Batanda v SDV Transami Uganda Limited (Civil Suit No. 0182 of 2010) [2011] UGCommC 2009 (8 September 2011)

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO. 0182 OF 2010]**

# **BATANDA STEPHEN PLAINTIFF**

### **VERSUS**

## **SDV TRANSAMI (U) LTD DEFENDANT**

### **BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA** KAKOOZA

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#### **RULING**

**15** The plaintiff sued the defendant company for breach of a contract of employment claiming a total of shs. 248,412,016/= as special damages, general damages for the alleged breach, interest at commercial rate on the damages from the date of judgment till payment in full, as well as for the costs of the suit. The defendant denied liability and pleaded that the plaintiff had no cause of action against her and that any claims for the alleged breach were the subject of arbitration proceedings before the Commission for Mediation and Arbitration (CMA) in the Republic of Tanzania, and could not be brought up again in this suit.

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**<sup>25</sup>** On When the matter was called on for a scheduling conference before my brother, Lameck Mukasa, J. on 22/04/2010, it was agreed that certain issues that had been agreed upon in a joint conference scheduling memorandum would be tried, as preliminary points of law. 7/07/201<sup>1</sup> when the matter came up before me for a review of the same scheduling memorandum, after a discussion with both counsel £or tj-jg parties, it was agreed that two questions be tried as preliminary points of law as follows:-

- of action against the 1. Whether the plaint discloses defendant: a cause - 2. Whether the suit can continue against the defendant in spite of the arbitral award entered by the CMA in favour of the plaintiff on 18/05/2010.

It was then agreed that counsel for both parties file written submissions to dispose of the preliminary points of law and they did so. M/s F. Mukasa 8s Co. Advocates filed submissions on behalf of the defendant on 22/07/2011, to which Nambale, Nerima & Co., Advocates filed a reply on 4/08/2011. Counsel for the defendant filed a rejoinder on 5/08/2011. At the scheduling conference before Justice Mukasa, it had been agreed that the Annexure to the plaint be admitted in evidence and they were accordingly admitted and marked as such. <sup>I</sup> shall therefore refer to them as exhibits and treat them as such and <sup>I</sup> will dispose of the two objections in the same order as they appear above.

**20 25** With regard to the first point raised, Ms. Hadijah Namyalo for the defendant referred me to the decision in **Auto Garage v. Motokov (No.3) [1971] EA 514,** as authority for the proposition that in order for a plaint to disclose a cause of action, it must show that the plaintiff enjoyed a right, that the right was violated and the defendant is liable for the violation. She further submitted that the defendant was not a party to **Exh. P2,** the letter that transferred the plaintiff from SDV Transami (U) Ltd. to SDV Transami Tanzania Ltd. For ease of reference in this ruling <sup>I</sup> will refer to the two companies as Transami (U) and Transami (T), respectively. That it was the latter company that terminated the plaintiffs employment with it, not the defendant. Ms.

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Namyalo further submitted that Transami (U) is a company duly incorporated in Uganda and a separate entity from Transami (T) which terminated the plaintiffs employment, meaning that the defendant here did not violate any right that the plaintiff enjoyed.

**5 10 15 20** Ms. Namyalo went on to .submit that the plaintiffs claim for accrued remuneration under paragraph 5 of the plaint was the same claim that had been considered by the CMA in Tanzania because it is for claims accruing after 28/02/2007, the date when Transami (T) terminated the plaintiffs employment. Regarding the plaintiffs claims for benefits due in respect of statutory superannuation contributions to NSSF claimed in paragraph 5 of the plaint, she referred to the decision in **Doreen Rugunda v. International Law Institute, SCCA No. 8 of 2005,** where the principle was upheld that a person does not have a right to recover remuneration under a contract of employment which he has not earned, or where they have not rendered any services for which remuneration is payable. She went on to submit that the defendant was not liable to make any contributions to NSSF because she duly informed that body that the plaintiffs employment with her terminated on 31/03/2006. She referred to the Regulation 7 (b) (ii) of the National Social Security Fund (Registration and Records) Regulations in support of her submission and attached a letter to her submission to show that the defendant complied with the said Regulations.

