Combined Services Limited v Attorney General of Uganda (Miscellaneous Application 801 of 2022) [2023] UGCommC 246 (7 June 2023)

Full Case Text

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA [COMMERCIAL DIVISION] **MISCELLANEOUS APPLICATION NO. 0801 OF 2022.** (ARISING FROM HIGH COURT COMMERCIAL DIVISION CIVIL SUIT(S) NO. 939 OF 2004, AND CIVIL SUIT NO. 657 OF 2003)

**AND**

# (ARISING FROM MISC. APP. NO. 555 OF 2008 (ARISING OUT OF CIVIL SUIT NO. 657 OF 2003 AND MISC. APP. NO. 596 OF 2009 (ARISING OUT OF **CIVIL SUIT NO. 939 OF 2004)**

## **COMBINED SERVICES LTD:::::::: APPLICANT/JUDGEMENT CREDITOR VERSUS**

ATTORNEY GENERAL OF UGANDA ...: RESPONDENT/JUDGEMENT DEBTOR

### **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI RULING**

This application is brought under Sections 34 and 98 of the Civil Procedure Act Cap 71, Section 33 of the Judicature Act, and Order 52 Rules 1, 2 and 3 of the Civil Procedure Rules S. I 71-1 seeking for declarations and orders that the mode of computation of awards and accrual interest in Civil Suit No. 657 of 2003 and 939 of 2004, and applications arising is a simple interest rates stated in the Judgment/ruling in each case; that the accrual sum, accrual interest and costs in all the cases stood at UGX 2,566,682,864/ as at 2nd January 2014 when the Respondent made payment of UGX 2,000,000,000/; that after offsetting that amount, a balance of UGX 396,826,305/ unpaid which has been accumulating interest since 3rd January 2014; that the judgment

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debtor is indebted in a sum of UGX 1,197,871,843/ being the balance of the decretal sum and accrued interest from 3'd January 2014 to 3 I't May 2022 being the last date of computation; an order compelling the Respondent to pay all the decretal sums, accrual interest and costs, that the Respondent's refusal to compute or pay the applicant is an act of contempt of Court and should be fined to pay UGX 200,000,000/, and costs of the application be provided for.

The Application is supported by the affidavit of Muliisi cedric Irumba, the Managing Director of the ApPlicant'

### Grounds of the aPPlication.

The grounds upon which the application is brought are laid down in the affidavit in support of the application, and are briefly as follows:

That the Applicant/Judgment Creditor successfully filed and prosecuted Civil Suit No. 65':- of 2003 where by Judgment delivered on 2nd September 2009 it was awarded UGX 129.564,968.17l for unpaid certified works at interest rate of 24%o per annum; UGX 162,333,8001 for the value of materials left on site plus interest at 24Yo per annum; UGX 13,818, ll4.8gl for retained money and interest at 8Yo per annum and general damages. That it was also awarded usD 237.112.36 for unpaid certified works plus interest and USD 25,278.g0 for retained money plus interest of 4o/o per annum; and that costs were taxed and allowed at UGX 39,993 ,107 I

Further, that the Applicant filed and successfully prosecuted Civil Suit No. 939 of 2004 wherein judgment dated l4s February 2008 awarded them special damages of USD 11,021 atinterest of 4YoperannumandUSD23,548 at4%oinlerestperannum'general damages of USD 5000 at 4%o interest per .urnum, and costs were allowed at UGX 7,953,5001. That the Respondent filed and successfully prosecuted a counterclaim

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under Civil Suit No. 939 of 2004 where they were awarded special damages or refund of UGX 41,306,4281 at 24yo interest per annum. That costs of Miscellaneous Applications No. 596 of 2009 and No. 555 of 2009 filed by the Respondent were awarded to the Applicant at UGX 4,058,000/ and UGX 5,017,000/ respectively.

That the decrees, orders and certificates were extracted and served upon the Respondent but it has never been fully paid despite several reminders except for payment of UGX 2,000,000,000/ which was made on 2nd January 2014. That the Applicant tried to enforce the awards of Court vide Miscellaneous Applications 648 of 2015 and No. 0811 of 2021, but that both Court declined to issue compelling orders because the balance on decretal sum and interest due were disputed by the Respondent and needed either consent ofthe parties or adjudication. That the Applicant sought the Respondent's input in a meeting through a letter dated l't March 2022 but that the same was ignored.

