[2022] UGCommC 179

### THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA ICOMMERCIAL DIVISION]

### CryIL SUIT NO. 246OR 2OIO

### ALLIAZ PHARMACY LIMTTED: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : PLAINTIFF VERSUS

# STANBIC BANK UGANDA LIMITED: : : : : : : : : : : : : : : : : : : : : : DEFENDANT BEFORE: HON' LADY JUSTICE ANNA B. MUGENYI JUDGMENT

This suit was filed by Alliaz Pharmacy Limited (hereinafter referred to as the Plaintiff) against the Defendant by way of ordinary plaint seeking for a declaration that the Plaintiff has never applied for or been granted an overdraft by the Defendant in excess of UGX 50,000,000/; is not in breach of the Overdraft Vehicle and Asset Finance Facilities and it is not indebted to the Defendant, a permanent injunction restraining the Defendants, its agents or seryants or workmen from impounding or selling or realising security from any or all of the buses leased to the Plaintiff namely UAG 1 10J, UAK 948T, UAL 147D, UAL 327L, UAK 939T, UAL 333L, UAL 227L, UAH 040M, UAG 120J, an order appointing an independent accountant to verifu, ascertain and report to Court about the true status of the Plaintiffs account, special damages of UGX 195,834,946.351, general damages, interests, costs and interest on costs.

The brief facts constituting the Plaintiffs case are that on or between 2004 and 2008 the parties entered into several contracts of Vehicle and Asset Finance under

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which the Defendant financed the Plaintiffs acquisition of several buses. That on 27rh March 2008, one bus registration number UAH 262X was involved in an accident and written off by IWS National Insurance corporation Limited; which also paid UGX 130,598,720/ as insurance compensation to the Defendant.

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That the Defendant breached their contract and debited the plaintiffs account of the monthly repayment instalment of UGX 4,575,6001 and monthly insurance premium of UGX 1,840,250/ and VAT for the months of April, May and June 2008 amounting to UGX 22,712,109/. That in further breach, the Defendant refused to utilise the compensation from the insurers to replace the plaintiffs lost bus which adversely affected the Plaintifls business.

That on 21't September 2009, the Defendant instructed its auctioneers IWS Armstrong Auctioneers to impound several of the buses on allegation that the Plaintiff was in default; and yet bus registration number UAH 040M had no outstanding loan and buses UAL 321 and UAK 939T were not retumed to the Plaintiff r:ntil l2l0l/2010. That the impounding of the buses was in breach of contract and that it subjected the Plaintiff to loss of UGX 69,734,249.51/ being payment for monthly instalments, monthly insurance premium, advance payment to civil Aviation Authority, advanced parking payments to Multiplex Limited, salaries for 3 drivers, salaries for 3 inspectors, salaries for 2 conductors and auctioneer costs.

Further that on 25/02/2009 when the plaintiff applied for renewal of its overdraft, the Defendant instead granted a term loan of UGX 50,000,000/ on 06/05/201 0, and debited the Plaintifls account beyond the usual monthly instalments which reduced the loan to UGX 30,000,000/ which affected the plaintiff s cash flow and business operations. That on the 24111/2009 the plaintiff sold off 2 of the buses

registration numbers UAJ l65u and UAK 8014 to Ssebana Kizito and yet the Defendant wrongtully debited the plaintifls account of UGX 35,g99,660.951 in respect of the said two buses yet they endorsed the sale and entered a lease with the buyeron 18112/2008.

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That on 29112/2009 by High court order in HCCS No. 425 of 2009, bus registration number UAK 948T was attached and the Defendant continued debiting the Plaintiffs account for December 2009 to June 2010 for the bus yet they knew it was no longer in the Plaintiffs possession. That the total deduction was UGX 67,488,927 .89/ for monthly instalments and insurance premium plus vAT. That on ll/0612010, the Defendant instructed its auctioneers to impound several buses yet some of them had no outstanding balances; and that on 16106/2010 the Defendant wrote to the Plaintiff recalling the overdraft facility of uGX lg7,0g3,606l and the vehicle and Asset Finance facility of UGX g69,559,g55/ demanding that the Plaintiffpaid the balance plus interest in 30 days.

That the Defendant advertised a number of the plaintiff s businesses in the New vision newspaper of 25/0612010. The plaintiff avers that the Defendant,s actions are in breach of contract and that the high handed manner of man handling and harassing the Plaintifls passengers while impounding the buses occasioned financial loss to the Plaintiff.

