[2024] UGCommC 298

**THE REPUBLIC OF UGANDA**

**IN THE HIGH COURT OF UGANDA AT KAMPALA**

**(COMMERCIAL DIVISION)**

**CIVIL SUIT NO. 555 OF 2018**

**CAIRO INTERNATIONAL BANK LTD ::::::::::::::::::::: PLAINTIFF**

**VERSUS**

**NASSER LUYIMBAZI :::::::::::::::::::::::: DEFENDANT**

**Before: Hon. Lady Justice Cornelia Kakooza Sabiiti**

**JUDGMENT**

1. **Introduction** 2. The plaintiff instituted this Civil Suit No. 555 of 2018 against the Defendant for recovery of Ug.shs. 139,500,000/= (Uganda Shillings One Hundred Thirty-Nine Million Five Hundred Thousand Shillings), interest, general damages for breach of contract, interest thereon at a commercial rate and costs of the suit. 3. It was the Plaintiff’s case that on 18th April 2018, the Defendant applied for and obtained a cheque discounting facility of Ug.shs. 37,100,000/= (Uganda Shillings Thirty-Seven Million One Hundred Thousand) against cheque Nos. 000369, 000370 and 000371 amounting to a total of Ug.shs. 53,000,000/= (Uganda Shillings Fifty-Three Million) from the Plaintiff. On 19th April 2018, the Defendant again applied for and obtained a cheque discounting facility of Ug.shs. 23,800,000 (Uganda Shillings Twenty-Three Million Eight Hundred Thousand) against cheque Nos. 000372 and 000373 amounting to a total of Ug.shs. 34,000,000 (Uganda Shillings Thirty-Four Million) from the Plaintiff. 4. On 20th April 2018, the Defendant further applied for and obtained another cheque discounting facility of Ug.shs. 36,750,000 (Uganda Shillings Thirty-Six Million Seven Hundred Fifty Thousand) against cheques Nos. 000375, 000376 and 000377 amounting to a total of Ug.shs. 52, 500,000 (Uganda Shillings Fifty-Two Million Five Hundred Thousand) from the Plaintiff. On the above dates, the Plaintiff credited the Defendant’s account with Ug.shs. 53,000,000, Ug.shs. 34,000,000/= and Ug.shs. 52,500,000/= which the Defendant withdrew on the respective dates. 5. The Plaintiff further claimed that upon its attempt to collect the above cheques drawn by MSJ retail shop & wholesale in favour of the Defendant, they were dishonored on grounds of insufficient funds. The Defendant was informed and asked to refund the above funds but they remained outstanding. When the Plaintiff conducted a search at the business names registry at the Uganda Registration Services Bureau, it discovered that MSJ retail Shop and wholesale is a registered business with the Defendant as its sole proprietor. 6. It was also the Plaintiff’s claim that the Defendant through fraud/deceit and/or misrepresentation acted dishonestly thereby causing financial loss which deeply inconvenienced the Plaintiff. The particulars of fraud/deceit and/or misrepresentation pleaded were; (a) the Defendant withholding information from the Plaintiff that he was the sole proprietor of MSJ retail shop and wholesale; (b) the Defendant knowingly withholding information from the Plaintiff that MSJ retail shop and wholesale’s account at Equity bank did not have sufficient funds to clear the cheques; and (c) the Defendant withdrawing a total of Ug.shs. 139,500,000/= well knowing that MSJ retail shop and wholesale account at Equity bank lacked the funds to clear the discounted cheques. 7. The Defendant filed a written statement and counterclaim. In his defence, he denied any liability to the Plaintiff. He admitted to having a banker-customer relationship with the Plaintiff for over 18 years and receiving Ug. Shs. 139,500,000/=on his account from the Plaintiff. However, in April 2018 his health condition started deteriorating, and in May 2018 he was diagnosed with diabetes which affected his business and his effort to discharge his obligations with the Plaintiff crippled. 8. Further that he informed the Plaintiff not to bank the cheques because he did not enough money to clear them. He averred that he approached the Plaintiff for a bank overdraft but was instead advised to apply for a cheque discounting facility and informed that in order to deal in such, he needed to either issue cheques in the name of a company or a business name. That it was within the knowledge of the Plaintiff that MSJ retail wholesale shop was a business name used by the Defendant and all the cheques in the cheque discounting facility issued in the business name which covered over Ug.shs. 700,000,000 (Uganda Shillings Seven Hundred Million), out of which only cheques in the value of Ug.shs. 139,500,000 (Uganda Shillings One Hundred Thirty-Nine Million Five Hundred have been questioned. At the Defendant’s request, the Plaintiff’s managing director changed the interest rates imposed on him because it was good business for the Defendant. 9. In addition, the Defendant denied breaching the contract because he gave the Plaintiff the options of treating the unpaid cheques as a loan or a surrender of properties by the Defendant in the value of the cheques. The Plaintiff chose to take the property which the Defendant surrendered including; motor vehicle cruiser TX UAY 702F japan, Toyota hiace van UAR 639E Japan, Toyota hiace van UAS 141S Japan, and a plot of land comprised in Block 466 Plot 432 busiro. That these properties were sufficient consideration for the value of the dishonored cheques and he discharged his obligation. 10. The Defendant denied fraud claims against him and pleaded fraud against the Plaintiff with particulars of; changing the position of the Defendant from applying for a bank draft to engaging in a cheque discounting facility without fully explaining everything pertaining to it as was required by the Bank of Uganda Consumer Guidelines; charging the Defendant exorbitant interest of Ug.shs. 500,000/= per Ug.shs. 50,000,000/= every day; receiving from the Defendant Ug.shs. 500,000/= to effect the transfer of land comprised in Block 446 Plot 432 Busiro; failure to avail a copy of the valuation report to the Defendant in respect of the properties handed over to discharge his obligation; and filing this suit well knowing that the Defendant discharged his obligations. 11. The Defendant also pleaded negligence against the Plaintiff with particulars of changing the Defendant’s position of using bank overdraft to a cheque discounting business which was unique to him and without explaining to the Defendant the product in a language he understood; failing to advise the Defendant as a consumer of the Plaintiff’s product accordingly; failing to advise the Defendant to seek independent legal advice before entering into the transaction; and paying cheques before maturity. 12. In his counter claim, he took issue with unconscionable interest of 1% per day which tantamounted to an illegal transaction and sought a declaration that the whole transaction was illegal; a declaration that the Counterclaimant was an illiterate and the transaction entered into was an illegality as it was never explained to him in a language he understood; a declaration that the terms and conditions of the transaction were never consented to by the Counter claimant as he was never advised to seek independent legal advise as per the laws governing financing of businesses in Uganda; a declaration that he stood discharged of any obligation to the Plaintiff. an order awarding him costs of the counterclaim to a tune of all the illegal payments as a result of the illegal rates. 13. In its reply to the written statement of defence and counterclaim, the Plaintiff maintained that the Defendant applied for the cheque discounting facility on several occasions and had breached the contract when he did not fulfil his obligation of settling the bank under the facility as agreed. The Defendant did not disclose at any one time that he was trading under MSJ retail and whole shop a fact, which was only discovered after the investigation. The alleged options were only an aftermath of the breach. The logbooks for vehicles UAR 639E and UAS 141S were rejected by the Plaintiff and returned to the Defendant because they were not registered in his name. The land title was also not registered in the Defendant’s name and at an appropriate time, it would be returned to the Defendant. The Plaintiff denied the allegations of fraud and negligence. 14. In answer to the counterclaim, the Plaintiff denied all the allegations therein and averred that the Counterclaimant entered into the Cheque discounting facility agreements without any duress and on his own volition. The product was a legal product with a clear policy governing its operations. The Counterclaimant had no claim whatsoever and was not entitled to any reliefs sought under the counterclaim. 15. **Issues** 16. The following issues were agreed upon for determination under the Joint Scheduling Memorandum adopted by the court: 1. Whether there was a valid contract between the Plaintiff and the Defendant. 2. Whether or not the Defendant breached the contract with the Plaintiff. 3. Whether the Defendant is indebted to the Plaintiff in the sum of Ug.shs. 139,500,000/=. 4. Whether the Plaintiff acted fraudulently in its dealings with the Defendant. 5. Whether the Plaintiff was negligent in its dealings with the Defendant. 6. Whether the Cheque Discounting Facility product was legal. 7. Whether the Plaintiff’s imposed daily interest of 1% is unconscionable? 8. What remedies are available to the parties. 17. **Witnesses** 18. Hearing was by witness statements in lieu of examination in chief and cross examination. The Plaintiff led evidence through PWI-Ms. Immaculate Komuhangi Irumba, its Chief Operations Officer. The Defendant’s witnesses were Mr. Bulamu Mayanja Nathan, who purchased M/V Reg No. UAY 702F from the Plaintiff as DW1, Mr. Hussein H. Sentamu, a former banker as DW2, Mr. Nsamba Abas Matovu, an advocate working with Abbas Advocates as DW3, and the Defendant as DW4. 19. **Representation** 20. The Plaintiff was represented by M/s. Tumusiime, Kabega & Co. Advocates and the Defendant was represented by M/s. Abbas Advocates.

