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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0014-2003
J.K. PATEL :::::::::::::::::::::::::::::::::::::::
PLAINTIFF
VERSUS
UGANDA REVENUE AUTHORITY :::::::::::::::::::
DEFENDANT
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
J U D G M E NT:
THE case for the
plaintiff which the defendant disputes is that he paid his tax liability to the
defendant for the period 1982 –
1991 in which there was an overpayment of
Shs.55,517,870-.
These were the points of agreement at the scheduling
conference:
1. URA issued an agency notice to M/S Spear Motors Ltd to recover
taxes payable by the plaintiff for the period 1982 – 1991.
2. M/S
Spear Motors Ltd made payments on behalf of the plaintiff in the sum of
Shs.192,539,314- to the defendant, URA.
3. The plaintiff made direct
payments to the defendant on account of his tax liability in the sum of
Shs.37,280,286-.
4. The High Court of Uganda paid directly to URA a sum of
Shs.17,503,574.
When the sums above are put together, you get a total of
Shs.247,323,174-. It has taken the parties over ten years to reconcile the
figures.
There are three issues for determination:
1. Whether the
plaintiff’s claim is barred by limitation.
2. Whether the plaintiff is
entitled to refund of Shs.55,517,870-.
3. Whether the plaintiff is entitled
to the other reliefs sought.
Counsel:
Mr. Richard Okalany for
the plaintiff.
Mr. Habib Arike and Ms Stella Nyapendi for the
defendant.
A brief background to the case is necessary if the context in
which the decision in the matter is to be understood.
The defendant is a
statutory body responsible for collection of taxes. The plaintiff is a tax
payer. Between 1982 and 1986, he did
some construction work for M/S Spear
Motors Ltd. The said company defaulted in payments and the plaintiff took them
to Court vide
HCCS No. 103/88 J.K. Patel –Vs- Spear Motors
Ltd.
The award in that case attracted the attention of URA which
empowered the judgment debtor, Spear Motors Ltd, to act as its agent in
collecting taxes payable by the plaintiff then estimated at Shs.315,064,338-.
On 18/11/92, R. Rajasingham J, made the following
order:
“I do therefore, in exercise of the inherent jurisdiction of the Court in the interests of justice order that all future sums due on the instalments shall be deposited in Court to the credit of the case and that no sums shall be withdrawn from the monies so deposited, without notice to the Revenue Authority.”
On the strength of this order several
installments were deposited into Court until the issue of the excess payment
arose after Spear
Motors had made yet another direct payment to URA in an
apparent violation of the Court order.
I will not go into the details of
the acrimonious correspondence between the plaintiff and URA, URA and Court.
That story is too
long for our purposes herein. The long and short of it is
that when the parties failed to agree on the way forward, the plaintiff
filed
this suit on 21/1/2003.
From the points of agreement, both parties now
accept that the plaintiff’s tax obligation for the period in question was
Shs.191,805,304-
and that the total amount paid by the plaintiff through Spear
Motors Ltd, Court and directly by the plaintiff to URA was Shs.247,323,174-.
The difference between the two figures is Shs.55,517,870-, the amount claimed by
the plaintiff herein.
The plaintiff had another claim of Shs.41,712,148-
but the parties opted for a settlement out of Court in respect of it. A consent
order is on record as P. Exh. XV. The claim of Shs.55,517,870- has to-date
remained a thorn in the flesh of the defendant.
As to whether the
plaintiff’s claim is barred by limitation, it must be appreciated that
this is a matter that has been in the
corridors of High Court for close to 20
years now. The thrust of the defendant’s case is that the
plaintiff’s cause
of action arose over six years before 21/1/2003 when
this suit was filed. Hence the argument that it is time barred.
Money
which is paid to one person which rightfully belongs to another, as where money
is paid by A to B on a consideration which has
wholly failed or by mistake is
said to be money had and received by B to the use of A. It is recoverable by A.
