[2012] UGHC 427

# **CIVIL SUIT NO. 0031 OF 2009** THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA HOLDEN AT GULU .

**NEW HONEST ENTERPRISES LTD PLAINTIFF**

# •S =VERSUS=

#### DEFENDANT **HASSAN OPIO T/A ACHOLI BER HARDWARE OT NYONYO ENTERPRISES:::::::::::::::::::::::::::**

### BEFORE HON. JUSTICE WILSON MASALU MUSENE

#### JUDGMENT

This case arose out of the dispute between two hither to trading partners, M/S New Honest Enterprises Ltd (Plaintiff) and Hassan Opio, Trading as Acholi ber Hard Ware and Ot Nyonyo Hardware Enterprises (Defendant).

The Plaintiff's claim against the Defendant is for recovery of Shs. 31,948,000/=, general damages for breach of contract, interest and costs.

The background is that on various dates in the years 2006, 2007 and 2008, the Defendant obtained building materials and/or trade

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goods on credit from the Plaintiff and issued cheques which bounced upon presentation to the Defendant's Bankers and/or in some instances were never presented. Instances of when cheques were not presented was when the Defendant is said to have told the Plaintiff that there were no sufficient funds on the Defendant's accounts. The Defendant, on the other hand, concedes that he obtained goods from the Plaintiff but has paid all the outstanding money due and owing. The Defendant's contention is that he paid the Plaintiff by cheque and cash, and that he was therefore not indebted to the Plaintiff at all.

At the scheduling conference, the Agreed facts were that the Plaintiff supplied the Defendant with building materials over divers periods. Some documents were also agreed to and will be referred to imthedater part of this Judgment.

# **The issues framed were:-**

- **1**. Whether or not the Defendant is indebted to the Plaintiff in the sum of Shs.81,948,000/ ⁼ . - 2. What remedies are available to the parties.

^I shall deal with the above issues one by one, starting with 1st one. PWl, Mayur Ruparel, testified that he does business as a company known as "New Honest Enterprises Ltd, a registered company in Uganda. And that he is a Director in the company. He testified that his company has been dealing in hardware business with the

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Defendant and the Defendant would pay cheques. He, however, added that the Defendant has not paid for cheuqes he issued wprth Shs. 81,948,000/=. He started with the first cheque, No. 000523 dated 19.7.2006, drawn on Stanbic Bank, Gulu for Shs. 4,368,000/=. PW1 stated that when he presented the cheque, it bounced with inscriptions "Refer to Drawer", on 20.7.2006, and the same was exhibited as PI. He added that the same had not been paid for by the Defendant to date.

The Defendant does not deny that he issued the cheque or that it bounced. The Defendant's case is that when the cheque bounced, he issued another cheque No. 252 in replacement, drawn on Centenary Bank dated 24.7.2006. And according to the submissions of Mr. Sam Njuba for the Defendant, the burden lies on the Plaintiff to produced invoices and Delivery Note to show that the payment was another transaction. That was because the Plaintiffs testimony was that cheque No.252 drawn on Centenary Bank and dated 24.7.2006 was in respect of another transaction and not replacement of the bounced cheque. Mr. Otim Atiang for the Plaintiff submitted that though the amount was the same, the Defendant obtained goods at the same rate, and so the coincidence in the amount is not proof'of payment as claimed by the Plaintiff. Mr. Otim Atiang referred to the Defendant's Bank Statement (Exhibit DI), whereby there were coincidences of similar or same amounts for different transactions.

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At page ¹ of the Centenary Rural Development Bank Ltd (Statement of OT NYONYO ENTERPRISES), cheque No. 364 effective 8.1.2008 for Shs. 18,400,000/= is of the same amount as No. 366, also for Shs. 18,400,000/=, drawn in favour\* of Mayur. He submitted that those were two distinct transactions but bearing the same amount. Another example was given on page 2 of the said Bank Statement, where there is a cheque No. 261 in favour of Mayur for Shs. 14,400,000/=; which is the same as cheque No. 262 for Shs. 14,400,000/=, and same as cheque No. 265 for the same amount of Shs. 14,400,000/=. It is along list of seven transactions of the same amounts drawn on different dates in favour of Mayur Ruparel.