In defence, the Defendant filed their written Statement of Defence in which they averred they offered the Plaintiff other overdraft facilities in addition to what the Plaintiff mentioned to finance the debit orders on its transactional account. In specific response about the ucx 130,59g,720/, the Defendant avers that UGX 106,830,2171 was used to settle outstanding lease and insurance premium for the

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said bus, ucx 23,768,503/ was credited to the Plaintiff s account as well as UGX 11,725,542/ paid to Plaintiff as insurance refund.

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The Defendant admits debiting the Plaintiff s account for the months of April, May and June but avers that it was not in breach of contract because under the lease agreement the monthly instalments were payable as long as the lease facility was outstanding as the insurers had not yet settled the compensation claim. The Defendant denied breaching the contract or the principle of restitution as it was under no obligation to buy for the Plaintiff another vehicle upon receipt of compensation.

The Defendant admits instructing auctioneers on2l/09/2009 to impound buses to recover ucx 1,265,683,386/ which was owing at the time and which the plaintiff has refused to settle. That in September 2009, bus registration number uAH 040M had an outstanding balance of UGX 7,907,670.32/ and that buses number UAL 321L and, UAK 939T were released to the plaintiff on 08/01/2010 on terms set out in the parties' letters.

The Defendant denies approving the sale of buses Registration numbers uAJ l65u and UAK 80lA; adding that it was not privy to any deed discharging the plaintiff from its obligations. They added that the said buyer Ssebana Kizito separately applied to the Defendant for lease facilities under which disbursements could only be made upon satisffing all conditions precedent; and that the conditions were satisfied on 08/01/2010. Therefore, before then, the plaintiff remained bound by the terms of the lease agreement and therefore the Defendant lawfully debited the Plaintifl s transactional account.

That the wrongful attachment of bus registration number uAK 94gr by a third party did not suspend or cancel the Plaintiffs obligation to repay therefore that the

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said deductions were lawfully done. The Defendant admits instructing auctioneers to impound buses to recover a sum of rJGx r,025,479,g44r which was owing to the Defendant as of l rff June 2010; and, further denies breach of contract as the buses had been pledged as security for a facility advanced to the plaintiff under letter dated 30th April 2009.

That on 16th June 2010, the Defendant lawfully called upon the plaintiff to settre the facilities but that the praintiff neglected to do so, and therefore that the Defendant lawfully advertised the said vehicles. In addition, the Defendant avers that the Plaintiff applied for an overdraft of UGX 50,000,000/ but did not have sufficient funds on their transactional account most times therefore the account was overdrawn. That in addition, a sum of UGX l72,gg9,l2gl arose out of interest on the overdraft.

The Defendant also filed a counterclaim for the sum of UGX I ,062,7 65,5g1 .07 /

### COUNTER-CLAIM

The Defendant filed this counterclaim for recovery of UGX r,062,765,5gr.07r, interest and for costs. The brief facts constituting the counterclaim are that the Counterclaimant granted the Counter Defendant/Plaintiff various leasing facilities for acquisition of buses and that they had different rease agreements made in respect of each bus. The counter Defendant was to pay monthly instalments when due and he had authorised the counterclaimant to debit its transactional account of the instalments by way of standing orders.

That the counterclaimant further extended to the counter Defendant several insurance premium finance facilities in respect of the said vehicles; wherein finance charges were to be charged on each facility. That the counter Defendant was at all material times required to provide sufficient funds in its transactionar

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account to meet the monthly instalments. That the account was overdrawn beyond the limit and that as of 30th June 2010, a sum of UGX Z22,gg9,l2g/ was outstanding on the Plaintiffs transactional account.

That the counter Defendant breached the agreement by holding insufficient funds on the transactional account to meet the standing debit orders, and failing to deposit the overdrawn sum upon notification. In effect, interest on the overdrawn amount accrued at the prevailing interest rates of the Defendant. That by 6s July 2010, the sums had accumulated to UGX 939,766,453.07/.

In their reply to the Defence, the Plaintiff avers that the Defendant accepted ^a smaller amount of money in compensation from National Insurance Corporation and continued treating it as a subsisting policy. That the Defendant miscalculated the outstanding lease and premium sums hence debiting the plaintiff with UGX 106,830,2171, without taking into account that rhe plaintiff financed 20yo of the purchase ofthe bus.

