THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

COMMERCIAL DIVISION

CIVIL SUIT NO. 43 OF 2014

SEBASIF GROUP ENTERPRISES LTD:::::::::::::::::::::::: PLAINTIFF

VERSUS

DFCU BANK LTD:::::::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT

BEFORE THE HON. MR. JUSTICE HENRY PETER ADONYO

JUDGMENT

1. Background:

The Plaintiff a body corporate applied for and obtained from Uganda Leasing Company Ltd., a financial institution and the predecessor of the instant Defendant, three finance lease facilities which included those for the financing of an Isuzu Truck registration number UAA 373U which is the suit truck. To accomplish the contract three documents were executed including a Master Lease Agreement of the lease terms dated the 27^th July 1998, leasing facility dated 14^th July, 1999 and a Vehicle lease Schedule dated the 14^th July 1999. The facility was paid up by the Plaintiff to the Defendant and the Plaintiff took possession of the vehicle. A dispute thereafter arose between the parties for the Plaintiff sued the Defendant claiming amongst others special damages, general damages, interest at the commercial rate and the costs of the suit arising out of a breach of the contract of Motor vehicle Leasing Agreement in respect to motor vehicle No. UAA 373U which the Defendant leased and later sold to the Plaintiff.

1. Brief Facts:

By a lease agreement schedule No. 2 executed on the 14^th day of July, 1999 between the Plaintiff and the defendant (formerly Uganda Leasing Ltd.), the Plaintiff purchased on leasing arrangements a motor vehicle Registration number UAA 373U at a total price of Ug. Shs. Fifty Million Only (Ug. Shs50, 000,000/=) for which the Plaintiff was to pay in installments together with accrued interests thereon until completion. Immediately after execution of the agreement, the Plaintiff took possession of the motor vehicle but the original logbook remained with the Defendant. The Lease Agreement had with it an option of purchase the motor vehicle by the Plaintiff at the end of the lease term which the Plaintiff is said to have exercised. Prior to execution of the lease agreement for the said vehicle, the Plaintiff had a transportation contract with Nile Breweries Ltd to transport beer to Nimule in Southern Sudan. The particular vehicle was said to have been recommended by the Defendant’s director called Juma Kisame who had dealt with the Plaintiff’s director to be suitable for the transportation business. It is stated that though the Defendant told the Plaintiff’s director that although at first Uganda Leasing Ltd policy was that it would deal only brand new vehicles, the said leasing company had discovered that the average Ugandan businessman could not afford new vehicles and as such Uganda Leasing Ltd adjusted its policy to deal in even used vehicle where were however to be in good condition as the ones had been identified and got for the Plaintiff by the Defendant’s Director, Juma Kisame. Upon the Defendant’s director identifying the said vehicle as suitable for the business which the Plaintiff was to undertake, the plaintiff’s director was taken to inspect the vehicle by one Mukasa Robert who had been delegated by the said Juma Kisame to take him where the motor vehicle was and upon inspection and satisfaction that the motor vehicle was in good condition accordingly, a cheque of Ug Shs 50,000,000/= was drawn and paid to one Mutasingwa Charles who was stated to be the owner of the vehicle though only later it to turned out that vehicle was registered in the names of a one Hassan Matovu whom the Plaintiff’s director had never met before even to date. The lease term was of two and half years (2 ½) years but the vehicle on numerous occasions got impounded by police under allegations that it had been stolen from another person only four months into its usage by the Plaintiff. One such occasion was late 1999 when the same was impounded by the police and parked at Kampala central Police Station for a period of seven (7) months. It is stated that with the several police disturbances, the Plaintiff’s director sought the intervention from the defendant company who at first told him to clear up the lease upon which then the defendant would intervene only for the defendant to fail to avail the vehicle’s  original log book even when the lease was paid up and an option to purchase exercised by the plaintiff and when the Plaintiff’s director pleaded for even to be given a photocopy at least of the motor vehicle’s registration log book, he was availed with a letter from the Defendant’s Legal Department to the Central Police Station which stated that the Defendant had no interest in the said vehicle yet at the said time the lease with the Defendant for the said vehicle was still ongoing and the vehicle registered in the defendant’s name. When the plaintiff’s director took the photocopy of the vehicle’s log book for verification at the Uganda Revenue Authority (URA), he discovered that the vehicle had never been registered in the names of the said Charles Mutasingwa whom the defendant had paid for the motor vehicle but rather in the names of one Hassan Matovu the URA records showing that the said Hassan Matovu having never been registered on the log book and the first owner of the vehicle in Uganda was the Government of Uganda and on further inquiry into the government vehicle record at Ministry of Works, he discovered that the Government still had its vehicle registration on the said log book and its vehicle was a green Mercedes  Benz Cross Country make with sitting capacity of 5 as opposed to that which the defendant had delivered at the plaintiff’s premises which was a Fuso lorry cream in color and was 2 seater vehicle. With this finding and because of the continuous disturbance by the police, the Plaintiff was left with no choice but to park the vehicle at its parking yard at Spire Road in Jinja Municipality as from the month of May 2006 to date and had to hire another vehicle to execute its contractual obligations with Nile Breweries awaiting the rectification of the matters concerning the suit vehicle. The Plaintiff insists that though it purchased the said vehicle the Defendant deliberately refused to avail it with the original log book thus resulting into this suit.

