C & S Upholstery Limited v Bank of Uganda (Civil Suit 407 of 2020) [2025] UGHCCD 32 (27 February 2025)

**THE REPUBLIC OF UGANDA**

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

**(CIVIL DIVISION)**

**CIVIL SUIT NO. 407 OF 2020**

**C&S UPHOLSTERY LIMITED:::::::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF**

**VERSUS**

**BANK OF UGANDA:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT**

***BEFORE: HON. JUSTICE SSEKAANA MUSA***

**JUDGMENT**

The plaintiff brought this suit against the defendant for, breach of its duty of fairness and transparency, payment of the general damages, loss of business profit and loss of income, exemplary damages, Interest thereof and costs for the suit.

In May 2019, the defendant called for bids for the replacement of carpets on levels, 1, 3,4,6,8 and 9 of the new building of the defendants headquarters to which the plaintiff submitted a bid dated 14th June 2019.

The plaintiff submitted a bid, including a Manufacturer's Authorization from Windsor International Limited, confirming their relationship. The Bank of Uganda sought confirmation of the Plaintiff's authorization and relationship with Shaw Contract Group and Windsor International.

That Shaw Contract Group confirmed that the plaintiff was their authorized supplier and Windsor International was their intermediary.

The Bank of Uganda's Executive Director of the Public Procurement and Disposal of Assets recommended investigations into the Plaintiff for alleged misconduct, and the Evaluation Committee recommended eliminating the plaintiff from the bidding process based on a forged Manufacturer's Authorization form.

Despite earlier written assurances from the plaintiff's associates, the Bank of Uganda did not find a relationship between them.

The Public Procurement and Disposal of Assets Authority (PPDA) notified the plaintiff of the defendant's complaint, and a hearing was scheduled.

Following a hearing and investigation, the PPDA found no merit in the defendant's allegations, confirming Windsor International's authorization and that there was no breach of ethical conduct by the Plaintiff. The PPDA also noted that the defendant and its officers did not have a reasonable basis to reject the plaintiff's bid and refer the plaintiff for disciplinary actions.

The plaintiff claims the defendant's actions caused damage to their reputation as a leading carpet supplier, resulting in financial distress and potential foreclosure proceedings.

The Plaintiff estimates losses worth UGX 5,254,455,600 from lost earnings, and UGX 2,000,000,000 from rejected bids.

The defendant argues the suit is barred by law because the plaintiff did not use the administrative review remedies available under the PPDA Act.

The defendant states the plaintiff was never suspended by the PPDA Authority and had a valid PPDA Registration Certificate, a KCCA Trading Licence, and a Certificate of Incorporation allowing them to engage in other bids.

The defendant asserts the plaintiff's bid was rejected because the samples failed to meet the required technical specifications.

Even if the samples had been compliant, the plaintiff's bid was the most expensive and least economically efficient.

The defendant argues that they acted reasonably and were statutorily authorized to report suspected procurement misconduct, thus having a full defense.

The defendant claims immunity from the action under Section 126 of the PPDA Act, which protects actions done in good faith.

The defendant asserts the damages sought by the plaintiff are not connected to the defendant’s conduct and are exaggerated.

The defendant argues that penalizing them for flagging suspected misconduct would deter compliance with procurement processes.

***Special facts***

*The carpet procurement was not done under one tender but three.*

*The first tender received six bids, including the plaintiff's, but all failed at the technical evaluation stage.*

*The second tender received three bids, including the plaintiff's, but the plaintiff failed to submit test and inspection information from the manufacturer and a valid Manufacturer's Authorization Form (MAF).*

*The MAF submitted by the Plaintiff was from "Windsor International Ltd," which was not a listed carpet manufacturer. The defendant wrote to the PPDA Authority to investigate the Plaintiff and another bidder for suspected procurement misconduct and the PPDA Authority found no liability upon investigation. The second tender was cancelled.*

*The third tender specified a minimum face weight of 60 oz /yd2 for the carpets, a requirement the Plaintiff failed to meet. The Plaintiff submitted samples with a face weight of 40 oz/yd2 and 26 oz/yd2. The Plaintiff’s director admitted the samples did not meet the required minimum face weight.*

*The Plaintiff’s bid was also the most expensive, at UGX 3,254,455,600, compared to the winning bid of UGX 1,485,369,441.*

**Issues for Determination**

1. *Whether the suit is barred in law.* 2. *Whether the Defendant owed the Plaintiff a statutory duty of fairness and transparency.* 3. *Whether the Defendant breached that statutory duty.* 4. *What remedies are available to the parties?*

The plaintiff was represented by *Counsel Paul Rutisya* while the defendant was represented by *Counsel Hussein Ghulam*

Both parties filed their witness statements, trial bundles, and the submissions which I have duly considered.

