[2004] UGCA 32

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

CORAM: HON. JUSTICE G. M. OKELLO, JA. HON. JUSTICE S. G ENGWAU, JA. HON. JUSTICE C. K. BYAMUGISHA, JA.

$I_1 = I_2$

## CIVIL APPEAL NO 66 OF 2002

#### **BETWEEN**

WILSON BUYONDO KAMUGUNDA ::::::::::::::::::::::::::::::::::::

AND

BANK OF BARODA (U) LTD::::::::::::::::::::::::::::::::::::

(Appeal from the judgement of the High Court (Katutsi. J) dated 14^th May 2002 on HCCS No. 1373 of 1998).

#### **JUDGEMENT OF G. M. OKELLO, JA.**

This is an appeal from the judgement and orders of the High Court (Katutsi. J) in High Court civil suit No. 1373 of 1998.

$\mathbf{1}$

The background facts leading to this appeal are detailed out in the judgement of Byamugisha, JA and I need not repeat them here. Suffices it to state that the appellant's suit in negligence against the respondent was dismissed with costs on the ground that he did not prove his claim on the balance of probabilities, hence this appeal.

The appeal is based on the following three grounds, namely:-

$\mathbf{1}$

$\sim$ 1 $\sim$

- (1). That the learned trial Judge erred in law and in fact when he failed to evaluate the evidence as a whole and considered the plaintiff's case separately from the defence as a result reached a wrong conclusion. - $(2)$ The learned trial Judge erred in law and in fact when he did not find that the plaintiff had on a balance of probabilities proved his case. - The learned trial Judge erred in law and in fact by $(3)$ applying the wrong principles of law to the facts before him and thus reaching a wrong conclusion.

Mr. Kenneth Kakuru, learned counsel for the appellant, argued the three grounds together. I propose to consider them also in a similar manner.

The gist of the main complaint of Mr. Kakuru on behalf of the appellant was that the trial Judge had not properly evaluated the evidence on record and thereby reached a wrong conclusion. He pointed out that the trial Judge fell into that error because he did not look at the Written Satement of Defence. He only looked at the Plaint and the evidence adduced by the appellant's witnesses. He argued that had the learned Judge looked at the respondent's Written Statement of Defence, he would have found that the respondent had admitted some facts. The evidence given by PW1 and PW2 was to the effect that H. Kamugunda and G. Katanywa, were long dead when an account was opened in their names at the respondent's Bank. Those admitted facts and the said evidence of PW1 and PW2 would have shifted the evidential burden to the respondent. For this proposition, counsel relied on Col (RTD) Dr Besigye Kizza Vs Museveni Yoweri Kaguta, election Petition No 1 of 2001. P. K. Semwogerere and others Vs A. G., Constitutional Petition No 5 of 2002 (SCU) and James Mboijana Vs Caroline Mboijana and others, Civil appeal No 87 of 2002 (CA unreported).

$\mathbf{I} = \mathbf{I}$

Another complaint which Mr Kakuru raised was that the learned trial Judge erred when he found that section 82 (1) of the Bills of Exchange Act applied to the facts of this case. He wondered who the respondent's client was when H. Kamugunda and G. Katanywa were long dead. He criticised the trial Judge for separating the issue of opening the account in the names of H. Kamugunda and G. Katanywa from the issue of payment of the proceeds of the cheque. In counsel's view, these two issues were inseparable; the account was fraudulently opened in those names.

It was his contention that as the respondent gave no evidence, there was sufficient evidence on record to prove on the balance of probabilities the appellant's case.

$\overline{I}$

Mr. Kanyemibwa, learned counsel for the respondent, did not agree. He supported the trial Judge's decision. He pointed out first that certain matters were stated by Mr. Kakuru as facts when there was no evidence to support them. He listed those as:-

- $(1)$ That the cheque for $80,000,000/$ = payable to H. Kamugunda and G. Katanywa was part of the compensation to the payees. - $(2)$ That the appellant went to the Ministry of lands and was told that a cheque was issued to compensate H. Kamugunda and G. Katanywa. - That internal investigation of the respondent revealed that $(3)$ David Mukasa and another were responsible for the fraud in opening the account in the names of H. Kamugunda and G. Katanywa.

