THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO. 0634 OF 2010
[ARISING FROM CIVIL SUIT NO. 0332 OF 2008]
STEPHEN SERUWAGI KAVUMA::::::::::::::::::::::::::::::::::::APPLICANT
VERSUS
BARCLAYS BANK (U) LIMITED :::::::::::::::::::::::::::::::::RESPONDENT
BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA
RULING
The applicant brought this application under the provisions of s.98 of the Civil Procedure Act and Order 21 rule 17 of the Civil Procedure Rules (CPR). He sought for orders to set aside a consent judgment and decree in HCCS 0332 of 2008, stay of execution of the said decree, leave to appear and defend the suit, special direction as to accounts and the costs of the application.
The application was supported by an affidavit sworn by the applicant on 9/11/2010. The respondent filed an affidavit in reply deposed on 17/02/2011 by Grace Nanteza, an advocate practicing with the firm of Muganwa, Nanteza & Co. Advocates, the lawyers of the respondent. Ms. Nanteza further deposed a supplementary affidavit in reply on 7/03/2011 and the applicant deposed an affidavit in rejoinder on 7/03/2011.
The background to the application was that the applicant was the defendant in HCCS 0332 of 2008 which was brought under O. 36 CPR to recover money outstanding due to an unauthorised overdraft facility on his prestige account with the respondent. On the 26/2/2009 the applicant entered into a consent order wherein it was decreed that he pays shs. 309m claimed in the plaint, impliedly giving up his right to apply for leave to defend the suit. By the consent order and decree the applicant bound himself to pay the sum of shs. 309m in instalments of shs. 30m per month over a period of 11 months. It was provided in the consent order and decree that in the event that the applicant failed to fulfil the terms thereof, the defendant/respondent would be free to recover the whole amount outstanding with interest. The applicant also agreed to pay the costs of the suit. It appears the applicant failed to meet the terms of the decree upon which the respondent applied for execution thereof by attaching his property. He then brought this application.
In his affidavit in support of the application, the applicant admitted that he held a prestige account with the respondent but only shs. 200m was outstanding on the account at the time of filing HCCS 332 of 2008, inclusive of interest, not shs. 309m as was claimed in the plaint. He further averred that after he signed the order, he paid up to shs. 95m to M/s Muganwa, Nanteza & Co. Advocates, in satisfaction of the debt by issuing 6 cheques drawn against an account in Cairo International Bank. He named the cheques in his affidavit as Nos. 302392, 301393, 301394, 317530 and 317539. He also attached a copy of a bank statement of Cellular Galore Ltd. with Cairo International Bank and a receipt issued to him by the respondent’s advocates as Annexure “A” and “B” to his affidavit.
The applicant further averred that he made other payments to the respondent’s advocates in excess of shs. 40m but the advocates refused to issue him with receipts or account to the bank for the monies paid. That in addition, the debt claimed in the plaint included a sum of shs. 26,945,000/= which was debited from his account without his knowledge and which the bank failed to account for. Further that the respondent’s claim in the suit would only arise from interest which ought to have been levied on reducing balances but not the principle, together with other penalties, charges and deductions that were not due. He further averred that court ought to direct a vouching of the accounts to ascertain what ought to have been due under the consent order, lest he pay the bank money that is not due to it. He finally averred that he requested the respondent for a reconciliation of accounts to ascertain what was rightly due to them but they declined to so reconcile them.
In her affidavit in reply, Grace Nanteza averred that by the time of filing the suit the applicant’s account with the bank had been reconciled and the amount due on account of the overdraft was shs.309m. Further that by the time the firm received instructions the applicant had presented a cheque to the bank (No. 331516 attached to the affidavit as Annex “MM”) to settle his obligations, but it was dishonoured on presentment. She further averred that when the respondent sued the applicant he proposed to settle the debt and a consent order was subsequently entered on 26/02/2009, in which he committed to payment of shs. 10m each month starting March 2009 till payment of the debt in full. Further that before the consent order the applicant wrote Annexure “NN” to M/s Muganwa, Nanteza & Co. Advocates proposing a settlement of the matter.
