Agoe Ekallo and 8 Others v The Micro Finance Support Centre Limited (Civil Suit No. 111 of 2011) [2012] UGHC 438 (12 June 2012)

Full Case Text

## **OTHE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **CIVIL SUIT NO. 111 OF 2011**

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#### **VERSUS**

# **MICRO FINANCE SUPPORT CENTRE LIMITED DEFENDANT**

## **BEFORE: HON. LADY JUSTICE ELIZABETH MUSOKE**

#### **RULING**

**1**

**I**

The plaintiffs brought this action against the defendant after obtaining a representative order to represent themselves and 43 others, being former employees of the defendant, Uganda Micro Finance Support Centre Limited, whose services were terminated in April 2004. The plaintiffs are claiming jointly and severally from the defendant, inter alia, for the recovery of their severance packages. The plaintiffs contend that they were variously employed by the defendant and its predecessors until the month of April 2004 when they were all retired and/or terminated from the defendant's services. Before the termination " of'the'piaintiffs' services, the defendant in its board meeting of 15" May

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2003 had passed a resolution to pay severance packages to all its staff

**I**

(both the plaintiffs who would be laid off and the other staff members who would remain in the service). The plaintiffs allege that anothe package called 'separation package *'* ' was to be paid to tho plaintiffs/(the defendant's staff who would be laid off) which comprise of a two month salary for every year worked by o March 2001, transport for self and family to home vill g resettlement of shs.1,000,000/= for each one.

|O The plaintiffs further contend that the Government of Uganda did indeed release the money to the defendant to settle the plaintiffs'' severance packages but to date the defendant has not passed on the said money to the plaintiffs. Instead, the defendant has only paid the separation package, and only after making some of them sign disclaimers to the effect that they don't have any other, or further claim, against the defendant.

The plaintiffs further contend that the defendant's failure and/ or refusal to pay their severance packages was wrongful, a breach of their entitlements and fraudulent on the part of the defendant.

The defendant in his written statement of defence raised number of defences, that the plaintiffs were employed on the basis of employment contracts, none of which entitled them to any severance packages as claimed, and that the defendant fulfilled its legal obligations at the material times.

**2**

The defendant further stated that they intended to raise preliminary objections on the grounds that:

- 1. The suit was barred by limitation having been filed outside the limitation period. - 2. That the suit was res judicata with regard to the $1^{st}$ and $2^{nd}$ plaintiffs.

When the matter came up for hearing, Counsel for both parties were required to file written submissions, which they did.

In his written submissions, Counsel for the defendant contended that the suit was caught by limitation and could not be sustained. $10$

Citing Section 3(1) of the Limitation Act Cap 80, Counsel submitted that Paragraphs $4(a)$ and $4(b)$ of the Plaint state that the plaintiffs' employment was terminated in $2004$ and a resolution to pay them severance packages passed in 2003. From the face of the plaint it is clear that the cause of action (if any) would have accrued upon $= 1\sqrt{ }$ termination of the plaintiffs' employment in April 2004.

The plaint was however filed in court on 1st June 2011 seven years from the date of accrual of the cause of action, which is beyond the statutory limit of six years.

Counsel relied on the Court of Appeal decision in Iga Vs Makerere $2D$ University [1972] 1 E. A 65, where it was held that a plaint barred by limitation is barred by law and must be rejected.

In reply, Counsel for the plaintiffs submitted that whereas it was true that the plaintiffs' employment with the defendant ended in April 2004, their claim was for specific performance by the defendant of its resolution to pay a severance package to them. Much as the said, resolution was passed by the defendant board in a meeting held on t 15th day of May 2003, no specific date was set for the payment o said severance package. The limitation period would have running from the date set for payment of the package had it be

He submitted that even if the date had been set for payment of the severance package, the limitation provision relied on by the defendant - *V®* would not apply to the plaintiffs' claim by virtue of S.3(6) of the Limitation Act which excluded claims for specific performance of the defendants resolution to pay the plaintiffs' severance packages.

I have considered the submissions of both learned Counsel, the law and the authorities relied on. I tend to agree with Counsel for the — 1-^ plaintiffs, that the claim is of specific performance of the board resolution that was passed by the defendant company to pay severance packages to the plaintiffs. The Limitation Act Cap 80 as already pointed out by the learned Counsel above provides that actions founded on tort or contract should not be brought after the expiration of - > six years. Section 3(6) there is however an exception to Section 3(1).