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She explained that the defendant did not terminate the plaintiffs employment with her but the plaintiff chose to go and work for Transami (T) for better pay. That the plaintiff therefore could not claim that after he moved to that company, his employment with the

defendant continued to subsist. She concluded that for those reasons the plaint disclosed no cause of action against the defendant.

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In reply, Mr. Nelson Nerima submitted that the decision as to whether a cause of action is disclosed in the plaint or not is determined solely on the basis of the pleadings. He relied on the decision in Attorney General v. David Tinyefuza, S. C. Constitutional Appeal No. 1 of 1997. He went on to submit that in the instant case, the plaintiff pleaded that the defendant promised that upon his return to Uganda he would return to his job. That when Transami (T) terminated his employment in 2007, Transami (U) failed to take the plaintiff back in 10 its employment despite his having been given the option to return to his position as Export Manager. That he therefore seeks damages for various losses so occasioned. He then posited that triable issues of both fact and law arise from the pleadings which cannot be disposed of without taking evidence and the plaintiff should not be driven from 15 the seat of justice without being heard.

Mr. Neirma went on to propose that in case there were facts that had not been pleaded in the plaint, the lapse could be cured by amendment. He then submitted that the law as it stands today is that a plaint can only be rejected for not disclosing a cause of action if no $20$ amount of amendment can cure it. He relied on the decision in Narotham Bhatia & Hemantini Bhatia v. Boutique Shazin Ltd. CACA No. 16 of 2009 wherein the court applied the decision in Tororo Cement Co. Ltd. v. Frokina International Ltd. SCCA No. 2 of 2001 for his submission. He concluded that the plaint in this case discloses a cause of action for breach of the employment contract and prayed that the objection be overruled with costs.

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Given the submissions above I have first to dispose of the issue whether, in view of what has transpired before in the hearing of this case, the issue of the absence or presence of a cause of action will be disposed of as a point of law *per se,* or in the light of evidence already adduced in the suit by the parties.

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In **Narotham Bhatia & Hemantini Bhatia v. Boutique Shazin Ltd.,** (above) the Court of Appeal re-stated with approval the principle that was laid down in Mulla's Code of Civil Procedure that:

*"A cause of action means every fact which if traversed, it would be necessary for the plaintiffto prove in order to support his right to a judgment of the court. In other words it is a bundle offacts which, taken with the law applicable to them give the plaintiff a right to claim relief against the defendants. It must include some act done by the defendant since (in) the absence ofsuch an act, no cause of action can possibly accrue ... Everything which if not proved, would give the defendant an immediate right to judgment must be part ofthe cause of action ... the cause of action must be antecedent to the institution ofthe suit."*

**3** The Supreme Court in the same case re-stated with approval the principle as it was laid down in **Auto Garage & Another v. Motokov (No. 3)** (above) where Spry V. P ruled at page 519 that:

> *"I would summarize the position as I see it by saying that if a plaint shows that the plaintiff enjoyed a right, that the right has been violated and that the defendant is liable, then, in my opinion, a cause of action has been disclosed and any omission or defect may be put right by amendment. If, on the other hand, any of those essentials is missing, no' cause of action has been shown and no amendment is permissible."*

The court went on to rule that the matter is one to be decided by perusal of the plaint and any annexure to it, not on a basis of evidence. But my understanding of the court's decision is that it would apply in a matter where no evidence has been taken yet. And the circumstances in the which the challenge that there was no cause of action came before the court in the **Motokov case** can be distinguished from those in the instant case.

In the **Motokov case,** after- the hearing began there application for leave to amend the plaint. In the course arguments an oral application was made that the plaint be struck out as disclosing no cause of action. The amendment to the plaint which Motokov sought leave to make was the insertion of an additional paragraph, pleading as an alternative cause of action a claim to the price of goods sold and delivered, with interest and expenses. was an of the

The application for leave to amend was opposed by the appellants. They claimed, first, that the plaint did not disclose a cause of action and therefore, had to be rejected under the rules and could not be amended. In the alternative, if there was power to amend, they submitted that that power should not be exercised, both because it would allow the introduction of a new cause of action after the expiration of the period of limitation and because of undue delay in the making of the application. The decision in the **Motokov case** that has been cited here was handed down after a second appeal in the East Africa Court of Appeal and is a much respected decision.