e**) The Law and analysis of the Evidence**

1. The Plaintiff bears the burden to prove its allegations to the satisfaction of Court, if it is to succeed as provided for under section 101 of the Evidence Act. This burden is on a balance of probabilities. 2. PW1’s evidence recounted the monies disbursed to the Defendant against the cheque numbers on the various dates, the dishonour of the cheques due to insufficient funds, the notification of the dishonour to the Defendant, the discovery through investigation that MSJ retail shop and wholesale was a business registered with the Defendant as a sole proprietor, and the breach by the Defendant of his obligations under the transaction as averred in the Plaintiff’s pleadings. She reiterated that the Defendant’s alternative options to settle his obligations after the breach were two vehicles registration Nos. UAR 639E and UAS 141S plus the certificate of title which were rejected by the Plaintiff because they were not registered in the Defendant’s name. 3. Further that the Plaintiff was not privy to the transfer process of the properties to the Defendant and did not receive any money from the Defendant as alleged to effect transfer to the Defendant’s name. On several occasions, the Plaintiff called the Defendant to collect the said documents in vain. She continued that the facility was granted to the Defendant on the basis of his account history because he was a customer that deals in cheques and was previously collecting money from the Plaintiff. 4. Additionally, PW1’s evidence was that through deceit and /or misrepresentation, the Defendant acted dishonestly and caused financial loss and deep inconvenience to the Plaintiff. She recounted the particulars of fraud pleaded in the plaint and testified that upon scrutiny of several documents, it was discovered that a payment of Ug.shs. 48,169,924 (Uganda Shillings Forty-Eight Million One Hundred Sixty-Nine Thousand Nine Hundred Twenty-Four) was variously paid by the Defendant to the Plaintiff between 27th April 2018 and 30th June 2018 leaving an outstanding balance of Ug.shs. 91,330,076/= (Uganda Shillings Ninety-One Million Three Hundred Thirty Thousand Seventy-Six). The Plaintiff had formally demanded for the suit funds from the Defendant but was ignored. Through the Defendant’s unjustified actions, the Plaintiff had suffered from deprivation of these funds, financial stress and had been severely inconvenienced. 5. In cross examination, PW1 testified that she joined the Plaintiff bank in March 2019. The 25% interest was the going rate but she was not sure if it was the interest rate as part of the transaction. In PEX1, the Defendant’s cheque value was 53million but applied for 37million. This was an exceptional approval and he was given 100% of the cheque value. Exceptional approvals were given to a long standing creditor. They were not following the terms of the application. Exceptional approvals were based on lending of credit and bank account. The creditor had been accessing lending and paying back for over one year. In PE2, the Defendant applied for 23.8 million and was given 34 million. It was a 100% of the cheque and not 70% as per the note on the application. Local cheque was an UGX cheque, which the Defendant was paying and was supposed to be 70%. The total payment rate of the three cheques was Ug.shs. 139.5m and exceptional approvals were open to their customers. Therefore in this case, the Defendant benefited from the 30% additional amount. 6. Further that the clearing rules for cheques then was 4 working days from 18/4/2018. All the cheques were issued before 22nd April 2018. The Defendant took money on 18th, 19th and 20th April 2018. They assessed a customer based on credit lending term and before application was considered, they would do analysis. The Defendant was told to come and collect the certificate of title and logbook. First credit was 27th April 2018 with 500,000 then 2nd May 2018 he deposited one million. On 3rd May there was 10,019,924/=. On 8th May there is a deposit of 300,000. The deposits by the Defendant as shown in PE12 stop at 27,000,000/=. The deposit of 3rd May came from other facilities which he had in the bank on one of his accounts and was transferred to settle this loan. 7. Additionally, she was not sure whether the Defendant had authorized the transfer of these funds. She explained that the bank earned a commission on the cheques in the transaction through withdrawals for example where the total amount of the cheques were Ug.shs. 53,000,000/=, the Defendant in PEX 15(b), the withdrawal slip, asked for Ug.shs. 52,720,000/= to cater for the commission. It was a tariff guide that was running in 2018 because that was the withdrawal plus commission of the bank for the facility. The Defendant was aware of this charge because he was using the facility for a long time and those were standard charges. If he had any issue, he would have complained. She was not aware that a bank official called Kabuye inspected the land with the Defendant and that the Defendant paid money for valuation. The debit charge of Ug.shs. 1,350,000/=on PE12 was a percentage of the 27 million they collected and was paid to the debt collectors. They instructed debt collectors who received the 27 million from the Defendant and they brought it to the bank. 8. In re-examination, it was PW1’s evidence that the 10 million came from other accounts that the Defendant had with the bank. In answering questions from the court, PW1 maintained that the Defendant applied for a discounting facility and Uncleared effects was the same as the discounting facility. The bank would give effects which are not yet cleared for utilization and at maturity recover plus the commission. It was more common during the clearing rules then because it took four days. Now they have automated clearing house so people no longer use that facility because it clears the next day. The Defendant had one personal account and also had two temporary overdrafts. They were not being operated on this account but when they were closing the accounts, they just transferred and closed them when they were doing the write off because when he defaulted, he even abandoned the other ones. 9. Further that at that time, the Defendant had a personal current account, temporary overdraft 1, temporary overdraft 2 and a secured loan account which he paid off at the time. The transaction for a mortgage was not completed because the titles were not in the Defendant’s names. 10. It was DW1’s evidence that he was the registered owner of motor vehicle Reg No. UAY 702F, a Toyota Prado Land Cruiser TX black in colour since 14th September 2022. He was in possession of the same since 29th June 2018, after purchasing the vehicle at Ug.shs. 27,000,000/= (Uganda Shillings Twenty-Seven Million) from the Plaintiff who was represented by Mugisha James T/A Kamu Auctioneers and Court Bailiffs. He learnt of the sale through a one Ayet, the Chief Security guard at Greenland Towers, a building which housed both the Plaintiff and M/s. Pearl Advocates & Solicitors, his law firm. 11. Prior to purchasing the vehicle, he carried out due diligence from the Plaintiff and the Defendant and established that the Defendant had defaulted on payment of monies disbursed to him under a cheque purchase product from the Plaintiff and surrendered the vehicle in issue in satisfaction of his loan/debt obligation. The Plaintiff appointed Mugisha James T/A Kanu Auctioneers and Court Bailiffs as its agent to negotiate and sale the vehicle for purposes of using the proceeds to satisfy the Defendant’s outstanding obligations. He kept making different offers which were rejected for being below the valuation report that the Plaintiff had until he realized Ug.shs. 27,000,000/=, which as a customer of the Plaintiff himself was deducted from his account on his orders. He executed a sale agreement dated 29th June 2018 with the Plaintiff through its agent Mugisha James witnessed by Mutyaba Crammer and Claire Akampulira, an advocate of the High Court and Head Legal department of the Plaintiff. 12. During cross examination, DW1 reiterated that during due diligence, he was informed by the Plaintiff that the Defendant had defaulted the payment of money advanced to him under a cheque purchase product from the Plaintiff and had surrendered the subject vehicle to the Plaintiff. He confirmed that that upon the advise of Ms. Claire Akampurira, the Manager Legal of the Plaintiff, he paid the money onto the Defendant’s account. DW1 was not re-examined. 13. DW2’s testimony was that he was a banker for 15 years and served in different capacities including teller, credit officer, credit manager, senior credit manager, credit operations manager, senior relationship manager, credit evaluations, and head of credit among others in several banks including DFCU, Housing Finance and Tropical Bank. He left the banking sector in 2020 and was approached by the Defendant to assist him interpret two bank statements, indicated to be from the Plaintiff where he had been a customer holding account No. 1/7867/101/1/1 for more than 10 years. He was also asked to interpret the documents dated 18th , 19th and 20th April 2018 in relation to his bank statements. The statement dated 15th April 2019 was given to the Defendant as a customer and the other dated 1st November 2019 was served on M/s. Abbas Advocates, his lawyers. 14. Further that the Defendant informed him that his intention of analysing the said documents was that being an illiterate, he suspected the bank of wanting to cheat him because it had instituted this suit to recover monies he had already paid. Upon scrutinising the bank statements, he observed that the forms dated 18th, 19th, and 20th April 2018 indicated that the Defendant was offered only 70% of what he applied for and was not to get the whole amount indicated in the cheques; the bank statement served on the Defendant’s lawyers indicated that the Defendant was operating four bank accounts to wit 01/7867/101/1/1, 01/7867/302/1/1, 01/7867/311/1/1 and 01/7867/311/1/1 and upon informing the Defendant about the same, he insisted that he only opened one bank account to wit 01/7867/101/1/1 and had never signed or consented to open any other bank account with the Plaintiff. 15. From the statements and cheques issued by the Defendant, it appeared the Plaintiff paid the subsequent cheques with full knowledge that the 1st cheques were dishonoured which was unusual in the banking sector. Some transactions were carried out by the bank on the Defendant’s known account without clear explanations and one could not tell where the money came from or where it went. For example transfers dated 9th May 2018, 31st May 2018, 19th June 2018, and 2nd July 2018 on the Defendant’s trial bundle at page 42 yet they were affecting the Defendants balances especially what was owing to the Plaintiff. He noticed that the Defendant made deposits and other monies were paid to his known accounts which appear not to have been withdrawn by the Defendant for instance dated 2nd, 3rd, 4th, 8th, 16th May 2018 and 30th June 2018. 