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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0530 OF 2004
WERE FRED ::::::::::::::::::::::::::::::::::::::::::::
PLAINTIFF
VERSUS
KAGA LIMITED :::::::::::::::::::::::::::::::::::
DEFENDANT
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
J U D G M E N T:
The
Plaintiff’s suit against the Defendant is for the recovery of special
damages, general damages, interest, exemplary damages
and costs of the suit. He
bought a vehicle from one Muyingo. The vehicle was in the names of the
Defendant. He paid the full purchase
price and took possession. His attempts
to transfer it into his names failed because of the Defendant’s claim that
Muyingo
had no authority to sell it. The defence grounds it claim in the
Nemo dat quod non habet rule.
The only point of agreement is that
the car was registered in the names of the Defendant. The rest is disputed.
There are three
issues for determination:
1. Whether there was a contract of
sale between the Plaintiff and the Defendant.
2. Whether the Defendant is in
breach of the contract, if any.
3. Whether the Plaintiff is entitled to the
remedies sought.
Representation:
Mr. Sekaana for the
Plaintiff.
Mr. Kajeke for the Defendant.
Before I delve into the
assessment of evidence in this case, I consider it necessary to state the law on
some aspects of this case.
1. Burden of proof
In law, a fact is
said to be proved when Court is satisfied as to its truth. The general rule is
that the burden of proof lies on
the party who asserts the affirmative of the
issue or question in dispute. When such party adduces evidence sufficient to
raise
a presumption that what he asserts is true, he is said to shift the burden
of proof: that is, his allegation is presumed to be true,
unless his opponent
adduces evidence to rebut the presumption. The standard of proof is on a
balance of probabilities.
Relating the above to this case, the Plaintiff
has alleged that the sale was between him and the Defendant through its agent
Muyingo.
The burden rests on him to prove that allegation.
2. The
Nemo dat principle
The case relates to alleged passing of title. The
basic principle is Nemo dat quod non habet [No one gives who
possess not]. In other words, a transferor cannot give a better title to
property than he or she possesses. This
principle was established at common
law. However, it is now part of our Statute law. Section 22 of the Sale of
Goods Act (Cap 82)
provides:
“Subject to this Act, where goods are sold by a person who is not the owner of the goods ......... the buyer acquires no better title to the goods than the seller had .....”
As we shall see later in
this Judgment, there is an exception to this rule: unless the owner of the goods
is by his or her conduct
precluded from denying the seller’s authority to
sell.
3. Contract
This means an agreement enforceable at law.
For a contract to be valid and legally enforceable, there must
be:
i. capacity to contract.
ii. intention to contract.
iii. consensus
ad idem.
iv. valuable consideration.
v. legality of
purpose.
vi. sufficient certainty of terms.
The agreement in this case
appears to embody all the above factors to make it enforceable at
law.
4. Authority
In as far as there was no direct relationship
between the Plaintiff and the Defendant, Court will consider the status of
Muyingo in
this case: his authority to sell the vehicle. Authority in the
context of this case simply means delegated power: a right or rights
vested in a
person or a body of persons. In law, a person vested with authority is usually
termed as agent, and the person for whom
he acts, the principal. In this way,
he may have power to make a contract on behalf of that other person, the
principal. That contract
then becomes the principal’s, the agent not being
himself a party because it was not personally his contract. In short, our
law
recognizes that he who does something through another does it himself: qui
facit per alium, facit per se. Agency can arise expressly or by
implication.
Enough of the legal principles. I now turn to the evidence
of each party, the Plaintiff’s first.
He (Plaintiff) hails from
Bugiri District. He came to the city on 8/6/2004 looking for a vehicle to buy.
In the company of his brother,
Were Moses, they proceeded to a place called
Pine, in the city, where second hand vehicles were on sale. He found there a
vehicle
with a notice that it was on sale. His evidence is that he inquired
about it and was allowed to test it on the road. On liking
it, one Muyingo who
was taking care of it told him to pay for it. He said he had the power to
conclude the deal. He there and then
paid Shs.1,500,000- and went back to
Tororo to mobilize the balance of Shs.4,000,000-. The vehicle remained at
Pine.
On 10/6/2004 he returned to Kampala and paid the balance to
Muyingo. They then executed a sale agreement, P. Exh. 1. Upon execution
thereof, he was given the log book; a page extract from the Defendant’s
Managing Director’s passport bearing his photo
and signature; a copy of
the Defendant’s certificate of incorporation; and 4 transfer forms duly
stamped and signed. Thereafter,
he took possession of the vehicle.
It
lacked seats and tyres. He worked on them and made the vehicle road worthy.
He used it for two weeks and thereafter embarked
on the process of registering
it in his names. He delegated the task to one Kebba who later told him that the
Defendant wanted to
see the original sale agreement. He contacted the
Defendant’s Managing Director, one Allan Mugisha, who refused to sanction
the transfer.
