Introduction
Justice Christopher Madrama Izama clarified that an underlying principle is the rule of evidence regarding estoppel by agreement. A party is estopped from contradicting their own written agreement, as stated by Lindley L.J. in Huddersfield Banking Co. Ltd v. Henry Lister & Son Ltd (1895) 2 Ch. D 273 at page 280: "A consent order is as good an estoppel as any other order. Background. The respondent (plaintiff) sued the appellants (defendants) for mesne profits, rent, and recovery of movable property after being evicted. The plaintiff claimed a loan of UGX 170,000,000 with a 10% monthly interest rate, while the defendants argued it was a sale agreement. The trial court ruled in favor of the defendants, finding no evidence of a loan agreement and no fraud. The plaintiff appealed to the Court of Appeal, which reversed the decision, finding:
1. The transaction was a loan, not a sale.
2. The transfer of the suit property was illegal and fraudulent.
3. The respondent was entitled to special and general damages.
The Court of Appeal awarded UGX 71,860,116 in special damages and UGX 50,000,000 in general damages, with costs
The Evidence Act under sections 91 and 92 governs the exclusion of oral evidence to prove the contents of documents. In this case, the written agreement (exhibit P1) was the sole evidence considered, and the courts found no evidence of a loan agreement, only a sale agreement.
Despite the plaintiff's claims, the loan agreement was not produced as evidence, and the defendants' case relied on exhibit P1 and transfer forms.
The Court of Appeal upheld this finding, noting that no loan agreement existed on record, and the appellant's payment of UGX 158,000,000 to Housing Finance Bank Ltd did not suffice to prove a loan agreement.
Grounds of Appeal
That the learned Justices of the Court of Appeal erred in law and fact in finding that there was no meeting of the minds between the appellant and respondent in relation to the sale agreement.
That the learned Justices of the Court of Appeal. erred in law in finding that the transaction between the appellant and the respondent was a loan agreement. Legal Representation. At the hearing, the appellants were represented by learned counsel Mr. Joseph Kyazze, learned counsel Mr. Edgar Ayebazibwe, and learned counsel Mr. George Arinaitwe. The respondent was represented by learned counsel Mr. Innocent Okeng and learned counsel Mr. Tonny Okweny. Counsel addressed the court by way of written submissions, and the court reserved judgment on notice.
Opinion of the Supreme Court Justice Christopher Madrama Izama noted that the Court of Appeal's conclusion was tricky due to evidence of payment and the plaintiff's admission of receiving a loan. The plaintiff testified to signing two agreements - a sale agreement and a loan agreement - but the loan agreement was not produced. The Court of Appeal inferred a loan agreement based on the plaintiff's testimony, contradicting the sale agreement (exhibit P1). Section 91 of the Evidence Act excludes oral testimony about the loan agreement's contents, but section 92 allows exceptions for fraud, intimidation, illegality, or mistake in fact or law. The court must consider these exceptions to determine whether to admit oral testimony to vary the terms of exhibit P1.
The Learned Justice of the Supreme Court carefully considered section 92 and its exceptions, noting that oral testimony may be admitted to invalidate a contract based on grounds like fraud or mistake in fact or law. The courts have used these grounds to set aside consent judgments, which are considered contracts between parties. Justice Christopher Madrama Izama further elaborated that under section 92(a) of the Evidence Act, oral testimony may be admitted to invalidate an agreement based on grounds such as fraud, intimidation, illegality, lack of due execution, lack of capacity to contract, failure of consideration, or mistake of fact or law. These grounds, when proven, can vitiate a contract.
Courts have used these grounds to set aside consent judgments, which are considered contracts between parties. In Hirani vs. Kassam (EACA), cited in Brooke Bond (T) Ltd vs. Mallya [1975] E.A. 266 at page 269, it was held that a consent judgment cannot be varied or discharged except on grounds that would invalidate a contract between the parties, such as fraud, collusion, or agreements contrary to court policy.
An underlying principle is the rule of evidence regarding estoppel by agreement. A party is estopped from contradicting their own written agreement, as stated by Lindley L.J. in Huddersfield Banking Co. Ltd v. Henry Lister & Son Ltd (1895) 2 Ch. D 273 at page 280: "A consent order is as good an estoppel as any other order."
The doctrine of estoppel bars any party to the contract from asserting a contrary position from that stipulated in the contract, as imported under section 114 of the Evidence Act. Section 114 states:
"When one person has, by his or her declaration, act, or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon that belief, neither he nor she nor his or her representative shall be allowed, in any suit or proceeding between himself or herself and that person or his or her representative, to deny the truth of that thing."
Justice Madrama noted that the current situation invokes the doctrine of estoppel by contract. In Peekay Intermark Ltd and Harish Pawani v. Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386, Lord Justice Moore-Bick stated in paragraph 56 that the terms of the contract give rise to an estoppel, preventing a party from denying the facts and matters upon which they agreed. This principle is supported by Colchester Borough Council v. Smith [1991] Ch. 448, affirmed on appeal [1992] Ch. 421.
In the case at hand, the plaintiff endorsed a land sale agreement and executed a transfer deed. As an adult of sound mind, signing a document with clear terms, the plaintiff cannot depart from those terms except on grounds that would invalidate a contract, such as fraud, lack of capacity, or duress.
The plaintiff did not assert these grounds but claimed the existence of two agreements: a loan agreement and a sale agreement. However, no written loan agreement was provided, and the sale agreement explicitly indicated full payment of consideration, allowing for rescission and refund only under specified conditions.
Section 92(a) of the Evidence Act does not support the plaintiff's claim of a loan agreement contradicting or varying the sale agreement. No evidence of a loan agreement exists on record, and the sale agreement's wording indicates an outright sale with a power of rescission. The trial judge correctly concluded that the plaintiff's testimony did not satisfy the requirements to vary or contradict the written sale agreement.
Section 92(b) of the Evidence Act prohibits oral testimony from varying or contradicting the terms of the land sale agreement. The plaintiff's assertion of two agreements does not meet this standard. The sale agreement, interpreted to allow rescission and refund, does not support the alleged loan.
Section 92(c) does not apply, as there was no separate oral agreement disclosing a condition precedent to the sale agreement.
Section 92(d) is not applicable because the plaintiff did not assert a distinct subsequent oral agreement to rescind or modify the sale agreement.
Sections 92(e) and 92(f), dealing with usage, customs, or facts explaining language, do not apply to this case.
In conclusion, the trial judge's decision was upheld, as the evidence did not support the plaintiff's assertions, and the sale agreement's terms were binding and clear. Find this case https://ulii.org/akn/ug/judgment/ugsc/2024/13/eng@2024-06-18
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