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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT
KAMPALA
(COMMERCIAL COURT DIVISION)
HCT - 00 - CC - CS -
0184 - 2001
1. ABDUL BASIT SENGOOBA 2. HARUNA NYANZI ::::::::::::::::::::::::::::::::::::: PLAINTIFFS 3. MARIAM NAMAWEJJE 4. AKRAM LULE suing through next of friend 5. IMAAMA NAMULIWAYA Haji Suleman Lule
VERSUS
STANBIC BANK LTD
(Former Uganda Commercial Bank Ltd)
::::::::::::::::::::::::::::: DEFENDANTS
BEFORE: THE HON. JUSTICE GEOFFREY
KIRYABWIRE.
J U D G M E N T:
The first, second and third plaintiffs are adults while the fourth and
fifth plaintiffs are minor children suing through their father
Haji Suleiman
Lule. All five plaintiffs are none the less children of Haji Suleiman Lule.
The plaintiffs claim jointly and severally
against the defendant bank for the
refund of Shs.28,000,000/= allegedly paid in 1996 for the purchase of a property
comprised in
Kyadondo Block 244 Plot 2485, at Kisugu Kampala (hereafter called
the property). The property it is pleaded was advertised by the
defendant bank
for sale through a firm M/S Speedway Auctioneers as part of a bank debt
recovery.
The plaintiffs allegedly paid for the property through a friend of
their father Haji Kaddu Kiberu. It was the plaintiff’s father’s
intention that the property would be bought for the benefit of the children who
at the time were all minors. After payment the plaintiffs
allegedly signed an
agreement, took occupation of the property and asked for the title deed and
papers showing that the mortgage
there on had been discharged. However it is
alleged that the defendant bank and their agents the auctioneer did not comply
with
this request. However 3 years after the said purchase the defendant bank
formally refused to have the property transferred to the
plaintiffs. Instead
the plaintiffs allege that the defendant bank re advertised the property and
“resold” it for which
reason the plaintiff’s now seek a refund
of their money and damages in lieu of specific performance.
For the
defence it is pleaded that no sale of the said property took place on the said
date by their agents M/S Speedway Auctioneers.
The defendant bank
denies that the plaintiffs signed any valid agreement of sale and took
occupation of the said property. The defendant
bank further pleads that if a
sale took place then it was done contrary to the banks express instructions and
that their agent auctioneers
must have been on a forlic of their own.
This case has a long history before the Courts having come before two
different Judges since it was filed in 2001. The file finally
came up for trial
before me in May 2005. At the scheduling conference before the first Judge
Justice J. Ogoola (as he then was)
the parties agreed to the following
facts;
1. That Speedway Auctioneers were agents of the defendant for purposes of sale of the suit property. 2. That the suit property was advertised for sale. 3. That the suit property has since been sold (to another person as I understand it).
The parties agreed to 3 issues for trial
namely;
1. Whether the suit contract between the parties is valid 2. Whether Kiranda and Kabuuka t/a Speedway Auctioneers sold the suit property to the plaintiffs and if so whether the defendant is vicariously liable. 3. Whether the plaintiffs are entitled to the reliefs sought in the plaint.
Mr. M.
Mbabazi appeared for the plaintiffs while Mr. J.M. Musisi appeared for the
defendants.
Issues No. 1: Whether the suit contract between the
parties was valid.
The contract in question (Exh. P.4) made
between M/S Speedway Auctioneers (referred to in the said contract as
“...as per instruction
given to us by Uganda Commercial Bank pursuant to
their mortgage rights”) of the one part and Abdul Basit Sengooba, Haruna
Nyanzi, Mariam Namawejje, Akram Lule and Umaama Namukwaya jointly of the other
part. It is signed by one Mubiru – Kalenge
(the second name is not clear)
for Speedway Auctioneers in the presence of Kiranda Andrew and the signature of
Haji Sulaiman Lule
(PW1) appears on behalf of the buyers.
Paragraph 2 of the
agreement provides the consideration as Shs.28,000,000/= the buyers having been
the highest bidder in the auction
“...conducted on the
4th of December, 1995”.
Counsel for the plaintiff
submitted that Haji Sulaiman Lule PW1 instructed his friend Haji Kaddu Kiberu
PW2 by letter Exh. P5 to look
around and purchase a property for his minor
children at the time. This Haji Kiberu did this by identifying and successfully
bidding
for the suit property. Haji Sulaiman Lule then signed the agreement on
behalf of his children as they were minors. Counsel for
the plaintiffs
submitted that this could be done as Haji Sulaiman Lule is the father of the
plaintiffs and therefore did not need
special authority to sign on their behalf.
Mr. Kiberu then paid the purchase price. Counsel for the plaintiff then
submitted
“...The payment was made and Speedway Auctioneers received the money. It was immaterial whether Kiranda or Kabuuka signed or not as sellers. What is important is that Speedway Auctioneers signed as the sellers to the plaintiffs. The contract of sale of the land was valid”.
Counsel for the plaintiffs challenges the
assertion by the defendant that the plaintiffs were minors and therefore could
not contract
as they allegedly did when in reality the defendant’s agents
accepted and receipted their money. He submitted that this would
constitute
unjust enrichment and should not be condemned by Court.
Counsel for the
plaintiff referred me to the case of Davies V Beynan Harris [1931]
47 TLR 424 for the proposition that contracts which give a minor a benefit of a
permanent nature like a contract for property
is voidable at the instance of the
minor until he/she is of majority age. In this regard the plaintiffs are
clearly still interested
in the property.
