COSCO Shipping LINES (Kenya) Limited v Synthomer Trading Limited & 3 Others (Civil Suit 107 of 2023) [2024] UGHC 1082 (4 December 2024)

Full Case Text

# THE REPUBLIC OF UGANDA, IN THE HIGH COURT OF UGANDA HOLDEN AT MUKONO **CIVIL SUIT NO. 107 OF 2023**

COSCO SHIPPING LINES (KENYA) LIMITED ::::::::::::::::::::::::::::::::: PLAINTIFF

#### **VERSUS**

- 1. SYNTHOMER TRADING LIMITED - 2. UGANDA REVENUE AUTHORITY - 3. LIBERTY ICD LIMITED - 4. RAJEM CLEARING AND FORWARDING LIMITED ::::::::::: DEFENDANTS

## BEFORE HON. LADY JUSTICE FLORENCE NAKACHWA

## **JUDGMENT**

### **Background**

- 1. On 19th September, 2023, the 1st Defendant made representations to the Plaintiff as the rightful consignee of cargo goods shipped by Ming Yang Solar Co. Ltd and presented a bill of lading No. OOLU8894674950 to the Plaintiff as a precondition for the release of goods in five containers to wit: TRHU4316260, DFSU7455047, TRHU5397712, TRHU7276670 and OOCU8383761. The Plaintiff upon receipt of the said bill of lading, released the said cargo goods to the 1st Defendant. - 2. On or about 25th September, 2023, the Plaintiff received information from Ming Yang shipper that it had not released any bill of lading to the 1st Defendant under any circumstances and still possesses the full set of the original bill of lading No. OOLU8894674950. Following this revelation, the Plaintiff's workmen and officials realized that the bill of lading that had been

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presented by the 1st Defendant through its authorized agent Hellas Uganda Limited is unauthentic and a forgery.

3. The Plaintiff acted on that new information and reported the matter to both the Kenyan and Ugandan police vide O. B No. 31/25/9/2023 and O. B No. SDREF: 21/25/09/2023. The Plaintiff engaged its legal counsel in Kenya in that regard and recovered four containers to wit: TRHU4316260, DFSU7455047, TRHU5397712 and TRHU7276670. That container No. OOCU8383761 was enrooted to Uganda and warehoused at Liberty ICD in Namanve, Mukono District, hence this suit.

## The suit

- 4. The Plaintiff filed this suit against the Defendants for: - (a) a declaration that the 1st Defendant is illegally possessing stolen cargo in a container form number OOCU8383761: - (b) special and general damages; - (c) interest; - (d) an order of permanent injunction against the 1st Defendant restraining it, its employees, its agents, officers, assignees or anyone howsoever claiming through it or under it from collecting, accessing and or otherwise interfering and or dealing with the goods under the Bill of Lading No. OOLU8894674950; - (e)an order of permanent injunction against the $2^{nd}$ , $3^{rd}$ and $4^{th}$ Defendants restraining them from releasing the goods under the Bill of Lading OOLU8894674950 to the 1st Defendant or any of its authorized agents;

- (f) a mandatory injunction order compelling the $2^{nd}$ , $3^{rd}$ and $4^{th}$ Defendants to release the goods under the Bill of Lading No. OOLU8894674950 to the Plaintiff for re-export; - (g) costs and interests of the suit; and - (h) any other relief the court shall deem fit to grant. - 5. The 1st Defendant never filed a written statement of defence despite effective service of court process. The 2nd Defendant filed its written statement of defence on 10th November, 2023, denying the allegation and claiming that the plaint does not disclose any cause of action against it. It further contended that it has no legal ownership of the consignment which is the subject matter of this suit and neither is it in possession of the alleged stolen cargo and that the cargo referred to has never been entered in the $2nd$ Defendant's ASYCUDA system as required by law. That the $2nd$ Defendant was prevented from dispensing its mandate by a court order in HCMA 152/2023-COSCO Shipping Lines (Kenya) Ltd v. Synthomer Trading Ltd & Others. - 6. The 3rd Defendant filed its written statement of defence on 23rd April, 2024, and averred that it is an inland container depot engaged in the business of cargo handling in Uganda in particular, safe storage of cargo and other merchandise pending URA clearance. It admitted that the suit container is in its custody but contended that on 11th October, 2023, it received the suit container vide OOCU8383761 for storage pending clearance of Uganda Revenue Authority (URA) taxes from Synthomer Trading Limited, the 1st Defendant.

