Blackburn v TAD Beer Trading Center Limited (Civil Suit 636 of 2023) [2024] UGCommC 216 (28 June 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

## **CIVIL SUIT NO. 0636 OF 2023**

# CAROLINE BLACKBURN AMERO ::::::::::::::::::::::::::::::::::::

#### **VFRSUS**

# M/S TAD BEER TRADING CENTER LTD :::::::::::::::::::::::::::::::::::

## (Before: Hon. Lady Justice Patricia Mutesi)

#### JUDGMENT

#### **Background**

- The Plaintiff brought this suit for a declaration that the Defendant is liable 1. for breach of contract and for the recovery rent arrears, renovation costs, general damages, interest and costs of the suit. - The Plaintiff's case is that on 1st July 2021, she and the Defendant executed $2.$ a 2-year tenancy agreement in which she rented out her house situate at Block 244 Plot 5776, Kisugu, Makindye Division, Kampala to the Defendant at a monthly rent of USD 2,000. The plaintiff alleged that the Defendant occupied the house but it defaulted in paying the rent for the months of March, April, May and June 2023, resulting into rent arrears of USD 8,000. The Defendant also erected structures in the compound and broke some of the windows and shutters in the house contrary to the terms of the agreement - The Plaintiff further alleged that after failing to pay the rent due, the 3. Defendant's director, one Mugiraneza Kassim, abandoned the premises leaving some of the Defendant's property there. That the Defendant further defaulted in paying utility bills which accumulated to over UGX 2,000,000. The Plaintiff has had to spend her own money to clear those bills and to pay for the secure storage of the said abandoned property.

On its part, the Defendant acknowledges the tenancy agreement. Its case is 4. that it paid all the rent due from it to the Plaintiff. It contends that towards the end of the tenancy, the Plaintiff started harassing it for no reason. That on 30th May 2023, the Plaintiff locked the rented premises without any court order or a lawful basis. All the Defendant's tools of trade and valuable assets were locked in which brought its operations to a halt. That this caused loss and injury for which the Defendant, in its counterclaim, seeks to recover its confiscated property, damages and costs.

#### **Issue arising**

- 5. At the scheduling conference, the parties framed the following issues for the Court's determination: - 1. Whether the Defendant is in breach of the agreement.

2. Whether the Plaintiff lawfully closed the rented premises without an order of eviction.

3. What reliefs are available to the parties.

#### **Representation and hearing**

- 6. At the hearing, Mr. Michael Busingye of M/S Prism Advocates appeared for the Plaintiff. Mr. Sengooba Muhammad of M/S Sebanja & Co. Advocates appeared for the Defendant. The Plaintiff testified in support of her case (PW1) and adduced 3 documents which were admitted into evidence and exhibited consecutively as P. Ex.1 – P. Ex.3. The Defendant neither presented any witness nor adduced any documents to prove its case. - 7. In her testimony, the Plaintiff testified that she owns a house on Block 244 Plot 5776 Kisugu, Makindye Division where she used to live with her family before relocating to South Africa. Sometime in December 2019 when she was planning her relocation, she was approached by Kassim Mugiraneza who styled himself as a director in the Defendant and showed interest in renting her house with an intention of using it as a training school. They agreed on rent and other key details. They later executed an agreement for a tenancy on $1st$ July 2021.