1. The Issues:

At the trial of this matter two issues were framed for the disposal of the suit, to wit;

1. Whether there was breach of contract by the defendant
2. Whether the plaintiff is entitled to the reliefs sought

1. The Evidence:

In a bid to prove its case the plaintiff adduced four witnesses by witness statements well as the defendant adduced two witnesses by witness statements. Haji Ismail Sebunya, (PW1) the Plaintiff’s director told court that  knew personally the Defendant’s director called Juma Kisame right from when the said Kisame was still working with the East African Development Bank (EADB) where he had gone to obtain a vehicle financing loan only to find that the EADB had was not  dealing in such business but the said Kisame told him to leave his contact in case they started dealings he would let him know. That later, Kisami called to inform him that he joined a new Bank which wit Uganda Leasing Ltd. which dealt in financing brand new vehicles and inquired from him whether he was still interested in such dealings and he answered in the positive and so he went to Uganda Leasing Ltd and in the process of discussing the possibility of acquiring a vehicle under a lease arrangement he clearly informed Mr. Kisami that he could not afford the cost of brand new vehicles, but promising a favorable payment schedule, the said Kisami convinced him to buy the new vehicle, subsequent upon which he was introduced by the said Kisame to a Mr. Kiboijana who was a vehicle dealer with Kampala Auto Center Ltd. where after he obtained motor vehicles UAA 245, UAA 246 and UAA 247 which the plaintiff paid up and exercised the option to purchase thereafter. That while still servicing the leases for the said vehicles the said Kisami called him again to inquire whether the plaintiff company still needed more vehicles since Uganda Leasing Ltd. had changed its policy from leasing new vehicles to old god ones upon realizing that the average Ugandan entrepreneur could not afford brand new vehicles and so switched to also lease used vehicles that were in “good” condition, and  so the Plaintiff’s director stated that he got interested  in the new development PW1 and accepted to deal. That shortly thereafter PW1 was called by Kisame to go and inspect a certain vehicle which the said Kisami deemed suitable for the plaintiff’s business and on PW1’s arrival at Uganda Leasing Ltd. Mr. Kisame delegated one Robert Mukasa to take the witness to Nsambya to inspect the suit vehicle and on arrival at Nsambya the said Robert Mukasa introduced him to one Mr. Mutasingwa the alleged owner of the suit vehicle. Upon the vehicle being made to start he witness liked it and thus they returned to Kisami where the price for it was determined with Kisami telling the witness that the vehicle was being sold Ug Shs 50,000,000/= which price the witness found favorable when he took into account difference in price in relations brand new vehicle prices. That shortly thereafter Mr. Kisami presented a lease offer of the suit vehicle to witness and accordingly a vehicle leased schedule for the suit vehicle was executed on the 14^th July, 1999 and the vehicle released to PW1. This schedule was exhibited as Exhibit PEX.1.