Ms. Nanteza went on to aver that the applicant was neither induced nor coerced to sign the consent order but he did so of his own free will. That subsequently he paid shs. 20m which was passed on to the respondent leaving a balance of shs. 289,000,000/= outstanding. Also that the applicant paid shs. 10m on account of costs of the suit and thereafter he failed to comply with the terms of the order. Ms. Nanteza further averred that the applicant issued 6 cheques to her firm towards satisfaction of the debt but they were returned unpaid by his bank.
In an affidavit in rejoinder, the applicant averred that he stopped his bank from paying cheques which he issued to the respondent’s advocates because they failed to credit his account with monies which he had remitted to them on account of the debt. That the said monies amounted to shs. 95m but the respondent’s advocates even refused to acknowledge receipt thereof. He denied ever having paid any of the costs of the respondent’s advocates and insisted that all the monies paid to them were for the reduction of his indebtedness to the respondent.
In a controversial supplementary affidavit in reply which was allowed to stand by court in spite of protests from the applicant’s advocates, Ms. Nanteza averred that the cheques that the applicant issued to her firm and which were dishonoured on presentment were Nos. 374606, 374607, 374608, 347609 and 374610. They were attached to the said affidavit as Annexure “TT.” She averred that these cheques were instead of those which she referred to in the earlier affidavit and which the applicant claimed to have issued to her firm, which she averred that the applicant had never issued to her firm.
At the hearing of the application, Mr. Musa Nsimbe for the applicant sought to abandon prayers (b) and (c), i.e. the order for stay of execution and that for leave to appear and defend the suit and his application was allowed. He therefore proceeded to apply for the variation or setting aside of the consent order, special directions as to accounts and the costs of the application.
In his submissions at the hearing of the application, Mr. Nsimbe repeated the contents of his client’s affidavits and stated that the applicant had raised serious accounting issues which called for the vouching of accounts between the parties and the respondent’s advocates. Further that a verification of accounts would have an effect on the consent order and the result would be a good ground for setting aside or varying the same. He relied on the provisions of Order 21 rule 17 of the CPR for his submissions.
In reply, Mr. Charles Semakula submitted that the application could not be sustained because first of all Order 21 rule 17 CPR did not apply to the instant case because it only applies in situations where there is a decree directing an account to be taken or a subsequent order giving directions with regard to the manner in which an account can be vouched. The second ground of opposition was that the applicant did not furnish grounds that would satisfy the conditions that have been laid down in previous decisions for setting aside consent judgments or orders. He relied on the decision in Brooke Bond Liebig (T) Ltd v. Mallya [1975] 1 EA 266.
Mr. Semakula further submitted that the applicant did not prove that he was induced to settle the matter without legal proceedings because attached to his affidavit was Annexure “C”, his own letter to the respondent proposing that the debt be settled. Further that in Annexure “NN” the applicant proposed to pay shs. 30m per month to settle the debt and that he never denied the debt of shs. 309m but only proposed to pay. That in addition, the applicant was neither honest nor consistent about the amount that he had paid to the respondent’s advocates.
In his rejoinder, Mr. Nsimbe argued that the respondent’s advocates were dishonest when they did not issue receipts for cheques that were issued to them by the applicant. Further that the amount of shs. 26m which the applicant claimed the bank debited from his account without explanation was never explained by the respondents.
Three issues arise from the evidence on affidavit and the submissions of both counsel which I think would dispose of this application as follows:-
i)
Whether this application was properly brought under the provisions of Order 21 rule 17 CPR.
ii) Whether the grounds raised by the applicant satisfied the criteria for setting aside consent judgments/orders and decrees.
iii)
Whether the applicant is entitled to the remedies sought.