That the Applicant commissioned Auditors to do technical review of the decrees and orders and they found that by 2nd January 2014 when the Respondent made payment, the total sum owing was UGX 2,566,682,864/, leaving a balance of UGX 396,826,305/ unsettled, which has accumulated to UGX 1,197,871,843/ as at 3l't May 2022. That it isjust and fair that the Application be entertained and granted.

In their affidavit in reply, the Respondent contend that there is a discrepancy in the computation of the sums owing, and that according to their records only UGX 13,679,309.28 remains outstanding after paying the UGX 2,000,000,000/ on 66 February 2014. That the Applicants did not heed to their advert of the desire to pay. That in a previous application by the Applicant for an order of mandamus, the Trial Judge set aside the certificates of order which had been issued against govemment in Civil Suit No. 657 of 2003 and 939 of 2004. They further contend thar another

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previous application No. l04l of 2017 to apply compound interest in the computation was dismissed. They pray that this Application be dismissed.

Only Counsel for the Applicant filed their submissions in support of the Application where they relied on the case of Esero Kasule versus Atlorney General HCMA No. 0688 of 2014 to submit that where Court has awarded interest under Section 26 of the Civil Procedure Act, interest should be counted up to the time of payment and it is paid first before the principal is paid so as to preserve the value of the money as capital and to adequately compensate the Plaintiff.

He added that they have demonstrated that the interest awarded by Court was simple interest rate and that therefore that the outstanding and due principal sum as at 1/2/2014 was UGX 396,826,304.76l and now the sum is at UGX 1,197,871,5381 and continues to eam interest until payment. He prayed that the prayers be granted.

#### REPRESENTATION

The Applicant was represented by lWs MNA Advocates whereas the Respondent was represented by The Attomey General's Chambers.

#### RULING

### a. Declaration on computation being simple interest

The issue is whether the computation by the Applicant is simple interest as had been awarded by the Court or compound interest. Apart from the fact that both take into consideration the principal sum, simple interest distinguishes between the outstanding money owed as principal and interest, and compound interest generally is interest upon interest. Interest is provided for under Secllo n 26 (2) of the Civil Procedure Act thus:

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" llthere and insofar as a decree is for the pawent of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudgedfrom the date ofthe suit to the date ofthe decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinl<s fit. "

The purpose for the award of interest was explained in the case of Tibeingana v Yijay & Another Miscelloneous Couse No. l0 of 2016 where Justice Christopher Madrama Izama cited the case of Tate & Lyle Food and Distribution Ltd v Greater London Council and another P98IJ 3 All ER 716where Forbes J held at page 722tha|:

"I do not think the modern law is that interest is awarded against the Defendant as a punitive measure for having kept the Plaintiff out of his money. I think the principle now recognised is that it is all part of the attempt to achieve restitutio in integrum.... I feel satisfied that in commercial cases the interest is intended to re/lect the rate at which the Plaintiffwould have had to borrow money to supply the place of that which was withheld."

It was for the above reason that the Court had awarded interest, however, in addition to the discrepancies on the accrued amount as at 2nd January 2014 before the Respondent made payment, the Applicant's assertion that their computation is by simple interest cannot be true after the Respondent paid off UGX 2,000,000,000/ in 2014. It is not logical that they are now claiming for UGX 1,197,871,538/ if they had applied simple interest. It must be noted that computation of interest should be guided by the Court order. Annexure B and F to the affidavit in support of the Notice of Motion have the orders on interest made by Court and they were as below.

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For Civil Suit No. 657 of 2003, Court awarded interest of 4%o per annum on the awards in USD and 24%o per annum on the awards therein from I ls January 2001 until payment in full, and interest of 8%o per annum on general damages from the date of judgment until payment in full. For Civil Suit No. 939 of 2004, Court awarded interest on (a) and (b) at a% per annum from I ls August 2000 and 29n November 2001 respectively until payment in full, and interest on (c) above at 4Yo per annum form the date ofjudgment until payment in full.