But that after taking over the vehicle and while in the process fixing it onto the fleet schedule for the transportation of Nile Breweries Ltd products, Mr.  Kisami sent Robert Mukasa whom the witness now  knew very well by this time and two others to conduct another  verification on the vehicle which process surprised the witness since he had expected that the defendant had done this prior to even identifying the vehicle for the plaintiff,. However the verification process went on and photographs of the vehicle were taken while in the custody of the plaintiff premises and a back to office report by the Defendant was executed and exhibited as PEX 2. Eventually the vehicle joined the fleet of the Plaintiff for transportation of Nile Breweries Ltd products only for it to start being impounded by the police five (5) months into its operation at Nile Breweries and it was eventually parked at the Central Police Station at Kampala for seven (7) months and when the witness sought the intervention of the defendant to enable the release of the vehicle from the police, he states that  was informed by several staff of the defendant including the said Kisami himself personally to continue servicing the lease facility for the defendant  to intervene  but nothing was done for this whole period until the witness pleaded with the police to release the vehicle  which was done but the vehicle still was routinely re impounded which the Plaintiff found costly and disturbing thus decided to parked it at its  premises to date. That the plaintiff subsequently paid up the lease facility and exercised the option to purchase of the suit vehicle as seen from the suit vehicle lease statement of accounts Exhibit P.EX. 3 and thereafter requested for the original log book from the Defendant too clear up the vehicle’s issues with police but in vain and so the  witness then later got a photocopy of the motor registration log book which was in the Defendant’s names as 2^nd owner in Uganda after one Hassan Matovu together with a letter to police written by the defendant’s legal department informing the  police that the defendant had no interest in the suit vehicle even yet it was the registered owner and the lease facility for the same had not yet been paid up as seen from the letter exhibited as PEX 4 and so with the photocopy of vehicle log book the witness proceeded to URA to verify the vehicle’s particulars which was in the defendant’s name only to find that save for the second owner being the defendant, the rest information stored by URA for the particulars of the vehicle were different. The witness then accordingly paid for a copy of that record which he tendered in court together with the  photocopy of the log book availed to the plaintiff by the defendant and the statement of particulars contained in the URA records which the witness tendered in court as Exhibits  EX.P.5 and EX.P.7 respectively. A close scrutiny of the records from URA shows that the first owner of the said motor vehicle was Uganda Government and the vehicle registration number UC0339. This revelation is said to have consternated the plaintiff which then sought to confirm with the  Ministry of Works which keeps records of government vehicles whether it had in its custody such information that indeed after inquiry in the said ministry   the witness was  shown the particulars  of a vehicle which was a station wagon green in color and of a Mercedes Benz make  Cross County model which was a five seater vehicle still in the possession of the government under State House yet the defendant’s availed log book described the vehicle as an Isuzu FVR lorry, Cream in color, 2 seater Reg No. UAA 373U with the first owner being stated as Matovu Hassan and the 2^nd owner being the defendant. That the Plaintiff upon receiving this information was  compelled the plaintiff to sue the defendant bank for breach of contract, refund of the principal cost of the lease facility plus interest paid on the same totaling to Ug Shs 78,448,500/=, loss of Ug Shs 3,000,000/= per month which the leased vehicle would have fetched were it  to transport Nile Breweries Ltd products which fund was diverted to hire an alternative vehicle to undertake the said contract all totaling to so far Ug Shs 570,000,000/= from October,1999 when the vehicle was impounded to date of filing the suit, together with the cost for mediation process in the matter which reached Ug Shs 10,000,000/=, the costs of this suit, general damages for the mental anguish suffered by the plaintiff and interest of 30%  per annum on the special damages above. During cross examination this witness confirmed to the court the defendant was not a car dealer but that all he knew was that is that it identified for its clients where to buy motor vehicles from and that the plaintiff did not approach the defendant for a vehicle financing loan but rather he was invited by the defendant’s Managing Director Kisami to enter into the vehicle leasing business with the defendant, who was by then still referred to as Uganda Leasing ltd. This witness confirmed further that he has never signed a Master lease but rather did so for a vehicle lease schedule for all vehicles he purchased through the defendant’s vehicle lease project. He further told court that he was not around when one Robert Mukasa from the defendant bank came to the plaintiff’s premises to take pictures of the vehicle but was only told by his accountant Ms. Proscovia and got to learn that a back to office report had been done only when he had sued the defendant bank. He further stated that although he had no order from the police to stop using the vehicle, the conditions under which it operated of being impounded every now and then forced him to park it until the mess it was in was sorted out by the defendant as he had been promised upon the plaintiff clearing up the lease. He confirmed that all correspondences between him and the defendant bank were always verbal.

