[2018] UGCA 238


#### THE REPUBLIC OF UGANDA

#### **IN THE COURT OF APPEAL OF UGANDA**

### ¹⁰ **AT KAMPALA**

## **CIVIL APPEAL NO. 26 OF 2008**

*(Appeal arising from the Judgment in HCCS No. 989 of 1999 (ArachAmoko, J) dated 12th December, 2007)*

**Prince Jackson Jemba:::::::** ¹⁵ **::::::: Appellant** *VERSUS*

**Allied Bank International (U) Limited Respondent**

| | Coram: | Justice<br>Kenneth<br>Hon.<br>Kakuru,<br>JA | |----|--------|--------------------------------------------------------| | 20 | | Justice<br>Hon.<br>Geoffrey<br>Kiryabwire,<br>JA | | | | Justice<br>Hon.<br>Remmy<br>Kasule,<br>JA<br>Ag.<br>K. |

# JUDGMENT OF THE COURT

**25** In the Court below, the respondent, a. commercial bank, as plaintiff, sued the appellant, as defendant, in HCCS No. 989 of 1999 for a sum of shs. 34,019,926= as money having become due for payment to the respondent on 30th July, 1999, together with interest thereon at 25% per annum.

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- The claim was based on a guarantee executed by the appellant as 30 . Managing Director of Messrs Permex International (U) Ltd in favour of the respondent in consideration of financial facilities advanced by the respondent to the said Messrs Permex International (U) Ltd. - 35

- There was failure by Messrs Permex International (U) Ltd to meet the repayment undertakings to the respondent. Thus the respondent resorted to recover the due sums from the appellant on the basis of the executed guarantee by lodging HCCS No. 989 of 1999. - The appellant, though admitting having executed the guarantee with the respondent, denied in his defence to the suit being liable 40 to the appellant He contended that receivers appointed by the respondent had taken over the stock in trade worth shs. 138,095,000= of Messrs Permex International (U) Ltd for purpose of selling the same and recover what was due to the respondent and handover the balance to Messrs Permex International (U) Ltd. 45 The said receivers had however not given any account as to how the stock in trade had been disposed of. As such, the appellant was not liable to the respondent whose receivers had failed to account for the proceeds of the sale of the said stock in trade. For the same reason the respondent had no basis to invoke the 50 executed guarantee as a basis to lodge a claim against the appellant.

The learned trial Judge at the hearing of the said suit received the evidence from both parties to the suit as well as their respective witnesses. The issue the trial Judge was to resolve was: Whether the debt the alleged debt owed to the respondent had been paid in

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full and the appellant thereby discharged of his obligation as a guarantor.

At the conclusion of the trial, and after evaluating all the evidence and applying the law to the facts of the case, the learned trial Judge held in the Judgement that:

> *"The burden ofproof lies on the person who wishes the Court to believe in its existence, unless it is provided by ang law that the proofofthatfact shall lie on at any particularperson. (See S. 102 ofthe Evidence Act).*

> *This issue is therefore From the foregoing evidence, which was not challenged bg the defendant, it is clear and I find that the plaintiff has demonstrated that the stock in trade was neither sold nor was ang moneg given to the plaintiff answered in the negative".*

The learned Judge then entered Judgment for the respondent in the sum of shs. 34,019,926= and interest thereon at 25% per annum from the dated of filing the suit till payment in full. She awarded to the respondent the costs of the suit.

- **75** Dissatisfied with the Judgment of the learned trial Judge, the appellant appealed to this Court. There are three grounds of appeal. - *1. The learned trial Judge erred in law and fact when she ignored to resolve factual disputes of accountability of the stock in trade worth shs. 138,095,000= (one hundred thirty eight million ninety five thousand shillings only) the property of principal debtor Permex*

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*International (U) Ltd which the receivers Allied Bank. International (U) Ltd took control of and sold.*

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- *2. The learned trial Judge erred in law and fact when she failed to evaluate Appellant's evidence to find that Appellant was discharged from all liabilities when respondent's appointed receivers took control over and sold the stock in trade worth shs. 138,095,000=.* - *3. The learned trial Judge erred in law and fact in awarding against appellant interest rate of 25% per annum compounded on daily balances with monthly interest which was manifestly harsh, unconscionable, excessive whereas there was no evidence pleaded nor adduced to show that the respondents were so entitled.*

On appeal learned Counsel Ms. Rachel Mulindwa represented the appellant while Dr. Joseph Byamugisha was for the respondent.