With regard to the 1st issue, I must first point out that counsel for the applicant provided no help at all to the court in his submissions on it. He promised that he would provide authority for his proposition that rule 17 of Order 21 applied to the matter but he did not do so. Nonetheless, Order 21 rule 17 CPR provides for special directions as to accounts in the following terms:-
“The court may, either by the decree directing an account to be taken or by any subsequent order, give special directions with regard to the mode in which the account is to be taken or vouched, and in particular may direct that in taking the account the books of account in which the accounts in question have been kept shall be taken as prima facie evidence of the truth of the matter contained in them with liberty to the parties interested to take such objection thereto as they may be advised.”
{ My Emphasis}
This is preceded by rule 16 which provides that:-
“16. Decree in suit for account between principal and agent.
In a suit for an account of pecuniary transactions between a principal and an agent, and in any other suit not hereinbefore provided for, where it is necessary, in order to ascertain the amount of money due to or from any party, that an account should be taken, the court shall, before passing its final decree, pass a preliminary decree directing such accounts to be taken as it thinks fit.”
{ My Emphasis}
It is also pertinent to point out that there exists Order 20 of the CPR which provides for applications for accounts. In that regard, Order 20 rule 1 provides for orders for accounts in the following terms:-
“Where a plaint prays for an account, or where the relief sought in the plaint involves the taking of an account, then, if the defendant either fails to appear or does not after appearance, by affidavit or otherwise, satisfy the court that there is some preliminary question to be tried, an order for proper accounts, with all necessary inquiries and directions usual in similar cases, shall immediately be made.”
It is my view that Order 20 rule 1 and Order 21 rules 16 and 17 are to be read together in order to get a rational understanding of the intent of the three provisions. I say so because the golden rule of statutory interpretation requires that in the construing of statutes, “we are to take the whole statute together, and construe it all together, giving the words their ordinary signification, unless when so applied they produce an inconsistency, or an absurdity or inconvenience so great as to convince the Court that the intention could not have been to use them in their ordinary signification, and to justify the Court in putting on them some other signification, which, though less proper, is one which the Court thinks the words will bear.” (Lord Blackburn in River Wear Commissioners v. Adamson (1876-77) L.R. 2 App Cas 743.)
Going back to the various provisions referred to above, the head note above Order 21 rule 16 CPR leaves no doubt that the provision was intended to apply in situations where a principal in a transaction relating to money or other quantifiable object sues an agent to ascertain what is due and owing to him/her. However, the rule may apply to other suits not provided for before in the rules but they must be for accounts of pecuniary transactions. If the outstanding amount is not certain, the court will order that accounts be vouched but that must be before pronouncing its final decree.
According to Black’s Law Dictionary (9th Edition) one of the meanings attributed to the term “vouch” is to authenticate a claim by vouchers. It is therefore the intention of rule 16 of Order 21 CPR that in appropriate cases where the parties have to settle accounts between them, the court shall ensure that before a decree is entered, the accounts are authenticated by examining appropriate records held between the parties relating to the pecuniary transactions between them. It is very important that this is done before the pronouncement of a decree because “decree” is defined by s. 2(c) of the Civil Procedure Act in the following terms:-
“(c) “decree” means the formal expression of an adjudication which, so far as regards the court expressing it, conclusively determines the rights of the parties with regard to any of the matters in controversy in the suit and may be either preliminary or final. …”
Going on to Order 21 rule 17 CPR, it seems to me to be an extension of the intentions of rule 16. My understanding of rule 17 therefore is that in cases where a decree has been passed for the taking of an account, the court has to give directions as to how the accounts are to be taken or vouched. Court will do this by giving directions as to which books of account or other documents kept by the parties are to be used as evidence of the truth of the matters contained in them. Parties may take objection to the books directed by the court.