The second Plaintiff’s witness Mukoova Proscovia (PW2) informed court that she was the Accounts Assistant in the plaintiff company a post she has held since 1994 through which she got to know the defendant bank. That she got to know the defendant bank when the plaintiff company got lease facilities from it around early 1999 since among her duties at the plaintiff company was to do book keeping, make returns, make claims for contracts undertaken on behalf of from Nile Breweries Ltd, reconcile the company’s accounts and also pay up loans of the plaintiff. That the suit vehicle had a contract with Nile Breweries Ltd as evident from its Delivery Notes and Tax Invoice she made to Nile Breweries Ltd for transport hire costs claims , the originals  which were sent and retained by Nile Breweries Ltd which  returned to her offices photocopy in proof of delivery and demand for payment. She exhibited the copies of the Delivery Notes and Tax Invoices as EXP 8.  This witness stated that she was present when the defendant’s official came to inspect the vehicle at their offices and confirmed that the vehicle was no longer operational for  it has since been is parked at the plaintiff’s garage as it had no log book. During cross examination, the witness informed court that she was not conversant with vehicle lease transactions but was aware that the plaintiff in this particular transaction exercised the option to purchase the vehicle and that the said vehicle was delivered at the plaintiff’s premises before verification by the defendant and the plaintiff did not also verify the same before taking it on since it was the duty of the defendant in whose names the vehicle was registered to do so and that the plaintiff had no copy of the log book of the vehicle to date. That in relations to the  first three vehicles leases the plaintiff had with the defendant, it was the defendant who did the verification of the vehicles and as regards the suit vehicle it was only after the plaintiff failed to get its log after completion of the purchase  that the plaintiff’s director went with a photocopy he had received from the defendant  to verify the vehicle’s true particulars with the URA. She confirmed that the plaintiff company incurred and continued incurring a lot of expenses on hiring other vehicle to transport products of Nile Breweries Ltd in the place of the suit vehicle as it had to be parked since it had issues. She also confirmed that the said truck was delivered to the plaintiff a week before the verification date. She was firm in her testimony that though she did not participate in negotiations for the transaction of the plaintiff with the defendant bank for the lease of vehicles she did pursue the contracts after they had been executed and got to know that there was the option to purchase the vehicle from the lease facility after full payment of the lease and also knew as a fact that it was the defendant bank which that identified all the four vehicles it has ever leased and subsequently sold to the plaintiff company.

The third Plaintiff’s witness was Bulamu Mary (PW3) and she was an employee of Nile Breweries as an Accounts Assistant from 1994 whose duties included remittances to the Nile Breweries Ltd Accounts department proof of deliveries for payments to the financial controller. She tendered in proof of her employments with Nile Breweries an appointment letter, a promotion letter and an identity card while working at Nile Breweries which were exhibited jointly as EXP 9. This witness went on to state that in the performance of her duties she came about the plaintiff company and its director and Accounts Assistant respectively as the plaintiff company was one of the companies which had contracts of transporting Nile Breweries ltd products and that she specifically got to know the suit vehicle when it was impounded at Nile Breweries Ltd premises where it was being loaded with beer upon which it had to be substituted and that her duties included the verifications that such vehicles had been loaded with Nile breweries ltd beer so as to make it possible for the trucks services to be paid for. That since that incident when the truck was impounded by police at the premises of Nile Breweries Ltd. when it was being loaded she never saw any further delivery notes with the suit vehicle’s registration number continued to see substitute other vehicles used by the plaintiff until she retired from Nile Breweries.