16. In addition, he noticed that from the statements, interest was being charged against the Defendant. There were transactions which increased the Defendant’s liability but who took the money and where it came from was not indicated for example the transactions dated 30th April 2018 and 9th May 2018 involving Ug.shs. 16,328,328, Ug.shs. 7,200,000/=, Ug.shs, 90,713/=. Banks allowed opening and operating bank accounts under business names and he found it irregular and unusual that Defendant was not given a key fact document on which there is full disclosure of all the key facts pertaining to the facility and a facility offer letter/loan agreement. 17. His evidence during cross examination was that Tropical bank was the last bank he worked in and was dismissed allegedly for causing financial loss in regards to a bank guarantee. He had filed a case to challenge the dismissal but he did not know in which court, and the case number. He studied Bachelor of Science in quantitative Economics from Makerere University but had no training in banking law. He did several courses at the institute of Bankers and also attended course in the system management in the INCOSIS India for about six months. He did not state the same in his statement but had the certificates with him at home. He did not attempt to visit the Plaintiff in regard to the statement because he deemed it unnecessary. He had known the Defendant for close to a year and he could not sustain a conversation in English for even two minutes, and that is why he called him illiterate. 18. He confirmed that DE6 at page 10 of the Defendant’s trial bundle was a letter in English authored and signed by the Defendant. DE7 at page 11 was a letter written in English by the Defendant. DE8 was also a letter written in English by the Defendant and in light of the letters written by the Defendant, he would not maintain his evidence that the Defendant was illiterate and he withdrew the same. He did not ask the bank or the Defendant for the documents that were not given to him. The Defendant told him that MSJ was a supermarket. 19. In answering court, DW2 stated that he did not give the Defendant a written document of his opinion after looking at the statement and he did not have any such document. He gave his opinion as a former banker. 20. DW3’s evidence was that around April 2018, he was instructed by the Defendant to advise and/or defend him of bounced cheques. He was informed by the Defendant about his proposal to the Plaintiff to treat the outstanding balance as a loan in a letter dated 25th April 2018, and the objection of the Plaintiff to the same on grounds that their arrangement was not a loan. When DW3 engaged the Plaintiff’s officials about the proposal, it was still turned down because the facility consumed by the Defendant had its own arrangement and could not be turned into a loan. Thereafter, the Defendant instructed him to negotiate on the line of handing over property to discharge his obligations. 21. He engaged the Plaintiff’s Managing Director and it was agreed that the property be valued before handover. After handover, he continued requesting for a valuation report in vain despite raising the issue formally in a letter dated 18th July 2018. From 24th April 2018 when the Defendant was informed of the bounced cheques, he made several deposits with the aim of reducing his debt. By the time the Defendant handed over his properties, the debt had reduced and later, the Defendant was discharged. The sum claimed by the Plaintiff in its pleadings was not the actual figure received by the Defendant since he was to receive 70% of the value on local cheques because they were from Equity bank. The Plaintiff’s claims only amounted to fraud and unjust enrichment since the Defendant discharged his obligations with the Plaintiff. The Plaintiff’s claim was from an illegal product and this court should not allow it to stand. 22. In cross examination, DW3’s testimony was that he was not the one that received instructions from the Defendant and DW3 did not look at the cheques earlier issued by the Defendant. The Defendant informed him that he issued cheques to the bank valued at Ug. shs. 139,500,000/= and they bounced but DW3 did not ask why. At the time of proposing the arrangement to be treated as a loan, the outstanding balance was Ug.shs. 139,500,000/=and the Defendant proposed that the said amount is turned into a loan. He confirmed that the Defendant was informed of the bounced cheques and subsequently made some deposits. He did not come across any document discharging a loan to the Defendant. 23. Further that he was part of the lawyers who drafted pleadings in this matter. He did not offer any evidence with regard to the allegations of fraud. The letters at pages 10 to 12 of the Defendant’s trial bundle to Plaintiff’s officials were written in English and they were produced by the Defendant. In re-examination, he stated that his colleague Peter Kawuzi received the instructions from the Defendant and could not confirm whether it was the Defendant who wrote the letters in issue and the circumstances under which they were signed by him. 24. DW4’s evidence was that he was an illiterate and had been a customer of the bank for over 10 years operating a savings account. On or around 2018, he went to the Plaintiff’s offices at Greenland Towers where he met an official of the Plaintiff who introduced himself as Kabuye working in the credit department. DW4 informed him that he wanted to apply to the Plaintiff for a bank loan to boost his business and Kabuye told him that he would need good security which he did not have at the time. Thereafter, he convinced DW4 to enter into a certain arrangement with the Plaintiff where he could withdraw money from the account and issue post-dated cheques to the Plaintiff in repayment of the same. 25. Further that he was diverted from the loan system he understood to a completely strange procedure but since he was in dire need of funds for his business, he decided to go along with what the Plaintiff’s officials advised, and started withdrawing money from account No. 7867 and issuing cheques to repay the same. The bank officials simply showed him places to append his signature but no document was explained to him in Luganda and he was not accorded a chance to obtain independent legal advice before signing on all the documents. Whenever he went to pick money, Kabuye who was keeping his cheque book would fill in some papers, show him where to sign to which he would comply, take them inside and later come back with money less than what DW4 anticipated with claims that the amount he was given was the percentage he was supposed to get regarding the cheques issued. 26. Additionally, that the interest rate of 1% per day on every 50,000,000/= that was levied on him was too high which negatively affected his business registered as MSJ retail shop & Wholesale. Later he requested that the exorbitant interest be reduced and the Managing Director of the Plaintiff wrote a note on his letter at page 10 of the Defendant’s trial bundle granting his request. Owing to the dishonest actions of the Plaintiff’s officials and the high interest rate, his business suffered financial distress and eventually collapsed. Around 24th April 2018, the Plaintiff informed him that his cheques had bounced and Ug.shs. 139,500,000/- was due and owing. Through his lawyers especially DW3, he started negotiations with the Plaintiff, and on 25th April 2018, he wrote a letter to the Plaintiff requesting that the outstanding balance be turned into a loan which was rejected by the Plaintiff. After 24th April 2018, he made several deposits in order to reduce the amount owing. 27. While the Plaintiff was considering receiving his motor vehicle Reg No. UAY 702F TX in lieu of the outstanding sums, he took the said vehicle to the Plaintiff’s premises where Mr. Kasasira Abraham one of the Plaintiff’s officials came with a mechanic who checked it to determine its condition. The Plaintiff later received the vehicle at Greenland Towers where he handed over the keys to the Plaintiff’s Managing Director, signed transfer forms, handed in a copy of his national identity card as well as Ug.shs. 500,000/= for purposes of transferring the vehicle. On 26th April 2018, he handed over to the Plaintiff’s officials the certificate of title to land comprised in Block 466 Plot 432 located at Maya in Mpigi district together with two sets of transfer forms, one signed by the representatives of the estate which sold the land to DW4 because he had not transferred it to himself and the other set was signed by himself. 28. The Plaintiff’s officials including a person introduced as a valuer and Kabuye carried out due diligence to confirm that he owned the land. On the day after the site visit, the Valuer and Kabuye asked him for Ug.shs. 250,000/= for a search and Ug.shs. 1,500,000 for valuation of motor vehicle UAY 702F which he paid in cash. DW3 asked for the valuation report but the Plaintiff refused saying that since it was not a loan, it was for internal purposes only. The Plaintiff could not claim the sums in the plaint because it took his properties and he did not take the full sums as indicated on the cheques. He did not owe the amounts claimed and the Plaintiff’s action only amounted to unjust enrichment. 29. His evidence in cross examination was that he had dealt with the Plaintiff for over 10 years and he used to get money for post-dated cheques issued. He was the owner of cheques PE1, PE2 and PE3 which were issued by Kabuye and was holding a savings account No. 7867 in the Plaintiff bank. He confirmed that he would issue cheques to repay the money he withdrew from the bank. He maintained that Kabuye kept his cheque book and was the one who used to sign for the money. He later admitted that he was the one signing. He did not tell his lawyers that it was Kabuye who signed the cheques and upon his instructions to Mr. Peter Kawuzi to negotiate with the Plaintiff, he went with DW3. He recalled writing to the bank in regards to this money and availing his lawyers with these letters. He confirmed writing the letters on pages 10, 11 and 12 of his trial bundle and signing an application to register MSJ retail shop and wholesale. 30. In re-examination, he maintained that it was Kabuye who was in custody of the cheque book and who wrote the application for the facility. He confirmed that he was the one who wrote the letters on page 10, 11, and 12 of the Defendant’s trial bundle and insisted that he paid all the outstanding monies he had with the Plaintiff. 31. In answering questions from court, he stated that he paid the money in cash. He first deposited on his account No . 7867 11 million and he again put 50 million. They sold his car plus the land. In addition, a valuation report was done but they refused to give it to his lawyer and they do not know how much the car was sold. The land was still in the names of the estate which sold to him the land. The car was not sold for Ug.shs. 27 million, it costed 60 million because it was a new land cruiser.