100 105 Counsel for the appellant submitted on the three grounds of appeal together. She contended that the learned trial Judge failed to properly evaluate the evidence that was adduced before her. The Judge failed to consider the evidence that the loan whose repayment the appellant guaranteed had also been secured by a motor-vehicle as additional security and that the respondent had sold the said motor-vehicle and the proceeds of the sale utilized as repayment for the debt due. Accordingly, Counsel argued, placing the stock in trade of Messrs Permex International (U) Ltd under receivership was unnecessary. ^Further, appellanfsCounsel submitted, that the first loan of US\$ 52,250 never materialized as • ~ ^I " the .said sum of money was- never passed over by the respondent

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110 115 appeal. to Greenland Bank as had been agreed. The learned trial Judge therefore ought to have accepted the evidence of the appellant and his witnesses that the receivers, who were agents of the respondent, disposed of the stock in trade whose value was sufficient to cover the sum due to the respondent. As such, the trial Court ought to have held that the loan due to the respondent had been satisfied in full by the proceeds, of the sale of the stock in trade. Counsel accordingly prayed this Court to allow the

120 125 130 For the respondent, Counsel submitted in opposition to the 3 grounds of appeal that the fact that receivers were appointed had not been an issue at all in the trial of the case. However these receivers were removed from keeping the stock in trade and this property was left in the premises, in whose compound, the appellant had also his residence. By the time the receivers returned after the Court interim order had been removed, the locks that the receivers had left at the premises had been removed, and replaced by new locks by the appellant. When the new locks were cut and the premises opened, all the goods that comprised the stock in trade had been removed by the appellant. The appellant's evidence of denial of this was rightly rejected by the trial Judge. Counsel for the respondent thus prayed that the appellant's appeal be dismissed.

On the issue of interest, respondent's Counsel conceded that the interest of 25% per annum had to be simple interest on the decretal sum calculated from the date of filing suit till payment in full. Counsel prayed for the appeal to be dismissed and for the

costs of the appeal as well as those in the Court below to be awarded to the respondent.

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In resolving the issues in this appeal, the duty of this Court as the 140 appeal Court of first instance, is to rehear the case by reconsidering and re-evaluating the evidence that was adduced before the trial Judge. The Court then makes up its own mind. not disregarding the Judgment appealed from, but carefully weighing and considering it and the conclusions reached upon by the trial Judge. This Court then decides whether or not those 145 conclusions arrived at by the trial Judge are right or wrong, given the evidence that was adduced and the law that was applied to that evidence and the overall facts of the case.

As to the manner and demeanour of witnesses, this appellate Court of first instance must be guided by the impressions made by 150 the learned trial Judge since it is her who saw the witnesses testify and was in a position, on judging the demeanour of those witnesses, to decide who was truthful and who was not.

As to other factors, apart from the manner and demeanour of witnesses, which this Court may consider to determine whether a 155 statement of a particular witness made at the trial, is credible or not, those can be taken into consideration by this Court, and if circumstances so warrant, this Court may come to a conclusion on a particular issue, different from the one arrived at by the trial Rule 30(1) of the Judicature (Court of Appeal See: Court. 160 Rules) Directions, SI 13-10. See also Banco Arabe Espanol vs Bank of Uganda: Supreme Court Civil Appeal No. 8 of 1998; and also: Pandya VR [1957] EA 336 at p. 338. 165 This Court shall follow the above principles in resolving the grounds of this appeal.

In ground ¹ of the appeal, the appellant alleges that the learned trial Judge erred when she ignored to resolve the factual disputes of accountability of the stock in trade worth shs. 138,095,000= the property of the principal debtor Permex International (U) Ltd, which the receivers appointed by the respondent took control of and sold.

175 a ¹⁸⁰ This witness 185 190 The trial Court record, which this Court has carefully considered, shows that the learned trial Judge evaluated the evidence of Pwl Dr. William Odele, Chief credit Manager of the respondent, to the effect that the receivers did not sell the stock in trade goods and no money was banked to the respondent bank. The learned Judge also considered the evidence of Pw2 Okum Gasper, representative of the receivers, who confirmed that nothing of the stock in trade goods was sold, and then also the evidence of another receiver, Pw3, Muhaise Bukalamasa. explained that the receivers employed Delta Force to guard the already locked store ofthe stock in trade goods. The receivers were then removed from guarding the store by the appellant on the basis of a High court interim order, exhibit 10, which temporarily restrained the respondent from selling the stock in trade goods. Later on, the High Court then dismissed the interim order on 30th August, 1999. However by the time the receivers went back to guard the stock in trade goods store, the appellant refused to cooperate with them and refused to open the premises by removing the locks he had put on. When the receivers used a welder to cut

those locks and the doors were opened, the store was empty. The stock in trade goods were not there.

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The learned trial Judge also considered the written statement of defence filed by the appellant as a defendant in HCCS No. 989 of 1999 whereby it was pleaded in paragraphs 5(iii) and (v) thereof that by the time of filing in Court that written statement of defence on 9th September, 1999, the receivers/manager had not sold the goods they had been appointed to sell when the appellant defaulted on the loan repayment. The trial Judge ruled, rightly in our considered view, that the appellant, as defendant, was bound by his pleadings in the written statement of defence.

Yet, the learned Judge found that the appellant in his testimony in Court, grossly contradicted himself first by asserting in his evidence in chiefthat the goods in the nature oftyres and batteries had been sold, but then in cross-examination, stating that he was not there when the goods were disposed of, he could not tell when they were disposed of. He also did not know which receiver disposed of the goods.