I agree with Mr. Kanyemibwa that the above facts were neither admitted nor was there any evidence to support them as it will be shown later in this judgement. Learned counsel pointed out further that Mr. Kakuru contended that since the respondent had admitted that it had collected the cheque and credited its proceeds on "Ham Kamugunda and G. Katanywa" account at its branch, the appellant only needed to prove that the said Ham Kamugunda and G. Katanywa were dead at the time of opening the account, then the evidential burden would shift to the respondent. The respondent would then have to prove that it was not negligent towards the appellant in permitting the opening and operating the account.

$\mathbf{A}_{\mathcal{A}}$

$\mathbf{1}$

Mr. Kanyemibwa submitted that that was not correct. The facts admitted by the respondent even together with the evidence adduced by PW1 and PW2 were not enough to shift the evidential burden to the respondent because the appellant had failed to prove his title to the cheque. There was no proof that the cheque was for compensating the people named therein. He stated that the appellant needed to adduce evidence to prove that the cheque was intended for Ham Kamugunda and G. Katanywa rather than for those persons who appeared at the respondent's premises and opened the account in those names. He submitted that there was no such evidence. Therefore, he concluded, the evidential burden could not shift to the respondent.

To appreciate the issues of dispute between the parties herein, it is necessary, as a starting point, to reproduce the relevant part of the pleadings. The appellant's cause of action was stated in paragraph 4 of the plaint as follows:-

$\mathsf{S}$

$(4)$ . The Plaintiff's cause of action against the two defendants is in tort of negligence, conversion and fraud and arose as follows:-

$\mathbf{1} = \mathbf{1}_{\mathbb{R}}$

- $(a)$ The Plaintiff's father H. Kamugunda owned land in Lake **Mburo National Park together with the late G. Katanywa.** The said land was taken over by Government. - On 23^rd December. 1996, a cheque No E003100764 for $(b)$ $80,000,000/$ = (Eighty million shillings) drawn on Bank of Uganda was issued payable to H. Kamugunda and G. **Katanywa being compensation for the above land.** (emphasis added). - H. Kamugunda and G. Katanywa being dead by the time, $(c)$ the second defendant converted the cheque and fraudulently obtained payment of the amount on the cheque through the first defendant which negligently allowed him to deposit the cheque with them and paid the proceeds to the second defendant. (emphasis added)

PARTICULARS OF FRAUD BY THE SECOND DEFENDANT (not relevant to this appeal).

#### Particulars of Negligence of the first defendant

Failing to verify the identity of the second defendant. $(i)$

## **Negligently allowing the second defendant to open an** $(ii)$ account in the names of the said H. Kamugunda and G. Katanywa.

It is important to point out here that the claim against the second defendant, David Mukasa, had been withdrawn. The suit proceeded only against the respondent whose response to the above pleadings went as follows:-

- $-3$ The first defendant at all material times had no knowledge of the matters alleged in paragraph 4 (a) and (b) of the plaint and are therefore not admitted. (emphasis added). - $\mathbf{4}_{\cdot}$ The first defendant admits that the cheque No. E003100764 for shs $80,000,000/$ = drawn on Bank of **Uganda payable to H. Kamugunda and G. Katanywa** was collected by the first defendant and the proceeds thereof placed to the credit of "Ham Kamugunda and" Godfrey Katanywa's account at the first defendant's branch at Kampala. - $5.$ The said cheque was collected by the first defendant in the ordinary course of business for its customers namely:-

Ham. Kamugunda and Godfrey Katanywa and the first defendant received payment thereof in good faith and

without negligence. The first defendant will rely on the protection of section 82 of the Bills of Exchange $Act$

