owes a dut of care to the customer to inform him promptly of such loss so that the customer may take up appropriate steps that might be open to him to avert any or further consequences resulting from such loss. In my opinion that duty exists whether the cheque was lost by the bank itself or by a third party having possession thereof on behalf of the 28 bank. To me this imposition of that duty will serve to re affirm and boost up confidence of the public in the banking sector and instill a degree of security for the customer's money at the banks. It is my considered view that, the defendant was obliged to have exercised care and ensured that indeed, the cheque reaches the drawee's bank so as its customer's can be paid. Moreover, after finding that the cheque got lost, the defendant should have contacted the drawee to ask for another cheque from the drawer. The use of delaying techniques by the respondent to avoid responsibility is of no help especially when the money and expectations of its customers lies solely on it. In view of the above and the evidence adduce before this court I am satisfied that, the plaintiff has proven its case to the expected standards in cases of a similar (civil) nature. The issue to be determined at this juncture is to what relief (s) are parties entitled to. It has been established without doubt that the cheque was lost while in the custody of the defendant. The defendant as a banker had a duty to act professionally in handling the cheque. It is obvious that the plaintiff has suffered for the conduct displayed by the defendant. Given the findings and observations made by this court, Judgment is hereby entered against the defendant The plaintiff shall be entitled to the following reliefs; 29 (a) The defendant shall pay the plaintiff USD 73,500 (United States Dollars Seventy Three Thousand and five hundred); (b) The defendant shall pay interest of 10% on (a) above from September 2009 to date of judgment. (c) The defendant shall pay interest of 7% on (a) and (b) above from the date of judgment until payment in full. (d) The defendant shall pay the costs of this suit. JUDGE 31st DAY MAY, 2012 Judgenment delivered this 31st day of May, 2012 in the presence of Mr. Kilindu, Learned Counsel for the Plaintiff and Mr. Ogunde, holding brief for Mr. Lutema, Learned Counsel for the defendant. JUDGE 31st DAY MAY, 2012 30