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Kisembo & Another v The Cooperativve Bank in Liquidation (Civil Appeal 1 of 2018)

Supreme Court · [2019] UGSC 97 · 2019 Appeal Dismissed (Decretal Sum Reduced) ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second civil appeal from the Court of Appeal in the bank's summary-procedure suit for recovery of a loan and overdraft debt
Decision
Appeal dismissed with costs; decretal sum reduced to Shs 101,456,303 with interest at 8% per annum from the date of judgment; banker's lien over the appellants' deposited securities upheld

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Holding

On a second appeal in a bank's debt-recovery suit, the Supreme Court upheld the concurrent findings that the appellants were indebted to the respondent. However, it held that the trial court's award of Shs 149,263,069 — based on unjust enrichment — was not proved in evidence; the proven combined indebtedness at the bank's closure was Shs 101,456,303. The appeal substantially failed and was dismissed with costs, but the decretal sum was substituted with Shs 101,456,303, carrying interest at 8% per annum from the date of judgment. The Court also upheld the bank's lien over the appellants' deposited securities until the debt is settled.

Facts

The appellants, trading as Ishaka General Hardware, operated three accounts with the respondent bank — two overdraft accounts and one instalment loan account. The bank sued under summary procedure to recover Shs 149,263,069 with 21% interest from 26 July 2001, being the outstanding consolidated balance. The Bank of Uganda closed the respondent bank on 19 May 1999 and appointed a liquidator. The appellants had requested renewal/enhancement of a Shs 40 million overdraft facility, approved by letter of 19 April 1999, but conditional on further documentation. The appellants denied indebtedness, contending the loans were cleared and that they never accessed the Shs 40 million facility because the bank closed shortly afterwards. The bank's sole witness, the liquidation coordinator, and documentary evidence (bank statements, the appellants' correspondence and affidavits) showed an outstanding combined balance of Shs 101,456,303 at closure. The first appellant had earlier admitted indebtedness of Shs 82,006,859 and Shs 78 million in affidavits. The trial court awarded Shs 149,263,069 on an unjust-enrichment basis, and the Court of Appeal upheld that award.

Issues

  1. Whether the Court of Appeal erred in law in holding that the appellants were indebted to the respondent Bank.
  2. Whether the appellants accessed the approved overdraft facility of Shs 40 million.
  3. Whether the appellants had other debts with the respondent Bank apart from the contested overdraft facility, and if so, what amount was owed.
  4. Whether the respondent Bank had a lien over the certificates of title deposited by the appellants as security.

Orders

  • The appeal substantially fails and is dismissed with costs in this Court and the Courts below.
  • The decretal sum is substituted with Shs 101,456,303 (from Shs 149,263,069) as the sum owed by the appellants to the respondent.
  • Interest of 8% per annum awarded to the respondent from the date of delivery of this judgment until payment in full.

Key headnotes

Evidence — Burden of Proof — Standard in Civil Suits
A party who alleges a fact must prove it; the burden of proof lies on the person who would fail if no evidence were given on either side, and in civil disputes it is discharged where substantial and dependable evidence establishes the fact as more likely than not.
Civil Procedure — Second Appeal — Scope of Appellate Interference with Findings of Fact
On a second appeal the appellate court is precluded from questioning the trial court's findings of fact where there was evidence to support them, and may interfere only where there was no evidence to support a finding, that being a question of law.
Contract Law — Bank Overdraft as Contract — Conditional Offer and Acceptance
An overdraft facility is a contract; where a bank's offer of an overdraft is expressly conditioned on execution of further documentation and there is no signed agreement or bank statement showing the funds were credited or drawn, the offer is not accepted and no contract ensues, so the customer is not indebted on that facility.
Banking & Finance — Banker's Lien — Retention of Securities for a General Balance
A banker may, in the absence of a contract to the contrary, retain as security for a general balance of account any goods or securities bailed to it; the deposited securities need not be released until the loan sum is settled.
Civil Procedure — Pleadings — Specific Denial and the Evasive Plea
A defendant who pleads in the alternative that any indebtedness was for a lesser sum must specifically state the sums paid and the figure admitted; an evasive or general denial does not amount to a specific denial and fails to discharge the defendant's evidential burden.
Damages & Quantum — Unjust Enrichment — Award Limited to the Sum Proved in Evidence
A court cannot award a sum greater than that established in evidence; an award founded on unjust enrichment that exceeds the proven indebtedness is erroneous and must be substituted with the amount actually proved.

Legislation cited (6)

  • Evidence Act Cap 6 s.101
  • Evidence Act Cap 6 s.102
  • Evidence Act Cap 6 s.103
  • Contracts Act 2010 s.109
  • Contracts Act Cap 73 s.2
  • Civil Procedure Rules Order 6 rule 8

Cases cited (10)

  • Stanbic Bank Uganda Ltd v Uganda Crocs Ltd (Civil Appeal No. 4 of 2004)
  • Banex Ltd v Gold Trust Bank (Civil Appeal No. 29 of 1995)
  • Consultant Surveyors & Planners vs. Standard Bank (U) Ltd [1984] HCB
  • Barclay's Bank PLC Vs. Quin-acre Ltd & Another [1992] 4 All.E.R 331
  • Capital and Counties Bank LTD Vs Gordon [1903] AC 240 at 249
  • Kifamunte Henry v Uganda (Criminal Appeal No. 19 of 1997)
  • Pandya v. Republic [1957] EA 336
  • Gestmin SGPS SA v. Credit Suisse (UK) Limited and Another [2013] EWHC 3560
  • Joshi v. Uganda Sugar Factory Ltd [1969] EA 570
  • Rachhobhai Shivabhai Patel Ltd & Anor v Henry Wambuga & Anor (Civil Appeal No. 6 of 2017)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.