In specific reference to the counterclaim, the plaintiff avers that the standing orders could only be debited on the plaintifls transactional account up to the overdraft limit of ucx 50,000,000/ and that there was no agreement to debit the transactional account beyond the overdraft limit. They prayed that the Counterclaim be dismissed with costs.

The Plaintiff presented two witnesses to wit: chris Kakama (pw1) and Dativa Nabimanya (PW2) while the Defendant presented Antony Mupere (DWl) and Magezi Antony Kafabusa (Dw2). Both counsel for the parties agreed to file written submissions which have been considered in this Judgment.

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### REPRESENTATION

The Plaintiffs/counter-Defendants were represented by IWs KBW Advocates and M/s KTA Advocates whereas the Defendant/counter-Claimant was represented by M/s H&G Advocates.

#### JUDGMENT

The following Issues were agreed upon by the parties for determination by this court:

- l. whether the Defendant is liabre to pay the praintiff rJGx 346,772,276r as outstanding sum owed to the plaintiff? - 2' whether the Defendant is riabre to pay to the praintiff uGX 987,120,000/ as tost revenue due to wrongful impounding of the vehicles? - 3' whether the Defendant is liabre to pay to the praintiff ucx gr,2l2,ss0/ as lost revenue from September 2009 to December 2015 in respect of buses Reg. Nos. UAL 321L, UAH 040M and UAK 939T? - 4. Whether the Defendant is liable to pay to the plaintiff UGX 4,971,061'814/ as lost revenue from September 2009 to December ²⁰¹⁵ in respect of buses Reg. Nos. IJAL 327L,, UAL 333L and UAK 94gT? - 5. Whether the Defendant is liable to pay to the plaintiff UGX l'872,436,027l as lost revenue from September 2009 to December ²⁰¹⁵ in respect of buses Reg. Nos. lJ AL 3ZlL and lJ AL 227L?

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- 6. whether the Defendant is riabte to pay to the praintiff UGX 11872,436,027/ as lost revenue from september 2009 to December ²⁰¹⁵ in respect of buses Reg. Nos. UAG t20J and UAG I l0J? - 7. whether the Plaintiff is entitled to compensation for the value of the buses Reg. Nos. UAL 327L,[JAL 333L, UAL 321L, UAL 227L, IJAG 120J, UAG l10J and UAK 948T? - 8. whether the Defendant is entitted to judgement in the sum of uGX 442,522,638/ on its counterclaim? - 9. What remedies are available to the parties?

Amended issues as at 27s November 201 9:

- 1. Whether the Defendant caused loss to the plaintiff by - Overcharged insurance - ll. Wrongful levies - t. In respect to refund of initial deposits on lease facilify - tv. By disposal of the buses excluding UAK 94gT - ^v With regard to excess money for payment of buses UAK 939T and UALI4TD - vt. With regard to unclaimed to unclaimed VAT - vt l. Disbursements of higher loan amount - vl . Wrongful impoundment and disposal of buses - IX. With regard to the utilisation of insurance compensation received

Nnb ### Issue l: whether the Defendant caused to the Plaintiff toss by overcharging insurance?

In the Plaintiffs written submissions, I realised that counsel maintained the first issues as they were famed in the Supplementary Joint Scheduling Memorandum filed on 19s March 2019, as opposed to the amended issues of 27s November 2019 as suggested by counsel for the Defendant, and sanctioned by Court. Counsel for the Plaintiff relied on the findings of the Independent Accountant to submit that the Defendant is liable to pay to the Plaintiff rhe sum of UGX 346,772,276/ after deducting UGX 442,522,638/ which the Plaintiff still owed from UGX 789,294,914/ which arose from the Defendant's actions.

In their submissions in reply, counsel for the Defendant submitted that the claim of UGX 3,680,500/ as stated in paragraph 6.2.1 of PE I for insurance premium for bus Reg. No. UAH 262xwhich was involved in an accident was not pleaded in the plaint. That in paragraph 6.2.1 (b) and (c), it was also stated that the Defendant caused loss of UGX 25,865,8691 by refusing to refund premiums for cancelled insurance policies for Vehicles Reg. Nos. UAK 939T, UAL 147D, UAL 227L, UAL 321L,uN- 327L and UAL 333L. He added that this is contrary to clause ⁴ of the IFPA wherein payments due to the Plaintiff from the insurance company were pledged as security for payment of money due to the Defendant; and that this was never pleaded in special damages.