**Issue one- Whether the Defendant breached the contract with the Plaintiff.**

1. In his written submissions, the Defendant raised a preliminary point to the effect that whereas the Plaintiff’s claim in the plaint was recovery of Ug.shs. 139,500,000/=, its evidence and submission was for Ug.shs. 91,330,076/=, a departure from its pleadings contrary to Order 6 rule 7 of the Civil Procedure Rules. Further that the Plaintiff had failed to adduce evidence in support of its claim filed in court and as such, court should not allow the Plaintiff to succeed on a case not pleaded. 2. The Defendant correctly cited the law as provided in Order 6 rule 7 and the decided cases prohibiting departure from pleadings by parties. However, in the case of **Kitaka Peter & 12 Others v. Mohamood Thobani** **Civil Appeal No. 20 of 2021**, the court held that *“there is some jurisprudence to the effect that where a departure from pleadings is revealed in the course of the trial and both parties submit on unpleaded points, then it is proper to deal with such an irregularity while dealing with one of the issues framed.”* 3. In the case of **Lukyamuzi versus House & Tenants Agencies Ltd (1983) HCB 74,** the court held that “*Where there is a departure in one’s pleadings one of the possible remedies is to apply to the court to have the offending part of the pleading struck out either before or at the hearing, this can be done especially where the inconsistency is contained in a reply before the pleadings are closed. The position is, however, a little bit different where the inconsistency is revealed in the course of the hearing of the case as it was in the instant case. In the present situation, it would have been impractical to adopt the above procedure because striking out the offending part of the pleading would have meant striking out the evidence of the only witness called by the defence. In such a case, it would be proper to deal with such irregularity while dealing with one of the issues framed by the parties.”* See also **Ajok Agnes versus Centenary Rural Development Bank Ltd HCCS No. 722 of 2014**. 4. The claim of Ug.shs. 91,330,076/=, was introduced by PW1 in her evidence in chief by stating that upon further scrutiny of the documents, it was discovered that the Defendant had made a payment of Ug.sh. 48,169,924/= to the Plaintiff between 27th April 2018 to 30th June 2018 leaving a balance of Ug.shs. 91,330,076/=. The Defendant’s counsel cross examined PW1 on this matter and submitted on her evidence. Therefore, following the above cited authority, this court can deal with the question of the extent of Defendant’s indebtedness to the Plaintiff if any. In addition, the Defendant’s cause of action did not change, rather what changed was the extent of the Defendant’s liability, which is the crux of this suit. It is therefore imperative that this court conclusively determines this matter on merit in the interest of justice. Therefore, the Defendant’s preliminary objection is overruled. 5. In the Plaintiff’s submission in rejoinder, it raised a preliminary matter to the effect that while this court ordered the Defendant to file his submissions by 7th August 2023, he filed the same on 21st August 2023 without any explanation for the delay in filing. The Plaintiff prayed that the court dismisses his defence and counterclaim with costs for the breach. It is true that the Defendant’s submission were filed 14 days later than when they were meant to be filed, reason for which rule 7 of the The Constitution (Commercial Court) (Practice) Directions applies. However, under the said rule, the discretion lies with the Judge on how to deal with the non-compliance. In exercising this discretion, I am overruling the objection by the Plaintiff in order to determine this matter on its merits, considering the fact that the breach of the directive was only for 14 days. 6. **Section 10 (1) of The Contract Act No. 7 of 2010 of the Laws of Uganda** defines a contract as an agreement made with the free consent of the parties with capacity to contract for a lawful consideration and with a lawful object, with the intention to be legally bound. This position is further expanded in the case of **J. K Patel v Spear Motors Limited SCCA No 4 of 1991** and **Blackstone's Law Dictionary (8th Edition)** where a contract is defined as being a legally binding agreement made by two or more parties or a promise or a set of promises the breach of which would under the law results into a remedy being granted and the performance of which the law recognizes as an obligation. 7. The evidence before court is that the Defendant applied for and obtained a cheque discounting facility totalling to Ug.shs. 139,500,000/= on various dates, and withdrew the same, less the amounts meant to cater for the withdrawal and commission of the bank. In consideration of the said monies, the Plaintiff was to recover the same upon maturity of PE1, PE2 and PE3 being cheques issued by MSJ retail shop & wholesale in Equity bank. This arrangement constituted a contract between the parties. 8. In **Ronald Kasibante vs. Shell Uganda Ltd HCCS No. 542 of 2006 [2008] ULR 690,** the court definedbreach of contract as *“the breaking of the obligation which a contract imposes which confers a right of action for damages on the injured party. It entitles him to treat the contract as discharged if the other Party renounces the contract or makes the performance impossible or substantially fails to perform his promise; the victim is left suing for damages, treating the contract as discharged or seeking a discretionary remedy.”* 9. The evidence adduced proved that MSJ retail shop and wholesale which issued the cheques was a business name used by the Defendant to trade. This was a fact admitted by the Defendant. The cheques admitted as PE1, PE2 and PE3 were dishonoured due to insufficient funds as proved by PE5 at page 11 of the Plaintiff’s trial bundle and DE7 at page 11 of the Defendant’s trial bundle. Having issued the said cheques under his business name, the Defendant had an obligation to ensure that there were sufficient funds, since they were the consideration provided for the monies advanced to him by the Plaintiff. Because he failed to perform the said obligation and the cheques were dishonoured, the Defendant was in breach of the contract he had with the Plaintiff. Issue one is resolved in the affirmative.