210 215 The appellant testified so inspite of the fact that, there was uncontradicted evidence that the residence where he lived was in the same place and compound where also the warehouse where the goods were and that both the residence and warehouse were in a perimeter wall which the appellant accessed every day to get to his residence. Further still, the appellant had also put his locks on the warehouse when the receivers/managers had also put theirs. However, by the time the High Court dismissed the appellant's application for a temporary injunction and ordered the

respondent to access the premises where the stock in trade goods were, the respondent and the receivers, found the locks they had put on the warehouse removed. The appellant was nowhere to unlock his locks and when the receivers cut them through a welder and opened the warehouse, they found the warehouse empty, the goods having been removed. The learned Judge on considering all the above evidence concluded that:

225 *"From theforegoing evidence, which was not challenged by the defendant, it is clear and Ifind the plaintiff has demonstrated that the stock in trade was neither sold nor was any money given to the plaintiff'.*

230 This Court finds that the learned trial Judge properly analysed the evidence and pleadings that were before her, correctly applied the law to the same and arrived at the right conclusions and decision.

Accordingly this Court finds no merit in ground ¹ of the appeal. The same is disallowed.

235 In ground 2 of the appeal the learned trial Judge is faulted by the appellant for having failed to evaluate the appellant's evidence so as to find that the appellant had been discharged from all liabilities when the respondent's appointed receivers took control over and sold the stock in trade worth shs. 138,095,000=.

240 As already pointed out in respect of ground ¹ of the appeal, our reevaluation and re-consideration of the evidence adduced at trial, shows that the learned trial Judge considered together and in detail the evidence adduced by the plaintiff, now respondent, and the plaintiffs witnesses as well as that of the defendant, now appellant who did not call any witnesses. The learned trial Judge

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245 also carefully considered the relevant portions of the pleadings of the parties to the suit.

We have ourselves re-evaluated the evidence of the appellant at the trial where he testified as Owl. He alleged that the receivers took bribes from him but he did not report this to anyone, including the police. He also claimed that the receivers disposed of the stock from the warehouse after they got the Court Order. However he contradicted himself soon thereafter when he stated in crocs examination that:

*"I said that the plaintiff had a right of recourse to the stock, because he had not sold by then, that is by 8/9/99 when the W. S. D. wasfiled. The stock was still in the go down. The stock was sold after that".*

260 This Court finds that the learned trial Judge properly evaluated the evidence that was before her and she arrived at the right conclusion that the appellant had not been discharged from liabilities because the respondent's receivers never took control over and sold the stock in trade worth shs. 138,095,000= or at all. Ground 2 of the appeal thus fails. The same also stands dismissed.

265 Ground 3 of the appeal faults the trial Judge for awarding interest at the rate of 25% per annum compounded on daily balances with monthly interest which was manifestly harsh, unconscionable and excessive.

The trial Judge awarded interest on the decretal sum of shs. 34,019,926= from the date of filing the suit till payment in full. While the trial Judge ought to have, specified the rate of intcicsi

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she awarded, it is not right and fair for the appellant to allege that the interest that the learned Judge awarded was compounded on daily balances with monthly interest.

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275 Counsel for the respondent on appeal conceded that the interest the trial Judge awarded on the decretal sum was at the rate of 25% per annum and was simple interest.

The appellant has thus not justified the assertion that the interest the trial Judge awarded was compound and thus harsh, unconscionable and excessive.

285 290 295 Having considered all relevant circumstances, particularly the fact that the dealings between the appellant and respondent were commercial dealings, and given the fact that under Section 26(2) a Court of law is entitled to award interest at such a rate that the Court may deem reasonable to be paid on the principal sum we hold that the simple interest at 25% per annum on the principal sum of shs. 34,019,926= from the date of filing suit to the date of payment in full is rather on the high side. The rate of interest that is appropriate in the circumstances is one which would be applied if the funds had been put on a fixed deposit in a commercial bank or been invested in bonds, but not the rate that a bank would charge one who takes a commercial loan. We find in the circumstances that the appropriate rate of interest in the circumstances is 16% per annum on the principal sum of shs. 34,019,926=. We set aside the award of 25% per annum and substitute the same with an award of 16% per annum simple interest on the principal sum of shs. 34,019,926=.

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¹ ^A J- ^I Accordingly ground ³ of the appeal also stands dismissed! except as regards the rate of interest which has been re-adjusted as above.

The In conclusion, all the ground of the appeal having substantially failed, this appeal stands dismissed except as to interest. Judgement of the High Court is hereby upheld with the appropriate modification on the award of interest, namely that the sum of shs. 34,019,926= shall carry simple interest thereon at the rate of 16% per annum from the date of filing suit till payment in full.

The respondent is awarded the costs of this appeal and those in the Court below.

³¹⁰ It is so ordered.

Dated at Kampala this *c^c^.. day of ...* ² **018.**

...................... **Kenneth Ka'kuru Justice of Appeal**

**Geoffr^ Kiryabwire Justice of Appeal**

**Remmy Kasule \ . Ag. Justice of Appeal**

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