In rejoinder, counsel for the Plaintiff submitted that the plaintiff prayed for the appointment ofan independent accountant (lA) under paragraph 3 (d) ofthe plaint to look into the Plaintiffs account, inter alia insurance and premium finance agreements. Therefore, that the IA who was appointed by court found that the Defendant caused loss by overcharging insurance premiums therefore that the

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Defendant cannot claim that it was not raised in the plaint. He added that clause ⁴ does not apply to refund of cancelled policy because it led the plaintiff to incur double costs for insurance leading to the loss now claimed.

^Ihave looked at submissions by both counsel and it is my considered opinion that because the IA pronounced himserf on matters of law, it was agreed that this Court only relies on matters of fact in the report and determines the matters of the law upon hearing both parties. It is upon that background that the Defendant proposed changes in the phrasing of the issues and court adopted them. Therefore, the same Defendant cannot turn around to claim that this issue was not pleaded as special damages in the plaint. paragraphs 5 and 6 of the plaint raise the issue of the continued charging of both the monthly instalments and insurance premiums after the bus had been involved in an accident, written off and compensation paid for it by the Insurance Company.

It was agreed that the calculations in the report remain and therefore, upon looking at the evidence, I find that the claim of UGX 3,6g0,500/ in respect of bus Reg. No. UAH 262x fails as even the IA in page 23 of his report in the response and findings, reconsidered his opinion and said the accident did not excuse the plaintiff from their obligation of paying insurance premiums. Looking at paragraph b under responses on page 23 0f pE l and annexure G, a letter written by the Defendant dated 04111/2010, it is true the Defendant objected to the praintiff s application for a refund of premium to the new poricies. The reason given by the Defendant was that all facilities with them had been calred up and were due for payment, which was true. Therefore, the overcharged insurance. Defendant did not cause loss to the plaintiff for

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#### Issue 2: Whether the Defendant caused wrongful levies? Ioss to the Plaintiff by making

counsel for the Plaintiff submitted that as established by the IA, the Defendant continued deducting monthly premiums for the months of December 2009 to April ²⁰¹⁰totalling ucx 12,180,7501 for buses Reg. Nos. UAJ l55U and uAK 80lA even after they had been sold to Bismarkan Coaches on 24/l t/2OOg.

In reply, counsel for the Defendant submitted that clause 6.1 of the Lease Agreements D4-D7 put the obligation to insure the leased buses on the plaintiff. In addition, that it was not alleged in the plaint that the plaintiff did not order for the said policies and that the said claim was not pleaded in the plaint as special damages.

From the evidence on record, it is clear that the lease in respect ofbuses Reg. Nos. UAJ l55u and UAK 80lA were assigned to Ssebana Kizito (Bismarkan coaches). The issue may be whether or not it was rightfulry assigned. clause 10.2 of the Terms and conditions of the vehicle and Lease Agreement allows for the assignment of its rights by the lessee but with prior written consent of the lessor. According to Black's Law Dictionary, an assignment is:

"A transfer or making oyer to another of the whole of any property, real or personal, in possession or in action, or ofany estate or right therein."

In the instant case, there is no evidence that shows that the plaintiff sought prior written consent from the Defendant before purporting to assign the lease to Ssebana Kizito. However, the plaintiff only notified the Defendant of their decision. I will not dwell much on that because the Defendant seemed to have consented upon receiving the letter because they acted upon the request by entering ^alease agreement with Ssebana Kizito on the lgth December 2009 (D 59). clause

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2.1-2 of D 59 stated that it was to finance insurance premium for the financed vehicles and clause 2.r.3 was to finance the takeover of a lease facility of the ² said buses from the Plaintiff It is clear that even the obligation to pay insurance premiums for the said buses was transferred to Ssebana Kizito.

However, like DW2 said in paragraph 65 (b) (iii) of his witness statement, D ⁵⁹ was an offer letter, which did not confer the obligation of paying the monthly insurance premium on him. The agreement was signed between the Defendant and Ssebana on 08/01/2010 as evidenced by D 63 and D 64. It is only until concluding the agreements that the burden would shift to the said Ssebana. In addition, the Plaintiff had the obligation to ensure that the buses were insured at all times and this only changed when the Defendant entered into another agreement with the new lessee on 08/01/2010. Therefore, I find that the plaintiffhas no claim against the Defendant, unless ifthe Defendant had charged both the plaintiffand Ssebana over the same premiums for the same period. No such evidence was produced, therefore, I find that the Defendant did not cause loss to the plaintiff through wrong levies.

# Issue 3: whether the Defendant caused the plaintiff loss with regard to initial deposits on the lease facirity for buses Reg. Nos. uAG rrOJ and uAG 120J.