According to Kebba, PW2, on taking the documents to URA, he
was told that some clearance was required from the Defendant before the
transfer
could be effected. When he contacted the Defendant’s officials, they told
him to produce the buyer himself. He did
just that.
PW3 Were Moses was
with the Plaintiff when the sale between him and Muyingo took place. Muyingo
assured them that he was an agent
of the Defendant. The other brokers around
also stated so. He, Muyingo, directed him where to find the Defendant’s
offices
at Namirembe Rd and he went there. He met a Secretary who told him that
the vehicle was on sale and that Muyingo was handling it.
On the strength of
that assurance, the parties concluded the sale transaction.
Turning now
to the defence, DW1 Allan Mugisha is the Defendant’s Managing Director,
MD. The Plaintiff went to him claiming
that he had bought the vehicle in issue.
Since the company records did not show that the vehicle had been paid for, he
went to police
and lodged a complaint. In the end, the Plaintiff surrendered
the vehicle to the police and the police returned it to him (DW1).
As to
whether he knows Muyingo, he said he does. However, he (Muyingo) is not an
employee of the Defendant. DW1’s evidence
is that the Defendant gave the
vehicle with its log book to Gerald Associates to sell it at Shs.8m. They did
not give him any other
document. He identified the stamp on the transfer
documents as that of the Defendant but said he did not know how Muyingo got it.
Likewise, he did not know how Muyingo got the extract from his passport, or the
certificate of incorporation in respect of Kaga
Ltd. According to him, such
documents are only issued upon the purchaser showing evidence of payment of the
purchase price to the
company.
DW2 Mildred Bamuhimbise is the official in
the Defendant’s company to whom the Plaintiff first reported the matter
through Kebba
(PW2). She retained the log book and forwarded the matter to her
boss, DW1 Allan Mugisha, to handle.
DW3 Mwine Arthur is the brain behind
Gerald Associates. He claims that he was given the vehicle in question to sell
it. He left
it at Pine. Later, he was contacted by the Defendant who wanted to
know whether he had sold it. When he went to Pine to find out
the whereabouts
of the vehicle, he was told that one Muyingo sold it. He does not know how
Muyingo accessed the log book.
From the evidence, there was no direct
sale transaction between the Plaintiff and the Defendant. The Plaintiff’s
case is that
Muyingo sold the vehicle to him on behalf of the Defendant. In the
circumstances of this case, I have to decide whether Muyingo
had express or
implied authority to sell it.
There is no direct evidence regarding any
express authority to do so. The evidence tending to indicate so is basically
circumstantial
in a sense that no written authority has been exhibited. I will
now proceed to consider the circumstantial evidence relied upon
by the Plaintiff
as giving him a cause of action against the Defendant. By circumstantial
evidence I mean a series of circumstances
leading to the inference or conclusion
that something happened and happened in the way indicated by the party asserting
so, in the
absence of direct evidence to that effect. In law, evidence which
although not directly establishing the existence of the facts
required to be
proved is admissible as making the facts in issue probable by reason of its
connection with or relation to them.
It is sometimes regarded to be of higher
probative value than direct evidence which may be perjured or mistaken:
Osborn’s Concise Law Dictionary, 9th Edition at
p.81.
I have considered the Plaintiff’s evidence on the matter. He
came from upcountry with intention of buying a vehicle. He went
to a place
where vehicles are sold and identified the vehicle in issue. He did not know
the owner of that particular vehicle. However,
one Muyingo came forward and
offered himself as the seller of the vehicle. He did not claim to be the owner
because the log book
spoke for itself on the matter: the owner was Kaga Ltd, a
company which could only transact business through its
servants/agents.
The Plaintiff took the bother to find out from Muyingo
whether he had the owner’s authority to sell the vehicle. Muyingo assured
him that he did. He produced to him the log book and other duly signed
documents.
As learned counsel for the defence has correctly argued, a
Motorcar Reg. book is not a document of title. Delivering thereof to the
buyer
does not of itself bestow title upon the person to whom it has been delivered.
However, as the learned author states in Sale of Goods by Prof. Ewan
Makendrick, Edition 2000 at p. 257, Sales of vehicles present particular
problems because, although registration books
cataloguing previous owners are
not documents of title, it is not usual to sell a second hand vehicle without
its registration book.
I take judicial notice of this notorious
fact.
Consequently, if the seller does not produce the log book, the
Court will be very suspicious about whether the purchaser has really
bought in
good faith. The Plaintiff is a taxi driver. He appears to have been in the
know of that much.
