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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0733-2000
SIMBA MOTORS LIMITED :::::::::::::::::::::::::::::
PLAINTIFF
VERSUS
1. JOHN SENTONGO
2. SALAMA ENTERPRISES LTD
:::::::::::::::::::: DEFENDANTS
BEFORE: THE
HONOURABLE MR. JUSTICE YOROKAMU BAMWINE
J U D G M E N
T:
The plaintiff is a limited liability company registered and
carrying on business in Uganda. It sued the defendants, an adult Ugandan
and a
company respectively, for a sum of Shs.9,100,000- with interest and costs of the
suit.
The following are the points of agreement in the case:
1. The
defendant issued a post-dated cheque of Shs.7,000,000- to the
plaintiff.
2. Shs.2,000,000- on that sum was paid.
3. The cheque was
dishonoured.
4. Notice of dishonour was given.
5. The 1st
defendant borrowed some money from the plaintiff.
From the record of the
proceedings, the parties did not frame the issues for determination at the
scheduling stage. The then trial
judge reserved them for framing later. She
left the station before doing so. The omission did not come to light till the
submissions
stage. At this stage each side came up with its proposed issues for
determination. From those proposals, I have derived the following
issues for
determination:
1. Whether the bounced cheques, one for Shs.7m and another for
Shs.1.3m were issued by the defendants, and whether the invoice for
Shs.800,000- was signed by the defendants, or any of them.
2. Whether the
defendant is indebted to the plaintiff in the sum claimed in the plaint or at
all.
3. Whether the defendants pledged a water pump to the plaintiff as
security for payment.
4. Remedies, if any.
Counsel:
Mr.
Kityo for the plaintiff.
Mr. Niwagaba for the defendants.
Before I
consider the evidence of the parties, let me state the law on proof in civil
cases.
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
principle to this case, the plaintiff has alleged that the defendants are
indebted to it. The burden lies on it to prove
that allegation.
At the
scheduling stage, learned counsel for the plaintiff intimated to Court that
although the original claim was for Shs.9,100,000-,
the plaintiff had before
giving him instructions to recover the same received Shs.2,000,000- which fact
had however not been communicated
to him at the time of filing. The plaintiff
accordingly stated its claim to be Shs.7,100,000-. During the pendancy of the
suit,
the defendant paid another Shs.3,000,000- to the plaintiff through its
counsel. This further reduced the plaintiff’s claim
further to
Shs.4,100,000-, the plaintiff’s current outstanding claim.
There
are two conflicting versions as to how the indebtedness arose.
From the
plaintiff’s point of view, according to its Managing Director PW1
Christopher Sebuliba, the 1st defendant bought a house from him in
1997. The purchase price was Shs.7,700,000-. The house was in Kizungu Zone of
Makindye. His
attempt to take possession failed because of a certain lady who
also claimed to have bought the same property. Upon the failure
of the
consideration, the 1st defendant agreed to refund the purchase price.
Hence the cheque in the sum of Shs.7,000,000-, Shs.700,000- having been refunded
to
him in cash.
As to the cheque of Shs.1,300,000-, Sebuliba’s
evidence is that the 1st defendant approached him again for a loan of
Shs.1,300,000-. He gave it to him. That later, he approached him for further
assistance
and he gave him four tyres at a cost of Shs.200,000- each. Hence the
genesis of the cheque in the sum of Shs.1,300,000- and the
invoice dated
24/4/98, P. Exh. V.
From the defendants’ point of view, as per the
evidence of DW1, Sentongo, they dealt with Sebuliba as a person and not the
plaintiff.