That may all be so but the provisions of Order 20 rule 1 seem to be paramount in the whole equation before the court because they appear to be the genesis of the provisions of Order 21 rules 16 and 17 for it is under O.20 that orders for accounts are provided for, in the main. Order 20 rule 1 provides that an application for an account is made “where the plaint prays for an account, or where the relief sought in the plaint involves taking an account.” In such suits, in the event that the defendant fails to appear or does not satisfy the court that there is some preliminary question to be tried in the suit, the court may immediately make an order for accounts to be taken. By necessary implication this would apply to a defendant who by his/her counterclaim prays that an account be taken between him/her and the plaintiff. It then follows that Order 21 rules 16 and 17 CPR can only be applied in suits where one of the parties has requested for an account as is anticipated by Order 20 rule 1 CPR.
I was unable to find earlier decisions about the application of Order 21 rule 17 CPR in this jurisdiction; but I am fortified in coming to my conclusion on this first issue by the decision of the Court of Appeal of Kenya in National Bank of Kenya Ltd. v. Pipeplastic Samkolit (K) Ltd. [2002] 2 EA 504, at 507. In that case, the Judge proceeded to entertain submissions on an application that accounts be taken when it was not one of the prayers in the plaint. Tunoi, Shah and Keiwua, JJA.; in unison ruled:-
“The Learned Judge erred not only in substituting what he thought ought to have been the proper rate of interest in place of what was agreed between the parties but he also erred in assuming jurisdiction to hear arguments, and rule thereon, on taking and settlement of accounts when such a relief was not part of the Plaintiff’s claim. Taking and settlement of accounts is not done, normally by Judge. Order XIX, rule 1 of the Civil Procedure Rules provides that if a plaint prays for an account or where the relief sought or the plaint involves taking of an account an order for proper accounts with all necessary inquiries and directions usual in similar cases shall be made. It must be noted that, as pointed out earlier, there was no issue in the plaint, for taking of accounts. We reiterate that it is not for a Judge to take accounts. The reason is clear. It is not the job of a Judge to be an accountant. That is why Order XX, rule 16 of Civil Procedure Rules gives special directions as to taking of accounts. Elaborate provisions have been made therein.”
Order 19 of the Kenya Civil Procedure Rules was then the equivalent of Order 20 of our rules but following the 2010 amendment of those rules, it became Order 20, similar to ours. There is now a difference in the provisions in the two jurisdictions in that while the Uganda CPR do not make specific provision for an application for an account by a defendant who brings a counterclaim, Order 20 rule 2 of the Kenya CPR does so. Order 20 of the Kenya Rules was at the time of the decision cited above the equivalent of Order 21 in this jurisdiction. It has now, similar to our CPR, been re-baptised Order 21.
In the instant case, the order that is contested by the applicant stated that it was an order as well as a decree. I therefore found it impossible to comprehend why this application was filed after a decree issued, and most singularly by consent of the parties to the suit. In addition, the applicant did not file a defence to the suit; the issue of a counterclaim wherein he sought to have accounts settled therefore could not arise. I therefore came to the conclusion that he could not bring an application under the provisions of Order 21 rule 17 CPR, and I find so.
As to whether the grounds raised by the applicant satisfied the criteria for setting aside consent judgments or orders, I was referred to the decision in Brooke Bond Liebig (T) Ltd v. Mallya, as authority for the criteria for determining whether a case had been made out to set aside or vary the consent order and decree. In that case, the Court of Appeal for East Africa held that a consent judgment can only be set aside for fraud, collusion or for other reason which would enable the court to set aside an agreement. Similarly, in Attorney General v. James Mark Kamoga, SCCA No. 8 of 2004 (unreported) it was held:-
“It is a well settled principle therefore, that a consent decree has to be upheld unless it is vitiated by a reason that would enable a court to set aside an agreement, such as fraud, mistake, misapprehension or contravention of court policy. This principle is on the premise that a consent decree is passed on terms of a new contract between the parties to the consent judgment. …” {My Emphasis}
It is upon those considerations that I will now consider the submissions of counsel and the affidavit evidence adduced by Mr. Kavuma in that connection in this matter.
