Atom Outdoor Ltd v Arrow Centre (U) Ltd (High Court Civil Suit No. 488 of 2003) [2004] UGCommC 42 (17 December 2004)

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)}}{\*\pnseclvl6\pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl7\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl8 \pnlcltr\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\pnseclvl9\pnlcrm\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}\pard\plain \s15\qc \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1 \widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14757788 \fs24\lang2057\langfe2057\cgrid\langnp2057\langfenp2057 {\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 THE REPUBLIC OF UGANDA \line }{ \b\lang1033\langfe2057\langnp1033\insrsid14757788 \par }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 IN THE HIGH COURT OF UGANDA AT KAMPALA \line (COMMERCIAL DIVISION) \line }{\b\lang1033\langfe2057\langnp1033\insrsid14757788 \par }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 HCCS NO. 448 OF 2003 \line }{\b\lang1033\langfe2057\langnp1033\insrsid14757788 \par }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 ATOM OUTDOOR }{\b\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 LTD:}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 :::::::::::::}{ \lang1033\langfe2057\langnp1033\insrsid14757788 :::::::::::::::::::::::::::::::::::::::::::}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 ::::::: }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 PLAINTIFF }{ \b\lang1033\langfe2057\langnp1033\insrsid14757788 }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 VERSUS \line ARROW CENTRE (U) }{ \b\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 LTD:}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 ::}{\lang1033\langfe2057\langnp1033\insrsid14757788 :::::::::::::::::::::::::::::::::::::::::::}{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 :::::::::: }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 DEFENDANT \line }{\b\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14757788 {\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 BEFORE: }{ \b\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 THE HON. LADY JUSTICE M. S. ARACH }{\ul\lang1033\langfe2057\langnp1033\insrsid14757788 -}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 }{ \b\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 AMOKO \line JUDGMENT: }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \line }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 The Plaintiff and the Defendant executed an advertising Agreement \'93the Agreement\'94 on the 15/1/2002 by which the Plaintiff agreed to rent advertising space for the erection of the Defendant\rquote s bill board at Nakivubo Stadium, and 30 street si gns at different locations in Kampala city. \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14047203 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 The Plaintiff performed its part of }{ \lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 the obligation}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 , but alleged that the Defendant did not pay fully for its services. Consequently the Plaintiff filed the }{ \lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 instant}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 suit in this Court for recovery of Shs.6}{\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 , 542,700}{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 - as the outstanding balance due, general damages plus costs. The matter was first referred for mediation to CADER under the Commercial Court Mediation Pilot Project Rules 2002. The claim was settled partly, and the monies}{ \lang1033\langfe2057\langnp1033\insrsid14757788 }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 paid. The only remaining issue i s the Shs.3. Sm for printing the flexi face for the bill board under clause 4 of the Agreement which provides that: \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid14757788 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93 The land lord will print the flexi face for the bill board at a cost of Ug. Shs.3}{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 , 500,000}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 - (in words) only. Atom will produce the vinlys fo}{\i\lang1033\langfe2057\langnp1033\insrsid14757788 r the street sig}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 ns at no extra charge. The advertiser, Arrow Centre will provide art work ready for }{\i\lang1033\langfe2057\langnp1033\insrsid14757788 printing for the large sig}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 n only.\'94 \line }{ \i\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14757788 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 This is the cause of the controversy as to who should pay the Shs.3.5m under the Agreement. Mr. Obed Mwebesa, counsel fo r the Plaintiff contended that this was an extra charge which the Defendant was supposed to pay separately under the clause, read together with clause 3 which provided that: \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid14757788 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93 Payment under this agreement shall be Annual rental of Ug. }{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 Shs.