About the cheque of Shs.7,000,000-, Sentongo says that it was not in
respect of a sale of a house as the plaintiff alleges but a
loan of
Shs.5,000,000- which he got from Sebuliba. According to him, he wanted to pay
some taxes on goods he had imported and the
said Sebuliba gave him that money,
to attract interest of Shs.2,000,000-. Hence the cheque. His evidence is that
the two parties
made an agreement, P. Exh. 1, in the hope that if he defaulted
in the payment, Sebuliba would take the house. As to the other cheque
in the
sum of Shs.1,300,000-, Sentongo’s evidence is that he received
Shs.1,200,000- in cash from Sebuliba and he was to pay
interest on it in the sum
of Shs.100,000-. Hence the cheque for Shs.1,300,000-. I have considered these
versions. It would appear
to me that as between the plaintiff’s and the
defendants’, the defence version makes much more sense. Having said so,
this Court is of the view that whether it goes by the plaintiff’s version
or that of the defendants, the fact remains that
the parties had financial
dealings which gave rise to the instant dispute. It has not been suggested, and
there is no evidence to
indicate so, that the plaintiff’s cause of action
is founded upon an immoral or illegal act. The presumption is that it was
a
moral and legal act, and therefore legally enforceable.
Regarding the
first issue, both cheques were payable to Simba Motors Ltd. It was not a
payment to Sebuliba to raise inference that
these dealings were on personal
basis. This disposes of the 1st defendant’s argument that he
dealt with Sebuliba as an individual and not his company. The first defendant
has not denied
issuance of the two cheques. He has also not denied the
signature on P. Exh. V, the invoice dated 24/4/98. The first issue is answered
in the affirmative.
As to whether the defendants are indebted to the
plaintiff in the sum claimed in the plaint or at all, I have already observed
that
the current claim is for Shs.4,100,000-. The plaintiff’s claim is
based on the two cheques and an invoice which are not denied
by the
1st defendant. I will start with the invoice.
It is dated
24/4/98. It is on a would have been plaintiff’s order paper couched
thus:
“To pay on the 16th of May Shs.800,000- (Eight hundred thousand shillings only).”
There is no indication
thereon as to what was being transacted. The same does not therefore speak for
itself. The plaintiff’s
case is that the first defendant was taking four
tyres on credit. The first defendant denies it. He claims that he borrowed
Shs.1,200,000-
on two different occasions and that the cheque dated 15/5/98, P.
Exh. IV, was a refund of that amount and the attendant interest
of Shs.100,000-.
I have already accepted as truthful the defence version on this issue. In
addition to that acceptance, I have considered
the fact that the parties did not
indicate what was being transacted. If it was a sale of tyres on credit as
alleged by Sebuliba,
one fails to see why the author did not state so. I note
that the same is dated 24/4/98. The parties agreed that payment be on
16/5/98.
Just a day before the due date, that is, on 15/5/98, the first defendant issued
the impugned cheque, P. Exh. IV, in the
sum of Shs.1,300,000-. It was in my
view not merely coincidental. It is evidence that by 15/5/98, the amount due
and owing from
the defendants to the plaintiff on the transaction of 24/4/98 was
Shs.1,300,000-. The first defendant issued the impugned cheque
on 15/5/98 to
settle that indebtedness. The Court’s finding on this point is that this
ill-fated cheque, P. Exh. IV, constituted
a payment of some additional borrowing
from the plaintiff by the defendants. Seeking recovery of Shs.1,300,000- being
the value
of the bounced cheque and Shs.800,000- being the amount stated in the
invoice is to claim twice in respect of the same debt. I hold
so.
I now
turn to the two cheques. Their issuance is not denied by the defence. Both
parties agree that they bounced. This means in
effect that the obligations of
the drawers of the two cheques which were to settle debts owed by them to the
payee, the plaintiff,
not discharged. It is settled law that when a bill is
dishonoured by non-payment an immediate right of recourse accrues to the holder.
Accordingly, a cause of action arose in favour of the plaintiff when the cheques
were dishonoured.
It is argued for the defendants that the plaintiff not
having given notice in reasonable time in accordance with S.48 of the Bills
of
Exchange Act committed an act that discharged the defendants from the liability
on the cheque for Shs.1,300,000- against the
1st defendant and the
cheque for Shs.7,000,000- against the 2nd defendant. Counsel has
placed reliance on J.B. Turyagenda –Vs- Charles Tumwesigye HCCS No.
57 of 2000 (unreported), a decision of Byamugisha J. (as she then was).
In that case, Court found that the plaintiff’s suit was time barred
for
non-issuance of a notice of dishonour in time. The delay was for five months.