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Another example was given of cheques on page 3 of the Statement, cheque No. 281 for Shs. 7,640,000/= dated-2^-1.2007 and cheque No. 288 of Shs. 7,640,000/= dated 14.2.2007; and many others of similar amounts on different dates, all in favour of Mayur Ruarel. • According to Mr. Otim Atiang for the Plaintiff, the instances pointed out above illustrated that the Plaintiff never issued a cheque in replacement or paid twice /thrice for the same transaction, but they were different transactions all together.

Although Mr. Sam Njuba for the Defendant maintains that those cheques were issued in replacement by the Defendant, this Court is more inclined to agree with Mr. Jude Otim Atiang for the Plaintiff that the Defendant issued cheques for every new transaction. This

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is because if the Defendant replaced the bounced cheques, then he should have removed those bounced cheques from Mayur. Why did he leave them if at all he had replaced them?

Before ^I conclude on this matter, ^I refer to the Plaintiff's further testimony in respect to another indebtedness by the Defendant in the sum of Shs. 11,500,000/= dated 14.12.2007 as per cheque No. 000505 drawn on Stanbic Bank, Gulu. It was issued by the Defendant trading as Acholi Ber Hardware. The same bounced with remarks "Refer to Drawer" on 14.2.2007. The same cheque was also presented on 5.2.2008 and again bounced with remarks, "Refer to Drawer". The same was exhibited in Court as P2.

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The Defendant conceded that he issued and signed the cheque but he added that he replaced it with another cheque on 8.1.2008 after taking more goods worth Shs. 6.900.000/=. The Defendant's case was that the balance over and above the previous cheque catered for the extra goods taken. However, and like in the previous transaction, the Defendant failed to convince this Court why he did not retrieve the cheque he replaced from Mayur. Why did he leave the bounced cheque with Mayur? The Defendant during crossexamination by the Plaintiff's Advocate stated that he did not retrieve the bounced cheques when he replaced them because Mayur told him he had destroyed them.

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**7** Given the large sums of money involved, this Court does not believe the Defendant at all. Even if Mayur told him he had destroyed the bounced cheques, Defendant would have demanded for acknowledgment of new cheques in lieu of bounced ones. It makes no business sense or no sense at all to replace a bounced cheque and then leave the same with the person in whose hands it bounced.

*to* The Plaintiff also tendered in Court, exhibit P3 in support of his claim for Shs. 16.080,000/= from the Defendant, vide cheque No.000411 drawn on Centenary Bank, dated 24.2.2008. The said cheque was presented and bounced. In his defence, the Defendant stated that he did not write the cheque himself but says he signed it, and that it was a blank cheque. And that he gave three such blank cheques. These were exhibit P3, P4 and P5 of Shs. 25,000,000/^= each (P4 and P5).

The Defendant testified that whereas he signed all the cheques relied upon by the Plaintiff, notably exhibits P3, P4 and P5, that it was the Plaintiff who filled in the names, amount of money and so the cheques were invalid. The Defendant further testified that exhibit P5 was not dated ahd invalid. The Defendant also denied during cross-examination from Plaintiff's Counsel ever getting goods worth 16,080,000/= or Shs. 25,000,000/= as per exhibits P3, P4 and P5. Again, this Court wonders why the Defendant signed the cheques if he did not get the goods worth as claimed?

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Under Section 72 of the Bills of Exchange Act, a cheque is a bill of exchange drawn on a Banker payable on demand. And under **Section 2(1), a bill of exchange is defined:-**

"*Section 2.(1) A bill of exchange is an unconditional order in writing, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of the specified person or to bearer".*

## **Furthermore, Section 2(4) provides:-**

"Section .2(4) a bill is not invalid by reason;

a. That it is not dated.

/

/

- b. That it does not specify the value given or that any value has been given therefore; ----- - c. That it does not specify the place where it is drawn or the place where it is payable.

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What is important therefore is the signature. As long as the cheque is signed, even if it is not dated or blank, it is not invalid under the law. So as long as the Defendant signed the cheques and gave to the Plaintiff, then they were valid and this Court can not believe the Defendant when during cross-examination, he conceded or admitted having issued bad cheques.