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However, in the instant case, the plaintiff in paragraph 4(a) of the *plaint* pleads that he entered into a contract of employment with the


defendant as a Stores Assistant and was later promoted to Exports Coordinator. He attaches a copy of the contract of employment as Annexure **"A".** There is no doubt that the contract of employment dated 12/10/1999 which was admitted in evidence as **Exh. Pl** is a document that originated'from SDV Transami (U) Ltd of Plot No. M61 Ntinda Road, Kampala. It was signed for Transami (U) by'Patrick O. Adengo, Executive Chairman and A. A. Stenning the Regional Director for the employer. The plaintiff put his hand to it accepting the terms and conditions of employment stated therein.

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**.0 5** In paragraph 4(c) the plaintiff pleads that in March 2006 he was transferred by letter dated 20/02/2006 to SDV Transami Tanzania Ltd, a sister company to the defendant. He was by that letter designated the Export Manager, Tanzania. The letter of transfer which was Annexure **"B"** to the plaint and admitted in evidence as **Exh. P2** shows that it originated from SDV Transami Tanzania, Bandari Street, Kurusani, Dar-es-Salaam. It was signed for the company by Ed Blagden as Managing Director and A. A. Stenning, the Group

Managing Director for the employer. The plaintiff put his hand to it on 25/02/2006 accepting the terms offered by Transami (T) Ltd.

**0** In paragraphs 4 (e) to (h) of the plaint the plaintiff went on to plead as follows:

> "e) In February 2007, the plaintiffs service with SDV Transami Tanzania was unlawfully terminated vide termination letter dated February 13, 2007. The plaintiff is challenging the procedure of termination before the Commission for Mediation and Arbitration in Dar Es Salaam Tanzania.

> f) The Plaintiff (I think defendant) has ignored the contract entered into between itself and the plaintiff and has continued

to act though the contract of employment between itself and the plaintiff had been determined and the benefits under it paid whereas not.

g) The plaintiff failed to take the plaintiff back into employment despite having agreed to do so in a letter dated June 30, 2006 in which they stated that " it should be clear to all parties that upon your return, you will revert to your position as the Exports Manager (subject to the position being vacant) or any other position relative to your qualification and ability. You will also be paid a salary commensurate to that position at that time."

h) The defendant has not taken any measures to determine the contract of employment with the plaintiff and has not paid any benefits to the plaintiff under the said contract.

i) The plaintiff remained unemployed as a result and has suffered loss of income and anguish arising from the disagreement."

Mr. Nerima argued that the issues raised can only be determined after hearing evidence and that the plaintiff cannot be driven from the seat of justice before he presents his case. But in my view, the plaintiff had presented the evidence that is necessary to determine this issue and it had been admitted by the court and marked. The record shows that at the scheduling conference held on the $22/04/2010$ the parties adopted the scheduling memorandum that had been filed in court on 19/04/2010. The documents to be relied on by both parties were agreed upon and by consent, they were admitted as Exhibits. At pages 2-3 of the joint scheduling memorandum the manner in which the documents were received and marked was indicated as follows:

- Appointment letter dated October 12, 1999 Exh. P1 $1.$ - Letter of transfer to Tansania datd February 20, 2006 Exh. P2 $2.$ - Email communication between the plaintiff and Ed Bladgen dated $\mathcal{S}$ . *February 24, 2006 – Exh. P3* - Letter to the plaintiff dated June 30, 2006 from SDV Transami Group $4.$ Managing Director, A. A, Stenning – Exh. P4

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- $5.$ Letter to the plaintiff from the Group Managing Director dated December 29, 2003 – **Exh. P5** - 6. Letter from SDV Transami Tanzania dated February 13, 2007 -Exh. P6 - 7. Letter from Human Resource Department SDV Transami dated May 10, $2007 -$ **Exh. P7** - 8. Form No. 1 of the Commission for Mediation and Arbitration in Dares-Salaam - 9. The complainant's and respondent's final submissions before the Commission for Mediation and Arbitration - *10.* The documents of deregistration, exportation and registration in Tanzania of the plaintiff's motor vehicle – Exh. P8 - 11. Other documents with leave of court.