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- 7. The 4th Defendant filed its written statement of defence and a counter claim against the Plaintiff on 7th November, 2023, making no admission to the allegation against it and contending that it shall raise a preliminary objection to the effect that the plaint does not disclose any cause of action against it. It added that it was approached by Hellas Uganda Limited to deliver container No. OOCU8383761 to Uganda relying on a delivery order issued by the plaintiff company. That its charges for the delivery of the container amounting to a sum of USD. 30,000 has never been paid and as such counter claims for the said sum from the Plaintiff which issued a delivery order. - 8. Despite effective service of hearing notices on the 1st and 4th Defendants on several occasions, they never turned up for the hearing of this case making it to proceed ex-parte against them. During the hearing of the suit, the Plaintiff was represented by Counsel Joel Phillip Olweny from M/s Adsum Advocates. The 2nd Defendant was represented by Counsel Eseza Victoria Sendege and Counsel Patricia Ndagire both from the 2nd Defendant's Department of Legal Services and Board Affairs. Counsel George Kintu from M/s George Kintu & Co. Advocates appeared for the 3rd Defendant. - 9. The Plaintiff and the 3rd Defendant presented before court one (1) witness each while the 2nd Defendant did not present any witness. Counsel for the Plaintiff, the 2nd and 3rd Defendants filed the parties' respective written submissions. The Plaintiff's counsel also filed submissions in rejoinder to the $2^{nd}$ and $3^{rd}$ Defendants' submissions.

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The 2nd Defendant raised a preliminary point of law to the effect that $10.$ the plaint does not disclose a cause of action against the $2nd$ Defendant. Counsel relied on the case of Ismail Serugo v. Kampala City Council & Anor. - Supreme Court Constitutional Appeal No. 2 of 1998. Counsel argued that there is no statement in the plaint or evidence of any form that points to the 2nd Defendant taking part in any illegal activities together with the 1st Defendant or in its own capacity. That the Plaintiff has not satisfied the third element that the 2nd Defendant is liable for violation of the Plaintiff's right. The 2nd Defendant's counsel prayed that all the claims against the 2nd Defendant be dismissed with costs to the $2nd$ Defendant.

In reply, the Plaintiff's counsel argued that the averments of the 2nd $11.$ Defendant's counsel are misconceived as there is undoubtedly a cause of action. That it is evident from the $2^{nd}$ Defendant's pleading that the $2^{nd}$ Defendant is bent on collecting taxes from whoever the court pronounces as the owner of the cargo consignment. The Plaintiff's counsel argued that it has always been the Plaintiff's case that the cargo consignment doesn't and should not attract any taxes in the circumstances as it isn't for domestic use but for re-export. That PW1's testimony confirms that the duty of the Plaintiff is only to re-export the goods to the original port of entry to wit, Mombasa and the other duties lie with the shipper. That the contention as to whether or not taxes are collectable by the 2nd Defendant clearly import that an issue has been created that directly affects the rights and obligations of the Plaintiff. That there is a potential violation of the Plaintiff's rights by the 2nd Defendant who is seeking to unjustly collect taxes from the Plaintiff without just cause.

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- Counsel further argued that during the locus visit at the premises of $12.$ the $3rd$ Defendant, officials of the $2nd$ Defendant stated that when goods initially enter the warehouse, the system generates an IM7 that usually tallies with the T1 from the original port of entry. That they further stated that if goods are assessed for tax purposes upon request by the consignee, then an IM4 is generated, but if they are for re-export purposes then a form EX8 is system generated. - Counsel claimed that the instant cargo consignment falls under EX8 $13.$ and is appropriate for re-export considering that it is now established that the original consignees, the 1st Defendant, had not paid for the consignment or made any effort to have the goods cleared for tax purposes. That in that regard the consignment ought to be re-exported back to the port of origin pending further directions or instructions from the shipper. Counsel contended that there is a cause of action made out against the 2nd Defendant who is seeking to unjustly benefit by collecting illegal taxes from the Plaintiff.