I will first address the averment by Mr. Kavuma that the consent order ought to be set aside or varied because when he signed it the amount of shs. 309m named in the decree was not due to the respondents but he owed them only shs. 200m, inclusive of interest. This would infer that he signed the order under a mistake that he owed as claimed in the plaint. As averred by Ms. Nanteza, this is not borne out in the applicant’s conduct prior to the signing of the consent order/decree. In his letter of 8/01/2009 the applicant wrote to the respondent’s advocates to inform them that he was aware of HCCS 332 of 2008. He requested that the suit be withdrawn from court and that he would deposit shs. 30m in court by 29/01/2009; that he wished to maintain his account with the respondent bank; that he would resume payment towards the outstanding by the end of February 2009. He also informed the advocates that he would be in a position to negotiate instalment payments because his business would then be operational. He promised that the situation (of non-payment) would change because he had signed a new contract which would take effect in February. He requested that the advocates verify an amount of shs. 26m with the bank, which he said was not clear on his account.
Judging from the contents of that letter, it would appear that save for the debit of the amount of shs. 26m which was not clear to him, the claim as it appeared in the plaint was correct. It is therefore surprising that he now acknowledges a debt of shs. 200m only. The criteria of a mistaken signing of the order/decree therefore has not been proved against the respondent or its advocates by the evidence on the record.
The larger part of the applicant’s evidence centred on the possibility of dishonesty or fraud attributed to the respondent’s advocates, by the claims he made that they refused to acknowledge in writing the payment of shs. 95m which he remitted by cheques. Though he also claimed to have made some payments to the advocates by cash there was not much evidence adduced in the applicant’s affidavits in relation to the payment of cash, i.e. when and how he paid it and to whom, but he dwelt on several cheques said to have been issued to the advocates but whose proceeds were not reflected on his account with the bank. That being his most solid claim, I expected him to pursue it vigorously, but alas! The statement that the applicant attached to his affidavit in support as Annexure “B” had crossing with a highlighter which completely obliterated the entries that he wished to draw the court’s attention to. And though his advocate, Mr. Nsimbe, promised that he would supply a clear copy of the statement to court before the delivery of this ruling he did not do so.
Again regarding the payments alleged to have been made to the respondent’s advocates, on 12/10/2010 the applicant wrote to the Head of Collections of the respondent bank (Mr. Philip Dande) at its head office in Kampala in relation to HCCS 332 of 2008. In the letter (Annexure “D” to his affidavit in support) the applicant undertook to settle the outstanding balance. He also informed Mr. Dande that he made payments of shs. 95m to the respondent’s advocates by cheques 301393, 301394, 302392, 317530 and 317539. The letter stated that evidence of payment was enclosed with it but it was not stated what that evidence was; neither was it attached to the copy annexed to the affidavit. I was therefore unable to ascertain from the applicant’s evidence whether the proceeds of his Cairo International Bank cheques, Nos. 301393, 301394, 302392, 317530 and 317539, were credited to the respondent’s advocates’ account or not because there was not an iota of evidence to prove that fact. This brought me to the conclusion that fraud was not proved against the respondent’s advocates, either.
Strangely, contrary to the applicant’s allegations, the respondent’s advocates admitted receiving 6 cheques from the applicant issued against his account with Cairo International Bank. They communicated this to the respondent by their letter dated 15/04/2009, Annexure “QQ” to the Affidavit of Ms. Nanteza. According to the 2 affidavits filed by the respondent’s advocates, the said cheques issued against Cairo International Bank were presented for payment but were dishonoured. Copies of the dishonoured cheques, Nos. 374606, 374607, 374608, 347609 and 374610 were attached to Ms. Nanteza’s affidavit dated 7/03/2011 as Annexure “TT”. Also attached to Ms. Nanteza’s affidavit dated 17/02/2011 as Annexure “UU” was a statement of account of M/s Muganwa, Nanteza & Co., Advocates for their Account No.1630000000832 with Post Bank (U) Ltd. The statement showed that cheques No. 374606, 374607, 374608, 347609 and 374610 were banked on 17/08/2009 but they were all returned unpaid. As a result, the Advocates met the loss of shs. 250,000/= on account of cheque rejection charges, also reflected in the statement.