It states:

**J**

**I**

*"The section shall not apply to any claim of contract for specific performance ofthe contract." (Cross* define).

In rejoinder, Counsel for the defendant, stated that a claim for damages $\frac{1}{2}$ is separate and distinct from a claim for specific performance. That since the damages sought are already established and have been particularised in the plaint, the claim is not one of specific performance but for damages.

In the case of Sachana Vs Hirji Pitambr [1958] E. A 503 it was held, that when a question of limitation is raised by the defendant, it is the duty of court to consider the point, but in doing so the court will only look at the plaint and will decide in light of the facts alleged and the prayer in the plaint, whether the claim is time barred, the allegation of facts being $\sim 10$ assumed for that purpose to be true.

In the instant case it is the plaintiffs' case as per the plaint that the defendant resolved to pay the plaintiffs' severance packages upon termination of their employment, a fact not disputed by the defendant. The defendant is stated not to have honoured their resolution which the board itself passed, a copy of which is attached to the pleadings. Although the plaintiffs never mentioned in their pleadings that the claim is for specific performance of the resolution passed to pay them severance packages, but rather raised a claim for special damages, " when comparing the amount claimed for special damages and the $-20$ amount in annexure "D" to the plaint that had been resolved by the board of the defendant company to be paid to the plaintiffs as severance package, the figure is indeed the same.

$\mathsf{S}$

I therefore find that although the plaintiffs' never mentioned any where in their pleadings that the claim is for specific performance a look at the plaint suggests otherwise. It is clearly for specific performance. Under the circumstances, the first preliminary objection fails.

I now turn to the issue of res judicata. Counsel for the defendant $-$ 5 submitted that the suit is res judicata in regard to the $1^{st}$ and $2^{nd}$ plaintiffs. This can be seen from paragraph 8 of the plaint which states that some of the plaintiffs (i.e. the $1^{st}$ and $2^{nd}$ plaintiffs) went to court and the last of the suits were concluded in 2011.

Citing Section 7 explanation 4 of the Civil Procedure Act Cap 71, $-1\heartsuit$ Counsel submitted that in the 1st plaintiffs' case the matters being reintroduced in the current suit were already dealt with and determined by his Lordship, Hon Mr Justice Remmy Kasule in HCCS NO 894 of 2004, **William Agoe Ekallo Vs The Micro Finance Support Centre Limited.**

That in the case of the 2nd plaintiff the matters being re-introduced in $-\frac{1}{2}$ the current suit were dealt with by both the Mengo Chief Magistrates Court in C. S No 621 of 2005, Byabagabi Katuku Vs The Micro Finance Support Centre Limited, and on appeal by his Lordship Justice V. T Zehurikize in HCCA No 27 of 2009.

تر \_ [1979] Counsel further relied on Posiyano Semakula Vs Susane Magala HCB 90, where the Court of Appeal held that;

> "In determining whether or not the suit is barred by res judicata, the test is whether the plaintiff in the second suit is trying to bring before the same court in another way, in form of a new cause of action a transaction which has already been presented before the

court of competent jurisdiction in earlier proceedings and which has been adjudicated upon. If this is answered affirmatively, the plea of res judicata will then not only apply to all issues upon which the $1^{st}$ court was called to adjudicate but also to all and every issue which properly belonged to the subject of litigation $\sim 5$ and which might have been raised at the time through the exercise of due diligence by the parties."

In reply, Learned Counsel for the plaintiffs, submitted that the suits of the $1^{\text{st}}$ and $2^{\text{nd}}$ plaintiffs that were decided were claims for a separation package which the defendant had resolved to pay to $-10$ persons who were going to be discontinued from the defendants' services. That some people were paid unconditionally and in line with the resolution but the Executive Director of the defendant company had imposed a condition for the $1^{st}$ and $2^{nd}$ plaintiffs to fulfil before getting paid and that they went to court to challenge $\sim$ the said conditions.