I have addressed my mind to counsel’s argument
and the law. The Bills of
Exchange Act, Cap 68, contains detailed rules relating to notice of dishonour.
When a cheque has been
dishonoured by non-payment notice of dishonour must be
given to the drawer and each endorser, and any drawer or endorser to whom
such
notice is not given is discharged. Section 47 refers. The notice may be given
as soon as the cheque is dishonoured and must
be given within reasonable time
thereafter. Section 48 (l) refers. In the absence of special circumstances,
notice is not deemed
to have been given within a reasonable time
unless:
(i). Where the person giving and the person to receive notice reside
in the same place, the notice is given or sent off in time to
reach the latter
on the day after the dishonour of the bill.
(ii). Where the person giving and
the person to receive notice reside in different places, the notice is sent off
on the day after
the dishonour of the bill, if there is a post at a convenient
hour on that day, and if there is no such post on that day then by
the next post
thereafter.
These rules have been applied rather strictly by the Courts.
Thus in Govind Ukeda Patel –Vs- Dhanji Nanji [1960] EA 410,
the plaintiff, a resident of Nairobi, presented a cheque, drawn on a Mombasa
Bank, for payment through his Nairobi bank on 13/12/1958.
On 16/12/1958, his
banker verbally informed him that the cheque had been dishonoured. The
plaintiff received back the cheque on
18/12/1958 marked “refer to
drawer.” On 19/12/1958 he sent the cheque to a friend in Mombasa to hand
it over to an advocate
for necessary action. The advocate wrote a letter on
22/12/58 informing the defendant that the cheque had been dishonoured which
letter he received on 23/12/58. On appeal from the judgment of the lower Court,
the Court of Appeal held that on the evidence it
was clear that notice of
dishonour had not been given within reasonable time and the appellant had not
given any evidence to show
that he had acted with due diligence or that there
were any special circumstances justifying the delay. In our situation, the law
provides that delay in giving notice of dishonour is excused where the delay is
caused by circumstances beyond the control of the
party giving notice, and not
imputable by his default, misconduct or negligence. S. 49 (1) thereof
refers.
In the instant case, the plaintiff through PW1 Sebuliba testified
that it issued a notice of dishonour to the 1st defendant on 19/3/99.
The cheque of Shs.7,000,000- was dishonoured on 18/2/97. The one for
Shs.1,300,000- was dishonoured on 19/5/98.
This in effect means that the notice
of dishonour was issued after over two years in respect of the first cheque and
after ten months
in respect of the 2nd cheque. No explanation has
been offered for the inordinate delays. As if that was not bad enough, the suit
was filed on 28/06/2000,
more than 3 years after the dishonour of the first
cheque.
From the pleadings and the evidence of the parties, the notice
was not sent on the day each cheque was dishonoured or within any reasonable
time thereafter. I agree with learned counsel for the defendants’
submission that the notice was in the circumstances of this
case not valid and
effectual as the law requires. The end result is that the plaintiff’s
action is barred by law in that it
cannot sue on the cheque by reason of its
failure to give notice within a reasonable time. I have considered the
plaintiff’s
evidence that after the dishonour, before the suit was filed,
and even as this suit was pending determination the defendants made
some
payments to the plaintiff. This evidence would only have been helpful if the
plaintiff’s cause of action had been for
the recovery of the balance on
the alleged transactions. It is not. The plaintiff’s suit is pure and
simple based on the
dishonoured cheques. The suit is barred by time. In
Nanji Khodabhai –Vs- Sohan Singh [1957] EA 291, a cheque was
dishonoured on 25/4/1955 and notice of dishonour was not given until 29/4/1955.
The Court held that the defendant
was discharged because there were no special
circumstances to justify any delay and notice should have been given on
26/4/1955.
Applying the same principle to the instant case, no special
circumstances have been pleaded or even given in evidence to justify
the delays.
I hold that the defendants were discharged from further liability on the cheques
by reason of the inordinate and inexcusable
delays. They are ipso facto not
indebted to the plaintiff in the sum claimed in the plaint or at all.