}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 15}{ \i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 , 000,000}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 - (in words) only for the .12 x 6m bill board and Ug. Shs. 19,500,000- (in words) only for all the 30 street signs. The grand total for both is Ug. Shs.34}{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 , 500,000}{ \i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 - (in words) only, including VAT 17%}{\i\lang1033\langfe2057\langnp1033\insrsid14757788 \'94}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \line }{ \lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14757788 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Mr. John Fisher Kanyemibwa, learned counsel for the Defenda nt held the opposite view. He contended on his part that the clause says the landlord (the Plaintiff) is the one who is to pay this cost. It does not say that the Plaintiff was to pass on the cost of the flexi face to the Defendant. The agreement would ha ve been specific, if that was the case. It speaks for itself. It would be stretching the agreement beyond its limits if one i}{\lang1033\langfe2057\langnp1033\insrsid14757788 s to read into it otherwise. \line }{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14047203 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Alternatively, Mr. Kanyemibwa submitted that the Court should apply the contra proferentem rule and interprete the Agreement against the Plaintiff which drew the agreement. \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 The iss}{\lang1033\langfe2057\langnp1033\insrsid14757788 ue therefore requires the inter}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 pretation of clause 4 of the Agreement dated 15/1/2001. Chitty On }{\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 Contract.... }{\lang1033\langfe2057\langnp1033\insrsid14757788 Edn paras 12 -}{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 044 says: \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid14757788 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93The common and universal principle ought to be }{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 applied}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 , namely, that [an agreement] ought to receive that construction which its language will admit; and which will best effectuate the intention of the parties, to be collected from the whole agreement, and that greater regard is to be had t o the dear intention of the parties than to any particular words which may have been used in the expression of their intent.\'94 \line }{\i\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14757788 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 LS Sealy & RJA Hooley in their book \emdash Text And Materials in Commercial Law \line Butterworths page 14 \emdash 15 also give some guidelines o}{\lang1033\langfe2057\langnp1033\insrsid14757788 n th}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 e interpretation of \line Commercial contracts. The text says: \line }{\lang1033\langfe2057\langnp1033\insrsid14757788 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid14757788 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93 The Courts are often called upon to construe the terms of commercial contracts. How do the Courts, and particularly the Commercial Court, set about construing them? The issue was addressed by Sir Robert Golf (now Lord Goff) in a paper entitled \'93 Commercial Contracts and the Commercial Courts published in [1984] LMCLQ 382. His }{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 Lordship}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 states that (p. 388): \line }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \par }{\i\lang1033\langfe2057\langnp1033\insrsid14757788 \'85}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 there }{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid14757788 i}{\i\lang1033\langfe2057\langnp1033\insrsid14757788 s}{ \i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid14757788 }{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 only one }{\i\lang1033\langfe2057\langnp1033\insrsid14757788\charrsid3027685 principle}{ \i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 of construction so far as commercial documents are concerned and that is to make, so far as possible, commercial sense of the pro vision in question, having regard to the words used, the remainder of the document in which they are set, the nature of the transaction, and the legal and factual metrix. He continues (p .391). \line }{\i\lang1033\langfe2057\langnp1033\insrsid11800449 \'85}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 In Commercial transactions, the duty of the Court is simply to give effect to the contract, and not to dictate to the parties what the Court thinks they ought to have agreed, or what a pers}{\i\lang1033\langfe2057\langnp1033\insrsid11800449 on (reasonable or otherwise) mig}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 ht have agreed if he had read the contract and addressed his mind to the problem which, in the outcome has arisen.\'94 \line }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid11800449 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 A similar approach was used by Lord Diplock in the }{\lang1033\langfe2057\langnp1033\insrsid11800449 Antaos Cia Navera SA \emdash Vs- Sale - Rederierna -}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 AB, The Antaios [1985] AC. That case c}{\lang1033\langfe2057\langnp1033\insrsid11800449 oncerned the construction of a }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 clause in a standard charter party. This is the relevant part of his address. \line }{\lang1033\langfe2057\langnp1033\insrsid11800449 \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid11800449 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93We would say that if }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449\charrsid3027685 necessary}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 , in a situation such as this, a purposive construction should be }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449\charrsid3027685 given}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 to the clause so as not to defeat the commercial purpose of the contract.