The advocates further admitted that the applicant paid shs. 20m by cheques No. 338595 and 338596, which was passed on to the respondent and which reduced his indebtedness according to the decree to shs. 289m. They also admitted that he paid shs. 10m as part of the costs of the suit, but which the applicant denied, meaning that by the time he filed this application, it was proved that he had paid shs. 30m only to the advocates.
That then begs the question. If the applicant did not owe shs. 309m and mistakenly signed the consent order/decree, why then did he issue cheques and purportedly pay cash to the respondent’s advocates in satisfaction of the decree? According to the letter of instruction to the respondent’s advocates dated 27/11/2008 (Annexure “LL” to the affidavit in reply) the applicant was operating an unauthorised overdraft with the respondent bank. When this was discovered, the applicant was requested to put his account in order by paying up shs. 309m which was found to be outstanding, but the bank’s efforts were futile because he kept making and breaking promises and issuing cheques that were dishonoured. The respondents then instructed their advocates to file this suit. The advocates were also instructed to institute criminal investigations to establish how the applicant had mismanaged his current account such that he had an unauthorised overdraft of up to shs. 309m.
The respondent’s advocates then filed HCCS No. 332 of 2008 in this court on 10/12/2008. There is no doubt that the applicant received the summons in the summary suit because in his letter of 8/01/2009 he stated that he had “seen” the suit but he did not apply for leave to file a defence therein. He instead offered to settle the matter out of court because he wished to maintain his account with the bank. He offered to start paying the monies owed by depositing shs. 30m. He subsequently entered into the consent order/decree on 26/02/2009. By these facts I was led to believe that the applicant sought to benefit from the consent order/decree by stalling investigations into his unethical and likely criminal conduct and avoiding possible prosecution for his operating of an unauthorised overdraft with the respondent. He achieved this end and no criminal investigations were conducted against him in the hope that he would make good his indebtedness. Having derived this benefit he now turns around and wants to have the consent order and decree set aside or varied.
It is a well known principle of equity that one cannot approbate and reprobate all at the same time. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that “a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage.” (Verschures Creameries Ltd. v. Hull & Netherlands Steamship Co. Ltd., (1921) 2 KB 608, at p. 612, per Scrutton, L.J.)
In Verschures Creameries Ltd. (above) a forwarding agent acting for the plaintiffs delivered goods to one of their customers contrary to their instructions. The plaintiffs then invoiced the goods to the customer, brought proceedings for the price of goods sold and delivered and recovered judgment against him. The customer failed to satisfy the judgment and was adjudicated bankrupt. The plaintiffs then brought proceedings against the forwarding agents claiming damages for conversion by misdelivery. The Court of Appeal (Bankes, Scrutton and Atkin, LJJ.) held that by suing the customer for the price of goods sold and delivered the plaintiffs had elected to treat the act of the forwarding agents in delivering the goods to him as lawful and could not in a later action against the agents treat it as unlawful.
And according to Halsbury’s Laws of England, 4th Edition, Vol. 16, para. 1055, after taking advantage of an order, a party may be precluded from saying that it is invalid and asking to set it aside. I therefore find that after he obtained respite from investigations and possible criminal prosecution by signing the consent order and decree, the applicant could not now turn round and say that he did not owe the amount claimed in the suit whose order and decree he acquiesced in.