Counsel for the plaintiff invited court to consider the findings of the IA in paragraph 5.1.2 ofPEl where he found that the loans disbursed for the 2 two buses were 1000/o of cost price, therefore no initial deposits were made on them. That the Plaintiff deposited 25oh of the cost price which was an equivalent of UGX 54,144'993/ which the bank did not take into account, and that as a resurt, the Plaintiff paid more in interest and vAT. Counsel added that pwl in her report made the same findings at page I I of pE4.

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Counsel for the Defendant pointed out that the IA did not disclose the sums allegedly paid by the Plaintiff in interest and VAT, but said the Defendant debited UGX 57,574,000/ from the Plaintiff's account and remitted the same to the bus suppliers. He submitted that the above action was consistent with Clause 3.2 of the Letter of Offer (D54). That if the Defendant had caused such loss to the Plaintiff, the Plaintiff would have discovered it and pleaded the same in the Plaint.

I have looked at the evidence on record and it is true as Counsel for the Defendant submitted that Clause 3.2 of D54 provided for initial deposit of 25% by the lessee (Plaintiff) estimated at UGX 55,000,000/ as a condition for the Defendant to order the buses. Both parties do not deny that UGX 57,574,000/ was debited off the Plaintiff's account for the same purpose, and the same is confirmed by the IA in Clause 5.1.2 and in Table 8 in Clause 6.2 of PE1. In addition to not denying offering the loan at 100% of cost price, the Defendant has not offered any explanation as to why the loans in respect of these buses were disbursed at 100% of cost price yet an initial deposit of 25% was made and even remitted to the supplier.

The Defendant's claim that the Plaintiff ought to have discovered and pleaded does not stand as it was upon the Plaintiff's request that an Independent Accountant be appointed to balance their books; and it is upon that exercise that this was discovered. In effect, I therefore find that the Defendant caused the Plaintiff loss by failing to refund the 25% initial deposit of cost on buses Reg. Nos. UAG 110J and UAG 120J.

Issue 4: Whether the Defendant caused the Plaintiff loss by disposal of the buses excluding UAK 948T

Counsel for the Plaintiff submitted that some buses were sold without sales agreements and they include: UAL 321L, UAL 227L, UAG 120J, UAG 110J and UAK 948T. He added that some buses were sold when there was a Court Order forbidding the sale and these include: UAL 333L and UAL 327L. Counsel pointed out that in cross examination DW1 admitted that there were no sales agreements, no reserve price and that he was not aware if the bank received the money for the sales.

Counsel therefore concluded that disposal of the buses was a sham sale which led the Plaintiff to incur losses because for some, there were no written sales agreements as well as no bid documents. In addition, Counsel submitted that there was no evidence of bank deposits or receipts acknowledging payment in respect of the buses. He prayed that Court upholds the IA's finding that the Defendant caused the Plaintiff loss of UGX 309,000,000/ on disposal of buses.

Counsel for the Defendant disputed those claims and said the valuation reports that the IA relied on were 2 years old at the time the sale took place. That the Defendant did not cause any loss as the IA's assessment was premised on a wrong presumption that the buses maintained the values in the report 2 years after their valuation. That from DW3's evidence, the buses were parked at the Defendant's yard in Salaama Munyonyo and deteriorating. In addition, that he wrongly assumed that buses Reg. Nos. UAL 227L and UAL 321L did not fetch any money because there were no sale agreements yet the Defendant received and accepted offers in the sums of UGX 40,000,000/ and UGX 45,000,000/ respectively.

I have looked at clause 6.2.3 of PE1 and the table showing the loss of UGX 309,000,000/ allegedly caused to the Plaintiff by selling the buses at low prices compared to the forced sale values from the valuation reports. As rightly submitted

for the Defendant, the valuation reports were mostly made 2 years before the sale of the buses. It is expected that within the 2 years, the buses have depreciated in value and therefore, the forced sale values would have reduced as well. It is, however, unfortunate that there were no updated valuation reports and therefore even the figures that the IA came up with may not reflect the actual or true loss if any. In addition, the Defendant did not avail sales agreements for buses Reg. Nos. UAL 227L and UAL 321L making it hard to reflect the loss suffered by the Plaintiff in respect of the same.

In the premises, I find that the evidence has not been proved on a balance of probabilities and even if Court were to award any amount in such losses, the true reflection of the loss has not been proved. Therefore, this claim has not been proved.