\'94 \line }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid11800449 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 That message is in line with the House of Lords approach in the case of Miramar Maritime Corpn \emdash Vs- Holborn Oil Trading Ltd [11984] AC 676, which dealt with a bill of lading issued under a Charter party in Exxonvor, 1969 in the following speech: \line \par }\pard \s15\ql \li720\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\ipgp1\pararsid11800449 {\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \'93The re must be ascribed to the words a meaning that would make good }{\i\lang1033\langfe2057\langnp1033\insrsid11800449 commercial sense if the Exxnon}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 voy bill of lading were issued in any of these situations, and not some meaning imposed upon a transferee to whom the bill of lading for goods afloat were negotiated, }{\i\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 a financial liability of unknown extent that no businessman in his }{\i\ul\lang1033\langfe2057\langnp1033\insrsid11800449\charrsid3027685 right}{\i\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 senses would be }{ \i\ul\lang1033\langfe2057\langnp1033\insrsid11800449\charrsid3027685 willing}{\i\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 to incur. }{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \line }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449 \par }{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 I take this opportunity of restating that if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449\charrsid3027685 common}{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 sense, it must be made to yield to business common sense.\'94 \line }{ \i\lang1033\langfe2057\langnp1033\insrsid11800449 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid11800449 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Keeping the above principles in mind, I find that the contract between the parties was a simple one. The Plaintiff described therein as the \lquote land lord\rquote undertook to provide advertising space to the Defendant described as the \'93Advertiser \'94. The Defendant agreed to pay rent for it, under clause 3. The parties agreed further under clause 4 that the Plaintiff would produce \'93the vinlys for the street signs at no extra charge\'94 while the Defendant would provide the artwork for the large sign. The Plaintiff also agreed to print the flexi face for the billboard at a cost of Shs.3.5m. Now, it would not make commercial sense for the Plaintiff to print the flexi face for the Defendant\rquote s billboard and pay for it. This is the kind of financial liability referred to in the authorities cited. \line }{\i\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 }{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \par }\pard \s15\ql \li0\ri0\sb100\sa240\sbauto1\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\ipgp1\pararsid14047203 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 The billboard belongs to the Defendant. Why would the Plaintiff pay for printing the flexi face for it? \line }{\lang1033\langfe2057\langnp1033\insrsid4086979 \par }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 The Defendant on the other hand stands to gain from the billboard. It is its property. It was also its obligation to provide the billboard for erection. The Defendant is the advertiser. The Plaintiff is the provider of the land. It makes its money from the rent and not from adverti s ement. To read into the agreement that the Plaintiff undertook to pay the cost of printing the flexi face for the Defendants bill board therefore would in my view lead to a conclusion that flouts business common sense, and must therefore yield to business common sense. \line }{\lang1033\langfe2057\langnp1033\insrsid4086979 \par }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 For that reason I rule that the Defendant is the one who is supposed to pay the Shs.3.5m for the printing of the flexi face for its billboard and not the Plaintiff. \line }{ \lang1033\langfe2057\langnp1033\insrsid4086979 \par }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 As for costs, it is trite law, that costs follow the event. The Defendant shall therefore pay the costs of this suit (See S. 27 CPA). \line }{\lang1033\langfe2057\langnp1033\insrsid4086979

\par M. S. Arach -}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Amoko \line }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 JUDGE \line }{\lang1033\langfe2057\langnp1033\insrsid4086979 17/12/2004 \line }{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \par }{\ul\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Judgment delivered in the presence of: }{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \line 1. Godfrey Humbaza holding brief for Obed Mwebes}{ \lang1033\langfe2057\langnp1033\insrsid4086979 a for the Plaintiff. \line 2. Okuni -}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Court clerk. \line 3. Absent: Defendant & Counsel. \line }{ \lang1033\langfe2057\langnp1033\insrsid4086979 M. S. Arach -}{\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 Amoko \line }{\b\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 JUDGE \line }{ \lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 17/12/2004 \line \par }\pard\plain \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid14047203 \fs24\lang2057\langfe2057\cgrid\langnp2057\langfenp2057 {\lang1033\langfe2057\langnp1033\insrsid13991573\charrsid3027685 \par }}