**Determination**

***Whether the suit is barred in law?***

The Plaintiffs’ Counsel submitted that the suit is not barred because it discloses a cause of action against the Defendant. A suit is barred if it is obstructed by a bar or barrier that prevents legal redress or recovery.

Counsel for the plaintiff noted that they have a cause of action against the Defendant, and that the Defendant owed them a statutory duty, which was breached and caused them injury and loss.

The suit is based on Sections 48 and 46(b) of the PPDA Act, which emphasize transparency, accountability, and fairness in procurement.

The defendant argued that the plaintiff should have sought remedies under the PPDA Act, including complaints to the Accounting Officer and the PPDA Tribunal, before filing the suit. The plaintiff’s director admitted in cross-examination that the Plaintiff did not follow this procedure.

The defendant stated that courts do not admit actions for breach of statutory duty when alternative remedies exist. The defendant asked the court dismiss the suit with costs.

***Analysis***

The plaintiff’s suit is for breach of statutory duty of fairness and transparency in considering the plaintiff’s bid. It is claim of breach of duty which arose out of neglect or failure to fulfil a just and proper manner of the duties of an office.

An individual may seek compensation against public bodies for harm caused by the wrongful acts of such bodies. Such claims may arise out of the exercise of statutory or other public powers by statutory bodies.

The fact that an act is *ultra vires* does not of itself entitle the individuals for any loss suffered. An individual must establish that the unlawful action also constitutes a recognizable tort or involves a breach of contract. See ***Public Law in East Africa by Ssekaana Musa pg 245-249***

The nature of damage envisaged is not necessarily categorized as special or general or punitive/exemplary damage. But such damage is awarded for misfeasance or nonfeasance for failure to perform a duty imposed by law.

The tort of misfeasance in public office includes malicious abuse of power, deliberate maladministration and perhaps also other unlawful acts causing injury. The breach of a statutory duty is an independent and separate cause of action premised on the defendant’s breach of a statutory duty under a statutory provision.

The plaintiff’s case is not barred by any law.

***Whether the defendant owed the plaintiff a statutory duty of fairness and transparency in considering the plaintiff’s***

The plaintiff’s counsel contended that the defendant owed them a statutory duty of fairness and transparency in considering their bid.

Breach of duty is defined as a violation or omission of a legal or moral duty, and can include negligence or oversight.

The Public Procurement and Disposal of Public Assets Act requires public procurement to be conducted with principles of non-discrimination, transparency, accountability, fairness, competition, and value for money.

The Act also states that a bidder should not be excluded from participating based on nationality, race, religion, gender, or other criteria.

The plaintiff argued that the defendant acted illegally by rejecting their bid without a reasonable basis, and that the Defendant and its officers acted out of malice.

The plaintiff provided evidence of a 25-year business relationship with the defendant.

The defendant’s Counsel argued that the plaintiff's claim does not satisfy all the necessary elements for the tort of breach of statutory duty, these elements are:

* 1. A statute must impose a duty. 2. There must be a breach of that duty. 3. The breach must result in damage to the claimant. 4. There must be a causal link between the breach and the damage.

While the defendant acknowledged a duty to act with transparency and fairness under Sections 48 and 46(b) of the PPDA Act, it asserted that this duty was not breached.

The defendant maintained it acted in accordance with its duty of due diligence by flagging suspected procurement misconduct and did so in good faith.

The defendant contended that its actions did not cause any damage to the plaintiff because:

The PPDA Authority never suspended the plaintiff, allowing them to participate in other bids. The plaintiff had a PPDA Registration Certificate, KCCA trading license, and Certificate of Incorporation which combined are a substitute for a PPDA Registration Certificate.