This Court is on the other hand, inclined to believe the Plaintiff's case in view of the testimonies of PW1 and PW2. Both PW1 and

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PW2 testified that they had at all material times been engaging the Defendant, asking him to pay for good received for which cheques issued by the Defendant had bounced. They added that they would even go up to Defendant's Hotel and the Defendant was promising to pay. The Defendant can not therefore turn round to say that he was not aware of the bounced cheques. To make the Defendant's case worse, the Defendant uttered five (5) receipts marked annextures "A", "B", "C", "D" and "E", which were tendered in Court and marked D1-D5, respectively. The above receipts were allegedly to proof payment for goods obtained from the Plaintiff. The Plaintiff denied the said receipts as belonging to it and pointed out several discrepancies and/or differences compared to annextures with exhibit P6, which was Plaintiff's genuine receipt, different from the one uttered by the Defendant.

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$15$ Mr. Jude Otim Atiang for the Plaintiff made detailed comparisons, and it will suffice for purposes of this Judgment to quote three of them as follows:-

- P6 has the letter "OM", while the Defendants Annextures "A", $\mathbf{i}$ . "B", "C", "D" and "E" do not have. - The "Box" in annextures "A", "B", "C", "D", "E" are not in ii. exhibit P6. - "TIN" and "VAT" numbers are written on one side in exhibit P6, iii. while the "TIN" and "VAT" numbers are written together in Defendant's annextures "A", "B", "C", "D" and "E".

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I Certify that this is a true Copy of the Original D. Rezietran Dated this ... The discrepancies in the genuine receipts of the Plaintiff and those uttered by Defendant is an indication of dishonesty on the part of the Defendant.

Lastly, on the first issue, Mr. Sam Njuba for the Defendant submitted that the cheques claimed are in the names of Mayur Ruparel, and so are other payments. And that Mayur is not a party to the suit and would have no locus to claim. He referred to the case of Salmon Vs Salmon & Co. Ltd (1895-9) All-E. R. 33, where it was held that "a company or corporation is a legal entity separate and set apart its members or shareholders". That the legal $10$ personality is an artificial one which is distinguishable from natural Possession of a legal personality implies that a personality. company is capable of enjoying rights and being subject to duties, separately from its members.

$\mathbf{1}$ Mr. Sam Njuba also quoted the case of Sentamu Vs U. C. B (1983) HCB 59, where is was held that the company is in law a different person altogether from it's subscribers, and though it may be that after incorporation the business is principally the same as it was before, and the same persons are Managers and the same hands receive the profits, the company is not at law the agent of the $\sim$ subscribers or trustee for them nor are the subscribers as members liable in any shape or manner. Mr. Njuba therefore submitted that now New Honest Enterprises would have no case against the Defendant.

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law, there veil to V- ith respected, much as a company is a different legal entity in arises a situation where the law allows the lifting of the see the real person behind the company. And as submitted in reply Mr. Jude Otim Atiang for the Plaintiff, in their pleadings on record and consequent transactions, the Defendant did not separate or distance Mr. Mayur Ruparel from the Plaintiff company.

7 he Defendant in his pleadings maintained that payments effected in Mayur's names were intended for Plaintiff. For example in para.7 of the original; written statement of defence, it is stated:-

*person empowered to carry on business on its behalf9. "7. That the Plaintiff's money was always paid to Mayur Rapurel whom the Plaintiff had represented to him as a*

The same statement above is reflected under paragraph 11 of the Amended Written Statement of Defence.

It reads:-

/

*"11. The Defendant paid the said monies either to the Plaintiff directly in cash and/crediting the Plaintiffs Bank Account or to one Mayur whom the Plaintiff had represented as a person empowered to carry on business on its behalf'.* According to the law, and as correctly submitted by Mr. Jude Otim Atiang for the Plaintiff, the parties are bound by their own pleadings. Mr. Sam Njuba for the Defendant, having stated in black and white that the money was paid directly to the Plaintiff company or through one Mayur empowered to carry on the Plaintiffs

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business, can not now turn around or change colours like a chameleon to depart from his own pleadings and mislead this Court. This is because at all material times, the Defendant knew and believed that all payments effected trough Mayur either in cash or cheque were for and on behalf of the Plaintiff.

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This Court was even surprised by the submission by Mr. Njuba that the Plaintiff was a nullity and it be rejected under 0.7 r.11 of the Civil Procedure Rules for disclosing no cause of action. Mr. Sam Njuba did not state so in his pleadings, notably the written statement of Defence.

In paragraph 5 of the amended Written Statement of Defence, it is stated as follows:-

"5. The Defendant avers that though he often dealt with Plaintiff on credit, he is currently not indebted in any way to him and the Plaintiff shall be put to strict proof of such is claims".