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- Contrary to Mr. Nerima's submission therefore, I found no need to hear further evidence from the plaintiff in order to determine whether $5$ there was a cause of action against the defendant or not because the necessary evidence, in my view, was without a doubt already on the record. - The letter of appointment (Exh. P1) had very specific terms of employment to guide the relationship between the plaintiff and the $\mathbf{0}$ defendant. It was signed by the plaintiff and for the defendant resulting into a written contract of employment at common law. One of the specific and strict terms of the contract imposed on the plaintiff in Clause 8 of the contract was as follows: - "The provisions (of) this letter of appointment may only be varied by agreement in writing signed by both you and the company. Any collective agreement reached on your behalf assumes agreement in writing."

And at the end of the contract were inscribed the following terms:

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"You are required to devote your whole time and attention to the business of the company and not to engage directly or indirectly in any other business of any kind."

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**5 LO <sup>15</sup> E** The letter that was captioned "Transfer" **(Exh. P2)** originated from Transami (T). It was never signed for the defendant as **Exh. Pl** was. There is no doubt that it changed the terms of the plaintiffs employment with the defendant. It required him to go and work with Transami (T) on different and perhaps better terms than those that were contained in **Exh. Pl.** The plaintiff signed **Exh. P2** with the Managing Director of Transami (T), and once he signed it, it was transformed into a contract between himself and Transami (T). That went against'the grain of the contract with Transami (U) for it violated Clause 8 of the contract between the plaintiff and the defendant here. The plaintiff thereby left Transami (U) and went off to work with Transami (T) which is clearly a separate legal entity from Transami (U). It is thus my view, and <sup>I</sup> find that the contract with Transami (U) was thereby terminated.

**20** Counsel for the plaintiff argued that the defendant undertook to let the plaintiff return to Transami (U) after his return from Tanzania as was pleaded in paragraph 4 (g) of the plaint. The letter dated 30/06/2006 was admitted in evidence as **Exh. P4.** The letter was signed by Mr. Stenning, the Group Managing Director and Edouard De Vergeron' the Regional Finance and Administration Manager. As opposed to **Exh. Pl** which was signed by the Patrick Adengo the Executive Chairman for Transami (U) Ltd, **Exh. P4** was signed off on behalf of SDV Transami (T) and **NOT** for the defendant here. It is my view, that though the letter of transfer and the letter promising the

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plaintiff that he would return to his employment in Uganda after leaving Tanzania was signed by Mr. Stenning the Regional. Managing Director and Mr. De Vergeron, the Regional Finance *&>* Administration Manager, in the absence of a written undertaking from Transami (U) to that effect, the defendant was not bound by the undertaking of the Tanzanian Company and I will explain why not.

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Though it was said to be a sister company of the defendant, there was no legal nexus established between the two companies who appear to be separate corporate legal entities as identified by their letter heads. And though there was an understanding that the companies operate as a Group, there was nothing to show that the Group was a legal entity and that its Managing Director had the capacity to, on his own bind each of the companies in contracts.

**5 0 5** Even if that were proved to be the ' case, when he signed the undertaking in **Exh. P4** that should he return to Uganda, the plaintiff would revert to his position as the Export Manager or any other position relative to his qualifications and ability, Mr. Stenning did not do so for Transami (U) but for Transami (T). It appears to me that Mr. Stenning's overall docket of managing the Transami Group probably led him to believe that his signature on a document of any of the companies could bind the others, but I think not. If a document originated from either company in its corporate capacity it could not bind the other, though part of the group, because of the principles of corporate personality and privity of contract. I therefore cdme to the conclusion that even if the plaintiff amended his pleadings, he could right due to him that has been violated by the defendant. Clearly no cause of action was established against the defendant in prove no

the plaint and the documentary evidence before amendment would cure that defect. court and no

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I will now address the question whether the plaintiff could maintain this suit against the defendant in spite of the fact that a decision was already rendered in his favour against Transami (T) before the Commission for Mediation and Arbitration in Tanzania.

