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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT
KAMPALA
(COMMERCIAL COURT DIVISION)
HCT - 00 - CC - CS -
0973 - 2004
KLAUS KEMPT
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
PLAINTIFF
VERSUS
YOBE OKELLO :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT
BEFORE: THE HON. JUSTICE GEOFFREY
KIRYABWIRE.
J U D G M E N T:
This suit is for the recovery of Euros 4,500 together with interest,
general damages and the costs of the suit.
The case for the plaintiff is that
on or about the 7th September 2002 the plaintiff at the request of
the defendant availed the said money to the defendant. It is alleged that the
defendant
had requested for the money because he was experiencing financial
difficulties and that he had a mortgage with a bank over his property
comprised
in leasehold Register Volume 1982 Folio 15 Block 17. The bank had then decided
to advertise the property for sale to recover
on the facility advanced to the
defendant. It is the case for the plaintiff that the plaintiff gave the
defendant a bridging loan
facility which was to be repaid at some unclosed time.
However todate despite several reminders the said loan has not been repaid
by
the defendant. For the defendant it is not denied that he received Euros 4,500
from the plaintiff. However it is denied that
the money was loan. It is the
case for the defendant that the money was for rent due from the plaintiff to the
defendant. As it
transpired the plaintiff and the defendant were old friends.
At one point in time between 1986 and 1988 the defendant had stayed
with the
plaintiff at his residence in Cologne Germany. Then at a later point in time
the plaintiff for a period of 43 months from
October 2000 to April 2004 stayed
at the residence of the defendant in Bukoto, Kampala. The plaintiff also claimed
the value a computer
tap top and printer supplied to the defendant at a cost of
Ug.Shs.5,400,000/=. It is the case for the defendant by way of counterclaim
that the plaintiff did not pay the due rent which by April 2004 had accumulated
to US$8,600. As to the said laptop the defendant
pleaded that it belonged to
the plaintiff who merely left it at the defendant’s home when he stopped
staying there.
At the scheduling conference it was agreed that the laptop
computer and printer be returned to the plaintiff by the defendant by depositing
it into Court. This after a while was done and consequently resolved the
dispute relating to the laptop. Furthermore at the scheduling
conference it was
agreed that the defendant’s property was advertised for sale; that the
defendant did stay at the residence
of the plaintiff in Germany between 1986 and
1988; that the plaintiff did stay at the residence of the plaintiff in Uganda
between
2000 and 2004 and that none of the parties paid any rent to the other,
while staying at the others residences.
Four issues were set
down for determination by Court.
1) Whether the Euros 4,500 was a loan to be paid back.
2) Whether the defendant was in breach of the loan agreement.
3) Whether the plaintiff is under obligation to pay rent for occupation of the defendant’s premises
4) Remedies.
Mr. Innocent Taremwa appeared for
the plaintiff while Mr. Tom Balinda appeared for the defendant. Only the
plaintiff and defendant
testified. There was no third party
evidence.
Issue No. 1: Whether the Euros 4,500 was a loan to
be paid back.
The facts surrounding the Euros 4,500 are fairly
straight forward. The defendant conceded receiving the money through various
money
transfer company.
The purpose of the money is what is in dispute.
The case for the plaintiff is that it was loan to enable the defendant clear his
obligations with his bank so that his home which was the subject of a mortgage
was not sold.
From the evidence adduced in Court there is no written
agreement as to the purpose of this money. So it is really a case of the
plaintiff’s
word against that of the defendant. According to the
testimony of the plaintiff, the defendant promised to repay him from the sale
of
Sun Flower Oil and that no date was fixed as when this would be. It would all
depend on the income of the defendant. However
the plaintiff then left Uganda
and went to Germany for a heart operation. On his return to Uganda in 2004 the
plaintiff then inquired
from defendant when his money would be repaid. It is
this point that the defendant allegedly told him to leave and stop staying
at
his house up to this point the plaintiff claims he was not aware of any
obligation to pay rent to the defendant.
According to the defendant the
money advanced to him would be offset against rent that the plaintiff was to pay
him for staying at
his house. The rent was US$200 per month. The defendant
testified that this rent was never paid and this created a problem between
the
plaintiff and the defendant. The situation was aggravated when the
defendant’s Germany Shepard Dog was poisoned. The
defendant testified
that he attributed the poisoning to the plaintiff who denied that he did it so
he was asked to leave the house.