I have looked at the calculation by both Parties and find that whereas there are some similarities, there are significant variances. I have also looked at the submissions of the Applicant and the authorities cited and I note that interest should not be awarded for unjust enrichment or benefit of one of the parties (See Lawrence Tumusiime V Patrick Idringi Salvado Civil Suit No. 321 of 2018). In addition, the Court of Appeal in Nipunnoratham Bhatia V Crane Bank Ltd CACA No. 75 of 2006 held that:

"lnterest allowed by Court for an amount to be refunded (paid) where there was no agreement for its payment (as is the case in the facts at hand) should be simple interest. "

In the instant case, it is not in dispute that the Court awarded simple interest, however what is in contention is whether the Applicant's computation is based on simple interest. Even if we were to go by the holding in Esero Kasule versus Attorney General (supra), the Applicant did not show how much of the interest and principal had been paid as at 02101/2014 and how much was left. Instead, they went on to keep charging interest of 24oh per annum on the entire balance. Looking at the evidence on record, specifically Annexures A and E, the amounts due as at 2nd January 2014 are as follows:

s-- Total amount due to the Applicant plus accrued interests

=Total decretal sum + total interest accrued

=8 I 0,409,883 + [97 6,902,102 + (104,135 \* I 53 I )]

: UGX 2,130,742,8741=

Plus costs

: 2,130,7 42,87 4 + 53,044,8s7

= UGX 2,183,787,731/=

Less the money due to the Respondent on the Counterclaim plus costs

=Total due {ounterclaim award and costs

: 2,183,7 87,7 3 I - 173,887,629

= UGX 2,009,900,1021

Minus the 2.000.000.000/ paid in 2014

= 2,009,900,102 - 2,000,000,000

## = UGX 9,900,1021

Therefore, I find that as at 02101/2014 when part payment was made, only a balance of UGX 9,900,1021 was left, which is closer to the calculations of the Respondent in Annexure A, except that they did not deduct the 50% ofthe costs awarded to them for the counterclaim from the total amount, which explains why they said the balance was 13 million shillings.

In light of the principle in the Esero Kasule versus Atlorney General (supra), the 2 billion shillings offset all the interest and most of the decretal sum. Therefore, since the

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balance is in UGX, an interest of 24Yo per annum will be applied on it. In addition, since the Applicant's last date of computation was 3l't May 2022 from 02/0ll20l4,the total outstanding amount is UGX 29,689,457/: as at 31't .}vday 2022.

Subsequently, whereas the Applicant's computation may be of simple interest, since there were disparities on the outstanding amount as on02/0112014, their prayer for a declaration that the judgment debtor is indebted in a sum of UGX 1,197 ,87 1,843/ is not granted. Instead, the Respondent is indebted in the sum of UGX 29,689,4571: as shown above (see detailed computation in schedule I attached to this Ruling).

## b. Order compelling Respondent to pay

The Applicant also prayed that the Respondent be compelled to pay the sum of UGX 1,197,871,843/ which they claim is the outstanding decretal sum and accrued interest as at 3l't lll4ay 2022 being the last day of computation. Being that the first prayer failed, it would also follow that the second one fails. However, that notwithstanding and in addition, I would like to make reference to the ruling of my learned brother Justice Mubiru in Combined Services Ltd V The Attorney General & Another Miscellaneous Application No.0811 of 2021 regarding a similar prayer made by the Applicant. He held that for an order of mandamus to be granted, it must be proved that the applicant has a legal right; a corresponding legal duty is imposed on the respondent; that the right and duty is not disputed or doubtful; and that there is no other adequate remedy at law. Before dismissing the application, the Judge held that the Applicant had not fumished evidence to show that the certificate of order was covered in the Govemment budget for that financial year or that they were covered by the Government plan of revenue and expenditure therefore the order would be of no practical value or effect. He also added that the applicant's right was in substantial dispute as the Respondent contended that the Applicant was only entitled to a sum of UGX 13,679,327.77/.

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Similarly, in the instant application, whereas this Court has now determined the amount due, the Applicant has not furnished evidence to show that the certificate of order is covered in the Government budget and plan or revenue and expenditure in financial year 2022/2023 therefore an order compelling the Respondent to pay the outstanding sum cannot be made. In addition, even Annexure C to the affidavit in reply, the public notice of 6th September 2021 only has UGX 13,679,328 as the amount which was verified for payment. Therefore, the Respondent is advised to plan accordingly to have the debt settled.

In the premises, the Application is allowed with the following terms:

- 1. The Respondent is indebted to the Applicant in the sum of UGX 9,900,102/ plus UGX 19,789,354.57/ totaling UGX 29,689,457/ $=$ . - 2. Each party to bear their costs.

Ombitative

HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................