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**10 15** For the defendant, Ms. Namyalo argued that it was not the defendant that terminated the plaintiffs employment but Transami (T). That the plaintiff was paid compensation in lieu of notice by the same Transami (T)- as is detailed in the arbitral award which was also on record. That the Commission for Mediation and Arbitration also dealt with the issue of the return of the plaintiffs motor vehicle and ordered that Transami (T) was liable to repatriate it, and made other related orders. That according to the award that was made by the CMA there is no doubt that the claims against Transami (T) are the same claims that were brought in this suit against Transami (U).

**20** Ms. Namyalo then submitted that the common law prohibits the recovery of damages by one person in a fresh suit where he/she has already been awarded damages .on the same set of operative facts even if such person hides his claim under a separate cause of action. She cited the decision in **Hunt v. Severs [1994] 2** A. C. **350** for the proposition that there is no consideration of public policy that can justify a plaintiff being compensated twice for the same loss. She also referred me to the decision in **Dimond v. Lovell [2002] 1** AC **384.** She then prayed that the plaint be struck out under the provisions of Order 7 rule 11 (a) and (e) CPR.

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In reply, Mr. Nerima submitted that this point of law is to the effect that the suit is *resjudicata.* He went on to submit that the principle could not apply because in Tanzania the plaintiff sued Transami (T) and not the defendant. That in this case, the plaintiff was suing the defendant for failing to take him back into her employment according to an undertaking she made. He asserted that the plaintiffs contract with the defendant was never terminated according to the Employment Act. That two points had therefore never been subjected to litigation with the defendant and *res judicata* could 'not apply because the plaintiff sued a different party and the causes of action were different.

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Mr. Nerima added that the quantum of damages awarded to the plaintiff by the CMA was not relevant at this stage; that the same could be relevant at the point of assessing damages. He then asserted that most of the submissions raised by counsel for the defendant would be proper if they were final submissions in the matter and not submissions on the preliminary points of law. He finally criticised the defendant's counsel's attempt to attach documentary evidence to her submissions and then prayed that the preliminary objection be overruled with costs to the plaintiff.

I could not agree with Mr. Nerima that the defendant's counsel was indirectly trying to raise the plea of *resjudicata.* Clearly, the defendant before the CMA and the defendant here are two distinct entities, as admitted by Mr. Nerima as he argued this point. Though the cause of action is alleged to have been based on the same contract of employment, the parties are different and *res judicata* cannot be a plea However, counsel for the defendant raised a valid point of law.

Assuming that this court found that there was a valid cause of action raised by the plaintiff against the defendant in this suit, would court then go on to entertain the action as it stands in spite of the decision of the CMA in favour of the plaintiff in the matter against Transami

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> The plaintiff's claim is for damages for breach of a contract of employment. That is also true about the matter that was successfully subjected to arbitration by the CMA. I have taken cognisance of the fact that the plaintiff seeks to amend his pleadings as was indicated in the proposed amended plaint filed in this court before leave was obtained to do so, on 20/05/2011. Even by that proposed amended pleading, the plaintiff would seek for damages against the defendant of up to shs. $13,586,226$ = on the allegation that the defendant never terminated her contract of employment with him. That in addition, the defendant refused to take him back into her employ in spite of a written undertaking to do so.

I have already ruled that the alleged undertaking by the defendant did not exist because the only document that the plaintiff sought to rely on to prove that fact originated from and was signed for Transami (T) and not for the defendant. There would therefore be no action that $20$ could accrue against the defendant here on that basis. In addition, though the plaintiff wishes to amend her pleadings as indicated in order to seek for damages for 3 months pay in lieu of notice, I believe that compensation in lieu of notice for the period that the plaintiff was employed by the defendant was considered and an award made in $25$ respect thereof by the CMA.

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Having ruled at page 16 of the award that Transami Tanzania's termination of the plaintiffs employment was *"violative both of substance and fair procedure,"* at page 17 the CMA considered severance pay under the Tanzania Employment and Labour Relations Act (ELRA) and ruled:

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*"The other claim under this head' is severance allowance payment, under the law this is payable to an employee who has worked for an employer for more than 12 months, evidence shows that the employee was recruited in 1995 and worked up to 28/2/2007, it is over 10 years, but the maximum payable period is 10 years. I order the complainant be paid shs. 2,416,723.00 as severance allowance in terms of section 42 of ELBA."*

**5** It is therefore clear from the arbitral award that although the plaintiff had sued only Transami (T) in the CMA, that body considered the whole time that the plaintiff was employed with the defendant and Transami (T) and awarded severance pay for the whole period due to the wrongful termination of his employment.