#### **Court's consideration**

- A cause of action was defined in the case of **Read v. Brown (1888)** $14.$ 22 QBD 128 at page 131 as "every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court." - Under Order 7 rule 11 (a) of the Civil Procedure Rules, S. I 71-1 it is 15. stated that a plaint may be rejected by the court if it does not disclose a

cause of action. In Auto Garage v. Motokov (No.3) [1971] E. A 514 at page 519 Spry, V-P said:

"I think the plaint may disclose a cause of action even though it omits some fact which the rules require it to contain and which must be pleaded before the plaintiff can succeed in the suit. In Cottar v. **Attorney General of Kenya (1938) 5 E. A. C. A.** 18 it was said by Sir Joseph Sheridan, CJ. that "what is important in considering whether a cause of action is revealed by the pleadings is the question as to what right has been violated". In addition, of course, the plaintiff must appear as a person aggrieved by the violation of the right and the defendant as the person who is liable. 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."

In Kapeka Coffee Works Ltd v. NPART, CACA No.3 of 2000 the 16. Court of Appeal held that:

> "In determining whether a plaint discloses a cause of action, the court must look at only the plaint and its annexures if any and nowhere else."

In deciding whether or not a suit discloses a cause of action, the court 17. examines only the plaint and any attachments to it and assumes that the facts alleged in the plaint are true. This was the position of the law in the

case of **Attorney General v. Oluoch (1972) EA.392** following the decision in Jeroj Shariff & Co v. Chotai Family Stores (1960) EA 374. Therefore, in this exercise, the court examines the plaint only and does not consider the written statement of defence. Order 7 rule 11 of the Civil Procedure Rules, cited above can only be invoked when the facts in the plaint are so clear as to require no evidence.

18. In the instant case, it is clear from the plaint that other than the prayer for permanent injunction, there are no facts or claim pleaded against the $2nd$ Defendant. I agree with the $2nd$ Defendant's counsel that there is no cause of action stated in the plaint against the 2nd Defendant. Even if the 2nd Defendant was not included in the plaint, it would still be bound by any court order. Hence, the preliminary objection is hereby upheld.

## Issues

The issues for determination by this court are as follows:

- 1. Whether the 1st Defendant's bill of lading is a forgery; - 2. Whether the 1st Defendant is in possession of stolen cargo; and - 3. What remedies are available to the parties? - It is an established legal principle in civil matters that he or she who 19. alleges must prove his or her allegation to the satisfaction of the trial court. The standard of proof required is proof by the plaintiff on a balance of probability. This principle is stipulated under sections 101 and 103 of the Evidence Act, Cap. 8. Section 101 of the Evidence Act states thus:

"Whoever desires any court to give 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. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person."

Section 103 of the Evidence Act provides that; $20.$ "The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."

In the case of Miller v. Minister of Pensions [1947]2 All ER $21.$ **372.** Lord Denning observed that:

> "The degree is well settled. It must carry a reasonable degree of probability but not too high as is required in a criminal case. If the evidence is such that the tribunal can say, we think it more probable than not, the burden of proof is discharged but if the probabilities are equal, it is not."

In consideration of the above legal principle, I will proceed to 22. determine the 1st and 2nd issues jointly since the resolution of both lead to the same conclusion.

## **Issues:**

- 1. Whether the 1st Defendant's bill of lading is a forgery; and - 2. Whether the 1st Defendant is in possession of stolen cargo - The Plaintiff's counsel submitted that PW1's largely unchallenged $23.$ witness statement, exhibits PEx1 and PEx4 show that the 1st and 4th Defendants possessed a counterfeit bill of lading. Counsel submitted that

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PEx4 specifically reveals that the shipper of the cargo consignment Mingyang Solar Co. Ltd had not released the original set of bill of lading to the 1st Defendant or any one as intimated. That when the matter was brought to the attention of the 4th Defendant, exhibit PEx8 reveals that the 4th Defendant stated that the 1st Defendant's representatives vanished. The Plaintiff's counsel submitted that the overwhelming evidence on record shows that the 1st Defendant was in possession of counterfeit documents at the time they were presented and was therefore in possession of a stolen consignment of goods. Counsel cited the case of Rahima Nagitta & 2 Others v. Richard Bukenya & 3 Others, HCCS No. 389 of 2010.