He submitted that in the present suit, the $1^{st}$ and $2^{nd}$ plaintiffs and indeed the rest of the plaintiffs are claiming severance package (not the separation package) that the defendants' board resolved to pay all its workers including those who were going to retain their $-2^{-2}$ employment as opposed to the separation package which was meant for only those who would loose their jobs. It is thus very clear that the subject matter of the present suit is very different from that of the earlier suit by the $1^{st}$ and $2^{nd}$ plaintiffs.

In rejoinder, Counsel for the defendant reiterated the provisions of Section 7 of the Civil Procedure Act and submitted that the claim in the present suit could have been raised in the earlier suit.

$\mathcal{I}$

Section 7 of the Civil Procedure Act Cap. 71 states:

"No Court shall try any suit or issue in which the matter was directly and substantially in issue in a former suit between the same parties in a Court of competent jurisdiction to try the subsequent suit or the suit in issue in $\; - \;$ which the issue has been subsequently raised and has been heard and finally decided by that court".

Explanation 4 of Section 7 of the Civil Procedure Act states;

"Any matter which might and ought to have been made a ground of defence or attack in the former suit shall be $-10$ deemed to have been a matter directly and substantially in issue in that suit."

In James Kiirya Vs East African Railways Corporation [1977] HCB 255, the plaintiff obtained judgement in a previous suit against the defendants for wrongful dismissal, he prayed for and was awarded $-\sqrt{5}$ damages for such dismissal but he did not ask for loss of benefits and none were awarded. The plaintiff filed this suit claiming for pension. Sekandi J. Held thus:

"The question of pension was in issue and ought to have been raised by the plaintiff in the first suit so that if he was so entitled $\frac{1}{2}$ the damages awarded would reflect loss. Therefore the present suit was barred by res judicata under S.7 of the Civil Procedure Act."

It is very clear, therefore, that in Civil Suit No 894 of 2004 and Civil Suit No 621 of 2005, and the subsequent appeal, the plaintiffs had $\angle$ respectively claimed for separation packages while in the present suit they are claiming for the severance package. I am of the view

that the severance package being claimed in the present suit is an issue which properly belonged to the subject of litigation in the earlier suits and which might have been raised at the time through the exercise of due diligence by these plaintiffs.

s based on the above that I find in agreement with Counsel for the defendant, that the suit is res judicata in respect of the 1st and 2nd plaintiffs.

On costs, as between the defendant and the rest of the plaintiffs (minus the 1st and the 2nd plaintiff) the costs will be in the cause. As between the 1st and 2nd plaintiffs and the defendant, each party will bear their own costs.

**9**

- V

*Ql°\\*

**5** It is so ordered.

**I**

**A**

**I**

*I* **Elizabeth Musoke JUDGE 12/6/2012**

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## THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA (CIVIL DIVISION) Civil Suit No. 111 of 2011

# WILLIAM AGOE EKALLO AND 52 OTHERS}::::::::::::::::::::::::::::::::::::

#### **VERSUS**

# THE MICRO FINANCE **SUPPORT CENTRE LTD**

#### }**\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\***

#### **ORDER**

THIS MATTER coming up this 13th day of June 2012, before His Worship John Eudes Keitirima for delivery of the ruling of the Hon. Lady Justice Elizabeth Musoke dated 12th June 2012 in the presence of Kakama Simon holding brief for Mr. Peter Paul Katutsi counsel for the Plaintiffs and Peter Kauma, counsel for the Defendant;

#### IT IS HEREBY ORDERED that:

- 1) The Defendant's preliminary objection on whether the suit is barred by limitation does fail. - 2) The suit is Res Judicata in respect of the $1^{st}$ and $2^{nd}$ Plaintiffs. - 3) As between the 1st and 2nd Plaintiffs and the Defendant, each party will bear their own costs. - 4) As between the Defendant and the rest of the Plaintiffs, the costs will be in the cause.

Dated at Kampala this 13th day of June 2012

GIVEN under my hand and the seal of this Honourable Court this

$\mu$ , 2012

$\frac{1}{2}$

**EXTRACTED BY:** KIWANUKA & KARUGIRE ADVOCATES, PLOT 5A2 ACACIA AVENUE, KOLOLO, P. O. BOX 6061, KAMPALA.

day of **REGISTRAR** DEPUTY

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