**Issue two -Whether the Defendant is indebted to the Plaintiff in the sum of Ug.shs. 91, 330,076/=**

1. It is not in dispute that by way of a cheque discounting facility, the Plaintiff extended to the Defendant Ug.shs. 139,500,000 which it was to recover upon maturity of PE1, PE2 and PE3. The said cheques were dishonoured due to insufficient funds, the Defendant was notified of the same and was asked to clear the balance. In the plaint, the Plaintiff sought recovery of Ug.shs. 139,500,000/=. However, it was the evidence of PW1 that after reconciliations, they realised that between 27th April 2018 and 30th June 2018, some deposits were made leaving an outstanding balance of Ug.shs. 91,330,076. 2. In sum, the Defendant’s case was that he does not owe the Plaintiff any money. Upon receipt of the notification, he engaged the Plaintiff who allowed to receive his properties in final settlement of his obligations in addition to other deposits earlier made and that the Plaintiff is estopped by its conduct from backtracking its decision of receiving the Defendant’s properties in satisfaction of his liability. 3. To this end, it is important to determine whether the properties in issue were applied by the Plaintiff to settle the Defendant’s liability. With the exception of DW2, all the other witnesses in this case gave evidence pertaining to either one or all the properties. PW1’s evidence was that as a way of settling his liability, the Defendant handed over to the Plaintiff a certificate of title to land comprised in Block 466 Plot 432 adduced in evidence as PE10 and three logbooks to vehicles UAS 141S, UAF 702F and UAR639E adduced in evidence as PE11. This was corroborated by the evidence of DW3 and DW4. 4. However, it was PW1’s evidence that the Plaintiff rejected two of the logbooks and the Certificate of Title for the land because they were not registered in the Defendant’s names. The Defendant’s evidence was that he also handed over motor vehicle registration No. UAY 702F to the Plaintiff, which was sold off without a valuation report being availed to him. DW1’s evidence was that he bought motor vehicle Reg. No. UAY 702F at Ug.shs. 27,000,000/= from the Plaintiff through its agent Mugisha James T/a Kamu Auctioneers and Court Bailiffs. Further that he kept making different offers which were rejected because they were below the valuation report. Additionally, that he had an account with the Plaintiff who asked him to transfer the purchase money to the Defendant’s account. Indeed, PE12 shows that on 30th June 2018, the Defendant’s account was credited with Ug.shs. 27,000,000/= from account 501129/501. PW1 also confirmed that an agent instructed by the Plaintiff recovered Ug.shs, 27million from the Defendant. 5. On 5th September 2022, the court directed that a search on all the properties given to the Plaintiff by the Defendant be conducted to ascertain ownership and registration. On 21st February 2023, Counsel Bright Kamusiime appearing for the Defendant informed court that UAS 141S was on 10th November 2022 registered in the names of Moses Tugumisrize, UAR 639E was on 18th February 2013 registered in the names of DeusTumusime, UAY 702F registered in the names of Nathan Mayanja Bulamu on 14th September 2022. It was further established that TX M/V UAY 702F was sold by the Plaintiff representative by a bailiff on 29th June 2018 to Bulamu Mayanja Nathan who made a witness statement to the Defendant. The land was registered under millennium Estate Developers on 7th September 2016. 6. On 6th September 2022, this court ordered that the certificate of title for Block 466 Plot 432 be deposited with the Deputy Registrar of the Commercial Division. The log books and the receipts from Ibraheem Auto (U) Ltd showing purchase of the vehicles in issue were attached to PE14. All this proves that with the exception of M/V UAY 702F, all the other properties were not sold by the Plaintiff. 7. The cheque value in PE1 was for Ug. shs. 52,000,000/=, PE2’s value was for Ug.shs. 34,000,000/=, and PE3’s value was for Ug.shs. 52,500,000/= which total to Ug.shs. 139,500,000/=. According to PW1, the Defendant was approved for 100% of the cheque values because he was a long standing customer and all the monies were credited on the Defendant’s accounts. PE4, the account statement of the Defendant dated 10th May 2018 shows that on 18th April 2018, the same date as PE1, the Plaintiff’s account was credited with cheques of Ug.shs. 18,000,000/=, 18,000,000/=, and 17,000,000/=, amounts which correspond with cheque Nos. 000370, 000371 and 000373 in PE1. PE15(b) a cash withdraw slip shows that on that very day, the Defendant withdrew Ug.shs. 52,720,000 with the difference being for commission and withdrawal as explained by PW1’s evidence. This withdrawal is reflected on PE4 together with the charges of Ug.shs. 280,000/=. 8. PE4 also shows that on 19th April 2018, Cheques Coll. Of Ug.shs. 17,000,000/= and Ug.shs. 17,000,000/= was credited on the Defendant’s account. On the same day, the Defendant withdrew Ug.shs. 33,810,000/= with the charges of Ug.shs, 180,000/=. This is corroborated by PE15(c), the withdrawal slip. Further PE4 shows that on 20th April 2018, the Defendant’s account was credited with cheques Coll of Ug.shs. 17,500,000, 17,500,000; and 17,500,000/=. On the same day, the Defendant withdrew Ug.shs. 52,220,000/= and Ug.shs. 277.500 was the cheque charges. This is corroborated by PE15(a). This proves that a total of Ug.shs.139,500,000/= was paid by the Plaintiff to the Defendant. It is noteworthy that all the applications for the facility in PE1, PE2 and PE3 all instruct the Plaintiff to debit account No. 7867 for commission of the transaction. 9. While the above monies were credited on the account of the Defendant who withdrew the same, PE12 shows that the Defendant’s account was credited with Ug.shs, 500,000/=on 27th April 2018, Ug.shs. 1,000,000/= on 2nd May 2018, Ug.shs. 10,019,924 on 3rd May 2018, Ug.shs. 300,000/= on 4th May 2018, Ug.shs. 250,000/= on 8th May 2018, Ug.shs. 50,000/= on 9th May 2018, Ug.shsh. 50,000/= on 11th May 2018, Ug.shs. 50,000/= on 14th May 2018, Ug.shs. 500,000/= on 15th May 2018, Ug.shs. 9,000,000/= on 16th May 2018, and Ugs.shs. 27,000,000/= on 30th May 2018 which totals to Ug.shs.48,719,924/= (Uganda Shillings Forty Eight Million Seven Hundred Nineteen Thousand Nine Hundred Twenty Four). When you subtract that figure from Ug.shs. 139,500,000/=, the balance is Ug.shs. 90,780,076 (Uganda Shillings Ninety Million Seven Hundred Eighty Thousand Seventy-Six) as the balance owed to by the Defendant to the Plaintiff. 10. The submission by the Defendant that his right to a fair hearing was violated by the change in the amount claimed is baseless because the Defendant cross-examined PW1 on her evidence, had opportunity to adduce his own evidence to discredit that evidence and also filed written submissions on this matter. 11. According to section 114 of The Evidence Act, when one person has, by his or her declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon that belief, neither he or she nor his or her representative shall be allowed, in any suit or proceeding between himself or herself and that person or his or her representative, to deny the truth of that thing. The Plaintiff never denied receiving properties from the Defendant in satisfaction of his obligations. However, as proved by the evidence, only one was sold by the Plaintiff. The principle of estoppel does not apply to these facts in my view. Therefore, based on the evidence on record, I have found that the Defendant owes the Plaintiff Ug.shs. 90,780,076.