The fourth plaintiff’s witness Detective Corporal No. 35691 Kibikwamu Reuben (PW4) informed court that he was an investigator at Jinja Central Police Station attached to the Criminal Investigation and Intelligence Directorate Kampala and that in February, 2013 he was approached by the plaintiff’s official and lawyers who availed him with a photocopy of a log book which was claimed to have been  had issued to the plaintiff’s director  by the Defendant to go and verify its  genuineness for motor vehicle registration No. UAA 373U on the information that the said vehicle had been purchased by the plaintiff company from the defendant company only to be impounded on and off by police yet it was not yet registered in the plaintiff’s names and had no log book in its respect. He went on to state that in respect of the action he was to undertake , he also availed a statement of one Sakwa Perez who was stated to be a police officer attached to Kibuli Criminal Investigation Department who  he had been instructed by the Defendant to investigate under what circumstances the suit vehicle Reg No. UAA 373U was impounded by the police. That he thus proceeded to Central Police Station Kampala where he discovered that a vehicle which had been impounded under police reference GEF 60/1999 had its particulars entered in the Criminal Record Book as CRB 13711/1999 and given a court criminal case registration number 1800 of 1999 at the Buganda Road Court with the parties the government of Uganda prosecuting one Matovu Hassan in a criminal matter charged with receiving goods stolen from outside Uganda contrary to section 317 of the Penal Code Act. That with the defendant’s availed photocopy he proceeded to URA with Police Form 28 to investigate the particulars of said vehicle where he was availed a photocopy of the log book of the said vehicle as per URA record which showed that the vehicle was first registered in the names of Uganda Government and then the defendant was entered as the 2^nd owner. He tendered the Police Form 28 dully received by URA and the log book as per URA record as exhibits P.Ex 10A and PEx.10B respectively.  That his discovery was that the log book for the vehicle as per URA records was No. RL 005820 for  a five  seater vehicle whereas the one which was held by the defendant was No. RL005285 for a two seater and when he conducted further investigations at the Office of The President which was the first owner of motor vehicle whose particulars were contained in URA records no. RL 005820 he found the log book No. to be 29799 as well held by Ministry of Works. This witness went further to state that his investigations proved that the suit vehicle had different log books which even had contradictory details and particulars with different dates of first registration and ownership in Uganda all of which made him to conclude in his report that the defendant was not innocent of the fraud in the process of registration of the motor vehicle otherwise it would not have appeared as 2^nd owner on two of the different log book. He tendered a copy his report as exhibit P.Ex 11. During cross examination PW4 told court that on the log book copy under UC 0339 had on it inscriptions of “value 2,630,000/= as per CME (Chief Mechanical Engineer’s) report and Auctioneers receipt No. 233562 Kamamu General Auctioneers with a stamp dated 25^th May, 1999 and yet on the same log book copy the CME wrote that the vehicle hand never been boarded off from President’s Office. He told court further that the inscriptions on the Ministry of Works log book that were stamped and dated 25^th May, 1999 had been disputed by the CME who then wrote that the vehicle had not been boarded off and accordingly stamped and signed the witness’s minutes of investigations to that effect on 8^th May, 2013. He further contended that although no one from either the Defendant Company or URA was charged for fraud, the URA realized the fraud in registration of vehicle marking it as a wanted vehicle for it had no proper documentations.

The defence evidence was adduced through the evidence of two witnesses with Sakwa Perez Mauso (DW1) telling court that he was a detective constable attached to Jinja Road Police Station and had been an investigator for the past 12 years that in 2013 he received instructions from the defendant bank to find out under what circumstances the log book of motor vehicle Reg No. UAA 373U had been requested by the police with the defendant bank giving him a letter dated 27^th March, 2000 in which the defendant bank was stating to the police that it had no interest to pursue on the said  vehicle though the defendant bank wanted him to find out the nature of the complaint against the motor vehicle was and also whether the vehicle was ever impounded by police at all. That to carrying out his assignment he went to Central Police Station where he got a file recorded under reference GEF No. 60 of 1999 with CRB No. 3711of 1999 in which there was  a complainant a Kenyan that his motor vehicle registration No. KAG 635G Isuzu Truck had been stolen and that it had been with the first registered in Uganda in the names Hassan Matovu who was also the suspect in the matter. That he found out that the case had been dismissed at Buganda Road Court after the suspects failed to turn up in court and to prove this contention he tendered in his report which was exhibited as Dex.5. During cross examination this witness told court that his PF 28 was not filled in because that was for the URA to do so and confirmed that the motor vehicle registration number on the log book which the defendant availed him with was different from those in the records held by the URA computer system and even from the original log book records with several inconsistencies seen between those held by URA which the original information and that during his inquiries he was informed by a detective constable that the defendant had written to the OC CID saying that the suit vehicle be surrendered to plaintiff plus its log book as so police  had released the suit vehicle it had impounded to the plaintiff accordingly.