In the instant case, the Defendant parted company with
both the car and its original log book. At the hearing, he talked of written
authority to Gerald Associates but none has been produced to Court. DW3 Arthur
Mwine, the very brain behind Gerald Associates claims
that he received the log
book and kept it securely in his drawer. Surprisingly, he claims that he does
not know how it landed in
Muyingo’s hands. No evidence has been presented
to Court that his premises were ever broken into to raise inference that he
did
not willingly part possession with it, assuming that DW1’s evidence that
he handed it to them is truthful and not an afterthought.
Muyingo himself did
not appear as a witness. He is said to have left the country soon after the
sale. Apparently he used the sale
proceeds for an air ticket. In the absence
of any evidence that Gerald Associates premises were ever broken into, and in
the absence
of any written authority by the Defendant to Gerald Associates,
Court is unable to rule out the possibility that the log book was
given to
Muyingo by Servants of the Defendant or that he got it from the person who had
lawful possession of it with the blessing
of the Defendant.
I have also
considered the Plaintiff’s evidence regarding Allan Mugisha’s
conduct upon hearing that Muyingo had sold the
vehicle.
It is that he
asked the Plaintiff to produce the original sale agreement or else he would be
considered to have bought air. He did
not say that Muyingo was a thief or that
he had no authority to deal with any prospective buyer what soever.
The
Plaintiff states:
“.................... He then told me that they had instructed Sulaiman Muyingo to sell the vehicle but did not take the money to him. That since he did not pass on the money, he was impounding the vehicle.”
From this evidence, which in my
assessment came from an honest source, Court is of the view that Mugisha knew
who the seller of the
vehicle was. The issue at that time was not whether
Muyingo had the authority to sell the vehicle but his failure to remit the sale
proceeds to them.
It is significant to note that Mugisha does not in his
evidence deny personal knowledge of Muyingo.
The Plaintiff continues:
“Mugisha told me that to assist me, there was a vehicle which Sulaiman Muyingo had left. That Muyingo had left the card with his (Mugisha’s) wife at the shop. He gave me a particular number plate and advised me that on seeing the vehicle, I should call him (Mugisha) and inform him where the vehicle was. Around the Arua Park I sighted the vehicle and called him. That vehicle was UAE 730 Z. On calling him, he told me to go to police and tell police that the vehicle had caused an accident and knocked somebody. I told him I wouldn’t manage that.”
This evidence was
never challenged at all during cross-examination. I accept it as truthful. It
shows Muyingo as a person who was
a very close associate of Mugisha to the
extent that when he was leaving the country, he left a card of his vehicle with
Mugisha’s
wife. I believe that evidence. It is evidence that strengthens
the Plaintiff’s case that Mugisha and Muyingo were not strangers
to each
other. They were business associates.
Further, I have considered the
efficacy and effect of the other documents which the Plaintiff received from
Muyingo as evidence of
authority to sell the vehicle. As already stated above,
they include a page from Mugisha’s own passport, P. Exh. IV. Mugisha
claims that he does not know how Muyingo got it. In this country, a passport is
personal to the holder, unless of course it has
been stolen from him. There is
no such evidence of its theft from Mugisha.
Muyingo also handed over to
the Plaintiff a copy of the Defendant’s certificate of incorporation, P.
Exh. 111. Again, Mugisha
claims that he does not know how Muyingo got
it.
He also gave him 4 transfer forms duly stamped and signed. Mugisha
has admitted the stamp to be genuinely that of Kaga Ltd. The
signature
appearing on those forms in all respects resembles that of Mugisha as it appears
in his passport. There was no attempt
to lead any handwriting expert’s
opinion that it is not Mugisha’s. If opinion evidence is required in a
case like this,
this was a proper case for such opinion. As far as Court is
concerned, there is no visual difference between the signature attributed
to
Mugisha on the transfer forms and Mugisha’s genuine signature in his
passport as per P. Exh. IV.
In all these circumstances, the Plaintiff was
of the view that the Defendant had authorised Muyingo to sell the vehicle
through the
release of the log book to him and signed transfer documents. From
my analysis of the evidence above, Court is of the same view.
Its view would
have been different if the log book had been found to be a forgery or credible
evidence had been led of its disappearance
from the person who had lawful
custody of it. The Court’s opinion would also have been different if the
Defendant had led
credible evidence which raised doubts as to the efficacy of
the extract from Mugisha’s passport or the duly signed and stamped
transfer forms.
I have already observed that if the goods are sold
without the authority or consent of the owner, the buyer acquires no title.
Section
22 of the Sale of Goods Act is clear on that. However, the section is
subject to the other provisions of the Act.
The same Act preserves the
rules of common law regarding principal and agent in section 58 (2) thereof.
Under common law, a sale
within the usual or ostensible authority of an agent,
even though outside his actual authority will bind the owner. It is therefore
immaterial in this case that Muyingo did not first hand over the sale proceeds
to the owner before handing over possession of the
vehicle to the
Plaintiff.