Counsel for the plaintiff also
argued that it was immaterial whether the plaintiff’s father or their
father’s friend made
the actual payment. Indeed Counsel for the plaintiff
submits that PW2 Haji Kiberu has never requested a refund of the money. All
this he argues showed that this was an investment made by a father for the
benefit of his children.
Counsel for the defendant faults the agreement
on several counts.
First of all Counsel for the defendant argues that
none of the plaintiffs signed the agreement. He argued that it was the
plaintiff’s
father Haji Sulaiman Lule PW1 who signed the agreement and yet
he did not show Court any authorization to do so on their behalf.
Counsel for
the defendant argued that for a person to sign a contract on behalf of minors
that person must be their legal guardian
but not necessarily their parent. He
therefore argued that this legal capacity had to be shown, I suppose through
same legal documentation.
Counsel for the defendant also wondered why Haji
Sulaiman Lule having appointed Haji Kiberu as his agent vide Exh. P5 then went
a
head to sign the agreement thereafter.
Counsel for the defendant
submitted that it is PW1 Haji Lule who made the purchase and that is why he
lodged a caveat in his personal
names on the title of the suit property as the
purchaser.
Counsel for the defendant argues on that ground alone no cause
of action has been established.
Secondly, Counsel for the defendant
submitted that the agreement is invalid for lack of capacity to contract because
the plaintiffs
are minors. He submitted that under Section 2(2) of the Contract
Act (Cap 73) a minor is a person who has not reached the age of
eighteen. He
further submitted that for minors Section 3 of the Sale of Goods Cap 82 only
allows minors to contract for “necessaries”
and in this case no
evidence was led to show that the suit property would meet that definition.
Counsel for the defendants argued
that 3 of the plaintiffs are now adults and
there was no reason for them not to come and testify in the case. Indeed he
observed
that none of the plaintiffs testified and so to him the plaintiffs are
not aggrieved parties and it is just their father.
I have perused the
submissions of both Counsels and reviewed the evidence adduced in
Court.
The legal arguments revolve around the validity of the contract.
The contract or agreement in question is Exh. P4. The arguments
presented to
Court to my mind revolve first around capacity and then secondly agency which is
really what the second issue is about.
In this case the issue revolving around
capacity relates to whether the plaintiffs as minors could and actually did
enter into the
agreement Exh. P.4. The evidence shows that the plaintiffs father
PW 1 Haji Lule signed the contract on their behalf by affixing
his personal
signature. It is therefore clear that Haji Lule is the one who entered into the
contract on behalf of his children.
Evidence was not lead as to the actual ages
of the children and as to whether by reason of their infancy they could not
actually
sign the said agreement.
Indeed because a person is a minor does not
ipso facto mean that he/she cannot sign an agreement and therefore must have
his/her parent
or guardian sign on his/her behalf.
A review of the legal
authorities on the subject of the law of minors’ contracts would suggest
that the primary objective of
the law is the protection of minors from the
consequences of their own inexperience (see the Law Reform Commission of Western
Australia
Report on Minors Contracts May 1988 accessed through www.austlii.edu:au/an/other/walrc/25/P25-II-R.pdf
on 24/06/04). This is the basis of the cited case Davies V Beynon-Harris
(1931) 47 TLR 424 which involved a minor paying rent.
However this
present case is different in that the said minors did not actually sign the
agreement and so the principles as to minors’
contracts would not apply to
them. The contractual obligations did not fall on the minors but rather their
father PW1 Haji Lule
and that is why he caused his friend PW2 Haji Kiberu to pay
the contract sum and why PW1 Haji Lule then signed the agreement. During
cross
examination PW1 Haji Lule testified that
“...I appointed Kiberu as my agent. Kaddu Kiberu paid the money on my behalf with instructions to register the title in my children’s names...”.
Clearly if the agreement did not meet
with problems it was the intention of PW1 Haji Lule that the beneficial interest
as a result
of the purchase would pass to his children at the time of transfer
of title ownership as he was the actual buyer of the said property.
I therefore
find that the plaintiffs did not enter into the contract and therefore the issue
of capacity or validity in their regard
did not arise. In this regard I agree
with the submissions of Counsel for the defendant that it is PW1 Haji Lule who
has the proprietary
interest and that the plaintiffs as named have no cause of
action. This is sufficient to dispose of this case. However before I
leave
this issue entirely there is also a lot of confusion with regard to the contract
as to when the auction actually took place.
The agreement states that the
auction took place on the 4th December 1995. However Exb. D. 1 a
letter from M/S Speedway Auctioneers signed by Kabuuka. J. and dated
10th January 1996 to M/S Mayanja Nkangi & Elue Co. Advocates
would seem to suggest otherwise. It reads in part
“... we refer to your instructions to us dated 2nd December, 1995 ... we took the initial procedure of 30 days and on 4th December 1995 the advertisement were placed in the New Vision.
On 4th January 1996, the notice elapsed and the sale would have been effected had there been a ready buyer.
However in the circumstances above, we under go a series of advertisements to attract buyer and at the same time search for them for private treaty sale...”
To my mind therefore there was no auction on
the 4th December 1995 as there was no ready buyer. Clearly the
agreement Exh. P4 and this letter Exh. D. 1 by the same auctioneers are
contradictory.
It is unfortunate that the auctioneers were not called by either
party to shed light on this aspect of the contract. Be that as
it may I find
that the plaintiffs have no cause of action and therefore there was no valid
contract between them and the defendants.
I also find that this issue
disposes of the case so I make no further findings on issues 2 and 3.
I
according dismiss the case.
As the suit was filed in the names of minors and
young persons I will exercise my discretion under Section 27(2) of the Civil
Procedure
Rules not to award costs against them. Each party will bear its own
costs.
Geoffrey Kiryabwire
JUDGE
Date: 06/07/06
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