#### Particulars.

$\ddot{\phantom{0}}$

- The said cheque appeared complete and regular on $(i)$ its face. There was nothing to put the first defendant on inquiry as to Ham Kamugunda and Godfrey Katanywa's title to the cheque. - The said Ham Kamugunda and Godfrey Katanywa (ii) were duly introduced to the first defendant by David **Mukasa a long standing customer of the first** defendant and their account was opened in a regular manner. - The said Ham Kamugunda and Godfrey Katanywa (iii) duly identified themselves to the first defendant and there was nothing to put the first defendant on notice that Ham Kamugunda and Godfrey Katanywa who appeared at the first defendant's premises and identified themselves as such had no title to the said cheque.

The said account was operated in accordance with $(iv)$ the mandate given to the first defendant by the said Ham Kamugunda and Godfrey Katanywa.

The above extract of the pleadings clearly shows the areas of dispute and agreement between the parties. The issues framed at the beginning of the hearing by the High Court were the following:-

- **Whether the Bank was negligent in opening a bank** $(1)$ account in the names of Ham Kamugunda and Godfrey Katanywa. - (2) Whether the Plaintiff is entitled to any remedies.

I would have expected the next issue after the first one above to have been:-

> "Whether Ham Kamugunda and Godfrey Katanywa (both deceased) rather than the persons who appeared at the first defendant's premises and opened the account in those names were entitled to the cheque."

This is so because the issue of title to the cheque was raised in paragraph 4 (b) of the of the Plaint and denied in paragraph 3 of the Written Satement of Defence. It, therefore, became an issue. In my view, this remained an issue even though it was not so framed.

Mr. Kakuru's main argument was that had the learned trial Judge properly evaluated the evidence before him, he would have found that the respondent had admitted some facts. He would also have found the evidence of PW1 and PW2 showing that H. Kamugunda and Godfrey Katanywa were long dead. The admitted facts plus the evidence, he argued, would have shifted the evidential burden to the respondent. Further, that since the respondent gave no evidence, the learned trial Judge should have found that the respondent was negligent.

With my utmost respect to Mr. Kakuru, I do not agree with that argument. Those admitted facts even together with the evidence of PW1 and PW2 are not sufficient to shift the evidential burden to the respondent. The principle that emerged from Col (RTD) Dr Besigye Kizza (supra), P. K. **Semwogerere (supra)** and followed in **James Mboijana (supra)** all cited to us by Mr. Kakuru himself is to the effect that before the evidential burden shifts to the respondent/defendant, the petitioner/plaintiff must first establish by evidence *prima facie* case in his/her favour. That meant in the instant case, that before the evidential burden could shift to the respondent, the appellant did not only have to prove that Ham Kamugunda and Godfrey Katanywa were dead at the time of opening the account in the respondent's bank in those names, as Mr. Kakuru would like us to believe. That is not enough. He had to establish by evidence, *prima facie* that the cheque was intended for his father Ham Kamugunda and Godfrey Katanywa. It is only then that the evidential burden would shift to the respondent to show that it did not act negligently towards the appellant, the owner, in dealing with the cheque.

My perusal of the record of the proceedings revealed that the admitted facts are:-

> "Defendant on or about 23/12/96 in its Kampala branch opened an account – current in the names of Kamugunda and Godfrey Katanywa and admitted a cheque No E.003100764 to the said account. Bank of Uganda cheque drawn in the names of Kamugunda and Godfrey Katanywa for shs $80,000,000$ was collected by the first defendant and credited to that account and was subsequently disbursed"

The gist of the evidence of PW1, Dawson Rujiji, is that he is the son in law of the late Ham Kamugunda who died in 1998. The said Kamugunda had three pieces of land near Lake Mburo. The lands were taken over by Government which had agreed to compensate the late Kamugunda for his said land. Its valuation was done. When the witness went for the money at the Ministry of Lands, they were told that their cheque was with Bank of Baroda. But when they checked with the Bank of Baroda, they were told that the cheque had been cashed.

Under cross-examination, the witness denied that he had any share on the land.