- The Plaintiff testified that at the signing of the agreement, Kassim paid rent 8. for 6 months ( $1^{st}$ July 2021 – $31^{st}$ December 2021) and the Defendant took possession of the house without issue. The Defendant later made payment of rent up to February 2023 and continued to occupy the premises. Towards the end of March 2023, Kassim, who had since relocated to Dubai, told her that business was slow. When the Defendant defaulted on its rent for 3 months, Kassim proposed that he sells the Defendant's property in the house, but when this property was valued before sale, the parties disagreed on the value assigned to it. The Defendant failed to get buyers and the Plaintiff suspected that the Defendant was tricking her into allowing it to take the property out of the premises, in the guise that it had been sold, to avoid it being attached to settle the rent arrears and other due outgoings. - 9. The Plaintiff further told the Court that after that failed ploy, Kassim through the Defendant's employees asked her to take up shares in the Defendant in consideration of the rent due. She rejected this proposal as Kassim had made it known to her that business was down. When the Defendant finally failed to pay, it used under-hand methods by bringing armed people to forcefully take its property out of the house, a move she thwarted by reporting to case to Kabalagala Police station which intervened and offered her protection. - 10. Finally, the Plaintiff told the Court that she soon discovered that all along, the Defendant had not been paying water, electricity and garbage collection bills. She also found out that the Defendant had severely altered the house, broken windows and shutters, damaged the walls and erected structures in the compound. She called in the area LC1 chairman who came and witnessed the process of getting the Defendant's property out of the house and taking it to a storage while taking stock of each and every item. The Defendant and its workers have since abandoned the premises leaving her in financial loss. - 11. After the hearing, counsel for the Plaintiff filed written submissions to argue the Plaintiff's case. I have carefully considered those submissions, the laws and authorities cited therein and all other materials on the record.

## **Resolution of Issues**

Section 101(1) of the Evidence Act states that whoever desires a court to give 12. judgment as to any legal right or liability dependent on the existence of facts which he or she asserts must prove that those facts exist. Section 103 of the Evidence Act also states that the burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence. In civil cases, the burden is on the plaintiff to prove the existence of his rights and the liability of the defendant on a balance of probabilities (See Miller V Minister of Pensions [1947]2 All ER 372). I will be guided by these principles on burden and standard of proof in evaluating the evidence adduced.

# Issue 1: Whether the Defendant is in breach of the agreement.

- Once a party does not perform his or her obligations in a contract as agreed, 13. that party is said to be in breach of that contract. Thus, breach of contract occurs when one party to the contract fails, neglects or refuses to perform the contract, without a legal excuse. (See William Kasozi V DFCU Bank Ltd, HCCS No. 1326 of 2000.) When breach of contract occurs, the innocent party is entitled to a remedy. (See Kabagambe Matthias V Kahire Nobert, HCCS No. 389 of 2016.) - In the instant case, the Plaintiff and the Defendant entered into a tenancy 14. agreement on 1st July 2021 (P. Ex.1). In that agreement, the Plaintiff rented out her house situate at Block 244 Plot 5776, Makindye Division, Kampala to the Defendant for a period of 2 years from 1st July 2021 to 1st July 2023 in exchange for rent at a monthly rate of UGX 6,500,000 for the first 6 months and UGX 7,000,000 for the remaining 18 months. - 15. Although the receipts attached to the Defendant's written statement of defence show that rent was only paid for the period between July 2021 and December 2022, the Plaintiff confirms that the Defendant paid all the rent save for the last 4 months of the tenancy. The Defendant did not adduce any evidence at the trial proving that it paid the rent for the said 4 months. P. Ex.2 is the inventory of the Defendant's property found in the suit house on 9th August 2023. In the premises, I find that the Defendant did not pay rent for

the last 4 months of the tenancy, despite occupying and using the premises during that time.

The Plaintiff further alleged that the Defendant made alterations to the suit 16. premises contrary to Clause 9(b) of the tenancy agreement which provides:

> "The tenant agrees not to change the use (or permit the use of) or construct (or permit the construction of) any improvements on, under or over the premises that would interfere with the character of the rental premises or the purpose for which they have been let."

In my considered opinion, for the Plaintiff to prove breach of this provision, the Plaintiff ought to have adduced evidence showing what the house looked like at start of the tenancy and at the end of the tenancy. The Plaintiff also needed to adduce evidence showing that the alterations made by the Defendant interfered with the character of the house as rental premises or that they interfered with the purpose for which the house had been let out.