- The Plaintiff's counsel argued that the fact that the 1st Defendant $24.$ never possessed the genuine bill of lading directly imports that it had no title to the consignment of goods in container number OOCU8383761 which is the subject of this proceedings. That an agency can be created in emergency situations so as to prevent loss of cargo. That in the instant case the circumstances revealed a crisis of inadvertence on the Plaintiff's part that necessitated quick and expeditious intervention for and on behalf of the disclosed principal Mingyang Solar Co. Ltd. Counsel invited this court to find that the $1^{st}$ and $2^{nd}$ issues have been discharged. - In opposition, it was argued for the $2^{nd}$ Defendant that the $1^{st}$ $25.$ Defendant is the rightful owner of the suit goods in container No. OOCU8383761, by virtue of the bill of lading, a title document which confers ownership and possessory rights to goods described therein. The 2nd Defendant's counsel relied on the cases of Equinox Global Trading v.

Panaphina HCCS No. 570 of 1999 and Fred Kamanda v. Uganda Commercial Bank, SCCA 17 of 1995.

- That it is evident that a bill of lading is a document of title and 26. therefore it is prudent to determine the authenticity of the bill of lading provided by the 1st Defendant to facilitate entry into the 2nd Defendant's ASYCUDA system. That the 1st Defendant presented a bill of lading to the $2nd$ Defendant to facilitate entry of the cargo into ASYCUDA as required by law - The 2nd Defendant's counsel submitted that whereas PW1 states that $\overline{27}$ the shipper of the cargo is still in possession of the original bill of lading, no tangible evidence has been provided to support this averment other than an email whose author could not be verified. Additionally, the 2nd Defendant's counsel claimed that while the Plaintiff stated that the bill of lading presented by the 1st Defendant is a forgery, no genuine copy of the bill of lading has been presented to this honourable court. - The 3rd Defendant's counsel submitted that the Plaintiff has not 28. discharged the burden of proof required to prove to this honourable court that the bill of lading in possession of the 1st Defendant is not genuine. Counsel prayed that this honourable court declares the 1st Defendant as the rightful owner of the goods therein and that the same be entered in ASYCUDA and all applicable taxes paid. - For the 3rd Defendant, it was contended that the 3rd Defendant is a 29. nominal party to this suit, which merely has the custody of the suit container

and willing to abide with the decision of court. That on the 11th day of October, 2023, the 3rd Defendant received the suit container vide No. 00CU8383761 for storage pending clearance of Uganda Revenue Authority (URA) taxes from the agents of Synthomer Trading Limited, the 1st Defendant. That the suit container was registered in the Uganda Revenue Authority (URA) system and the same contains 20 packages of solar panels.

- The $3rd$ Defendant's counsel submitted however, that before 30. clearance of taxes by the 1st Defendant, the 3rd Defendant received directives from CID Headquarters Kibuli, Interpol Uganda and Kenya that the suit container is a subject of fraud investigations and should not be released. That shortly thereafter, court issued an interim order prohibiting the 3rd Defendant from releasing the suit container to the 1st Defendant. Counsel stated that the 3rd Defendant filed its written statement of defence contending that it has no interest in the suit container save for storage charges and costs. That ever since this matter was filed, the 1st Defendant, Synthomer Trading Limited has never appeared at Liberty ICD Limited to claim for the suit container. That since the 1st Defendant has never appeared to present its documents of ownership (original bill of lading) to URA for tax assessment and thereafter pay the imposed taxes, considering the prevailing circumstances, this imputes fraud and forgery of the bill of lading. - In rejoinder to the issue of ownership of the suit container, the $31.$ Plaintiff's counsel stated that it is not the burden of the 2nd Defendant to argue the case for the 1st Defendant as to the existence of a genuine bill of

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lading or lack of it, and more-so to state that the bill of lading was presented to them. That none of these facts were pleaded by the 2nd Defendant in its written statement of defence and is not only a departure from their pleadings but also evidence from the Bar. That the 2nd Defendant has never produced any witness to confirm that the bill of lading is genuine or was presented to it as alleged.