The gist of the evidence of PW2, Wilson Buyondo, is not much different from the above. He is the son of the late Ham Kamugunda who died long ago. The witness was granted letters of administration of the estate of his

$11$

late father by Mbarara court. A copy of the grant was tendered in court at the hearing and was marked Exh. P1. The witness stated:-

$\bullet \qquad \qquad \bullet$

"My father died at Mburo Nyabushozi. lam not there now. We left because Government evicted us. We were not compensated. We asked and were told our money was in the Bank. Bank of **Uganda people said it was in Bank of Baroda. We went to bank** of Baroda but that there was no money. We were told that the money had been paid to Kamugunda and Katanywa. Their (sic) people were long dead. That is why I am here".

Under cross examination by Mr. Kanyemibwa, the witness emphasised that Kamugunda was his father. He denied that he keeps money in the bank. He admitted that he saw some photographs but denied that he knew any of the people in the photos.

Clearly, the admitted facts even together with the evidence of PW1 and PW2, can not prove that Ham Kamugunda and Godfrey Katanywa rather than the persons who appeared at the respondent's bank and opened account there in those names were entitled to the cheque.

What the people of Bank of Uganda or Ministry of Lands told the two witnesses that their cheque was with Bank of Baroda was hearsay. It cannot prove that the cheque which admittedly, was collected by the respondent, had been for compensation intended for Ham Kamugunda and Godfrey Katanywa (the dead persons) rather than the persons who

appeard at the rceporder\*s Bank and opened the account in thce names.

The appellant having fdled to estaUish by evitence pr\*n frcie titb to the cfieque had fdled to establbh rnn lbcie case in his favour. ln that case, the evxlential furden could nd shaft to fie respondent to show ttat it a@d wifiotrt negligence brards the owner when it deatt with fie cfieque. ln disagreernent with my colleagues, I wonkl dismiss the appeal and uphold fie trial Judge's dismissal with costs to the resporde,nt l'lowever, by a mapty of two to one, the appeal is allotred on the tenns propGed by Byamugisln, JA

I}&d {l{rtpaled\*t

Day of M.

I /\l (t \-\!l{ \,r--.\--^---o G. M. OKELLO. JT'STICE OF AI'PE/IL.

# THE REPL]BLIC OF TIGANDA IN THE COTIRT OF APPEAL OPF TIGANDA AT KANIPALA

# CORAM: HON. JUSTICE G. M. OKELLO, JA. HON. JUSTICE S. G. ENGWAU,JA. HON. JUSTICE C. K. BYAMLIGISHA, JA.

## CIVIL APPEAL NO. 66 OF 2OO2

#### BETWEEN

# \\ Il.so\ rlt YoNt)o K.\\tt (;I \D \ ======= ,\t,Ptit.l.,,\\1-

#### ANT)

## BANK OF BARODA (U) LTD RESPONDENT

(Appeal from the judgement and orders olthe High Court at Kampala (Katutsi, J.) dated l4th May, 2002 in HCCS No. 1373 of 1998).

#### JT:DGSIEN'I OF HON. JtIS'TI(]E S. G. INGWAT]. JA.

I had the benefit of reading in draft the judgrnent of Byarnugisha, J. A and I entirely agree with it that this appeal be allowed with costs here and in the High Court.

I would like, however, to errphasise the following points: First, a Bank of Uganda cheque No. E 003100764 in the sum of Uganda shillings eighty rnillion was issued in the narnes of Harn Karnugunda and Codfiey Katanywa as beneficiaries. It was a Government cheque issued on 23'd Decernber, 1996.

Secondly, the respondent bank adrnits having collected that cheque from the Bank ofUganda and deposited the proceeds on the account ofits customers, Ham Karnugunda and Godfrey Katanywa, at its branch at Karmpala.

Thirdly, the said Harn Kamugunda and Godfrey Katanywa were duly introduced to the respondent by David Mukasa, a long standing custorner of the bank.