Counsel for the defendant noted that the plaintiff's failure to win the tenders was due to non-compliant samples and the high cost of their bid, not the defendant's letter to the PPDA Authority. Specifically

In the second tender, the plaintiff failed to submit necessary test and inspection information and a compliant MAF.

In the third tender, the plaintiff’s samples did not meet the minimum technical face weight specification and their bid was the most expensive.

The first tender is not relevant to the claim.

The defendant argued that it acted with "transparency" and "fairness" by openly submitting the plaintiff for investigation due to the suspected misconduct.

The defendant stated that "transparency" means "openness and clarity" and "fair" means "impartial, just and equitable," according to Black's Law Dictionary.

The defendant emphasized that it was also obligated to act with due diligence and flag procurement misconduct and not to collude or connive in it.

The defendant highlighted that Section 118(5) of the PPDA Act allows the High Court to hold an Accounting Officer or any other person personally liable to breaches of procurement law, and Section 129 makes certain conduct criminal.

The defendant also cited Reg. 26 of the PPDA (Procuring and Disposing Entities) Regulations, 2023 which mandates procuring and disposing entities to exercise due diligence on all bids.

The defendant asserted that it has immunity under Section 126 of the PPDA Act for actions done in good faith.

The defendant argued that public policy favors vigilant conduct by procuring entities and that holding the defendant liable would deter reporting of suspected misconduct.

***Analysis***

Whether the plaintiff is entitled to sue for breach of statutory duty would depend on whether a private right of civil action arises under the statute.

In order to establish a cause of action based on a breach of statutory duty, the plaintiff has to show that;

1. The defendant is under a statutory duty; 2. The defendant has breached the statutory duty; 3. The breach caused the damage suffered by the plaintiff and 4. The damage is within the scope of protection of the statute.

See ***David Melvin Aryemu Ochieng v UMEME Ltd HCCS No. 15 of 2016***

The interpretation and reading of a statute may guide to understand whether Parliament intended that the breach of statute should give rise to a private right of action or otherwise.

***Section 43 of the Public Procurement and Disposal of Public Assets Act*** provides for the application of the basic principles of public procurement and disposal shall be conducted in accordance with the principles of non-discrimination; transparency, accountability and fairness; maximization of competition and ensuring value for money; confidentiality; economy and promotion of ethics.

The PPDA Act provides for transparency, accountability and fairness; all procurement and disposal shall be conducted in a manner which promotes transparency, accountability and fairness. The actions of the defendant when it caused the disqualification of the plaintiff without carrying out thorough due diligence or waiting for the clearance from Public Procurement and Disposal of Public Assets Authority was a breach of duty upon which public procurement is hinged.

The defendant had some discretion in exercising their statutory duties but they owe a duty of care to other parties who interface with like the plaintiff. Whether there is a mandatory requirement on the defendant to perform a task in certain manner or satisfy a condition or prohibition against certain acts or conduct, the statutory duty must be performed to the letter of the statute. See ***Lonrho Ltd v Shell Petroleum Co. Ltd (No.2) 1982 AC 173***

The defendant acted in breach of its mandatory legal requirement by rejecting the plaintiff’s bid without any justification or reasonable basis. The defendants breached its statutory duty of fairness and transparency in the consideration of the plaintiff’s bid. The defendant’s officers breached the key tenets of fairness and transparency in addressing any concerns that could have arisen during the flawed procurement process since there was no basis to conclude that the Manufacturer’s Authorisation presented by the plaintiff was a forgery.

The defendant’s contention that they acted in accordance with its duty of due diligence and the duty to flag suspected procurement misconduct and did so in good faith and the defendant’s conduct in requesting PPDA Authority to investigate did not cause the plaintiff any damage.

The duty to act with due diligence and the duty to flag suspected procurement misconduct did not give the defendant any right to act in a rash manner and declare the plaintiff’s Manufacturer’s Authorisation a forgery without investigating the allegations.

The defendant was duty bound to act with transparency and fairness and the elimination of the plaintiff from the procurement process due to an alleged forgery which was not proved to its satisfaction and was baseless.

***Whether the Defendant breached that statutory duty?***

The plaintiff’s counsel submitted that the defendant breached their statutory duty of fairness and transparency by unfairly treating the Plaintiff. A breach of statutory duty is a tort or misfeasance in public office.