Counsel for the plaintiff referred me to
Blacks Law Dictionary 6 Ed. Pg 936 which defines a loan as;
“...A lending delivery by one party to and receipt by another party of money upon agreed or express or implied to repay it with or without interest”.
Counsel for the plaintiff also referred me; Chitty an
Contracts 24th Edition at Pg 3189 where it stated;
“If money is proved or admitted to have been paid by ‘A’ to ‘B’ and then in absence of any circumstances suggesting the
presumption of advancement, there is prima facie, an obligation to repay the money. According, if ‘B’ claims that the money was intended as a gift, the onus is on him to prove the fact”
I was also referred to the case of Selden V
Davidson [1968] 1 WLR 1083.
Counsel for the defendant on the other
hand submitted that
“...The manner of advancement shows that
indeed it was a friendly loan...”
However Counsel for the
defendant then goes on to further submit;
“...It is the plaintiff who brought an action on allegations that he lent money to the defendant. By establishing that he gave money to the defendant, the defendant (sic) (I think he meant the plaintiff) has not set up a prima facie case of a loan. if this were not the case, Courts would be floaded with cases of people who through friendliness or even philanthropy give money to others and when relations between them get sour, they came forth claim that there is a loan with an obligation to pay. This would make a mockery of justice...”
I have perused the evidence adduced at
trial and the submissions of both Counsel. Clearly from the evidence of the
defendant he had
financial difficulties with his bank DFCU Bank Ltd. The bank
had advertised his property for sale on the 27th June 2003 as
evidence in Exhibit P4. He testified that he received the money and that he
would pay back through an offset of rent.
The defendant however did not agree
that this was a loan.
Counsel for the defendant tried to make a distinction
between what he termed as a friendly advance/loan and a loan. He submitted
that
this was a case of a friendly advance/loan and not a loan per se’. There
was no written agreement nor written demand
for payment. Counsel for the
defendant however is not clear as to the legal effect of a friendly advance/loan
as opposed to a loan
per se’. Indeed one these days does see a string of
cases coming up where one party or the other raises a claim or a defence
based
on a “friendly loan”. This is now becoming notorious enough for us
at the bench to take Judicial notice of this
practice. An example of another
such case is Gede Rwema V Ruth Bunyenyezi HCCS 181 of 2004
(unreported) where the money was allegedly advanced for a pyramid scheme called
gifting circles.
However it is difficult to find a common thread between
all these cases as to the legal effect of such a friendly loan. It would
appear
to me that what can be said of a friendly loan is that it is a loan given
informally between the lender and the borrower.
It can be given for a variety
of reasons and each case should be handled on its own merits. However such
informal facilities are
expected to be paid back and that is why non payment
leads to Court cases. To my mind a loan or a friendly advanced/loan is in legal
terms a loan within the meaning assigned to it by Blacks Law Dictionary (supra).
There is a prima facie legal obligation that it
be repaid.
I according
find in answer to the first issue that the Euros 4,500 was a loan to be paid
back.
Issue No. 2: Whether the defendant is in breach of
the loan agreement.
As found in the first issue there was a loan
between the plaintiff and the defendant. It was a very informal loan the terms
of which
are difficult to construe. As the plaintiff himself testified it was
fairly open ended. That notwithstanding it had to be repaid
at some stage and
it is clear from the evidence that at the time of the trial about 2 years after
the last disbursement this money
had not been repaid. I find that the
obligation to repay the money crystallized when the plaintiff demand for money.
The defendant
does not deny that the money was not repaid and so I find that the
defendant was in general breach of the obligation to repay the
money.
Issue No. 3: Whether the plaintiff is under obligation to pay rent for
occupying the defendant’s premises.
It is the evidence of
the defendant that the plaintiff at various times over a (3 years & 7
months) period between October 2000
and April 2004 stayed at the
defendant’s house. There was difficulty in fully describing the
accommodation given to the plaintiff.
However I made out that it was a guest
room, bath and toilet. The rest of the facilities in the house like kitchen,
domestic help,
water, electricity and security were shared. The plaintiff made
his own meals. The defendant testified that plaintiff 3 or 4 times
a year
returned to Germany from Uganda but all the time his room and property would
remain intact until the plaintiff returned.