Fourthly, the said Ham Kamugunda and Godfrey Katanywa duly introduced themselves to the respondent which believed their title to the cheque.

{

I

l0

Finally, the said account was operated in accordance with the mandate given to the respondent by the said Ham Kamugunda and Godfrey Katanywa.

At the trial, the following issues were framed:

## 1. Whether the Bank was negligent in opening a bank account in the names of Ham Kamugunda and Godfrey Katanywa.

$10$

$20$

## 2. Whether the plaintiff is entitled to any remedies.

My understanding of the respondent's pleadings is that at the time it collected the cheque in question, Ham Kamuguinda and Godfrey Katanywa were not yet its customers in the real sense. In my view, the said Ham Kamugunda and Godfrey Katanywa became the respondent's customers only and only when the said account was opened in their names. That was done on their introduction by the said David Mukasa who was a mere long time customer of the respondent bank.

Taking into account the amount of money involved and considering the fact that the cheque was issued by the Government, the respondent should have been more careful on the matter. It should have demanded an introduction by a person in authority like an L. C. official or a chief from the area the said Ham Kamugunda and Godfrey Katanywa came from. An introduction by David Mukasa on the basis of his being a long time customer of the bank was not enough, in my view. It is not known how David Mukasa came to know the said Ham Kamugunda and Godfrey Katanywa. His introduction of the said Ham Kamugunda and Godfrey Katanywa, in my view, is suspect. The respondent cannot and should not benefit by the protection from the provisions of section 81 $(1)$ of the Bills of Exchange Act.

According to the evidence of the appellant, by the time the said account was opened, his father, Ham Kamugunda and Godfrey Katanywa were already dead. When he was shown photographs of the said Ham Kamugunda and Godfrey Katanywa, the appellant said that the photographs were of people he did not know. The respondent bank, however, admits that on 23.12.96 a current account was opened at its Kampala Branch in the names of Ham Kamugunda and Godfrey Katanywa for shs. 80,000,000. The Bank collected the said cheque, credited it to that account and subsequently disbursed the money.

$\overline{2}$

The evidence of both PW1 and PW2 is that the Uganda Government had paid that money in compensation of the pieces of land previously owned by the late Ham Kamugunda and the late Godfrey Katanywa. Government of Uganda had taken their land and made it part of Mburo National Park. PW 2 is the son and administrator of the estate of the late Ham Kamugunda. Clearly, the evidence of both PW1 and PW2 states the purpose for which the cheque was issued and the names of the people who had title to the cheque. It cannot be said their evidence was hearsay and inadmissible because they did not prove title to the The information which both PW1 and PW2 got from the money. Ministry of Lands and the Bank of Uganda was to the effect that the said cheque was issued in the names of Ham Kamugunda and Godfrey Katunywa for 80 million shillings which fact was admitted by the respondent bank.

The question of title to the money was not an issue at the trial. Both PW1 and PW2 testified that the cheque was issued in compensation of the land acquired by the Government of Uganda from both Ham Kamugunda and Godfrey Katnywa. If the respondent bank was of the view that those who opened the account and disbursed the money were the right owners 20 of the money then it was incumbent upon it to prove the negative. The burden of proof, at that stage, in my view, had shifted to the respondent to establish that they were not negligent in verifying the identities of Ham Kamugunda and Godfrey Katanywa and the opening of the said account. I would agree with counsel for the appellant that the trial judge was wrong to separate the opening of the account and payment of the cheque because the two are inseparable. The learned trial judge was also in error when he held that section 81 (1) of the Bills of Exchange Act applied. The appellant, in my view, had proved his case on the balance of probabilities. 30

In the result, I would agree with the reasons given by Byamuguisha, JA in her judgment and terms proposed by her. I would, therefore, allow this appeal with costs here and in the High Court to the appellant.

Dated at Kampala this ------------------- day of --------------- 2004.

Conquien Hon Justice S. G. Engwau **JUSTICE OF APPEAL.**

$\ddot{\cdot}$

$10$