**Issue three- Whether the Plaintiff acted fraudulently in its dealings with the Defendant**

1. The Defendant faults the Plaintiff for persuading him through his agents to change from applying for an overdraft to a strange arrangement of cheque discounting facility, making him to sign documents in English without explaining to him in a language he understood and without according him a chance or advising him to seek independent legal advice. Further that the Plaintiff did not deny a one Kabuye and that he was filing all the forms/cheques for the Defendant who was only called to sign. He also faulted the Plaintiff for charging him exorbitant interest as evidenced by DEX6, and selling his properties before instituting the current civil suit. 2. In addition, PE1 to PE3 were faulted for contravening paragraph 2(b) of the general requirements/obligations of the financial services provider under Bank of Uganda Financial Consumer Protection Guidelines, 2011 which requires a service provider to provide the consumer with key facts document for the product or service informing them of the applicable charges, fees, or additional interest. The Defendant submitted that Plaintiff did not comply with these guidelines with an intention to cheat him because he was an illiterate. 3. In reply, the Plaintiff relied on **Commercial Court Consolidated** **Civil Suits Nos. 464 of 2018 and 36 of 2019 Haruna Sentongo v. Orient Bank Ltd** and submitted that the guidelines do not have the force of the law and consequently their breach is not a basis of a cause of action. Further that the submission that the Defendant was an illiterate was false because he confirmed during cross examination that he would issue cheques to the bank to repay the money he withdrew. He also confirmed that he signed the applications for the cheque discounting facilities and the corresponding cheques and DW2 withdrew his evidence that the Defendant was an illiterate after seeing the letters authored by him. 4. In **Fredrick J. K. Zaabwe v. Orient Bank Ltd and 5 others Supreme Court Civil Appeal No. 4 of 2006**, Katureebe JSC had this to say at P14 of his judgment.

*“In my view, an allegation of fraud needs to be fully and carefully inquired into. Fraud is a serious matter, particularly where it is alleged that a person lost his property as a result of fraud committed upon him by others. In this case it was necessary to ask the following questions; was any fraud committed upon the appellant? Who committed the fraud, if at all? Were the respondents singly or collectively involved in the fraud, or did they become aware of the fraud? I find the definition of fraud in BLACK’S LAW DICTIONARY 6TH Edition page 660, very illustrative.*

*“An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. A false representation of a matter of fact, whether by words or by concealment of that which deceives and is intended to deceive another so that he shall act upon it to his legal injury. Anything calculated to deceive, whether it is by a single act or combination, or by suppression of truth, or suggest ion of what is false, whether it is by direct falsehood or innuendo by speech or silence, word of mouth, or look or gesture........... A generic term, embracing all multifarious, means which human ingenuity can devise, and which are resorted to by one individual to get advantage over another by false suggestions or by suppression of truth and any unfair way by which another is cheated, dissembling, and any unfair way by which another is cheated. “Bad faith and “fraud” are synonymous, and also synonymous of dishonesty, infidelity, faithlessness, perfidy, unfairness, etc.*

*......................*

*As distinguished from negligence, it is always positive, intentional. It comprises all acts, omissions and concealments involving a breach of a legal or equitable duty and resulting in damage to another. And includes anything calculated to deceive, whether it be a single act or combination of circumstances, whether the suppression of truth or the suggestion of what is false whether it be by direct falsehoods or by innuendo, by speech or by silence, by word of mouth or by look or gesture....”*