**0 5** The Uganda Employment Act (2006) under which the plaintiff would have claimed, had he still been an employee of the defendant when his contract was terminated, provides for severance allowances in s.87 thereof. Under that provision, an employer shall pay severance allowance where an employee has been in his or her continuous service for a period of six months or more and where the employee is unfairly dismissed by the employer; the employee dies in service; employee terminates the contract due to physical incapacity; the contract is terminated by death or insolvency of the employer or by

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the labour officer for failure to pay wages. By virtue of the provisions of s.89 of the Act, the calculation of the severance pay is negotiable between the employer and the workers or their labour union.

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**5 10** Moreover, the employment contract between the plaintiff and the defendant did not provide for payment in lieu of notice. It simply provided that termination of services would be in accordance with the Uganda labour laws which, if the defendant had terminated the plaintiffs employment at the time stated would be the Employment Act of 2006. But it is denied by the plaintiff that the defendant terminated his employment. On the other hand the defendant asserts that the plaintiff simply left its employment in search of greener pastures so terminating the contract; and <sup>I</sup> agree.

**15 20** Even if his employment had been terminated unlawfully as is alleged (i.e. without paying him in lieu of notice as was required by s.25 of the repealed Employment Act, Cap 219) I would still agree with Ms. Namyalo's submission that a person should not claim for compensation for a wrong alleged to ensue out of the same set of facts, even if it is against two persons. The principle against double recovery was clearly articulated in **Ratych v. Bloomer, [1990] 1 S. C. R. 940** as follows:-

> *It is ci fundamental principle of tori law that an injured person should be compensated for the full amount of his loss, but no more. The plaintiffis to be given damagesfor the full measure of his loss as best that can be calculated. But he is not entitled to turn an injury into a windfall.<sup>9</sup>*

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Although the decision above is one from the Supreme Court of tne *\* V* United States, the principle against double recovery is well grounded m the common law as was explained in **Hunt v. Severs** and **Dimond v. Lovell** which were cited by Ms. Namyalo.

- **5** That being the general principle of law, no right would accrue to the plaintiff to bring another suit for a claim in respect of which he has already been compensated. The defendant's second preliminary objection to the suit therefore also succeeds, emphasising the fact that the plaintiff has no cause of action against the defendant. - **LO** Order 7 rule 11 (a) CPR provides that the plaint shall be rejected where it discloses no cause of action. The courts have consistently held that the rule is mandatory **(Hasmani v. National Bank of India Ltd. (1937), 4 E. A. C. A. 55** approved in **Auto Garage v. Motokov (No.3)).** - **15** In the end result, I have no alternative but to reject the plaint for the reasons stated above and it is hereby struck out. The costs for the preliminary points of law argued, as well as those for the suit shall be borne by the plaintiff.

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**JUDGE 8/09/2011**

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#### THE REPUBLIC OFFICANDA

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

## (COMMERCIAL DIVISION)

# CIVIL SUIT NO 182 OF 2009

BATANDA STEPLIEN .......... **HIMMONDAL PLAINTIFT**

#### **VERSUS**

SDV TRANSAMI UGANDA LTD ...................................

# DECREE

This matter coming for final disposal on this 8th day of September 2011 before Hon. I adv Instice Irene Mulyagonja Kakooza, in the presence of Mr. Nelson Nerima, Counsel for the Plaintiff and Miss Hadijah Natuyalo for the Defendant, it is hereby ordered and decreed their.

- $\mathfrak{u}$ The Plann in Civil Suit No. 182 of 2009 is hereby struck out. - $\vert \cdot \rangle$ The Plaintiff should pay costs of the preliminary objection and the sair

GIVEN under my hand and the seal of this Honourable Court this 25<sup>-d</sup> de -t ..... $Sept.$ .... 2011.

REGISTRAR

Decree extracted by: F. Mukasa & Co. Advocates 1<sup>th</sup> Floor, Spear House P. O. Box 4907 Kampala.

1919/2011 $N$ $\lceil n \rceil$