The paying of A to
B, according to the learned author of A CONCISE LAW
DICTIONARY by P.G. Osborn, 5th Edition at p. 212, becomes a
quasi-contract, an obligation not created by, but similar to that created by
contract, and is independent
of the consent of the person bound. The author
gives the basis of the action for money had and received as being rooted in
quasi-contract
on the footing of an implied promise to repay. The other view is
that in an action for money had and received, liability is based
on unjust
enrichment, that is, the action is applicable whenever the defendant has
received money which, in justice and equity, belongs
to the plaintiff under
circumstances which render the receipt of it by the defendant a receipt to the
use of the plaintiff. Whichever
way it is looked at, there must be evidence of
the payment sought to be recovered. If an overpayment similar to the one in
dispute
cannot be looked at in similar light, then I have misunderstood the
dispute between the parties. I believe I have understood it.
In the
instant case, payments were made to the defendant by the plaintiff or on his
behalf. Originally, the defendant denied most
alleged payments. In view of the
admitted facts, I don’t intend to re-open debate on it. The debate that
should henceforth
pre-occupy the parties and the Courts should be whether or not
the plaintiff’s claim of Shs.55,517,870- was time barred by
the time the
suit was filed in 2003. At the face of it, the suit would be time barred but
for a letter dated 4/8/1997 from the defendant
to the Registrar of the High
Court. Counsel for the plaintiff argues that it amounted to an acknowledgment
of a debt in terms of
S.22 (4) of the Limitation Act. Learned defence counsel
does not agree.
The section reads:
“Where any right of action has accrued to recover any debt or any other liquidated pecuniary claim ................... and the person liable or accountable therefore acknowledges the claim, the right shall be deemed to have accrued on and not before the date on the acknowledgment ............”
Whether or not the section applies to
suits against the Government or government bodies such as the URA has been a
subject of determination
in a number of cases including National Pharmacy
Ltd –Vs- K.C.C. [1979] HCB 256 and Sour Fap Famous RZ Promet Belgrade
Fransuska 61-65 & Anor -Vs- A.G.
HCCS No. 18/2001 reported [1997-2001] UCLR
396.
In the two particular cases above, Courts held that the
section applies to the government and its statutory bodies. The effect of
acknowledgment or part payment of a debt or other liquidated sum is that time
which had started to run against the creditor may be
stopped and made to start a
fresh by an acknowledgment of liability or by a part payment made by the debtor.
I am inclined to adopt
the view of the learned editors of Halsbury’s Laws
of England, 3rd Edn; para 594 at p.300 that if a debt is
acknowledged, it is immaterial that the amount of debt claimed is disputed in
the acknowledgment.
The amount of the debt can always be proved at the hearing.
I must decide therefore whether the defendant’s letter to the
Registrar of
the High Court amounted to an acknowledgment of the plaintiff’s claim to
the plaintiff. It reads:
“04 August 1997
The Registrar of the High Court
P.O. Box 785 (sic)
Kampala
Dear Sir,
Re: JADVA KARSAN PATEL: TAX AFFAIRS 1982 – 1991 YEARS OF INCOME
I have reviewed the tax position of Mr. Jadva Karsan Patel for the years 1982 – 1991.
The records available with my office indicate the following:
(a). Total tax payable per assessments for 1982 – 1991:
Shs.208,645,912-
Less amnesty (1989) Shs.16,840,608-
Balance payable Shs.191,805,304-
(b). Tax paid: 1982 – 1991 under the Agency Notice:
(i). By Spear Motors directly to URA Shs.192,539,314-
(ii). By the High Court to URA Shs.17,503,574-
(iii). By J.K. Patel to URA Shs.37,280,286-
Total payments per file Shs.247,323,174-
(c). According to Spear Motors Limited, total tax withheld and remitted through the High Court was Shs.122,525,018- made in seven equal installments.
(d). Of Shs.122,525,018- records indicate the High Court having passed over to URA Shs.17,503,574-. There is no evidence on file that the balance of Shs.105,021,444- was ever passed on to URA by the High Court.
This is therefore to ask you to clarify on this position, and where payment was made by the High Court, please provide evidence. Your quick response will be most appreciated to enable me finalise this case.
Yours faithfully,
Sgd:
C.K. Kaweesa
SENIOR PRINCIPAL REVENUE OFFICER – NAKAWA”
The letter was copied to all parties
concerned, including the plaintiff. It is not clear from the records whether
the Registrar offered
a prompt response or at all. I should state that for
quite some time, the reconciliation of records to determine the amount payable
and what the plaintiff had already paid remained quite a problem to the parties.