The second defence witness Robert Mukasa (DW2) informed court that he had an educational qualification of a degree  of Bachelor of Science in Mechanical Engineering with trainings in Banking and Finance, Project Risk Appraisal and while employed at Uganda Leasing Ltd (now the defendant bank) where he joined in 1997, he held the position of a Commercial Executive and later was promoted to the  post of Senior Loans Officer in charge of Project Evaluation and Loans Appraisal whose duties at the  defendant bank included ensuring that all department compiled with the bank’s policies, ensure that there were smooth  flow in loan appraisals and project evaluation and that later he assigned  to Head the Credit Risk Assessment position which he held until he resigned from the defendant bank. He informed the court that Uganda Leasing Company (ULC) was in the business of financing leasing services to customers who were desirous of acquiring equipment but lacked adequate security to enable them acquire a normal loan and capital resource which would enable them purchase the such capital equipments and that for that purpose the defendant bank designed a document in general terms where leases were governed called a Master lease agreement with the said terms being non negotiable. He tendered a copy of the same which he stated was never signed by any representative of the plaintiff exhibited as Dex.1. This witness confirmed to court that the plaintiff applied for a lease facility to finance the suit vehicle in July, 1999 and that he personally participated in the appraisal and evaluation of e application in that respect but that the plaintiff’s director (PW1) had revealed to him that he had  identified a vehicle which was on sale at Ug. Shs 60,000,000/= for which he had made a part payment of Ug. Shs 10,000,000/= and thus required Ug. Shs 50,000,000/= from the defendant to conclude the purchase thereof and so he sent PW1 to get an invoice of the transaction which PW1 brought along with the vendor whom he introduced to as the owner Charles Mutasingwa of the said vehicle he exhibited the Invoice as Dex.3. That thereafter he inspected the vehicle and found it to be in good mechanical condition with reasonable market price and suitable security he made and submitted a back to office report advising the defendant’s credit committee to consider financing the same in a report which he tendered as Dex.4. This witness confirmed his holding of the various positions in the defendant coming for he produced documents to that effect and further went on to state that during his time of employment with Uganda Leasing (defendant) Juma Kisami was the Manager Leasing and that he never confirmed whether the suit vehicle was fit and genuinely in existence although he stated that he knew that the plaintiff had acquired three (3) brand new vehicles under the defendant’s lease scheme in which the defendant specifically handled. He also confirmed that though the suit vehicle was a used one the defendant approved it as they trusted the plaintiff company for the defendant had known it for some time. He also verified that it was a common practice of the defendant bank to issue an Local Purchase Orders when a customer asked for lease of an equipment even before the bank had sight of such equipment for the defendant would later determine whether the equipment was fit, existed or was good security by looking at its tyres, number plate and by confirming whether the engine starts or not easily. And as regards the suit vehicle he stated that the bank needed additional security but went on to consider the those which had been provided in the master lease as sufficient and that since the master lease provided the option to purchase the equipment, then the bank was satisfied but he stated that he did not know whether the plaintiff company exercised the option. This witness also confirmed that the defendant company wrote a letter to the police expressing disinterest in the suit vehicle when it was only one (1) year into servicing the lease but was not privy to the reason as to why the defendant’s legal department chose to do that and similarly he does not know why instead of surrendering a photocopy of the suit vehicle log book the defendant sent the original log book. He further confirmed that as risk manager he did not advise the legal department to retain the log book since it was still under a lease facility and that he was sure someone in the bank signed the master lease for and on behalf of the plaintiff but confirmed that the copy generated for court purposes was never signed nor dated.

That concluded the evidence received in this court in regards to this suit. Thereafter the parties counsels sought and were granted leave to file written final submissions but only those of the plaintiff were. No reason is given as to not known why the defence chose not to file one. The written final submissions of the plaintiff together with evidence adduced in this matter have been considered accordingly.

1. Resolution of this matter:

From my perusal of the documents tendered herein court and the testimonies of witnesses who appeared before me, there is indeed no dispute to the fact that the lease agreement executed between the Plaintiff and the Defendant was signed by the parties herein and it formed a contract between themselves in line with the holding in the case of Esso Petroleum Co. v Uganda Commercial Bank Civil Appeal No. 14 of 1992 in which the Supreme Court of Uganda held;-

“….that the relationship of a banker and customer is contractual, consisting of a general contract and special contracts arising from particular requirements, the express terms of which, in so far as they conflict with implied terms of the general contract override them and in the event of their breach give rise to a claim of damages…”.

