Chribson (U) Ltd v Luwero District Local Government (HCT-00-CC-CS 918 of 2004) [2006] UGCommC 47 (30 October 2006)

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{\insrsid4989643 \chftnsepc \par }}\sectd \linex0\endnhere\sectlinegrid360\sectdefaultcl\sectrsid11623221\sftnbj {\footer \pard\plain \s15\ql \li0\ri0\widctlpar\tqc\tx4320\tqr\tx8640\pvpara\phmrg\posxc\posy0\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid4198775 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\field{\*\fldinst {\cs16\insrsid16275489 PAGE }}{\fldrslt {\cs16\lang1024\langfe1024\noproof\insrsid14434180 5}}}{\cs16\insrsid16275489 \par }\pard \s15\ql \li0\ri0\widctlpar\tqc\tx4320\tqr\tx8640\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 {\insrsid16275489 \par }}{\*\pnseclvl1\pnucrm\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl2\pnucltr\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl3\pndec\pnstart1\pnindent720\pnhang {\pntxta .}}{\*\pnseclvl4\pnlcltr\pnstart1\pnindent720\pnhang {\pntxta )}} {\*\pnseclvl5\pndec\pnstart1\pnindent720\pnhang {\pntxtb (}{\pntxta )}}{\*\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 \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\insrsid5464330\charrsid10687189 \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 THE REPUBLIC OF UGANDA}{\b\insrsid1136281\charrsid10687189 \par }{\b\insrsid11623221\charrsid10687189 \par IN THE HIGH COURT OF UGANDA AT KAMPALA \par (COMMERCIAL COURT DIVISION) \par \par HCT-00-CC-CS-0918-2004 \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 \par CHRIBSON (U) LTD :::::::::::::::::::::::::::::::::: PLAINTIFF}{\insrsid11623221\charrsid10687189 \par \par }\pard \qc \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 VERSUS \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 \par }\pard \ql \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 LUWERO DISTRICT LOCAL \par GOVERNMENT ::::::::::::::::::::::::::::::::::::: DEFENDANT \par }\pard \qj \li0\ri0\sl360\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10687189 {\b\insrsid11623221\charrsid10687189 \par \par BEFORE: }{\b\insrsid11091566\charrsid10687189 }{\b\ul\insrsid11623221\charrsid10687189 THE HONOURABLE MR. JUSTICE YOROKAMU BAMWINE \par \par J U D G M E N T: \par }{\b\insrsid11623221\charrsid10687189 \par }{\insrsid11623221\charrsid10687189 The plaintiff\rquote s claim against the defendant is for payment of Shs.37,228,745-, general damages for refusal and/or neglect to pay, interest as well as costs of the suit. }{\insrsid10687189\charrsid10687189 It is} {\insrsid11623221\charrsid10687189 the plaintiff\rquote s case that the defendant contracted them to execute road works in Luwero; that the defendant made part payment; and that the defendant did not meet its payment of the VAT obligation}{ \insrsid1580815\charrsid10687189 under the contract.}{\insrsid11623221\charrsid10687189 \par }{\insrsid9327688\charrsid10687189 \par The defendant in its written statement of Defence denied liability and contended that the contractual project was the exclusive responsibility of African Development Bank, ADB, through the Ministry of Local Government. \par \par There are 2 issues for determination: \par 1.\tab Whether the defendant is liable to make good the claim. \par 2.\tab Remedies, if any. \par \par }{\ul\insrsid9327688\charrsid10687189 Counsel}{\insrsid9327688\charrsid10687189 : \par Mr. Muyonjo for the plaintiff. \par Mr. Turyakira }{\insrsid11231828\charrsid10687189 and Anthony Ahimbisibwe }{\insrsid9327688\charrsid10687189 for the defendant. \par \par PW1 Christopher Mujulwa is the Managing Director (M. D) of the plai ntiff company. According to him, the plaintiff won a tender in 1997 for spot improvement of a road known as Katikamu-Wankanya-Kikyusa-Bamugolode. A contract was signed between the plaintiff and the defendant. Thereafter, the plaintiff carried out the w o rks set out in the contract. The works were approved and payments authorized. It is the evidence of Mr. Mujulwa that after the completion of the works, the plaintiff was given a final certificate No. 4. This certificate is on record as P. Exh. V1. It is the unchallenged evidence of the plaintiff that it was under paid in the sum of Shs.10}{\insrsid10687189\charrsid10687189 , 000,001}{\insrsid9327688\charrsid10687189 - and the VAT component of Shs.10}{\insrsid10687189\charrsid10687189 , 024,172}{ \insrsid9327688\charrsid10687189 - was never paid. This brings the Total default on this certificate to Shs.20}{\insrsid10687189\charrsid10687189 , 024,173}{\insrsid9327688\charrsid10687189 -. \par \par PW1 further told Court tha t the plaintiff also won a tender for a road known as Bamugolode-Kazwama-Nakasongola. Again, the plaintiff carried out the contracted road works the subject matter of certificate No. 5, P. Exh. V11. Under this certificate, it was under paid in the sum o f Shs.8}{\insrsid10687189\charrsid10687189 , 602,286}{\insrsid9327688\charrsid10687189 -. In addition a VAT component in the s}{\insrsid11231828\charrsid10687189 a}{\insrsid9327688\charrsid10687189 m}{\insrsid11231828\charrsid10687189 e}{ \insrsid9327688\charrsid10687189 amount was not paid. The plaintiff\rquote s claim on this certificate is therefore Shs.17}{\insrsid10687189\charrsid10687189 , 204,572}{\insrsid9327688\charrsid10687189 -. There is evidence that the plaintiff demanded for payment. To-date it has not been paid.