Dungu v Non-Performing Assets Recovery Trust (NPERT) (Civil Application No. 61 of 2003)

Court of Appeal · [2015] UGCA 23 · 2015 Appeal Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

First appeal from a judgment and decree of the Non-Performing Assets Recovery Trust (NPART) Tribunal

Decision

Appeal allowed; Tribunal judgment and decree set aside and suit against the appellant dismissed with costs

The full judgment

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Holding

The Court of Appeal allowed the appeal. It held that, where a claim is brought jointly and severally and outstanding issues remain, a judgment on admission against one defendant does not exonerate the other, and res judicata under section 7 of the Civil Procedure Act does not apply since that judgment did not arise from a former suit. However, entering the consent judgment against the 1st defendant occasioned gross injustice to the appellant by depriving him of the chance to test the evidence. On the merits, there was no evidence that the appellant, who merely signed the loan agreement as Assistant Manager, ordered disbursement before securities were registered, and Regulation 1 of the NPART Statute did not apply. The Tribunal's judgment and decree were set aside.

Facts

Buyaga Farmers Coffee Factory Ltd (1st defendant) obtained a bank loan from the now defunct Uganda Commercial Bank under a December 1990 agreement for a coffee factory project funded under a World Bank (IDA) line of credit to Government. The loan became a non-performing asset assigned to NPART for recovery. NPART sued the 1st defendant and the appellant jointly and/or severally for shs. 818,445,471/= plus interest. The appellant, who had signed the loan agreement as Assistant Manager of UCB's Development Finance Group, was sued under section 27 of the NPART Statute and Regulation 1 of its Schedule for allegedly disbursing the loan in disregard of bank procedures. In August 1996 the Tribunal entered a consent judgment on admission against the 1st defendant. The matter then proceeded against the appellant alone, and in October 2000 the Tribunal entered judgment against him for the whole claim. The funds had actually been disbursed in installments directly to the contractor, Wade Adams Constructions Ltd, by various UCB officers, not by the appellant.

Issues

Whether the decree against the appellant for shs. 818,445,471/= was unlawful given the prior consent decree against the 1st defendant for the same amount.
Whether the entry of a consent judgment on admission against the 1st defendant rendered the claim against the appellant res judicata or otherwise exonerated him.
Whether the Tribunal properly evaluated the evidence in finding that the appellant ordered disbursement of funds before security documents were executed.
Whether Regulation 1 of the Schedule to the NPART Statute applied to the appellant's conduct in signing the loan agreement.

Orders

Appeal allowed with costs to the appellant.
The judgment and decree of the NPART Tribunal are set aside.
Substituted with an order dismissing the suit with costs to the 2nd defendant (appellant).

Key headnotes

Civil Procedure — Joint and Several Liability — Effect of Judgment on Admission Against One Defendant

Where an action is brought jointly and severally against two or more defendants, a judgment on admission against one defendant does not exonerate the others where issues remain to be tried between the plaintiff and the remaining defendants.

Civil Procedure — Res Judicata — Requirement of a Former Suit

Res judicata under section 7 of the Civil Procedure Act does not apply to an order or judgment granted within the same suit, as the section requires a former suit as a necessary condition for the principle to operate.

Civil Procedure — Right to be Heard — Prejudice from Premature Consent Judgment

Where the claims against co-defendants are intrinsically intertwined and depend on common witnesses, a Tribunal that enters a consent judgment on admission against one defendant before all parties have presented their cases may occasion gross injustice by depriving a remaining defendant of the opportunity to test the evidence.

Banking & Finance — Liability of Bank Officer — Signing Loan Agreement Distinguished from Disbursement

The signing of a loan agreement by a bank officer is but one step in a process and does not of itself amount to disbursing loan funds; an officer who merely signs an agreement under instructions cannot be held liable for disbursement made by other departments before securities were registered.

Statutory Interpretation — NPART Statute Regulation 1 — Inapplicability to Special Credit Arrangements

Regulation 1 of the Schedule to the NPART Statute, which targets a staff member who granted a loan in disregard of established bank regulations, does not apply where the loan was a special arrangement governed by separate agreements requiring rapid disbursement outside ordinary bank regulations.

Legislation cited (7)

Civil Procedure Act (Cap 71) s.2
Civil Procedure Act (Cap 71) s.7
Civil Procedure Rules Order 1 Rule 3
Civil Procedure Rules Order 9 Rule 6
Rules of the Court of Appeal Rule 30(1)
Non-Performing Assets Recovery Trust Statute, Statute 11 of 1994 s.27
Non-Performing Assets Recovery Trust Statute, Statute 11 of 1994, Regulation 1 of the Schedule

Cases cited (5)

Semakula vs Magala and others (1979) HCB 90
Begumisa and Others v Tibebaga (Civil Appeal No. 17 of 2002)
Stroud vs Lawson and others [1895-9] 469 ALL ER at P. 473
Bank of India vs. Shah [1965] EA 18
Fredrick Sekyaya versus Daniel Katunda (1979) HICB P.46

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