It is therefore a great surprise to concede that the Defendant dealt with the Plaintiff on credit, and when the Plaintiff demands payment for the good supplied, then there is no cause of action, allegedly hiding under a technicality of Salmon Vs Salmon & Co. Ltd, an old case since abandoned in England itself under changing circumstances.

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I Certifr that this is a true Copy of the Original / D. Registrat Dated this

In any case, ^I wish to be emphatic that in the circumstances of the present case as seen form the pleadings on both sides, the case of **Salmon Vs. Salmon & Co, Ltd, even if it was the correct position of the law, is not applicable in the present case. The same is quoted out of context**

Secondly, Article 126(2)(e) of the Constitution of Uganda empowers Courts to administer substantive justice without undue regard to technicalities. The Plaintiff has a distinct cause of action in that the Defendant took his cement and/or other goods on credit, and attempted to pay by cheques which bounced with remarks like "Refer to Drawer"; And as long as the Plaintiff has not been paid partly or the whole amount due, then there is a cause of action and so the submissions by Mr. Njuba that there is no cause of action hereby rejected.

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All in all, and in view of what is outlined herein above, this Court finds and holds that the Plaintiff has proved its case on the balance of probabilities as far as the first issue is concerned. The Defendant is indebted and liable to pay the Plaintiff the sum of Shs. 81,948,000/ = .

^I now turn to the second issue as to what remedies are available to the parties. In the first instance, and on the basis of evidence adduced, Court finds and holds the Defendant liable to pay the principal sum of Shs. 81,949,000/= to the Plaintiff.

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It was further submitted that Court awards general damages to the Plaintiff. Indeed the Defendant breached the contract, promise and trust which was the basis of his transactions with the Plaintiff. It was submitted that the Plaintiff has been subjected to losses as it was unable to meet its financial obligations to its suppliers and Directors, and the Plaintiff lost out an opportunity to re-invest its business capital constituted in the unpaid debt. Mr. Otim Atiang for the Plaintiff quoted the case of **Kabona Brother Agencies Vs Uganda Metal Products and Enameling Co. Ltd (1981) HCB 74,** where is was held that for such breach of contract, such amount as may reasonably be supposed to have been in contemplation of both parties at the time the contract was made, as the probable result of the breach of it. Counsel for the Plaintiff therefore suggested that one-third of the principal sum be **paid as'**general damages. That would mean around Shs. 27,000,000/=. However, this Court holds that award such an amount would be prohibitive.

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In circumstances, ^I am inclined to award the sum of Shs. 8,000,000/= as reasonable general damages. Since I have awarded general damages for breach of contract, I decline to award interest. However, the Plaintiff is awarded costs of the suit.

**C°P.- n,**

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In conclusion therefore, having found and held in favour of the Plaintiff, the Defendant is hereby ordered to pay the principal.sum of Shs. 81,948,000/= to the Plaintiff, general damages of Shs. 8,000,000/= and costs of the suit.

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**ⁱ ^j Wilson Masalu Musene Judge**

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**5**

## THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA HOLDEN AT GULU

### CIVIL SUIT NO. 0031 OF 2009

## NEW HONEST ENTERPRISES LTD PLAINTIFF

### -VERSUS-

#### DEFENDANT HASSAN OPIO T/A ACHOLIBER HARDWARE OTNYONYO ENTERPRISES

#### DECREE

THIS SUIT coming this 5th day of April, 2012, for Judgment before HON. JUSTICE WILSON MASALU MUSENE in the presence of KUNIHIRA ROSELYNE Holding brief for JUDE T. ATIANG OTIM, Counsel for the Plaintiff, and in the absenceof the Plaintiff, Counsel for the Defendant and the Defendant,

IT is hereby DECREED and ORDERED that the Defendant pays to the Plaintiff: -

- (a) Principal sum of Ushs. 81,948,000/=(Shillings Eighty one million, Nine hundred forty eight thousand shillings only) - General Damages of 8,000,000/= (Eight Million shillings only). (b) - Costs ofthe suit. (c)

GIVEN under my Hand and the Seal ofthis Court this day of 2012.

AS, TANT REGISTRAR

#### DRAWN & EXTRACTED BY:

M/S ATIANG OTIM & CO. ADVOCATES, PLOT 17/18, BALLA ROAD, P. O. BOX 865, LIRA.