It is not clear why this was so since URA had records
indicating as per Mr.
Kaweesa’s letter. It would appear that what was confusing the defendant
was the original estimated tax
value of Shs.315,064,338-. So up to 1997, there
was no agreed position between the parties. I cannot blame it on any of the
parties.
Matters of money are like matters of the heart.
From the
pleadings, Court is able to tell that there were negotiations between the
parties on the way forward. In the end, the negotiations
bore no fruit. It is
trite that negotiations between parties to a dispute have no effect on
Limitation. A party seeing no end to
such negotiations files a suit while
negotiations continue to avoid the claim being caught up by the law of
Limitation: See: Allen Nsibirwa –Vs- NW & SC HCCS No. 811/1992
reproduced [1995] VI KARL 41.
I have read P. Exh. X
again and again. In my view it provided a vital break through to the parties in
as far as the impasse over
the plaintiff’s alleged over payment was
concerned. For the first time, the defendant stated in clear terms what
according
to their assessment and records the plaintiff should have paid to URA
and what he had actually paid. The other bit about Spear Motors
Ltd and
payments by High Court to URA were beside the point. In fact when information
was provided, the defendant had to relinquish
part of the claim it had over the
whole amount and hence the payment of Shs.41,712,148- to the plaintiff by
consent of the parties
vide the order of this Court dated 27/5/2003, P. Exh. XV.
Since this was a settlement out of Court and the parties have opted to
have the
dispute resolved on arguments only, I have not understood the basis for the
concession when it too should have been part
of the alleged time barred
claim.
Be that as it may, to the extent that the plaintiff’s claim had
all along been that he had made an overpayment in the sum of
Shs.55,517,870-;
and to the extent that the defendant’s stand this time (as at 4/8/97) was
that the difference between what
had been paid and what should have been paid
was Shs.55,517,870- implying that they were agreeing with the plaintiff’s
claim;
and to the extent that this was according to records available with URA
and therefore undisputed, this was an implied acknowledgment
of the
plaintiff’s claim. As stated above, I have read the letter over and over
again. I cannot come to any different conclusion.
The only issue as I see it
is whether since this was a letter addressed to a person other than the
plaintiff the same was an acknowledgment
within the meaning and context of S.22
(4) of the Limitation Act.
I have devoted considerable time to this point
as well.
The general principle is that an acknowledgement must be made to
the creditor by the debtor. What then happens when it is not made
to the
creditor but only copied to him?
There is very little literature on the
matter. What has been provided by counsel is not altogether helpful on that
point. However,
the Singapore Court of Appeal had an opportunity in CHUAN
& COMPANY PTE LTD –VS- ONG SOON HUAT [2003] 3 SGCA 15 to
explore the meaning of ‘acknowledgment of debt’ under the Limitation
Act in pari materia with ours. I applied the
same principle in MADHVANI
INTERNATIONAL S.A –VS- ATTORNEY GENERAL HCCS NO. 787/2002 (Civil
Division). The case is unreported and it would appear there has not been any
attempt to have that decision over-turned on
appeal as yet. [I accessed it on
Internet, Yahoo Search, ACKNOWLEDMENT OF DEBTS]. To understand its relevancy to
this case, I will
set out the facts as they appear in that
write-up.
CHUAN & CO. Pte Ltd (CHUAN) was a family company formed by
Ong Toh. Ong Toh had passed away. During his life time, Ong Toh dealt
with the
assets of CHUAN as if they were his own. Even after he ceased to be a
shareholder and director of CHUAN, he continued to
withdraw money from the
company. Ong Toh acknowledged the moneys taken by him from CHUAN by signing
yearly confirmation of debts
statements sent to him by the company auditors.
The last statement was signed by him on 10th March 1994, where by he
acknowledged owing CHUAN a sum of about S $7 million (the Debt).
On 9
December 1995, the executor of Ong Toh’s estate filed an estate duty
affidavit (the Affidavit) with the Estate Duty Department
(EDD) in which the
date was included as a debt owed by the estate to CHUAN. The EDD required the
executor to furnish documents to
support the claim that the estate owed the Debt
to CHUAN. The executors solicitors wrote a letter to CHUA’s Auditors (the
Letter) on 17th January 2001 explaining the EDD’s requirement.