- During the trial, the Plaintiff testified that at the end of the tenancy, she 17. found that the Defendant had severely altered the interior and exterior of the house by erecting structures in the compound and by breaking windows and shutters. She further relied on P. Ex.3 which were photos of the alleged alterations. In my view, this evidence is not sufficient to prove that the Defendant contravened Clause 9(b) of the agreement. It does not show what the premises looked like at the start of the tenancy so that the Court can contrast that outlook with the one at the end of the tenancy and confirm that alterations were indeed made by the Defendant. It also does not show that the alterations, if any, had any impact on the purpose of the tenancy agreement or on the character of the house in any way. - Furthermore, the Plaintiff alleged that the Defendant failed to pay utility bills 18. for the house which accumulated during the tenancy to a sum of over UGX 2,000,000, contrary to Clause 10 of the tenancy agreement. However, the Plaintiff did not adduce any of the said utility bills in evidence to corroborate that testimony. This Court therefore, remains unconvinced that the said

amounts remained unpaid and accumulated during the contract period as claimed by the Plaintiff.

In conclusion, the Court finds that the Defendant breached the agreement 19. by failing to pay the rent for the last 4 months of the tenancy.

# Issue 2: Whether the Plaintiff lawfully closed the rented premises without an order of eviction.

- This issue arose from the Defendant's written statement of defence in which $20.$ the Defendant claimed that the Plaintiff evicted it from the suit property prematurely and without an eviction order. Unfortunately, the Defendant did not adduce any evidence at the trial proving that the Plaintiff actually evicted it from the suit property. - On her part, the Plaintiff testified that, towards the end of March 2023, the 21. Defendant's director who had since relocated to Dubai, told her that the Defendant's business had slowed down. She stated that in the course of the 3 months that followed, the Defendant tried to sell its property in the house in order to pay the rent but all in vain. She further stated that the Defendant tried to forcefully take its property away without paying the due rent, an attempt which she thwarted. That eventually, all the Defendant's employees left and the house was abandoned. The Plaintiff then called in the LC1 chairman who came and witnessed the process of getting the property from the house to a separate storage facility. - 22. Clause 8(a) of the tenancy agreement stated that if any rent remains unpaid for one month after becoming payable, whether formally demanded or not, it shall be lawful for the landlord (Plaintiff) to re-enter upon the premises or any part thereon and to determine the tenancy. In this case, after several empty premises to pay the rent for a period of over 4 months, the Plaintiff exercised her right to re-enter the premises in August 2023. In doing so, she called in the LC1 chairman to witness the transfer of the property left by the Defendant in the house to a separate storage facility as per P. Ex.2. In these premises, I am unable to fault the Plaintiff for re-entering the house after

over four months of non-payment of rent, as this recourse had been agreed on expressly by the parties in Clause 8 of the agreement.

# Issue 3: What reliefs are available to the parties.

The Plaintiff prayed for the following reliefs which I will now traverse.

# **Declaration**

Following the findings above, the Court shall issue a declaration to the effect 23. that the Defendant breached the tenancy agreement of 1st July 2021 when it failed to pay rent for the last 4 months of the tenancy despite occupying the premises during that time.

# **Special damages**

- Special damages are financial losses resulting from a defendant's breach of 24. the plaintiff's rights which are ascertained and quantifiable at the time the suit is filed. In Stanbic Bank (U) Ltd v Hajji Yahaya Sekalega, HCCS No. 185 of 2009, it was reiterated that special damages must be specifically pleaded and proved, but that strict proof does not mean that that proof must always be documentary evidence. - The Plaintiff specifically pleaded special damages of USD 8,000 being the rent 25. arrears for the last 4 months of the tenancy. Through her oral testimony, the Plaintiff confirmed that the Defendant did not pay rent for those 4 months. Despite claiming that it does not owe any rent to the Plaintiff, the Defendant did not adduce any evidence to prove that it paid rent for the said 4 months. The receipts it attached to its written statement of defence proved that it paid rent only up to 1st January 2023. In those circumstances, I am satisfied that the Plaintiff is entitled to rent arrears for those last 4 months being UGX 28,000,000. - 26. The Plaintiff further sought to recover UGX 29,843,229 as costs for restoring and renovating the premises at the end of the tenancy. In the plaint, the Plaintiff did not specifically plead the particulars of these renovation costs. At the trial, the Plaintiff also failed to adduce any evidence proving the same

costs. In any case, the quotation for the restoration and renovation costs that was annexed to the Plaint is only an estimation of expenditure and does not prove that the Plaintiff actually expended and paid the quoted sum. The claim for restoration and renovation costs is, thus, rejected.