}{\insrsid13634009\charrsid10687189 Hence the claim of Shs.37}{\insrsid10687189\charrsid10687189 , 228,745}{\insrsid13634009\charrsid10687189 - herein.}{ \insrsid9327688\charrsid10687189 \par }{\insrsid13634009\charrsid10687189 \par PW1 was asked to explain the VAT component in the plaintiff\rquote s claim. He said that VAT is a payment which the plaintiff had to remit to URA. However, because the defendant did not pay to the plaintiff the said VAT compon ent of the contract, it remains due and owing from them to the tax body. \par }{\insrsid10174853\charrsid10687189 \par Court is satisfied by that explanation. There is evidence that the plaintiff executed the civil works as per the contract to the satisfaction of the defendant. The issuance of certificates in its favour by the defendant }{ \insrsid11231828\charrsid10687189 removes any doubt}{\insrsid10174853\charrsid10687189 about that. The issue as I see it is whether the defendant fully paid the plaintiff for the works. \par \par I have very carefully addressed my mind to the plaintiff\rquote s claim. The defendant had hoped to lead evidence }{\insrsid4017140\charrsid10687189 of 3}{\insrsid10174853\charrsid10687189 witnesses on the matter. It ended up calling only one witness, DW1 Ka}{\insrsid16522011\charrsid10687189 r}{\insrsid10174853\charrsid10687189 uma Kagina, an engineer with the Ministry of Works and Transport. From the testimony of this witness, he was in charge of co-ordinating programmes for maintenance of di stricts and urban community access roads in the country. He stated that the defendant was one of the beneficiaries to the project. \par \par He outlined the procedure of accessing the funds by the beneficiary districts as follows: upon the team of consultants bein g satisfied about the scope of works, documentation would be prepared. These documents would then be sent to ADB with recommendation of funding. If satisfied, ADB would then issue a certificate of NO OBJECTION which would trigger off the release by them

of sums equal to the contract sum stated in the bid. It is the evidence of this very defence witness that money would then be released to the District account of the project. Upon receipt of the money by the District, the same (the District) would then proceed to enter the contract with the bidder. In my view, the procedure was fair and easy enough to follow. Each completed certificate would then be paid off from this account fully controlled by the District, the defendant in this case. }{ \insrsid792815\charrsid10687189 T}{\insrsid10174853\charrsid10687189 he issue of the Luwero contracts w}{\insrsid792815\charrsid10687189 as}{\insrsid10174853\charrsid10687189 put to Mr. Kagina }{\insrsid792815\charrsid10687189 who }{ \insrsid10174853\charrsid10687189 testified that at the end of the programme he saw correspondence from the plaintiff complaining that it had not been paid some money. That he wrote back t}{\insrsid792815\charrsid10687189 o}{ \insrsid10174853\charrsid10687189 the District }{\insrsid792815\charrsid10687189 advising them to}{\insrsid10174853\charrsid10687189 handle the matter, inclu ding the payment of the VAT component. His letter of 14/6/2002 is on record as P. Exh. 111. In view of this evidence which was clearly favourable to the plaintiff,}{\insrsid3355875\charrsid10687189 the witness was never cross-examined }{ \insrsid16275489\charrsid10687189 and }{\insrsid3355875\charrsid10687189 from that point, the defendant started dilly darling with its remaining prospective witnesses until the Court acted under 0.17 r 4 to close its case.