Like in the case of the loan of
Euros 4,500 there was no rent agreement clearly making this another very
informal arrangement. The
defendant testified that the rent was US$200 per
month and was never paid throughout the time the plaintiff lived with them. The
plaintiff is now counterclaiming US$ 8,600 in rent.
The plaintiff
testified that he never contributed to electricity, water bills, and cost of
house repair. He testified that he once
in a while gave the security guard
money when the security guard requested him. He said he was a visitor not a
paying guest.
Counsels for both parties had tough time submitting on this
issue because not only was there no agreement there was nothing else which
was
written. Counsel for the defendant submitted;
“...it therefore follows that the plaintiff owes the defendant rent for 43 months at the rate of USD 200 per month which totals to USD 8,600/=. The defendant having admitted that he received the Euros 4,500 as an offset of rent, the plaintiff is therefore indebted to him for the balance. Euros 4,500 is the equivalent of USD 5,850 the balance therefore is USD 2,750 which is due from the plaintiff to the defendant...”
I have perused the
evidence on record and the submissions of both Counsels.
Unlike the issue of
the loan where there was evidence of remitting of money there is no documentary
evidence at all (payment by cheque,
receipt, letter of demand etc) of the
existence of a “tenancy” between the plaintiff and the defendant.
What is clear
is that the two were friends and at one time the defendant stayed
with the plaintiff in Germany and now the plaintiff also stayed
with the
defendant in Uganda. The period the plaintiff stayed with the defendant of
course is much longer 43 months as opposed to
7 months.
It is indeed
difficult to construe a tenancy if one stays at his friend’s house. One
would expect that if such an arrangement
did exist then the defendant should
have followed up rental payments when he chased the plaintiff from his house
which he did not.
The defendant merely testified that he tried to find out
where the plaintiff was in town to claim his money but was not successful.
I
find this testimony incredible coming from an old friend. It appears to me that
the defendant had little motivation to follow
upon the alleged USD 5,850 which
was due. This in rental terms is a lot of money to be left hanging about. I
agree with Counsel
for the plaintiff that if this money is due and owing the
legal onus is on the defendant to prove it. This he has not done. To
my mind
given the claim against the defendant for Euros 4,500, the whole rent claim
appears to have come as an after thought to offset
the amount. Objectively it
would have been reasonable to expect the plaintiff as a long standing visitor to
contribute to his hosts
expenses in keeping him even without a formal rent
relationship but this he did not do. This cannot reflect well upon him and
probably
was a basis for the breakdown of the friendship having stayed there for
a long time. As a friend the defendant was under a moral
obligation to make a
contribution to his upkeep while at the plaintiff’s house as a grown
person. Whatever really happened
here the truth lies some where between the
claim for the repayment of Euros 4,500, the death of a German Shepard Dog and
the breakdown
of good friendship. It is a pity this could not have been solved
through alternative dispute resolution (ADR) an opportunity this
Court gave to
the parties.
In answer to the third issue I find that on the evidence
adduced and balance probabilities the plaintiff was under no legally binding
obligation to pay rent for the occupation of the defendant’s
premises.
Issue No. 4: Remedies.
The plaintiff
prayed for the following remedies in the plaint.
1. Euros 6,500.
Only Euros 4,500 were proved and admitted to. I accordingly award the plaintiff Euros 4,500.
2. The return of laptop computer and printer or Ug.Shs.5,400,000/= being their value.
The laptop computer and printer were returned by order of Court and this rests that issue.
3. Interest at 24% from the 7th day of September till payment in full.
Clearly the parties as longtime friends did not intend to create any form of commercial transaction over the loan of Euros 4,500. I find it therefore unreasonable to give any interest in this so I give none.
4. General damages for breach of contract.
Counsel for the plaintiff led no evidence as to proof of general damages. He only cited the case of Fredrick Pool Nsubuga V AG. 1993 1 KARL 33 (unofficial) that general damages are within Courts discretion to put the plaintiff in the position he was before the wrong. He however said a figure of Ug.Shs. 8,000,000/= should be awarded as general damages.
I find that to give the informal nature of this transaction I would award
nominal damages instead of 10,000/=.
5. Costs.
I find that this is a good case for each party to bear their own costs given that this was an open ended loan.
As to the counterclaim I dismiss it and order that here again each party
bears its own costs given their conduct especially given
the hospitality
accorded by the defendant to the plaintiff for a long time.
Geoffrey Kiryabwire
JUDGE
Date: 25/05/06
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