In the final analysis, Court has come to the conclusion that
Muyingo had ostensible authority to sell the vehicle. His problem may
have been
the pocketing of the sale proceeds a matter that would not vitiate the
sale.
The Plaintiff identified the vehicle on 8/6/2004. He effected the
final payment on 10/6/2004. The transfer documents are dated 21/6/2004.
It is
not known when Muyingo left the country. For 2 weeks, the Plaintiff used it
without anybody raising a finger of the alleged
theft. If it had been entrusted
to Gerald Associates and it had disappeared as alleged, they would have been the
first to know,
not the Defendant who had already given possession to third
parties and all it was waiting for was the payment. I have also considered
the
amount of Shs.5,500,000- realised from the sale. For a second hand vehicle, it
does not appear to Court to have been so low
as to raise suspicion of any body
buying it that the seller was up to any mischief.
In my view, the
Plaintiff was a purchaser for value without any notice of the seller’s
defect of title. He acted in good faith.
There was, accordingly, a contract of
sale between him and the Defendant. I so find.
As to whether the
Defendant is in breach of it, there is evidence that upon realizing that Muyingo
had left the country without remitting
the proceeds to the Defendant, the
Defendant’s servants caused the vehicle to be impounded. It was later
returned to them
at the instance of the police. I’m unable to say that
the justice of the case warranted such hurried action on the part of
the police,
in the absence of evidence that the Plaintiff had committed an offence of theft
of the motor vehicle. Police could have
waited for the issue of ownership to be
determined between the parties. The repossession of the vehicle by the
Defendants and its
subsequent disposal, were in the circumstances of this case
in breach of the contract of sale.
The second issue is also answered in
the affirmative.
As to whether the Plaintiff is entitled to the remedies
sought, there is no doubt in my mind that the Plaintiff is an injured party.
The principle is that the injured party should be put as nearly as possible in
the same position, so far as money can do it, as
if he had not been
injured.
He has given evidence to show that he paid Shs.5,500,000- for
the vehicle. The Defendant has since repossessed it. Plaintiff is
entitled to
a refund of the said purchase price from the Defendant who can in turn seek
recovery of it from the said Muyingo as money
had and received.
He has
also given evidence that shows that by the time the same was sold to him, it
lacked seats and tyres. He put them there. His
claim is that he spent
Shs.2,500,000 in that regard but the receipts he has tendered in evidence come
to a total of Shs.1,252,000-.
Court is satisfied that he incurred that expense.
Shs.1,252,000- is awarded to him as special damage.
He has claimed loss
of income in the sum of Shs.100,000- per day from 23/6/2004 to-date. This is
based on his claim that for the
two weeks he had so far made use of the vehicle,
he was earning that much out of it daily. In view of that short time he had
stayed
with it, Court is of the view that the amount is on the high side and the
claim largely speculative. In my view, an award of general
damages would meet
the ends of justice. Doing the best I can, I consider a sum of Shs.1,000,000-
(one million only) an adequate
award of general damages and I award it to the
Plaintiff.
As for exemplary damages, these are normally awarded as
punitive damages over and above actual damages when the Defendant has acted
with
recklessness, malice and deceit. I have not considered those factors to be
present in this case. Court is therefore unable
to make any award of exemplary
damages. In any case, a claim for exemplary damages must be specifically
pleaded in the body of the
plaint together with full particulars of fact relied
upon to support the claim and not merely the prayer. There has not been any
such pleading herein.
He has prayed for interest of 30% per annum on
special damages without specifying from which date. The principle is that where
a
person is entitled to a liquidated amount or specific goods, as in this case,
and has been deprived of them through the wrongful
act of another person, he
should be awarded interest from the date of filing the suit. Where, however,
damages have to be assessed
by Court, the right to those damages does not arise
until they are assessed. In such event, interest is given from the date of
Judgment.
Considering that the issue of interest herein is coming up after the
assessment of damages, I would award interest at the claimed
rate of 30% per
annum from the date of Judgment till payment in full. I do so.
He has
prayed for the costs of the suit. The usual result is that the loser pays the
winner’s costs. I see no good reason
to order otherwise. The Plaintiff
shall therefore have the costs of the suit to attract interest at Court rate
from the date of
taxation till payment in full.
In the final result,
Judgment is entered for the Plaintiff against the Defendant in the following
terms:
a. Special damages: Ug. Shs.6,752,000- (six million seven hundred
fifty two thousand only).
b. General damages: Ug. Shs.1,000,000- (one
million only).
c. Interest on (a) and (b) at the rate of 30% p.a. from the
date of Judgment till payment in full.
d. Costs of the suit.
e. Interest
on (d) at Court rate per annum from the date of taxation till payment in
full.
DATED at Kampala this 23rd day of December,
2005.
Yorokamu Bamwine
J U D G E
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