# Issue 5: Whether the Defendant caused the Plaintiff loss with regard to excess money for payment of buses UAK 939T and UAL 147D

Counsel for the Plaintiff relied on the findings of the IA that the Defendant owes the Plaintiff UGX 63,683,800/ as excess money on payment for buses Reg. Nos. UAK 939T and UAL 147D. Counsel disputed the claims by the Defendant that the money was used to offset the Plaintiff's indebtedness for bus UAK 948T, as the same is still owing by the Plaintiff.

Counsel for the Defendant submitted that DW2 in paragraphs 76-78 of his witness statement clarified that the said balance was used to offset part of the Plaintiff's indebtedness in respect of bus UAK 948T. That the VAF Statement for the said bus was exhibited as D75.

From the above evidence, it is not disputed that upon receiving payment for buses Reg. Nos. UAK 939T and UAL 147D, there was excess money of UGX

63,683,800/. Upon looking at D 75, the bank statement for account No. 900000317 in the name of the Plaintiff, at item 145, I am satisfied that the said money was used to offset part of the Plaintiff's indebtedness; bringing the balance from UGX 163,495,953.66/ to UGX 99,812,153.41/. In the premises, no such loss was occasioned to the Plaintiff.

## Issue 6: Whether the Defendant caused the Plaintiff loss with regard to **unclaimed VAT**

Counsel for the Plaintiff reiterated their submissions that despite not pleading the claim of unclaimed VAT, it was upon their request that an independent accountant was appointed and that they associate with his findings that the Plaintiff suffered loss of UGX 255,796,347/ in unclaimed VAT paid by the Plaintiff.

Counsel for the Defendant denied causing the Plaintiff loss of UGX 255,796,347/ in unclaimed VAT. He added that VAT was provided for in Clause 3.4 of DE54, clause 6.5 of DE55, clause 5.4 of DE56 and clause 6.5 of DE57. Counsel submitted that the Plaintiff did not exhibit any correspondences to show that PW1 had requested for VAT invoices and the Defendant had refused to avail them. He added that if that loss had been occasioned, PW2 would have disclosed it to the Plaintiff's lawyers and the same would have been pleaded as a special damage.

In surjoinder, the Defendant avers that they are not bound by the IA's reconciliation of the Plaintiff's account because the alleged finding on the alleged tort is a matter of law which the Court is mandated to determine based on the Plaintiff's plaint.

From the evidence on record, it is clear that the Plaintiff possibly has unclaimed VAT, however there is no evidence to impute the same on the Defendant. As Counsel for the Defendant put it, there is no evidence in form of any correspondences to show that the Plaintiff requested for VAT invoices and they were denied. If the Plaintiff suffered such loss, the Defendant cannot be blamed for it.

Issue 7: Whether the Defendant caused the Plaintiff loss by disbursement of higher loan of 80% instead of 75% for buses Reg. Nos. UAH 040M, UAJ 165U, UAK 801A, UAL 227L, UAL 321L, UAL 327L and UAL 333L.

Counsel for the Plaintiff relied on the findings of the IA to submit that the Defendant only contributed 75% of the cost price of the mentioned buses but charged interest on 80% of cost price and hence overcharged the Plaintiff.

The Defendant denied causing the Plaintiff loss of UGX 56,664,538/ by disbursing higher sums than agreed. That the IA misinterpreted the Letters of Offer in clause 4.1 of DE56 and clause 4.1 of DE57 which require the Plaintiff to contribute 20% of the cost price hence mandating the Defendant to finance 80%. Therefore, that the Defendant did not commit any tort but disbursed in accordance with the terms of the Letters of Offer. Counsel added that DW2 clarified that 25% was only in respect of buses UAG 110J and UAG 120J where the Defendant financed only up to $75\%$ .

I have looked at the evidence on record as well as the submissions of both Counsel and it is true that the disbursement of 75% of the cost price by the Defendant was only for some buses in respect of offer letters DE 54 and DE 55 for the purchase of the first 3 buses that is UAG 110J, UAG 120J and UAH 040M as stated in clause 2 of DE 57. Therefore, I agree with Counsel for the Defendant that the IA was misguided by the Offer letters to reach a wrong decision and I find that the Defendant did not disburse a higher loan as claimed, as the offer letters for buses Reg. Nos. UAH 040M, UAJ 165U, UAK 801A, UAL 227L, UAL 321L, UAL

327L a',d UAL 333L the agreed percentage of roan disbursement was goTo which the bank rightfuly disbursed

^Itherefore find that this claim was not proved on a balance ofprobabilities by the Plaintiffand therefore it fails.

