[2005] UGCommC 25

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A. LTD DEFENDANT \par \par }{\b\ul\insrsid8734079\charrsid9180058 BEFORE: THE HON. MR. JUSTICE FMS EGONDA-NTENDE \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\insrsid8734079 \par }{\b\ul\insrsid8734079\charrsid8468298 JUDGMENT \par }{\insrsid8734079 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12479085 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid14293931 { \insrsid12479085 The Plaintiff, Hardware Deals (U) Ltd, seeks to recover from the defendant, Alam Construction E. A. Ltd, }{\insrsid9854599 Shs.28,615,800.00}{\insrsid8801665 for goods supplied to the defendant, }{\insrsid342025 general damages, interest and costs of this suit.}{\insrsid11632130 The plaint alleges that on the 19}{\super\insrsid11632130\charrsid11632130 th}{\insrsid11632130 October 2002, Khalid Alam, Managing Director of the defendant, introduced to }{\insrsid14319604 him on}{ \insrsid4601792 e}{\insrsid14319604 Antony Byaruhanga, as an employee of the defendant with authority and instructions to collects goods from the plaintiff on credit on behalf of the defendant}{\insrsid475795 . Over a period of time Anthony Byaruhanga, collected goods from the plaintiff}{\insrsid14703238 , on credit, leaving post dated cheques, which were returned unpaid, when presented for payment}{\insrsid6962494 , leaving the defendant indebted to th e plaintiff in the sum of Shs.28,615,800.00.}{\insrsid8734079 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid6962494 \hich\af0\dbch\af0\loch\f0 2.\tab}}{\insrsid6962494 The defendant denied }{\insrsid1574201 k nowledge of the transctions upon which this claim was based, averring that Mr. Anthony Byaruhanga, was not its employee, but a sub-contractor}{\insrsid8355422 . Khalid Alam had never instructed the said Byaruhanga to collect }{\insrsid2438919 the}{ \insrsid8355422 goods on credit on behalf of the defendant}{\insrsid2438919 or at all. Defendant denied issuing the cheques claimed to have been isssued by the defendant.}{\insrsid10517267 Neither had it received a notice of dishonour of the said cheques.}{\insrsid9183542 The defence further averred that the said dealings between Byaruhanga and the plaintiff were a fraudulent design to defraud the defendant.}{\insrsid6962494 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid338230 \hich\af0\dbch\af0\loch\f0 3.\tab}}{\insrsid338230 At the commencement of the trial }{\insrsid481468 four}{\insrsid338230 issues were framed}{\insrsid1602319 by the parties}{ \insrsid338230 . These are}{\insrsid2428921 ;}{\insrsid338230 }{\insrsid2428921 }{\insrsid10906061 i}{\insrsid338230 )}{ \insrsid481468 Whether Byaruhanga was ever introduced to the plaintiff by the defendant with authority to collect goods on behalf}{\insrsid1602319 of the defendant}{\insrsid4601792 ;}{\insrsid2428921 }{\insrsid1602319 ii) Whether defendant is indebted to the plaintiff; }{\insrsid2428921 }{\insrsid1602319 iii) If two is answered in the affirmative}{ \insrsid14771267 , whether cheques annexures a, b, c, were issued by the defendant in settling of their indebtness}{\insrsid14108847 to the plaintiff; and }{\insrsid2428921 }{\insrsid14108847 iv) remedies.}{\insrsid14299194 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid14108847 \hich\af0\dbch\af0\loch\f0 4.\tab}}{\insrsid14108847 The plaintiff called one witness}{\insrsid6311906 and the defendant called two witnesses. Written submissions were filed}{ \insrsid14299194 by counsel}{\insrsid6311906 .}{\insrsid14108847 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid6311906 \hich\af0\dbch\af0\loch\f0 5.\tab}}{\insrsid6311906 PW1 was }{\insrsid7813017 Joseph Iga, the Managing Director of the Plaintiff. }{\insrsid10310739 He tetisfied that }{ \insrsid16276326 Mr. Khalid came to his offices sometime in 2002, towards the end of 2002, and he introduced one Anthony, whose other}{\insrsid4784440 name he could not remember, that he would be collecting materials on behalf of the company. It was agreed that where the materials were being taken on credit, }{\insrsid12986950 the company would leave a post dated cheque. The statement of account for the defendant showed that there was an outstanding sum of shs.28,615,800.00 unpaid to the plaintiff.