1. In **Mpungu & Sons Transporters Ltd v. Attorney General & Anor SCCA No17 of 2001,** it was held that *“this court further elucidated upon the proof of fraud in FAM International Limited -Vs- Mohamed Hamid El Fatih (Civil Appeal No. 16 of 1993). (supra) in which Odoki, JSC, (as he then was) stated thus: It seems to me that while the statement quoted from Halburys Laws of England (Supra) represents the law on the standard of proof in fraud cases in general terms, it does not go far enough to emphasise that in fraud cases the standard is more than a mere balance of probabilities though less than proof beyond reasonable doubt…."* 2. On the issue of illiteracy, it was the Defendant’s evidence that he was an illiterate and that the bank officials only showed him where to sign without explaining the documents in Luganda. It was also DW2’s evidence that the Defendant was an illiterate who struggled to hold a conversation in English. However, the Defendant confirmed writing and signing letters in English to the Plaintiff’s officials which were exhibited as DE6, DE7 and DE8 at pages 10 to 12 of the Defendant’s trial bundle. When DW2 was shown these letters in cross examination, he withdrew his evidence about the illiteracy of the Defendant, who also confirmed signing the application to register his business name, pursuant to which a certificate of registration exhibited as PE8 was issued. 3. Section 1(b) of the **Illiterates Protection Act Cap 78** defines an illiterate to mean, in relation to any [document](https://ulii.org/akn/ug/act/ord/1918/9/eng%402000-12-31#defn-term-document), a person who is unable to read and understand the script or language in which the [document](https://ulii.org/akn/ug/act/ord/1918/9/eng%402000-12-31#defn-term-document) is written or printed. Ordinarily, bank documents in Uganda are in English as was in the transactions in issue. The evidence summarized in the paragraph above proved that DW4 was able to read and understand a document in English, reason for which he authored DE6, DE7 and DE8. This negated his allegation of being an illiterate and I am therefore unable to fault the Plaintiff in fraud on this ground. 4. In the case of **MTN Two One Two Staff Cooperative And Credit Society Limited v. Samuel Majwega Musoke HCCS No. 0082 of 2021**, the court held that *“since the purpose of independent legal advice is to ensure that the borrower obtains a full and frank understanding of the risks and obligations associated with taking on the loan, mortgage or other facility, save for those situations where independent legal advice is mandatory, evidence may be adduced to show that even without it, the borrower signed the contract fully understanding his or her rights and obligations; to show that the party understood the general basis of the documentation and the consequences which may arise in the result of a default. This will depend on the complexity of the transaction. The need for independent legal advice may be rebutted where the lender can prove that the contract was signed by a free and independent mind with commercial knowledge, experience, and general sophistication or independence (see Bank of Montreal. v. Duguid (2000), 132 O. A. C. 106). Therefore the mere lack of independent legal advice will not invalidate a transaction in the absence of proof of non est factum, unconscionability, fraud, misrepresentation or undue influence (see Avon Finance Co Ltd v. Bridger [1985] 2 All ER 281 and Barclays Bank Plc v. O’Brien andanother [1993] 3 WLR 786; [1994] 1 AC 180; [1993] 4 All ER 417). This onerous obligation to permit the other party independent legal advice is imposed on lenders to ensure that persons who are granting security, or otherwise indebting themselves to the creditor in circumstances where they may not directly benefit from the funds being advanced, or where they may be subject to undue influence, receive independent legal advice.”* 5. PE1 to PE3 proved that an application to this facility was a one paged document with words ordinarily used in English. Because the Defendant was able to read and understand English, he would have sought the independent legal advise if he there was anything he did not understand. No evidence was led to prove that the Plaintiff’s officials exerted any undue on him to overcome his desire to seek independent legal advice. Certainly, this cannot form any basis to prove fraud against the Plaintiff. 6. Regarding the breach of the Bank of Uganda guidelines, in **Haruna Sentongo v. Orient Bank Ltd (supra)**, the court held that *“I will address the question of legality of the Bank of Uganda Financial Consumer Protection Guidelines 2011 upfront. As rightly submitted by counsel for the Defendant, the position taken by this court in Miao Huaxian vs DFCU Bank & Anor HCCS NO. 078 of 2016, where the legal force of the Bank of Uganda Financial Consumer Protection Guidelines 2011 was addressed still stands. In that case, the court held that the guidelines did not have the force of law and consequently their breach is not a basis of a cause of action. It would therefore follow that the Plaintiff’s allegations of breach of a fiduciary duty to act fairly and reasonably in all its dealings with him as a consumer and duress, premised on the Guidelines which have no legal basis fail.”* To this end, DW4’s allegation of breach of the consumer protection guidelines cannot the basis for fraud allegations. 7. Turning now to the claim of charging the Defendant interest without his consent and knowledge. DE 13 at pages 41 to 42 of the Defendant’s trial bundle showed that the Plaintiff charged DW4 interest of Ug.shs. 416,989 on 28th April 2018; Ug.shs. 4,394,727; Ug.shs. 4,527,828/= on 28th June 2018; Ug.shs. 3, 782,804 on 27th July 2018; Ug.shs. 19 on 28th November 2018; Ug.shs. 407 on 29th December 2018; Ug.shs. 489 on 29th January 2019; and Ug.shs. 805 on 28th February 2019. The description of all these debits was debit interest. DE13 also shows that on 2nd July 2018, the DW4’s account was debit with Ug.shs. 1,350,000/= being commission of the Ug.shs. 27,000,000/=. 8. In reply, the Plaintiff’s submission was that interest was charged on the Defendant’s account after he defaulted on payment of the sums advanced under the facility. It charged a reasonable amount of interest as a penalty for the overdrawn account from 25th April 2018. In fact PW1 admitted charging DW4 interest after default. It is my considered view that as with any bank, upon default, the Plaintiff was entitled to impose a penalty on the Defendant. Therefore, there was nothing fraudulent about the interest charged after default. As far as the commission is concerned, PW1’s evidence was that the Plaintiff had to pay the agents who recovered the Ug.shs. 27,000,000/= from the Defendant. Indeed DW1’s evidence was that he bought the vehicle through an agent appointed by the Plaintiff. Because the Agents work for a fee, the commission charge is reasonable 9. While the Defendant alleged that it was the Plaintiff’s official named Kabuye who kept his cheques books and would fill them only for the Defendant to sign, no evidence was led to prove this. As such, this court cannot rely on the same to prove fraud. Similarly, the issue of the properties has already been discussed and I have found no basis to fault the Plaintiff in any fraudulent transaction regarding the same. The Defendant failed to prove to this court that the Plaintiff acted fraudulently in its dealings with him. Therefore, this issue is resolved in the negative.

**Issue four- whether the Plaintiff was negligent in its dealings with the Defendant**

1. The court in **Obed Tashobya v. DFCU Bank (U) Ltd, HC Civil Suit No. 742 of 2004**, adopted the standard set by Lord Warrington in **Lloyd Bank Ltd Vs E. B Savory & Co [1933] AC 201**, where it was stated that:

*“The standard by which the absence or otherwise of negligence is to be determined must be ascertained by reference to the practice of reasonable men carrying on the business of bankers and endeavoring to do so in such a manner as may be calculated to protect themselves and others against fraud”.*

1. On this issue, the Defendant faulted the Plaintiff for not disclosing key facts documents outlining the features of the cheque discounting facility to him. In his view PE1 to PE3 were lacking when compared to a loan agreement which is always detailed indicating all charges, penalties and commissions if any, executed with a witness and /or an independent legal advisor of the consumer’s choice and translated in a language they understand. He questioned advancing 100% of the cheque amounts under exceptional circumstances which were never explained or even indicated to court and without exhibiting any document signed by himself. 2. Further the Defendant submitted that without being negligent, there was no way in banking practice one would have given money on the subsequent cheques after the first one bouncing on 22nd April 2018. In rejoinder, the Plaintiff submitted that Plaintiff received and withdrew the money from his account on the 18th, 19th and 20th April 2018 and denied any negligence. 3. As far as disclosure is concerned, I am of the considered opinion that the banks do not have one format of documents to be used in all transactions/ facilities extended to their customers. Where a format used sufficiently relays all the necessary information for a customer to make an informed decision, the bank would have performed its obligations of disclosure. Upon a close scrutiny of PE1 to PE3, it was easy to establish that all the relevant information including the fact that it was a purchase of cheque/uncleared effects in amounts stated, the cheque value, the drawer of the cheque, a request to allow the purchase of the cheques on a stated account number, for the cheques deposited, an account number to be debited for the commission of the transaction, the name of the applicant and their signature, an indemnity clause that is unequivocal and irrevocable to indemnify and hold the bank harmless against all claims in respect to loss or damage arising from the instructions, the percentages of the value of the cheques that the bank would pay, signature of the applicant and provisions for the approvals of the bank were all provided. 4. In my view, this was sufficient information that would enable any customer make an informed decision regarding this kind of transaction. That the format was not as a loan transaction cannot be a ground to fault the bank since this was not a loan transaction. 5. In addition, the submission by the Defendant that the Plaintiff negligently gave him more money under the facility after the first cheque bounced on 22nd April 2018 is not only false but unfounded. Pursuant to PE1 to PE3, on 18th, 19th and 20th April 2018, the Defendant’s account number was credited with the sums in issue as clearly stated in PE4. The said monies were withdrawn by the Defendant on the same dates they were credited to his accounts as proved by PE15 (a), (b) and (c). This negates the assertion that any monies were paid after 22nd April 2018. 6. According to PE1 to PE3, cheques in the local currency as those in this case could only be purchased by the Plaintiff at 70% of the value of the cheque. However, it was PW1’s evidence that the Defendant was advanced with 100% of the cheque values under exceptional circumstances because he was a long standing customer of the bank. The policy in issue was set by the Plaintiff who chose to waive it in favour of the Defendant during the approvals of his applications. After the necessary approvals, 100% of the money was deposited to DW4’s account who withdrew all of it after catering for the necessary commission. I find no fault with the Plaintiff’s conduct of waiving its own policy prior to disbursing the money to the Defendant, especially where he took benefit of the same. I have therefore found no reason to hold the Defendant liable in negligence. This issue is resolved in the negative.