## Issue 8: whether the Defendant caused the praintiff ross by wrongfur impoundment and disposal of buses

counsel for the plaintiff submitted that despite the fact that the ross of UGX 8,700,000,000/ was not pleaded, it arose from the findings of the IA who was appointed by consent of both parties. That pwl set out her grounds of adjusting the loss suffered by the plaintiff in her supplementary witness statement, and that she is a qualified certified public Accountant, therefore counsel for the Defendant cannot purport to challenge her evidence when they did not bring an expert witness to controvert her evidence\_

He added that while the Judge permitted the sale of some vehicles, the sare was conducted irregularry, ilegally and there was no accountability of the proceeds, causing loss to the Plaintiff. That it is not true that bus Reg. No. UAK 94gr was sold to Reverend,Ezra Bikangiso as it had been aftached by the court in DE 39. counsel also added that the plaintiff had settled the leases for buses UAG l20J and UAG 110J. That whereas counsel for the Defendant argues that they were subject to further security and debenture under DE 57, 5g and D 14, there was no default by the Plaintiff and therefore no right to impound.

Counsel invited court to uphold the findings of the IA that the overdraft facility was fixed with a limit of UGX 50,000,000/ and that there was no other offer retrer of another overdraft facility of UGX 27o,ooo,ooor. In addition, that pwr computed

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losses for buses UAL 327L and UAL 333L for the period 20/12/2009 to l2l10/201I prior to their wrongful impoundment.

In reply, counsel for the Defendant submitted rhat the loss of UGX g,700,000,000/ is a special damage which ought to have been pleaded in the plaint. The Defendant denied causing the said losses and avers that pwl's computation was full of errors as she negated the Defendant's right of impoundment on default yet the IA established default by the Plaintiff in spite of the demand notices. That it was also in conflict with the IA's conclusion on page 27 of pE I that impoundment was ^a prerogative of the Defendant. Secondly, that it was erroneous for the IA to accept PWI's computation of loss in respect of bus Reg. No. uAK 94gr which was illegally sold to Rev. Ezra Bikangiso; and that the IA went on to say the lease facility ofthat bus had been settled, whereas not.

In relation to buses UAL 333L and UAK 327L, counsel for the Defendant submitted that the PlaintifPs inaction towards the wrongful impounding of the buses amounted to acquiescence or implied consent to the eventual sale of the buses; and that the Plaintiff is not entitled to claim for loss ofrevenue.

The first step in determining whether or not the Defendant wrongfully impounded or disposed of the buses is to know whether or not there was a default because as submitted by counsel for the Defendant, the Defendant was mandated to dispose of the buses upon default under clauses 14. 1 of Dl, clauses ll.l.1 and 11.2. I of D3' D4, D5, D6 and D7. It is not in dispute that the plaintiff was in defaurt of repaying some of the monies when they were due; and the IA also confirmed the same in clause 5.5 of PEI at page 13. There is evidence that the Defendant issued several reminders like those issued on 2l/ogl2oo9, oglol/2olo and 16106/2010,

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which even the IA noted. Therefore, the Defendant acted upon the default to impound the buses under the clauses mentioned above.

Specifically, in regard to buses Reg. No. uAG l20J and UAG 110J, I agree with counsel for the Defendant that the 2 buses were rightfully impounded as they had been pledged as security under clause g.l.l of D57, and under clause 2.g.1I and 2.8.12 of D58. Counsel submitted that their lease facilities had been settled but the Plaintiff had not exercised its option of purchasing them. Further, both the plaintiff and IA admitted that Justice Irene Mulyagonja permitted the sale of the buses in her ruling in P8.

The only issue that I find that may arise is the accountability of the proceeds from the sale of the sold buses. The IA in Table 4 on page 14 of pEl listed all the sold buses and theses included buses UAK 94gr, uAL 3z1L and uAL 227L among others' In paragraph 5.8 ofpEl, the IA noted that the Defendant did not provide accountability for the three buses mentioned above. In their response dated 20/12/2017 marked as annexure E to pEr, the Defendant promised to send the accountability on the utilisation report the following day but there is no evidence that it was ever sent. There was no valuation report or sales agreement for the said buses.