}{ \insrsid10174853\charrsid10687189 \par }{\insrsid3355875\charrsid10687189 \par In a letter dated 19/4/2002 the defendant\rquote s CAO wrote to the PS Ministry of Works, Housing and Communication confirming that work had been done to the sat isfaction of the defendant. He pointed out what had been paid and what had not been paid and requested the addressee to attend to the plaintiff\rquote s complaint of non-payment. The Permanent Secretary in his wisdom advised the CAO, and therefore the defendant , that the district should identify, find a source to clear the outstanding debt since the ADB project had ended after all funds had been disbursed to the District. \par \par From the evidence of the plaintiff\rquote s Managing Director and that of DW1 Kagina,}{\insrsid4329126\charrsid10687189 the man behind the co-ordination of the project at the national level, the defendant has no plausible defence to the plaintiff\rquote s claim. The plaintiff has proved to the satisfaction of the Court on the balance of probabilities that it is entitled to payment of Shs.37}{\insrsid10687189\charrsid10687189 , 228,745}{\insrsid4329126\charrsid10687189 -. I so find.}{ \insrsid3355875\charrsid10687189 \par }{\insrsid5185649\charrsid10687189 \par As regards the plaintiff\rquote s claim for general damages, Court has been invited to consider that these works were completed almost 10 years ago and the fact that ADB remitted the whole contractual sums to the defendant. That the defe ndant for some reason diverted the money and thus brought fiscal strain to bear on the plaintiff. }{\insrsid4017140\charrsid10687189 Counsel has}{\insrsid5185649\charrsid10687189 proposed to me a sum of Shs.15m as a reasonable award of general damages. Counsel for the defendant filed no submissions and therefore made no p roposal. Certain factors must be considered before damages can be calculated. One such factor is the role of the injured party following the breach of the contract: he is expected to do what he can to look after his own interest. The injured party must in other words mitigate his loss. \par \par In the instant case, it is true that the payments accrued to the plaintiff in the late nineties. From the pleadings, Court}{\insrsid3557308\charrsid10687189 is able to tell that there were negotiations between the parties on the way forward for a long ti me. In the end, the negotiations bore no fruit and hence this case. In my view, the plaintiff did not have to wait till November, 2004 to file the suit. It could have done so earlier to mitigate the loss which its officers are now complaining about. D oing the best I can, I consider an award in the sum of Shs.3}{\insrsid10687189\charrsid10687189 , 000,000}{\insrsid3557308\charrsid10687189 - (three million only) reasonable. It is awarded to the plaintiff.}{\insrsid5185649\charrsid10687189 \par }{\insrsid3557308\charrsid10687189 \par It is submitted for the plaintiff that since the defendant has without justification retained the plaintiff\rquote s money for all this period of about 10 years, the plaintiff is entitled to interest at commercial rate, since the plaintiff is a company engaged in business for profit. It is prayed that interest be paid from 2001. In a case of this nature,}{ \insrsid4793059\charrsid10687189 interest is a discretio nary remedy. In equity, interest is awarded whenever a wrong doer deprives the other of money for which he needs to use in his business. It is plain herein that the plaintiff should be compensated for the loss thereby occasioned to its business. It is n ot enough that the money withheld from it by the defendant is by these presents to be replaced. For this reason, the plaintiff shall be compensated by an award of interest at the rate of 21% per annum from the date of filing the suit till payment in full . The plaintiff shall also have the costs of the suit.}{\insrsid3557308\charrsid10687189 \par }{\insrsid4793059\charrsid10687189 \par In the final result, judgment is entered for the plaintiff against the defendant on the following terms: \par (i).\tab Special damages: Ug. Shs.37}{\insrsid10687189\charrsid10687189 , 228,745}{\insrsid4793059\charrsid10687189 - (Thirty seven million two hundred twenty \tab eight thousand seven hundred forty five only). \par (ii).\tab General damages: Ug. Shs.3}{\insrsid10687189\charrsid10687189 , 000,000}{\insrsid4793059\charrsid10687189 - (Three million only). \par (iii).\tab Interest on (i) above at the rate of 21% per annum from the date of filing \tab (17/11/2004) till payment in full and on (ii) above at the same rate per annum \tab from the date of judgment till payment in full. \par (iv).\tab Costs of the suit. \par \par }{\insrsid4087743\charrsid10687189 \par }{\insrsid4793059\charrsid10687189 Yorokamu Bamwine \par }{\b\insrsid4793059\charrsid10687189 J U D G E \par }{\insrsid4793059\charrsid10687189 31/10/2006 \par \par 31/10/2006 \par Mr. Muyonjo for plaintiff. \par Plaintiff\rquote s Managing Director present. \par \par }{\b\insrsid4793059\charrsid10687189 Court:}{\insrsid4793059\charrsid10687189 Judgment delivered. \par \par Yorokamu Bamwine \par }{\b\insrsid4793059\charrsid10687189 J U D G E \par }{\insrsid4793059\charrsid10687189 31/10/2006 \par }}