<OUEOULE I

| Awards | | rate used USD | | UGX | INTEREST RATE | |-----------------------------------------|---------------|---------------|----------|-------------|---------------| | civil suit No.657 0f 2003 | | | | | | | Uncertifed works | | | | | | | 43r,883,227 | | | | | | | 70% | 302,318,259 | 2,044 | L47 ,905 | | 4% | | 30% | 129,564,968 | | | 129,564,968 | 24% | | | | | | | | | value of materials left | 162,333,800 | | | 162,333,800 | 24Yo | | | | | | | | | RETAINED MONEY | | | | | | | 46,043,716 | | | | | | | TOYo | 32,230,60L.41 | 2,044 | 75,772 | | 4Yo | | 30% | 13,813,114.89 | | | 13,813,115 | 24% | | general damages | 70,000,000 | | | 70,000,000 | 8% | | | | | | | | | | | | | | | | civil suit No.939 0f 2004 | | | | | | | unpaid money | 27,894,15L | 2,537 | 11,021 | | 4% | | money due | 59,s99,988 | 2,53! | 23,548 | | 4Yo | | general damaSes | 12,655,000 | 2,53r | s,000 | | 4Yo | | Total | 810,409,883 | | | | | | | | | | | | | Counterclaim | | | | | | | | 47,306,428 | | | 47,306,428 | 24% | | Recovery of advance | 3,976,7 sO | | | | | | Costs | | | | | | | | | | | | | | Costs | | | | | | | civil suit No. 939/2OO4 | | | | | | | 7,953,500 | | | | | | | 5OYo | 3,976,750 | | | | | | civil suit No. 657 ZOO3 | 39,993,107 | | | | | | Misc. App No. 555 of 2008 | 5,017,000 | | | | | | Misc. App No. 596 of 2009 | 4,058,000 | | | | | | | | | | | | | Current outstanding as at 31st May 2022 | | | | | | | Balance afler O2 O7/2O14 | 9,900,102 | | | 9,900,102 | 24% | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | | |

| | EFFECTIVE DATE OF | | ACCRUED INTEREST | ACCRUED INTEREST | | |--------------------|--------------------------|--------------------|-------------------------|-------------------------|--------------| | INTEREST PA | INTEREST | NO. OF DAYS | (UGX) | (USD) | | | | | | | | | | | | | | | | | 5,916.21 | 11/01/2001 | 4,739 | | 76,813.46 | | | 31,095,592.36 | 11/01/2001 | 4,739 | 403,731,540 | | | | 38,960,112.00 | 11/01/2001 | 4,739 | 505,841,016 | | | | | | | | | | | | | | | | | | | | | | | | | 630.88 | 11/01/2001 | 4,739 | | 8,191.04 | | | 3,315,147.57 | 11/01/2001 | 4,739 | 43,042,423 | | | | 5,600,000.00 | 02/09/2009 | 1,583 | 24,287,123 | | | | | | | | | | | | | | | | | | | | | | | | | 440.84 | 29/11/2001 | 4,417 | | 5,334.77 | | | 941.92 | 11/08/2000 | 4,890 | | 12,619.15 | | | 200.00 | 14/02/2008 | 2,147 | | 1,176.44 | | | | | | 976,902,102 | 104,135 | | | | | | | | | | | | | | | | | 9,913,542.72 | 15/01/2001 | 4,735 | 128,604,451 | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | 2,376,024.48 | 02/01/2014 | 3,040 | 19,789,354.57 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 July 20 | | | | | | | | | | | | | | | | | | | | | |

$\mathbf{X} = \begin{bmatrix} \mathbf{X} \\ \mathbf{X} \\ \mathbf{Y} \end{bmatrix}$

| Rate as at Total 14 | OZ OT 2O oustanding in USD | Total outstanding | |------------------------|-------------------------------|-----------------------------------------| | 2,531- | 224,7 t9 | 568,870,828 533,296,s08 | | | | 668,L74,8t6 | | 2,537 | 2 3,963 | 50,661,821 56,855,538 94,287,123 | | | | | | 2,537 2,s31 | 16,356 36,767 | 47,404,299 91,556,410 | | 2,537 | 6,176 | 15,635,530 | | | | 2,730,742,874 | | | 128,604,457 | L69,gLO,a79 t,976,750 t73,887,629 | | | | 3,976,750 39,993,107 5,017,000 |

^y ()

29,689,457

4,058,000 5?,O44,857