However, I must note that whereas the IA in table 6 on page I 6 stated that there were no sales agreements for buses uN- 32rL and UAL 227L and did not include the amount ofproceeds realised, table 4 on page 14 has details ofthe buyers and the date ofdisposal. This contradiction may only point to an error because the offer letters were given to the IA. on the other hand, I also find that the Defendant has not satisfactorily accounted for the proceeds of sale of the said buses. From paragraphs 40 and 42 of D 74, the witness statement of Denis owili, it was

q, ail

generally said that the upon the sale of 7 buses, the 2 buses in question inclusive, the Defendant recovered ucx 220,000,000/ which reduced the plaintiffs indebtedness to ucx 259,306,764.s/. No reference was made to any bank statements reflecting the said transactions although the IA only contested the proceeds for 5 buses in table 6.

Although counsel for the Defendant said the buses were subject of security for the leasefacilitiesunderclause8.l.l ofD5Tandclause2.g.ll and2.g.l2of D5gand that they were also subject of the debenture deed and that they were sold under clause 9.1 ofthe said deed, the Defendant ought to have provided accountability for the sales proceeds ofthe buses. It is true that the plaintiffhad charged all its assets and property in favour of the bank under clause 3 of the debenture deed. Therefore, the Defendant rightfully impounded and sold the buses, however, they ought to have given accountability of utilisation of the proceeds from the sale.

From paragraph 42 of D 74, ucx 22o,ooo,oool was recovered after selling the buses UAK 948T, UAL 32lL,LJAL227L,uAG l20J and uAG 110J. From table 6' only ucx 24,000,000/ from the sale of buses UAL 333L and UAL 3zTLwere accounted for. Going by the evidence of Dennis owili and table 6 by the IA, there is a balance of UGX 196,000,000/ unaccounted for. Neither DWl nor DW2 accounted for them. I find the Defendant to have caused loss of uGX 196,000,000/ to the Plaintiff.

## Issue 9: whether the Defendant caused the plaintiff loss with regard to the utilisation of insurance compensation received

counsel for the Defendant denied causing loss to the plaintiff and submitted that upon their objection, the IA amended his repot stating that the Defendant

deposited the said amount on the Plaintifls account, yet he had no mandate to reverse his own report.

In rejoinder, counsel for the Plaintiff asserted that the IA did not contradict himself but rather considered the compensation in computing the final amount owed to the Plaintiff on page 27 of PE t.

I have looked at paragraph 5.8 on page 15 of PE 1 in relation to utilisation of insurance compensation received, and the IA clearly stated that he was unable to confirm if the funds were transferred to the Plaintiffs account or not because he had not looked the bank statement. However, upon looking at the affidavit and bank statement attached, in his response and findings, the IA admitted that the said balance of UGX 23,768,203/ was deposited on the Plaintiff s bank account No. 0140005492601 in the names of Alliaz Pharmacy Ltd on the 24th of June 2008.

I have looked at DE 32, the bank statement showing that the said money was indeed deposited on the Plaintiffs account on24/06/2008, therefore, the Defendant did not cause any loss to the Plaintiff by utilising the insurance compensation received. This claim also fails.

In the premises, the suit is dismissed on most of the grounds but partly succeeds for failure to provide accountability for proceeds from the sale of the buses Reg. Nos. UAK 948T, UAL 32lL,UAL 227L,UAG 120J and UAG I lOJ to a tune of UGX 196,000,000/. I also make an order for the refund of UGX 57,574,0001 being 25%oinitial deposit on the cost of buses Reg. Nos. UAG l10J and UAG 120J.

Interest at court rate is awarded from the date of award till payment in full. No order as to costs.

s-b

## COUNTER-CLAIM

The Defendant was claiming for recovery of UGX 1,062,765,581.07l in their Counter-claim, however, in their submissions in reply, Counsel for the Defendant prayed for judgement to be entered for the sum of UGX 442,522,6381 as certihed by the IA in the executive summary at page 4 of Pl. Both parties seemed not to dispute that sum as suggested by the IA. The only dispute is in relation to the findings on losses purportedly caused by the Defendant's actions.

I will therefore now proceed to allow Counterclaim in favour of the Countercl aimant/Defendant in the following terms :

- 1. The sum of UGX 444,522,6381 be paid to the Counterclaimant/ Defendant by the Counter-Defendant. - 2. Interest at court rate from date of award till payment in full. - 3. Costs of the counterclaim to be paid to the Counterclaimant/Defendant.

..... -.. -bA.

HON. LADY JUSTICE ANNA B. MUGENYI DATED ^It>\ ry