The letter further explained that without such documents, the EDD would refuse
to “make a deduction for the alleged debts.”
The letter
concluded by asking CHUAN’s auditors to let the executor have
“Copies of all the documents substantiating the alleged
debts.”
CHUAN went into voluntary liquidation. The liquidator
of CHUAN commenced the present action to recover the Debt from Ong Toh’s
estate.
Ong Toh’s estate pleaded, as in the instant case, that the
liquidator’s action was time barred on 10th March 2000 (i.e.
six years from March 10, 1994). S.6 (1) (a) of the Limitation Act of Singapore
provides that an action founded
on a contract must be brought within 6 years
from the date on which the cause of action accrued.
In response, the
liquidator of Chuan argued that Ong Toh’s estate had acknowledged the
Debt. The liquidator claimed that the
Affidavit or the letter constituted an
acknowledgment of the Debt by Ong Toh’s estate. Hence, the date of
accrual of the cause
of action was postponed to the date of the Affidavit or the
Letter. S. 26 (2) of their Limitation Act provides that where a person
liable
for any debt “acknowledges the claim or makes any payment in respect
thereof”, the right of action to recover
the debt shall be deemed to have
accrued on the date of the acknowledgment.
The judge at the first
instance held against the liquidator. The liquidator appealed to the Court of
Appeal. The issue on appeal
was whether the Affidavit or the Letter was an
acknowledgment of a debt within the meaning of S.27 of the Limitation Act.
Section
27 defines “acknowledgment of debt”. Under section 27 (1)
an acknowledgment of debt “shall be in writing and signed by the person
making the acknowledgment.” S.27 (2) further provides that “any
such acknowledgment may be made by the agent of the person by whom it is
required
to be made and made to the person, or to an agent of the person, whose
title or claim is being acknowledged.”
As to whether the Affidavit
was acknowledgement of debt “made to CHUAN or to an agent of CHUAN within
the meaning of S.27 (2)
of the Act, the Court of Appeal held that the Affidavit
was not “made to” CHUAN or its Solicitors. It was addressed
to the
EDD. CHUAN only secured a copy by virtue of an order of Court. Such a
delivery, by compulsion of an order of Court, would
not suffice to constitute an
acknowledgment. The Court held, and this is very crucial for purposes of the
instant case, that an acknowledgment involved some intention to convey the
contents of the document to the creditor or his agents either deliberately
or
impliedly. The emphasis is mine.
As to whether the Letter was an
acknowledgment of debt, the rule governing the construction of a document was
applied to determine
whether it constituted an acknowledgment of debt. The
letter constituted an acknowledgment if the maker intended it to be. Where
a
word in a document is clear, the Court will take its clear meaning. It is only
if the word is ambiguous that the Court may refer
to extrinsic material and give
the word a meaning which is different from its plain meaning.
The Court
concluded that the Letter that referred to CHUAN’s
“allegation” of a debt and asked CHUAN for documents
“substantiating the alleged debts” did not amount to an
acknowledgment of a debt. The Court said that it came to this conclusion by
reading the plain words
of the letter.
The Court of Appeal dismissed the
liquidator’s appeal and confirmed that their claim was time
barred.
In the instant case, the plaintiff was not the addressee of P.
Exh. X. He was the subject matter. But besides being the subject
matter of
that letter, the defendant considered it necessary to copy it to him. This
distinguishes the facts in this case from those
in CHUAN where the creditor got
it through an order of Court. Indeed in the Madhvani case, supra, Court refused
to accept as an
acknowledgment of a debt a letter that had not been copied to
him. In the instant case, if the author had intended that the content
be not
conveyed to the plaintiff, or had intended that the contents be not acted upon,
I do not see why he should not have written
a confidential letter to the
Registrar or just a “without Prejudice” Letter. He freely
copied it to a number of people, including the plaintiff. He put in black and
white, in (a) and (b), what
the records available with his office indicated at
the material time. What they indicated is what the plaintiff had been saying
all along. In my view the letter involved some intention to convey the contents
of it to the plaintiff, deliberately or impliedly.