As
to whether the defendants pledged a water pump to the plaintiff as security for
payment, I have found the evidence in support of
that claim most unsatisfactory.
DW1 Sentongo claims that he took it to the plaintiff’s offices; that he
was with one Seguya.
This Seguya has not appeared as a witness for either
party. There was no acknowledgment of its receipt in writing. Sentongo claims
that this was an over sight. I doubt that an important machine like a water
pump said to be worth millions of shillings could merely
have been dumped at the
plaintiff’s offices without anything to show for it. It is noteworthy
that the defendants raised this
issue after Sebuliba had demanded payment based
on the dishonoured cheques. It appears to me that this was just an after
thought;
a cover up to defeat the plaintiff’s claim. This water-pump
transaction has not been proved by the defendants on the balance
of
probabilities or at all. Accordingly, the defendants’ counter claim must
fail and it fails.
As regards the remedies open to the parties, the
law is that where one party alleges that it paid another and the other denies
receipt
of the payment, the onus is on the party who alleges payment to prove
the payment. The rationale is that it is very hard to prove
a negative:
J.K. Patel –Vs- Spear Motors Ltd SCCA No. 4 of
1991.
I accept the principle in that case.
In the instant
case, the defendants allege that one Seguya collected Shs.400,000- on behalf of
Sebuliba. Seguya did not appear as
a witness nor was any acknowledgment of its
receipt produced at the hearing. There is cause to doubt the alleged payment.
The first
defendant also claimed that Sebuliba advised him to give Shs.900,000-
to a one Makumbi. As the defence was closing its case, the
defendant purported
to introduce in evidence as an exhibit a Makumbi’s purported
acknowledgment of receipt of that amount.
One wonders why such a document was
never produced and marked as an exhibit at the scheduling stage if at all it was
in existence
by then. Court rejected it because its introduction was in
contravention of the conventional rules of procedure.
The plaintiff is a
company. The first defendant is not an illiterate man. He is the Managing
Director of the 2nd defendant. It is a fundamental attribute of
corporate personality that a company is a legal entity distinct from its
members. In
these circumstances, the 1st defendant’s alleged
dealings with Sebuliba as if he, Sebuliba, was the company he had issued cheques
to is to say the least
amazing. Equally amazing is his insistence that he had
no dealings with Simba Motors Ltd when the two cheques in issue were clearly
in
the name of that company. If he knew nothing about Simba Motors Ltd and the
same had not rendered any service to him to warrant
payment, why did he act as
he did? I would have been of a different opinion if Sentongo was a simple
village peasant and not the
Managing Director of the 2nd
defendant.
The burden of proving that the defendants fully settled their
indebtedness to the plaintiff lay on the defendants themselves. They
did not
discharge that burden on the balance of probabilities or at all. Accordingly,
the Court’s finding is that the sum
of Shs.3,300,000- would still be due
and owing from the defendants. However, in view of the Court’s finding
that failure to
give notice of the dishonour of the cheques within a reasonable
time discharged them from further liability, I hold that the plaintiff
has no
enforceable claim against the defendants. Accordingly, the plaintiff’s
suit shall be dismissed and is hereby dismissed.
As regards costs, the
usual result is that the loser pays the winner’s costs. However, this
practice is subject to the Court’s
discretion such that a winning party
may not necessarily be awarded his costs. For example, in Dering
–Vs- Uris [1964] 2 All ER 660 the plaintiff sued the defendant in
respect of a libel. The jury, who were obviously not sympathetic to the
plaintiff, awarded him
contemptuous damages of one half penny. The trial judge
did not award the plaintiff his costs, even though they probably ran into
thousands of pounds.
In light of the peculiarities of this case and the
parties unconscionable conduct towards each other, I am inclined to order that
each party bears its/his own costs, save any costs that may already have been
decreed to either party in any event. I order so.
Yorokamu
Bamwine
J U D G E
21/06/2006
21/6/2006
Mr. Gilbert
Nuwagaba for defendants.
Mr. Kityo for plaintiff absent.
Parties
absent.
Court: Judgment delivered.
Yorokamu
Bamwine
J U D G E
21/6/2006
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