- That for the 2nd Defendant to state facts that were not earlier pleaded 32. is an ambush, illegal and in bad faith. Counsel invited this court to find for the Plaintiff by ignoring the 2nd Defendant's submissions on the issue of declaration of ownership of the suit container. - The Plaintiff's counsel added in rejoinder that exhibit PEx4 is a letter 33. from Ming Yang Solar Co. Ltd the shipper and is not a data message as defined. That this was confirmed by PW1 that the letter was intimated to the Plaintiff by the shipper and it contained the key aspects of the cargo manifest to wit; shipper, shipping line, the consignee and the container numbers. That this testimony of the letter was never challenged by the 2nd Defendant. Counsel contended that exhibit PEx4 is authentic as all the contents were confirmed by the Plaintiff's witness under examination. - That the corresponding letters like exhibit PEx7, authored by the 34. Plaintiff's firm of advocates in Kenya requesting Kenya Revenue Authority to hold the cargo consignment pending investigations by Kenya police, corroborates and confirms the content of exhibit PEx4 that the bill of lading was fake, a forgery and a counterfeit. Counsel prayed that this honourable court finds that exhibit PEx1 is unauthenticated and does not entitle the 1st

Defendant to the cargo consignment and it is therefore not the owner of the goods in question.

The Plaintiff's counsel asserted that in this particular crisis of loss of $35.$ the cargo wrongly released, the Plaintiff was the defacto agent of the disclosed principal Ming Yang Solar Co. Ltd and rightly filed this action to recover these goods for and on its behalf.

## **Court's consideration**

- A bill of lading is a legally binding document that provides the carrier 36. and the shipper with all the necessary details to accurately process a shipment. It is a legal document issued by a carrier (transportation company) to a shipper that details the type, quantity, and destination of the goods being carried. It is a receipt for the shipped products and represents the agreed terms and conditions for the transportation of the goods. - In the case of Equinox Global Trading Company Limited v. 37. Panalpina Uganda Limited HCCS 1298 of 1999, Justice Stella Arach Amoko (RIP) held that in international law, a bill of lading is a document acknowledging the shipment of the consignor's goods for carriage by sea. It operates as the receipt of the goods; it summarizes the terms of the contract of carriage, and acts as a document of title of the goods. - The meaning of a bill of lading is stated in Halsbury's Laws of 38. England 4th Edition, Volume 41 paragraph 946 as follows:

"A bill of lading is a receipt for goods delivered to and received by a ship, signed by the person who contracts to carry them, or his agent,

and evidencing the terms of the contract of carriage under which the goods have been so delivered and received. During the period of transit and voyage the bill of lading is recognised by the law merchant as the symbol of the goods described in it, and the endorsement and delivery of the bill of lading operates as a symbolic delivery of the goods. Property in the goods passes by such indorsement whenever it is the intention of the parties that the property should pass, just as in similar circumstances the property would pass by actual delivery of the goods. The holder of the bill of lading is entitled as against the shipper to have the goods delivered to him to the exclusion of all other persons. He is thus in the same commercial position as if the goods were in his physical possession, subject to the qualification that he takes the risk of non-delivery of the goods by the shipowner, and that in order to obtain actual delivery of the goods from the shipowner, he may be obliged to discharge the shipowner's lien for freight."

- The general rule is that the owner of the goods is the person named 39. in the bill of lading as consignee and the one who holds the original bill of lading. In the case of P & O Nedloyd Uganda Ltd v. Tesco International Ltd CACA 86/2004, the learned Justices of the Court of Appeal held that a bill of lading is a document of title. It is a document of title because it contains a statement by the master of a ship that he is in possession of cargo, and an undertaking to deliver it. It enables the consignee to dispose of the goods by endorsement and delivery of the bill of lading. - Typically, a bill of lading will include the names and addresses of the 40. shipper (consignor) and the receiver (consignee), shipment date, quantity,

exact weight, value, and freight classification. Also included in the bill of lading are: a complete description of the items, including whether they're classified as hazardous; type of packaging used; any specific instructions for the carrier; and any special order tracking numbers. Some of the most common types of bill of lading include: Inland bill of lading, Ocean bill of lading, negotiable bill of lading, non-negotiable bill of lading, claused bill of lading, clean bill of lading and uniform bill of lading.

- A bill of lading being a legally binding document implies that it can be $41.$ used in litigation if the need arises and essentially it works as undisputed proof of shipment. Therefore, once its authenticity is disputed, the party believing in its accuracy or authenticity must prove it. Accordingly, any bill of lading presented to anyone without the knowledge, authorization or consent of the owner of the goods named therein means it is forged and as such any person in possession of the goods named in a forged bill of lading must be held liable for being in possession of stolen goods. - In the instant case, it was PW1's evidence that on the 19th day of 42 September, 2023, the 1st Defendant approached the Plaintiff with a bill of lading number OOLU8894674950 that revealed it as the consignee for goods comprised in five containers to wit: TRHU4316260, DFSU7455047, TRHU5397712, TRHU7276670 and OOCU8383761. That acting on the representations, the Plaintiff's officials were compelled to release the said goods to the 1st Defendant since the documentation was routinely a precondition to access consignee goods as "keys to the warehouse".