}{\insrsid10814417 This statement}{\insrsid12518531 }{\insrsid10814417 of account is dated 24 June 2003. When }{\insrsid8017297 t he statement }{\insrsid10814417 was sent to the defendant}{\insrsid8017297 , a few days later,}{\insrsid10814417 Mr. Khalid came to the witness and told him that }{\insrsid4482216 he had no outstanding account with them.}{\insrsid6311906 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid3553164 \hich\af0\dbch\af0\loch\f0 6.\tab}}{\insrsid3553164 PW1 testisifed that }{\insrsid1338375 Anthony would always bring a Local Purchase Order from the defendants, instructing them to release the goods to Anthony, and it was accompanied with post dated cheques. }{\insrsid4946650 He tendered into evidence 12 exhibits. Exhibit P1 was the statement of account issued by the plaintiff to the defendant.}{ \insrsid10303600 Exhibits P2, P3, }{\insrsid1008947 P4 }{\insrsid10303600 and P}{\insrsid1008947 5}{\insrsid10303600 were cheques}{\insrsid1008947 issued by the defendant to the plaintiff which were returned unpaid}{\insrsid9770885 . Exhibits P6, P7, P8 and P9 were local purchase orders issued by the defendant to the plaintiff. Exhibits }{\insrsid5789841 P10, P11 and P12 were invoinces issued by the plaitiff to the defendant for goods supplied to the defendant, for which payment ha s not been received.}{\insrsid3553164 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11880537 \hich\af0\dbch\af0\loch\f0 7.\tab}}{\insrsid11880537 PW1 stated that the plaintiff claims Shs28,615,800.00 from the defendant}{\insrsid7281438 .}{\insrsid1513170 Anthony handled all the transactions}{\insrsid734758 , and the local purchase orders stated that Anthony would collect the goods.}{\insrsid14777493 As the cheques would }{\insrsid12783358 near maturity}{\insrsid14777493 Anthony would bring cash and collect the cheques. }{\insrsid12783358 When the cheques bounced, the witness attempted to notify Mr. Alam but could not raise him on phone.}{\insrsid11880537 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12783358 \hich\af0\dbch\af0\loch\f0 8.\tab}}{\insrsid12783358 Mr. Khalid Alam, Managing Director of the defendant was }{\insrsid11617357 DW1. He stated that }{\insrsid3555574 between June and October 2002 he went to PW1\rquote s office, after Mr. Anthony Byaruhanga had informed him, that }{\insrsid15169255 the plaintiff might offer them better deals for the purchase of construction materials. Mr. Anthony Byaruhanga was a subcontractor}{\insrsid9916730 with the defenant. The witness and Mr. Anthony Byaruhanga went to see PW1, who they met in his office.}{ \insrsid12783358 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid9916730 \hich\af0\dbch\af0\loch\f0 9.\tab}}{\insrsid9916730 They produced a list of goods that they require to purchase. }{\insrsid13920852 They agreed on payment terms. Goods were to be supplied on credit against post dated cheques for three weeks. The plaintiff issued them with a proforma invoice. }{\insrsid16324637 D W1 waited until just about when they needed the goods and he returned to Mr. Iga\rquote }{\insrsid10239290 s office, together with Mr. Byaruhanga. He made out a cheque for the goods they neeed}{\insrsid5963942 . He told PW1 that Mr. Byaruhanga would come with a truck to collect the goods. The goods were worth around Shs.7,000,000.00.}{\insrsid9916730 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid5963942 \hich\af0\dbch\af0\loch\f0 10.\tab}}{\insrsid5963942 DW1 denied that }{\insrsid14950526 he ever stated that Mr. Byaruhanga had the authority to transact any business for the defendant. This is was a one off contract}{\insrsid15800781 .}{\insrsid10035986 On or about the 22}{\super\insrsid10035986\charrsid10035986 nd}{\insrsid10035986 June 2 003, he walked into Mr. Kategere\rquote s office, an accoutant with the defendant and he saw some papers with the name of the plaintiff on them. }{\insrsid11159011 He called Mr. Kategere to his office, and asked him about the papers. He told him that those papers had nothing to do with the defendant. }{\insrsid5963942 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11159011 \hich\af0\dbch\af0\loch\f0 11.