The elements of a breach of statutory duty include a statute imposing a duty, a breach of that duty, and damages to the claimant as a result of the breach.

The plaintiff claimed that the defendant breached their duty by recommending the plaintiff's suspension due to an alleged forgery without proper investigation.

The plaintiff asserted that they fulfilled all requirements for the bid, as confirmed by their authorization letter.

The defendant claimed that the plaintiff had forged a manufacturer’s authorization but did not do their own investigations and instead referred the matter to PPDA.

The plaintiff also indicated that the reason for the rejection of their bid was that the defendant believed they could not investigate themselves and PPDA was in charge, and further clarified that Windsor International is a company based in America and was in charge of anything that went through them.

A witness, DW1, confessed that instead of conducting their own investigations, the defendant told the Public Procurement and Disposal of Assets Authority to conduct the investigations and they found no merit in the allegations.

The defendant responded that even if a breach of statutory duty were found, the plaintiff is not entitled to damages because:

* + The statute does not specify a penalty or sanction for the breach of duty. + The plaintiff suffered no actual damage. + Any alleged damage was not caused by or connected to the defendant's conduct. + Principles of remoteness, contributory negligence, and mitigation of damages should apply.

The measure of damages should be limited to the penalty or sanction provided in the law said to have been breached.

The defendant maintained that the Plaintiff's failure to succeed in the tender process was due to their failure to meet technical specifications and their high bid price, not because of the defendant's conduct.

The plaintiff failed to prove they were ever suspended by the PPDA or denied a PPDA registration certificate and that they had the necessary documentation to participate in other bids.

***Analysis***

The plaintiff must show that the defendant had failed to fulfil the statutory duty and the statute may prescribe a standard based on reasonableness or reasonable care. A common standard required of the defendant is the requirement to do what is reasonably practicable.

The defendant breached the statutory duty when it treated the plaintiff was unfairly contrary to the law by writing a letter to the Public Procurement and Disposal of Assets Authority on 4th March 2019 recommending the suspension of the plaintiff from Public Procurement and Disposal of Assets Authority proceedings due to the alleged forgery of authorization letters from its suppliers without proof of the same.

The defendant failed to carry out its own due diligence or own investigations, the defendant told the Public Procurement and Disposal of Assets Authority to conduct investigations on its behalf and it found no merit in the allegations because the manufacturer’s authorization was properly issued by Windsor International.

Since the allegations of forgery of Manufacturer’s Authorisation were found to have no merit and basis, the defendant was in breach of its statutory duty against the plaintiff.

***What remedies are available to the parties?***

The defendant argued that the plaintiff's claim for lost business (UGX 8.2 Billion plus interest), and the value of the lost bid (UGX 3.2 Billion plus interest) are not supported by evidence and are outrageous.

The defendant noted that the plaintiff’s evidence did not include proof of bids rejected due to lack of a PPDA certificate or any bidding documents.

The defendant asserted that the plaintiff's claims would result in unjust enrichment.

**Exemplary Damages:**

The defendant argued that exemplary damages are not warranted because there was no proof of oppressive or unconstitutional action by the defendant, nor any evidence of the defendant acting to procure a benefit at the Plaintiff's expense.

***Analysis***

The plaintiff made claims for lost earnings of 5,254,455,600/= in the plaint but the evidence adduced was quite speculative and was not supported by any evidence. The plaintiff failed to give this court any guidance on what lost for the single contract where they had been rejected. The evidence adduced by the PW2 indicated that a sum of 8,200,000,000/= was the value of the business lost by the plaintiff when he was flagged to Public Procurement and Disposal of Public Assets Authority.

The plaintiff made a claim for an entire quotation of the contract and failed to guide court on how much was supposed to be earned as profit without considering the entire contract sum could not have been profit margin.

The rest of the claims for lost income are also speculative since the plaintiff could not confirm whether company had ever bided for such work.

The court makes the following awards;

1. *This court in the circumstances awards the plaintiff a sum of 200,000,000/= as general damages for lost earnings due to breach of the statutory duty.* 2. *The said award shall carry an interest of 15% per annum from the date of judgment.* 3. *The plaintiff is awarded costs of the suit.*

I so Order.

***Ssekaana Musa***

***Judge***

***This Judgment shall be delivered by the Registrar this……..day of February 2025***