**Issue five- whether the cheque discounting facility product was illegal**

1. It was the Defendant’s submission that the Bank of Uganda Guidelines were not followed which makes the facility illegal, and thereforeall arrangements arising therefrom cannot be sanctioned by the court. That the arrangement was unfair since PW1 during cross examination informed court that it was the Plaintiff to determine how much it charged in form of commissions and interest. That these crucial aspects were not disclosed to Defendant so as to make an informed decision as to whether he takes the product. The Plaintiff misrepresented facts concerning the product and made the Defendant believe that there were no such charges.

1. The legality of the Bank of Uganda Guidelines has already been discussed under issue three and as such, there is no need to repeat the same here. These Guidelines cannot be a basis to declare the product illegal. The evidence before court especially PE4 and PE15 (a), (b) and (c) shows that Defendant was aware of the commission to be paid to the Plaintiff and that is why he withdrew amounts less than what was credited on his account. In addition, PE1 to PE3 clearly state that commission would be charged by the Plaintiff and the Defendant provided an account number from which the commission was to deducted. A critical analysis of the evidence also shows that interest was only charged upon his default, a practise which is common in banking. Had the cheques not bounced, there would be no interest imposed by the Plaintiff. This does not make the product illegal. DW4 did not prove any misrepresentation by the Plaintiff. This issue is resolved in the negative.

**Issue six- whether the Plaintiff’s imposed daily interest of 1% is unconscionable**

1. Inthe case of **Charles Athembu v. Commercial Microfinance Limited & Anor, Civil Application No. 0001 of 2014** the court held that **“**equity interferes in many cases of harsh or unconscionable bargains.” Unconscionable is defined in *The Shorter Oxford English Dictionary*, Third Edition, Volume II, page 2288, when used with reference to actions etc. as “showing no regard for conscience; irreconcilable with what is right or reasonable.” An unconscionable bargain would, therefore, be one which is irreconcilable with what is right or reasonable. …..the test is whether the conditions and the terms of interest are so unconscionable as to shock the conscience of the Court (see *George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, [1983] 2 AC 803, [1982] 1 All ER 108* and *Central Inland Water Transport Corporation v. Brojo Nath Ganguly [1986] 3 S. C. C. 156*). If the cases are examined, it will be seen that three elements have almost invariably been present before the court has interfered. First, one party has been at a serious disadvantage to the other, whether through poverty, or ignorance, or lack of advice, or otherwise, so that circumstances existed of which unfair advantage could be taken: secondly, this weakness of the one party has been exploited by the other in some morally culpable manner: and thirdly, the resulting transaction has been, not merely hard or improvident, but overreaching and oppressive. 2. The Defendant’s submission on this issue was that it was not disputed by the Plaintiff that he was charged 1% per day before filing of the suit which prompted him to write DE6 at page 10 of the his trial bundle to the Plaintiff’s Managing Director requesting the same to be changed, which was granted. Further that 1% per day totals to 30% per month giving a total of 360% per annum which is unconscionable. 3. In DE6, the Defendant stated thus” thank you for the good services always rendered to me. However my business has picked and I always bring cheques of about 50m everyday which the bank purchases at the rate of 1% and have never bounced. I feel the charge is high and hereby request to reduce the charge to 0.5% on every cheque presented so that I am able to continue in business as the bank also benefits.” The response to this letter is not visible. The Plaintiff maintained that there was only commission charged on the facility and the interest was only applied after default, the account becoming overdrawn from 25th April 2018. 4. DE 13 at pages 41 to 42 of the Defendant’s trial bundle showed that the Plaintiff charged DW4 interest of Ug.shs. 416,989 on 28th April 2018; Ug.shs. 4,394,727; Ug.shs. 4,527,828/= on 28th June 2018; Ug.shs. 3, 782,804 on 27th July 2018; Ug.shs. 19 on 28th November 2018; Ug.shs. 407 on 29th December 2018; Ug.shs. 489 on 29th January 2019; and Ug.shs. 805 on 28th February 2019. The description of all these debits was debit interest. 5. While DW4 claimed that the Plaintiff’s managing director reviewed the terms upon his application, I was unable to confirm the same because DE6 was faint so the comment made thereon was not legible. Be that as it may, the above interest was charged after default and the figures are not exorbitant in relation to the amounts advanced to DW4 under the facility. In addition to that, the interest was only charged between 28th April 2018 to 28th February 2019, yet the Defendant is still indebted to the Plaintiff. In my view, the interest charged is reconcilable with what is right and reasonable. I have therefore found no basis to find the interest charged as unconscionable. This issue is resolved in the negative.

**Issue seven- Remedies available.**

1. The Plaintiff prayed for general damages of Ug.sh. 30,000,000/=. In **Maruri Venkata Bhaskar Reddy & Ors v. Bank Of India (Uganda) Ltd Civil Suit No. 804 of 2014,** it was held that “the law on general damages is that the damages are awarded at the discretion of the Court and the purpose is to restore the aggrieved person to the position they would have been in had the breach or wrong not occurred. In the assessment of general damages, the court should be guided by the value of the subject matter, the economic inconvenience that the plaintiff may have been put through and the nature and extent of the injury suffered. See: Uganda Commercial bank v. Kigozi [2002]1 EA 305). The damages available for breach of contract are measured in a similar way as loss due to personal injury. The court should look into the future so as to forecast what would have been likely to happen if the contract had not been entered into or breached. See: Bank of Uganda Vs Fred William Masaba & 5 Others SCCA No. 3/98 and Esso Petroleum Co. Ltd VsMardon (1976) EWCA Civ 4; [1976] QB 801.” 2. In the instant case, the Plaintiff has been out of its money since April 2018. Given the value of the subject matter and the economic inconvenience occasioned to the Plaintiff, I will award general damages of Ug.shs. 15,000,000/= (Uganda Shillings Fifteen Million). 3. In the case of **Maruri Venkata Bhaskar Reddy & Ors v. Bank Of India (Uganda) Ltd**, (supra), the Court further held that “the basis for an award of interest is that the defendant has kept the plaintiff out of his money and the defendant has had the use of it himself and ought to compensate the plaintiff accordingly. In determining a just and reasonable rate of interest, courts take into account the ever rising inflation and drastic depreciation of the currency. A plaintiff is entitled to such rate of interest as would not neglect the prevailing economic value of money, but at the same time one which would insulate him or her against any further economic vagaries and the inflation and depreciation of the currency in the event that the money awarded is not promptly paid when it falls due.” See also: **Kinyera Vs the Management Committee of Laroo Building Primary School HCCS 099/2013.** 4. Considering that these transactions were financial in nature, the Plaintiff’s business involves lending money to earn a commission and/or an interest and the Plaintiff has been without its money since 2018, I will award interest of 6% on the principal sum from the date of judgment till payment in full. The Plaintiff is also awarded costs of the suit. 5. In sum, the Counterclaim fails and the Plaintiff’s suit succeeds with the following orders:

The Plaintiff is awarded a sum of Ug.shs. 90,780,076 (Uganda Shillings Ninety Million Seven Hundred Eighty Thousand Seventy-Six) being monies owed by the Defendant.

The Plaintiff is awarded general damages of Ug.shs. 15,000,000/= (Uganda shillings Fifteen Million).

The Plaintiff is awarded interest of 6% p.a on (i) above from the date of judgement till payment in full.

The Plaintiff is awarded costs of the suit.

The certificate of title deposited with the Court Registrar for the land in Block 466 Plot 432 should be handed back to the Defendant.

It is so ordered.

**CORNELIA KAKOOZA SABIITI**

**JUDGE**

**Date: 19th April 2024**