\tab}}{\insrsid11159011 DW1 was nevertheless suspcious. He called DW2, Roy Kairu, an Engineer with their company, and notified him that there was something fishy going on. }{\insrsid8923748 At that time, he had had no intimation from the plaintiff of a nything going on between their companies like the issue of bounced cheques or unpaid for goods. He asked Kategere and Roy to accompany him to Mr. Iga\rquote s office. }{\insrsid11159011 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid16669362 \hich\af0\dbch\af0\loch\f0 12.\tab}}{\insrsid16669362 On arrival at Mr. Iga\rquote s office, DW1 asked him, if he was aware of any transactions}{\insrsid2387720 that had tak en place. The witness was not aware of any himself, as they did not have any ogoing jobs at the time. PW1 informed him that Anthony Byaruhanga had collected some goods}{\insrsid9246916 on behalf of the company, and had been paying for these goods.}{ \insrsid3699158 Mr. Iga showed the witness a fax from Byaruhanga notifying Mr. Iga of payments into their account made that day.}{\insrsid1204749 DW1 lost his temper}{\insrsid9322126 , wondering how Mr. Iga would receive a fax from a private fax agency without informing him}{\insrsid10969571 of what was happening.}{\insrsid16669362 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid10969571 \hich\af0\dbch\af0\loch\f0 13.\tab}}{\insrsid10969571 DW1 further testified that at this meeting, Mr. Iga did not reveal or show to him that there were any cheques that had bounced}{\insrsid10158 that he was holding. He promised t}{\insrsid6976669 o cooperate with the defendant}{\insrsid8534397 . DW1 left with his party and went to the Jinja Road police station where he left Kategere under arrest.}{\insrsid7168184 DW1 then went to Doshi Hardwares and met Managing Director. He found papers }{\insrsid15693244 that revealed a similar scam had been going between Doshi Staff and some of the people at the defendant. With the help of the Doshi Managing Director Byaruhanga was arrested and taken to the Police.}{\insrsid14884482 Charges were opened up against Byaruhanga and Kategere.}{\insrsid10969571 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid15145177 \hich\af0\dbch\af0\loch\f0 14.\tab}}{\insrsid15145177 DW1 further testified that they held another meeting with Mr. Iga in his brother\rquote s office. }{\insrsid14308326 They agreed to recover what they can from these people but that it was now a police case. They would keep in touch.}{\insrsid12871152 DW1 informed Mr. Iga that the person who asked to assist them trace the goods had not shown up. \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid12871152 \hich\af0\dbch\af0\loch\f0 15.\tab}DW1 further testified that the cheques exhibited in this case were from the}{\insrsid7281438 i}{\insrsid12871152 r Crane Bank account, which was not in use. The signatures on them were not his signatures. The signatures were crude forgeries. The handwriting on the cheques was not his handwriting.}{\insrsid4024488 If the defendant was to obtain credit, this was to be negotiated by DW1 and if it invovled a big purchase, it would have to be reduced into writing. Neither of this was done in this case.}{\insrsid13193036 He denied that Mr. Byaruhanga was their employee. He was an independent contractor.}{\insrsid13065564 }{\insrsid15145177 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8468298 \hich\af0\dbch\af0\loch\f0 16.\tab}}{\insrsid8468298 DW2 was Roy Kairu, an engineer employed by }{\insrsid5975719 the defendant}{\insrsid9075531 .}{\insrsid4029984 He testified mainly to the meeting with Mr. Iga which he attended together with Mr. Kategere.}{\insrsid14706399 His account of what transpired in that meeting largely agrees with the account of DW1.}{\insrsid4029984 He stated that Mr. Anthony Byaruhanga was a sub contractor who worked with the company whenever there was work for him to do. He was not employed by the company on a full time basis.