This is also the position was followed by Kato Ag. J (as he then was) in the case of Mobile (U) Ltd v Uganda Commercial Bank 1982 HCB 64. Thus when the holding above is related to the situation in the instant matter, it clear to me that the relationship between the parties herein was consummated when a lease agreement was signed between the parties and thus binding them for the defendant bank did identify and or accepted to finance the used vehicle for the benefit of plaintiff company. This is an undisputed fact with the said vehicle beings confirmed by DW2 as having not been verified for worthiness or genuineness by the bank before the bank contracted with the plaintiff company the lease agreement for even the defendant bank retained the motor vehicle’s log book as lien to service the lease for the vehicle by the plaintiff though DW2 told court that the vehicle leasing arrangement was initially for strictly brand new vehicles. In my view the fact that the bank entertained a lease facility for a used vehicle which it had not even verified before first conducting the necessary prior investigations as to its suitability and its particulars in order to protect the resources it was going to release clearly showed that either the bank was amateurish in handling the mater or there was insider incompetence as far as the arrangement were concerned and for which reason it must take full responsibility. From the evidence which has adduced before this court, it is clear to me that once the defendant company put in place a facility which it deemed was economically viable for its customers and for which it hoped to make money then it had the duty to take all the necessary steps to ensure that the process cit was undertaking met the standard s required to ensure that there was returns to investments was secured. In respect of the instant matter before me, it is clear to me that the defendant carried its duty in a very lackadaisical manner or laid back manner when it handled the issue of the lease with such wanton abandonment that it is easy for me to conclude that the defendant bank breached its breached professional trust not only when it failed to investigate the motor vehicle which was presented to it for leasing purposes but when it even wrote to the police upon the motor vehicle being impounded to state that it had no interest in the same yet it had kept the original logbook of the vehicle and the leasing process was till up and about. The fact that it surrendered to the police the suit vehicle’s original log book with the statement that it had no further interest in the same is indeed telling on the manner which the facility was handled which in my view was contrary to all known norms of how such a facility should be handled in addition to breaching bank client confidential relationship especially when viewed in the premise that the lease facility was still being serviced.

On the other hand what I finds not amusing is the fact the defendant bank from the evidence consistently tendered in court appears to be registered in two out of the three log books said to in relations to the  suit vehicle leads to high suspicion that there was knowledge on the part of the defendant bank that not only was it aware of fraudulent acts in regards to the registration of the motor vehicle but that having known of the fact of fraud decided to conceal it and continued with business as usual when it decided to proceed with the leasing arrangements yet it should have taken the only option of cancelling the same and cooperating with all authorities concerned to bring any culprits including its staff if they were involved to book for there was sufficient evidence that the motor vehicle in question had been reported stolen and a criminal case had commenced in a competent court of law and so the fact that it continued to behave as if nothing was wrong clearly proves to me that the bank was aware that there was fraudulent action  in relations to the motor vehicle in question a fact that  corroborate the testimonies of  by PW1 and PW2 when the Plaintiff  exercised the option to purchase the suit vehicle and demanded for the original log book the bank never disclosed that it had the same or that it had handed it to police yet it continued to make the Plaintiff company pay for a lease of a motor vehicle which it had dropped interests and for which criminal action was taking place. From the testimony of the plaintiff’s director, it is clear to me and this is not rebutted that he only got to know of the criminality affecting the motor vehicle when realize after he demanded for a photocopy of the log book to start processing the motor vehicle’s a log book only to receive a copy of a letter which the defendant’s legal department had written to the police expressing lack of interest in the vehicle’s affairs at police, yet it held the same in trust for the plaintiff’s money after paying the lease facility. This is indeed preposterous and an unbelievable conduct. The defendant bank is said to have executed a master lease that was neither negotiable nor disclosed to the plaintiff as stated by DW2 but the same could not be produced for verification in court apart from an unsigned document a  clear manifestation that the defendant bank was in the know that there was no proper transaction but one which was shrouded with e fraud and meant to in appropriately relieve the plaintiff of its money for even the current managing director of the defendant who is said to have personally handled this transaction particular transaction with the plaintiff was never brought to court to clarify to court as to what exactly happened yet he was very central in all the transactions between the bank and the plaintiff going to prove the view of the court in the case of  Halesowen Presswork and Assemblies Ltd v Westminster Bank [1970] 3 WLR 625 where  Buckley L.J. was of the view that ;-

“It has long been recognized that a banker has a general lien, on all securities deposited with him as a banker by customer unless there be an express contract or circumstances that show an implied contract inconsistent with the lien”.

Yet in this case the bank even showed lack of interest in the lien it had but more seen to be interested in the plaintiff’s money when it kept on telling it that it would only intervene on the issues of the frequent impounding of the motor vehicle  by the police only after the plaintiff had completed paying for the lease as is evidenced from PW1’s testimony yet even when that was done  it did not intervene but even failed to surrender the log book after all lease payment and the purchase of the suit vehicle was complete. It did not even bother to inform the plaintiff where the log book was.  This was criminal action in the least for which I hold the bank to be liable.