There is also the question whether the applicant was induced to sign the order and decree. This claim would be related to duress and/or coercion and undue influence. Starting with duress, the basis of duress is an unlawful threat amounting to “coercion of the will”. In Pao On & Others v. Lau Yiu & Another [1979] 3 All ER 65, relying on the decisions of Lord Wilberforce and Lord Simon of Glaisdale, in Barton v. Armstrong [1976] A.C. 104, at p. 121, Lord Scarman ruled that there are criteria that are relevant in considering whether the plaintiff acted voluntarily or not in signing an instrument or entering into a contract. That in determining whether there was coercion of the will such that there was no consent, it is material whether the person alleged to have been coerced did or did not protest; that at the time he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised, and finally, whether after entering the contract he took steps to avoid it.
There is no doubt in the instant case that the applicant could have filed a defence in the suit without signing the consent order and decree. Even if he had been out of time for the application for leave to file a defence he could have obtained leave to file one by showing that he did not owe the amount that was claimed by the respondent in the suit. He did not do so but opted to settle the matter amicably. The applicant also could have taken the advice of counsel but he chose not to do so. That cannot be blamed on the respondent either. As to whether he protested before he signed the consent order, the resolution to compromise the suit was initiated by the applicant himself. The respondent only followed up his proposal which was in writing in his letter of 8/01/2009 to the respondent’s advocates (Annexure “NN” to the affidavit of Nanteza).
As to whether the applicant protested against the order and decree, after he signed it, it took him one whole year and 9 months to file this application. And during that time, there was not a word from him to say that the decree was in error or unjust but instead, he purported to issue cheques in satisfaction of the decree. That being the case, I would say that the applicant’s action did not show that he was protesting. Even after he filed this application, it took his advocates more than a year to take it out and serve it on the respondent. Had the Deputy Registrar been vigilant, by the 10/02/2011 when she signed it off, I believe at their request, she ought to have dismissed the application under Order 12 rule 3 for failure to serve it on the respondent within the period of 15 days of filing it as is required by that rule. I therefore find that the applicant’s protest was too late and cannot be considered positively at this point in time.
The law also recognises a kind of duress termed “economic duress,” both in situations where there exists a relationship between the complainant and the defendant and in situations where it is not. Black’s Law Dictionary (9th Edition) defines economic duress as an unlawful coercion by threatening financial injury at a time when one cannot exercise free will. It is also termed “business compulsion.”
In The Siboen & The Sibotre [1976] 1 Lloyd's Rep 293 and in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd. [1979] QB 705 the English Courts recognised that commercial pressure may constitute duress the pressure of which can render a contract voidable. In both case it was stressed that the pressure must be such that the victim’s consent to the contract was not a voluntary act on his part. And in order to prove economic duress, it must be shown that the payment made or the contract entered into was not a voluntary act.
In The Sibeon, Kerr, J stressed that in a contractual situation commercial pressure is not enough to prove economic duress. The court must be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of his free consent and agreement. This would depend on the facts in each case. He considered that two questions had to be asked before the test could be satisfied: (1) did the victim protest at the time of the demand and (2) did the victim regard the transaction as closed or did he intend to repudiate the new agreement?
It is clear from the evidence as already evaluated above that the applicant did not prove the two tests for economic duress to be satisfied. He neither protested at the time of signing the consent order and decree nor at any time after that, till he filed this application 1 year and 9 months later. There was also no evidence that he intended to repudiate the new agreement because he purported to honour it by issuing cheques which were dishonoured and paying about shs. 20m cash. He therefore regarded the consent order and decree as closure to the suit and it would have remained so, had not the five cheques he issued to the respondent’s advocates bounced and so attracted criminal investigations and probable prosecution.