}{\insrsid5975719 }{\insrsid9911615 \par }\pard \qc \li360\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid5977478 {\i\insrsid9911615\charrsid8923800 Whether Byaruhanga was ever introduced to the plaintiff by the defendant with authority to collect goods on behalf of the defendant \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8923800 \hich\af0\dbch\af0\loch\f0 17.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid14293931 { \insrsid8923800 It is not in dispute that Anthony Byaruhanga was}{\insrsid14840274 ,}{\insrsid8923800 }{\insrsid14840274 with respect to}{\insrsid8923800 the first transaction that DW1 negotiated with PW1}{\insrsid14840274 , authorised to collect the goods in question sometime in October 2002. As to what happened thereafter, this is in dispute. It is }{\insrsid6307305 the }{\insrsid14840274 contention of the plaintiff that DW1 introduced }{\insrsid6378968 Anthony Byaruhanga to PW1 as an employee of the defendant with authority to collect goods on credit on behalf of the defendant.}{\insrsid14099052 This is denied by the defendant. Hence this first issue. }{\insrsid8923800 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid14099052 \hich\af0\dbch\af0\loch\f0 18.\tab}}{\insrsid14099052 The burden of the proof lies upon th}{\insrsid6427226 e party wishing to prove a}{\insrsid14099052 particu lar fact to do so. And in this case this burden is discharged }{\insrsid6427226 on a}{\insrsid14099052 balance of probability. It is the duty of the plaintiff to prove that this }{\insrsid1923156 alleged introduction took place, as it is denied by the defendant.}{\insrsid14099052 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid15090710 \hich\af0\dbch\af0\loch\f0 19.\tab}}{\insrsid15090710 On this issue we have the }{\insrsid6427226 direct }{\insrsid15090710 testi}{\insrsid11551727 mony of t wo opposing witnesses, PW1 and DW1. Both Managing Directors of their companies}{\insrsid16677304 . PW1 states that DW1 introduced Anthony Byaruhanga as his employee with authority to collect goods on credit for the defendant. DW1 states that }{ \insrsid11344129 he told PW1 when they negotiated for a particular set of goods that Anthony Byaruhanga would come with a truck to collect the goods in the question and that this was a one off transaction. }{\insrsid9308422 }{\insrsid15090710 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid13320735 \hich\af0\dbch\af0\loch\f0 20.\tab}}{\insrsid13320735 I am inclined to accept the evidence of DW1 on this point in light of what transpired after th}{\insrsid5578450 e initial}{ \insrsid13320735 transaction. }{\insrsid14643494 DW1 stated that the signatures on the cheques}{\insrsid531824 exhibited by the plaintiff and which}{\insrsid14643494 accompany}{\insrsid531824 ed }{\insrsid14643494 these transactions were forged, and were not his signature. This is born out by the }{\insrsid9467315 remarks on three of the }{\insrsid12649707 four }{\insrsid9467315 exhibited cheques endorsed by the Bank that \'93signature differs\'94. }{ \insrsid15208865 This was not brought to the attention of Mr. }{\insrsid6647281 Khalid immediately it occurred.}{\insrsid15691334 It is odd that instead of talking to his opposite number, the Managing Director of the defendant, PW1 apparently was in touch with Mr. Kategere of the defendant compnay, over these issues}{\insrsid16256389 , which came out in the open, in the meeting on 22}{\super\insrsid16256389\charrsid16256389 nd}{\insrsid16256389 June 2003, in which PW1, DW1, DW2 and Mr. Kategere were.}{\insrsid12387435 It is also apparent that }{\insrsid4281851 }{\insrsid12387435 a}{\insrsid3609698 ll the other post dated cheques}{\insrsid12387435 ,used }{\insrsid12802835 in this transaction}{\insrsid3609698 were withdrawn, and replaced with cash payments, unlike in the first transaction}{\insrsid4602509 .}{\insrsid4281851 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid9467315 \hich\af0\dbch\af0\loch\f0 21.\tab}}{\insrsid9467315 It is possible that a person could give authority as alleged and the person authorised still acts in a fraudulent way}{ \insrsid1990564 , against his principal, in the dealings with the third party.