1. Remedies:

As can be seen from the testimony of both PW1 and PW2 the suit vehicle was required to perform a contract which the plaintiff had contracted with Nile Breweries Ltd. for which the plaintiff was to fetch an amount of Ug Shs 3,000,000/= per month, which the plaintiff lost from October, 1999 when the suit vehicle was parked to date. When this contract is related to the lease which was for two and half years at a monthly rental of Ug Shs 2,614,950/= thus it can be seen that the plaintiff paid to the defendant a total of Ug Shs 78,448,500/= for the suit vehicle under the defendant’s lease facility project meaning that the defendant had a duty either to hand it a motor vehicle with clean title or refund its money with interests thereon for in the case of  Haji Asumani Mutekanga v Equator Growers (U) Ltd SCCA No. 7 of 1995 Supreme Court found similar situation to exist when it held that ;-

“(3). In breach of contract, Special damages must be specifically pleaded and strictly proved irrespective of whether there is a defence to the claim or not. Proof of special damages consists evidence of particular losses

(5). Shs 1 million would be awarded as general damages for breach of contract”.

In light of all the above the plaintiff I am convinced that the plaintiff has made a case for special damages for the loss of SHs. 3 million income which it incurred loss from October, 1999 till now since the vehicle was parked from the time it was done so till this matter came to court. I addition,I would find that since the motor vehicle for which the plaintiff was to make money had criminal issues with the police, it should be returned to police for their action at the costs of the defendant but since the defendant received funds from the plaintiff purportedly for its lease the suit vehicle would be directed to refund all the money it received from the plaintiff paid in that respect with interest at commercial rate from the date when the purported lease started till its completion and taking into account that the plaintiff has been denied the use of the said money since 1999 for it had to hire services of other equivalent vehicle to meet its obligation with Nile Breweries Ltd. began running till its complete payments. This would amount would be include the cost for the entire lease facility of Shs. 78,448,500/= together with Shs.  2.5 million being the cost of exercising the option to purchase the suit vehicle which was paid to the defendant.

The plaintiff also prays for general damages to the tune of Ug Shs 10,000,000/= for the mental anguish suffered and financial setback occasioned there from  for which I am tended to believe that since in my view the action of the defendant tended to criminality , thus leading the plaintiff company to believe that it was dealing with persons of integrity yet the evidence on record showed the contrary , this court would be constrained to condemn the defendant to pay not the amount requested by the plaintiff but a higher amount for this matter must have had a major setback in the business of the plaintiff and caused unnecessary anguish to its owners and so an amount of Shs. 70, 000,000/= would in my view be commensurate in the circumstances. In addition, I would condemn the defendant to pay an exemplary damage of Shs. 30,000,000/= to make it handle matters which come before it in a professional manner in future. And since I find that the plaintiff is the successful party in this matter, it would be rewarded with the costs of this suit which the defendant would pay the costs of this suit.

1. Orders:

It is the finding of this court that the plaintiff has proved its case against the defendant to the level of proof required and the following orders are made:

1. The defendant to refund Ug. Shs.78,448,500/ incurred by the Plaintiff together with Ug. Shs. 2,500,000/= being the cost of exercising the option to purchase the suit vehicle which was paid to the defendant as the lease loan facility with interests at commercial rate of 21% from the date of filing this suit till payment in full.
2. The defendant is to pay to the plaintiff an amount being the difference between Ug. Shs.3,000,000/= and Ug. Shs 2,614,950/= which is Ug. Shs. 385,050/= per month for the loss incurred when the plaintiff had to hire another vehicle to take over a contract for which the lease of the motor vehicle had in the first place been obtained from the month of October, 1999 till month of March, 2002 (Ug. Shs. 10,396,350/=) and an amount of Ug. Shs. 3, 000, 0000/=   per month from the Month of April 2002 to the month of November, 2009 being the period for which it would have had the leased vehicle as its own (Ug. Shs. 276,000,000/=) thus making a grand total of Ug. Shs. 286,396,350/= when this suit was filed in court the date of filing this suit with interests at the rate of 21% per annum.
3. The Defendant caused the owners of the Plaintiff unnecessary anguish resulting from its unprofessional conduct in respect of the leasing agreement and would be condemned to pay general damages of a higher amount than prayed for amounting to Ug. Shs.70, 000,000/= would in my view be commensurate in the circumstances.
4. The Defendant is to pay exemplary damages of Ug. Shs. 30,000,000/= only being levied for its reckless behavior towards the plaintiff.
5. The Suit motor vehicle is to be handed over to the Uganda Police at the costs of the defendant for its action to be returned to its rightful owners or to be dealt in accordance with the laws.
6. The defendant would meet the reasonable costs incurred by the plaintiff in this matter.

These orders are made at the High Court of Uganda, Commercial Division holden at Kampala this 12^th day of March, 2015.

Henry Peter Adonyo

Judge