It carried a very clear
message, whether the author intended it that way or not, that the plaintiff had
made an over payment to
the tune of Shs.55,517,870-. It was not saying that
this was “an alleged payment” but that the plaintiff had paid
Shs.247,323,174-
according to their records when he should have paid
Shs.191,805,304-. It’s only the subject matter of (c) and (d) that
required
verification by the Registrar since the Registrar could not have been
expected to know how much had been paid directly to URA by
Spear Motors Ltd and
the plaintiff. When all is said and done, Court is satisfied that the Letter
constituted an acknowledgment
of the fact that an over payment had been made by
the plaintiff to URA. It is immaterial that Mr. Kaweesa chose to address the
letter
to the Registrar of the Court rather than the plaintiff for as long as
through it he could kill many birds with one stone. For as
long as it was
copied to him, it was as good a message to him as it was to the Registrar and
vice versa.
Accordingly, I accept the submission of learned counsel for
the plaintiff that the Letter was a solid and sufficient acknowledgment
of a
debt to the plaintiff. It rekindled the plaintiff’s claim such that by
the time he filed the suit on 27/1/2003, the cause
of action was still within
the six years period.
I would answer the first issue in the negative and
is do so.
As to whether or not he is entitled to the claim of
Shs.55,517,870-, the answer is in my view quite obvious from my assessment in
the first issue. Having stated that he made an over payment, which is conceded
in P. Exh. X by the defendant, I hold that he is
entitled to a refund of that
much.
As to whether he is entitled to the other relief’s sought
that is, interest and costs, it has been submitted that this was business
income; that the defendant has utilized it for a long time and deprived him of
its use; and that he should be compensated for that
non-use by way of interest.
I agree.
The principle that emerges from decided cases, notably
Sietco –Vs- Noble Builders (U) Ltd, SCCA No. 31 of 1995, is
that where a person is entitled to a liquidated amount and has been deprived of
it through the wrongful act of another person,
he should be awarded interest
from the date of filing the suit. The circumstances of this case warrant that
the plaintiff be awarded
interest on the decretal amount. It shall be at the
current commercial rate of 25% per annum from the date of filing till payment
in
full.
Finally, my interpretation of the Letter, P. Exh. X, could of
course be wrong. Even then there is irrefutable evidence that the plaintiff
was
supposed to pay Shs.191,805,304- and that he paid Shs.247,323,174-. That much
is stated in the letter, whether or not it amounts
to an acknowledgment of a
debt. My understanding of the law is that a Statute barred debt is still
payable despite the fact that
its payment cannot be enforced by an action:
Cheshire, Fifoot & Furmston’s LAW OF CONTRACT, 14th Edn, at
p.713. Save for the psychological satisfaction derived from the pendantic
application of laws, some of which may be unrealistic;
and given that the
defendant has already made part settlement of the debt through a consent order,
I’m unable to discern any
moral justification the defendant can advance to
deprive the plaintiff of Shs.55,517, 870- that clearly belongs to him; and this
after levying from him another Shs.191,805,304-.
This would appear to me
to be the sort of mischief, the unsatisfactory state of affairs which the wise
framers of our constitution
meant to remedy in Article 126 (2) (e) thereof. It
would appear to me that on equitable considerations as well; given the many
years the plaintiff has spent seeking recovery of a fairly obvious claim; and
considering that even if the statutory period expires
before an action is
brought the plaintiff’s rights are not
necessarily extinguished, this would
be a fit and proper case to be considered
for a remedy under S.98 of the Civil Procedure Act if only that would bring
litigation
in this particular case to an end. I would allow the
plaintiff’s claim under this head as well in accordance with S.98 of
the
Civil Procedure Act and 17 (2) (c) of the Judicature Act, cap 13 (as amended by
Act 3 of 2002, S.4 thereof) and I do so.
For reasons stated above, the
plaintiff’s claim is allowed on terms set out herein above, with costs to
him against the defendant.
I so order.
Yorokamu Bamwine
J U D G
E
05/06/2006
5/6/2006
Habib Arike
Stella Nyapendi for
defendant
Richard Okalany for plaintiff.
Court: Judgment
delivered.
Yorokamu Bamwine
J U D G E
5/6/2006
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