}{\insrsid3883708 Nevertheless in this particular case, I am not persuaded that }{\insrsid9568769 the plaintiff has established}{\insrsid3823862 ,}{\insrsid9568769 on a balance }{\insrsid11873785 of }{\insrsid9568769 probability}{\insrsid3823862 ,}{\insrsid9568769 that }{\insrsid16143914 Anthony Byaruhanga was introduced as having the authority to collect on}{\insrsid5505271 an}{\insrsid16143914 }{ \insrsid5505271 on-}{\insrsid16143914 going and indefinite basis goods on credit}{\insrsid5505271 for the defendant, without limits whatsover of any kind, save to produce a post dated cheque}{\insrsid13765155 , in support thereof}{\insrsid15208865 . }{ \insrsid13765155 The DW1 has denied making this representation. I find no reason to disbelieve him }{\insrsid3756275 in }{\insrsid13765155 this regard}{\insrsid11873785 and believe PW1 instead}{\insrsid13765155 .}{\insrsid13320735 \par }\pard \qc \li360\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid5977478 {\i\insrsid15096021\charrsid15096021 Whether defendant is indebted }{\i\insrsid16590528 to the plaintiff}{\i\insrsid15096021 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid16590528 \hich\af0\dbch\af0\loch\f0 22.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid14293931 {\insrsid16590528 Having answered Issue No}{\insrsid4459609 .}{\insrsid16590528 1 as I have done}{\insrsid4459609 ,}{\insrsid16590528 I do not find that the defendant is indebted to the plaintiff}{\insrsid4459609 ,}{\insrsid16590528 }{\insrsid11020352 as the person they dealt with had no }{\insrsid15424820 express }{\insrsid11020352 authority}{\insrsid8027261 }{\insrsid16603401 which}{\insrsid11020352 they alleged he had}{\insrsid4459609 , to transact the business he did}{\insrsid11020352 .}{ \insrsid16603401 Neither I am able to find ostensible authority to found any indebtness in the dealings between Anthony Byaruhanga and the Plaintiff.}{\insrsid7827663 In any case this has not been alleged. The case was founded upon express authority.}{ \i\insrsid16590528\charrsid8061382 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid8061382 \hich\af0\dbch\af0\loch\f0 23.\tab}}{\insrsid8061382 However}{\insrsid15424820 ,}{\insrsid8061382 in case I am wrong, and the plaintiff has proved the re presentation alleged to have been made to him by DW1, I would have held that the defendant is indebted}{\insrsid16216071 in the sum claimed by the plaintiff}{\insrsid15424820 ,}{\insrsid16216071 to the plaintiff}{\insrsid15424820 ,}{\insrsid16216071 as the goods in question had been supplied to the person authorised by the company to receive them.}{\i\insrsid8061382\charrsid16216071 \par }\pard \qc \li360\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin360\itap0\pararsid5977478 {\i\insrsid11098174\charrsid8152417 If two is answered in the affirmative, whether cheques annexures a, b, c, were issued by the defendant in settling of their indebtness to the plaintiff}{\i\insrsid16216071\charrsid8152417 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid11098174 \hich\af0\dbch\af0\loch\f0 24.\tab}}\pard \ql \fi-360\li720\ri0\sl360\slmult1\widctlpar\jclisttab\tx720\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin720\itap0\pararsid14293931 {\insrsid11098174 DW1 denied ever writing and issuing the cheques in question. This evidence is not contradicted. I accept that DW1 did not issue these cheques}{\insrsid8152417 . They were}{\insrsid684641 not}{\insrsid8152417 issued by }{\insrsid684641 the defendant to the plaintiff to settle any indebtness.}{\i\insrsid11098174\charrsid684641 \par {\listtext\pard\plain\lang1024\langfe1024\noproof\langnp2057\insrsid684641 \hich\af0\dbch\af0\loch\f0 25.\tab}}{\insrsid684641 In the result I would dismiss this suit with costs.}{\i\insrsid684641\charrsid12801110 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12801110 {\insrsid12801110 Dated at Kampala this 30}{\super\insrsid12801110\charrsid12801110 th}{\insrsid12801110 day of May 2005 \par \par \par \par FMS Egonda-Ntende \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9911615 {\insrsid12801110 Judge}{\i\insrsid9911615\charrsid14626718 \par }}