I will next consider the possibility that there was undue influence imposed on the applicant. Undue influence exists where a contract has been entered as a result of pressure which falls short of amounting to duress, the party subject to the pressure may have a cause of action in equity to have the contract set aside on the grounds of undue influence. Undue influence was described by Lindley LJ in Allcard v. Skinner (1887) 36 Ch D 145, as “… some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating and generally, though not always, some personal advantage gained.” But later on it was thought that there can be no definite description of undue influence and in hyperlink, Lord Nicholls described the concept as follows:-
“Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. In everyday life people constantly seek to influence the decisions of others. They seek to persuade those with whom they are dealing to enter into transactions, whether great or small. The law has set limits to the means properly employable for this purpose. The law will investigate the manner in which the intention to enter into the transaction was secured. If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or 'undue' influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person’s free will. It is impossible to be more precise or definitive. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion.”
Where a contract is found to be entered into as a result of undue influence, this will render the contract voidable. This will enable the person influenced to have the contract set aside as against a party who subjected the other to such influence. In addition, in some instances the party influenced may be able to have a contract set aside as against a party who was not the person inflicting the influence or pressure. There are three classes of undue influence which were set out in Bank of Credit & Commerce v. Aboody [1990]1 QB 923, actual undue influence and presumed undue influence which is divided into two categories, Class 2a and Class 2b undue influence.
Actual undue influence, as the name suggests, requires proof that the contract was entered into as a result of actual influence exerted. The claimant must plead and prove the acts which they assert amounted to undue influence. This may include such acts as threats to end a relationship or continuing to harass the party where they have refused to consent until they eventually give in. The evidence adduced by the applicant does not bear this out.
Under Class 2a undue influence there is no requirement to prove that improper influence was actually exerted. Instead it must be established that there was a relationship which as a matter of law gives rise to a presumption of undue influence or that the transaction is one which can not readily be explained by the relationship of the parties, such as parent and child, solicitor and client, doctor and patient or trustee and beneficiary. In such cases where the transaction is obviously not to the benefit of the vulnerable party but confers a great advantage to the party in a fiduciary position, the law will raise a presumption that the transaction was entered into as a result of some sort of abuse of the relationship. This requirement used to be expressed in terms of manifest disadvantage but there is no doubt in my mind that the relationship between the applicant and the respondent does not fall in this category.
Going on to Class 2b undue influence there is no automatic presumption arising as a matter of law. Here it must be established that there is a relationship of such a kind that one party in fact placed their trust and confidence in the other to safeguard their interest. Any relationship is capable of amounting to this and examples include husband and wife, cohabitees, employer and employee. The important distinction between Class 2a and 2b is the fact that the trust and confidence relationship must be proved. In Lloyds Bank v. Bundy [1975] QB 326, as an exception, it was held that a relationship of trust and confidence existed between a bank manager and his client in a situation where the client had reposed his full trust in the bank and sought no legal advice while depositing a certificate of title for his home as security. But in National Westminster Bank v. Morgan [1985]1 AC 686 it was held that the normal relationship between banker and client is not one of trust and confidence. The applicant’s case did not fall under this category either, so undue influence is clearly excluded.
I finally considered whether there was a misapprehension or contravention of court policy but that was not the applicant’s case. This means that all that was done was done well under the law save for the alleged fraud of the lawyers which was not proved by the applicant. I therefore find that the applicant is not entitled to setting aside of the consent order and decree either.
Regarding the debit of shs. 26m from his account which the applicant claimed not to understand, this could have been reason for filing defence, instead of offering to compromise the suit by entering into a consent order and decree. Having done so, it is presumed that he had fully considered his accounts with the respondent and saw no hindrance whatsoever to signing the decree which was a final pronouncement of the court that the matter was closed between the parties. I therefore see no reason to set aside the decree on account of that.
In conclusion, the applicant failed to prove the criteria required to set aside the decree that he entered into in the suit. He also did not prove that this is a case that falls under the provisions of Order 21 rule 17 CPR for the vouching of accounts. This application is therefore dismissed with costs to the respondent.
Irene Mulyagonja Kakooza
JUDGE
14/04/2011