- Similarly, the Plaintiff's prayer for recovery of the money she says she paid 27. towards utility bills and storage expenses cannot succeed. This is because the particulars of the utility bills and the storage expenses were not specifically pleaded in the plaint and they were not specifically proved by her at trial through the presentation of receipts of payment issued to her in her name. - 28. In the end, I find that the Plaintiff is entitled to special damages of UGX 28,000,000 being the rent arrears for the last 4 months of the tenancy.

#### **General damages**

- 29. General damages refer to the losses which flow naturally from a defendant's breach. They are what the law presumes to be the direct, natural or probable result of a defendant's breach (see Opia Moses v Chukia Lumago Roselyn & **5 Ors, HCCS No. 0022 of 2013**). They are also said to be the immediate, direct and proximate result, or the necessary result, of the wrong complained of. - 30. The evidence adduced by the Plaintiff at the trial proved that out of the 24 months' tenancy, the Defendant paid rent for 20 months and failed to pay for the last 4 months. The Plaintiff testified that the Defendant made several empty promises to pay the outstanding rent before, eventually resorting to trickery and use of force so that it takes its property out of the house and disappears without paying the rent. For a tenant who had diligently paid rent for the longer part of the tenancy, it is unfortunate that the Defendant could resort to such conduct that was calculated to cheat the Plaintiff. - 31. The natural and probable result of the Defendant's conduct is that it caused financial loss and inconvenience to the Plaintiff who has been kept out of her rent for the last 4 months of the tenancy to this day. It also resulted into anguish and distress to the Plaintiff who does not stay in Uganda but who, in those circumstances, had to contend with the trickery and force applied by

the Defendant so that it runs away from the premises without paying the due rent. For all this loss and injury, the Court awards general damages of UGX 14,000,000 to the Plaintiff.

## **Interest**

- Section 26(2) of the Civil Procedure Act Cap 71 gives the Court the power to 32. award interest on damages. Ordinarily, a successful plaintiff is entitled to interest at a rate that would not neglect the prevailing economic value of money but which would also insulate him or her against further economic vagaries, like inflation and depreciation of the currency, in the event that the money ordered to be recovered is not paid promptly when it falls due. (See Mohanlal Kakubhai Radia V Warid Telecom (U) Ltd, HCCS No. 0224 of 2011.) - In view of these principles, the Court hereby awards interest to the Plaintiff 33. on the special damages at the rate of 18% per annum from 1st July 2023 until full payment and on the general damages at the rate of 13% per annum from the date of judgment until full payment.

## Costs

34. Section 27(1) of the Civil Procedure Act Cap 71 gives this Court the discretion to award the costs in a suit before it. The general rule is that costs follow the event. This means that an award of costs will generally flow with the result of litigation and that a successful party is entitled to costs, unless the Court, for good reason, orders otherwise (See Kwizera Eddie V Attorney General, Supreme Court Constitutional Appeal No. 01 of 2008). I have not found any reason to deny the Plaintiff in this case the costs of the suit. I, accordingly, award the costs of the suit to the Plaintiff.

### **Reliefs**

Consequently, judgment is hereby entered in favour of the Plaintiff against 35. the Defendant on the following terms:

- i. It is hereby declared that the Defendant breached the tenancy agreement of $1st$ July 2021 when it failed to pay rent for the last 4 months of the tenancy despite occupying the premises during that time. - ii. The Defendants shall pay the sum of UGX 28,000,000 in special damages to the Plaintiff. - iii. The Defendants shall pay interest on the special damages in (ii) above at the rate of 18% per annum from 1st July 2023 until full payment. - The Defendants shall pay the sum of UGX 14,000,000 in general damages iv. to the Plaintiff. - The Defendants shall pay interest on the general damages in (iv) above at $\mathsf{V}.$ the rate of 13% per annum from the date of judgment until full payment. - vi. Costs of the suit are awarded to the Plaintiff.

Ha trieadenter

Patricia Mutesi **JUDGE** $(28/06/2024)$