PW1 further testified that on the 25th day of September, 2023, the $43$ shipper of the cargo consignment Ming Yang Solar Co. Ltd informed the Plaintiff that it still possessed the original bill of lading but another bill of lading was presented by the 1st Defendant leading to a string of frantic actions by the Plaintiff's officials. The Plaintiff reported the matter to the local police at Mombasa, Kenya *vide* OB No. 31 of 25/9/23 and together with its lawyers from M/s CM Advocates LLP their collective actions led to the recovery of all but one of the container No. OOCU8383761 that had already crossed into Uganda.

- PW1 stated that the Plaintiff's officials were informed by the 1st $\overline{44}$ Defendant's agent Heilas Uganda Limited that the aforesaid container had crossed into Uganda likely headed for a bonded warehouse in Namanve by the name Liberty ICD Ltd. And that on 29th September, 2023, the 4th Defendant (the 1st Defendant's clearing agent) notified the Plaintiff that the 1st Defendant has acted with impunity and its actions suggests intent to fleece the Plaintiff of the said cargo. PW1 added that the containers both in Kenya and Uganda are accruing demurrage and storage charges to the detriment of the Plaintiff and that four containers in Kenya cannot be reexported back to China unless the container the subject of this suit is reexported back to China. - The letter from Ming Yang Solar Co. Ltd which was admitted as PEx4 $45.$ reads as follows:

"TO: COSCO SHIPPING LINES (KENYA) LTD This is to certify that we are the shipper of this shipment, and that the full set original B/L is held in our hand and has not been

delivered to anyone, and one important fact is that we have never received a deposit or payment from the consignee. Now we have learned that the destination consignee has picked up cargoes by using a counterfeit bill of lading. Please start the investigation immediately. Our company reserves all the rights related to the goods. BL NO.: OOLU8894674950 **VESSEL & VOYAGE: EMMANUEL P 001W** ATD:2023-8-22 ATA:2023-9-10 POL:NANSHA, CHINA POD:MOMBASA, KENYA CONTAINER NO.: TRHU4316260 / DFSU7455047 / TRHU5397712 /TRHU7276670/OOCU8383761 **COMMODITY:SOLAR MODULE**

**Best regard"**

In Fam International & Anor. v. Mohamed Hamid el-Fatih, SCCA 46 No. 16 of 1993, Justice Odoki, JSC (as he then was) reiterated the need for any allegation of fraud to be specifically pleaded and particularized, and strictly proved; and gave the reason therefor, that: -

"Fraud is a serious matter and the person against whom it is alleged should be afforded sufficient notice to enable him answer the allegations."

Justice Odoki, JSC however, in that case, approved of the learned trial Judge's statement that: -

"Fraud is such a grotesque monster that the Courts should hound it wherever it rears its head, and wherever it seeks to take cover behind any legislation.'

Similarly, in the case of *Frederick J. K. Zaabwe vs Barclays Bank* 47 Ltd & 5 Others -SCCA No. 4 of 2006, Justice Katureebe, JSC who delivered the lead judgment, with which the other members of the Court agreed, stated that: -

> "In my view, an allegation of fraud needs to be fully and carefully inquired into. Fraud is a serious matter, particularly where it is alleged that a person lost his property as a result of fraud committed upon him by others."

In the instant case, fraud was pleaded and the 1st Defendant was 48. served with the summons to file a defence but it did not file one. Once fraud is brought to the attention of court, the court must deal with it. The crucial evidence by PW1 and the letter from their principal, Ming Yang Solar Co. Ltd which is exhibit PEx4, have not been controverted by the 1st Defendant, which is conclusive evidence that the bill of lading presented by the 1st Defendant to facilitate its receipt of the five containers including container No. OOCU8383761, is a counterfeit, hence a forged document. During locus visit, this court confirmed that the container which is the subject of this suit is in the custody of the 3rd Defendant for storage purposes.

In my judgment, in the absence of any evidence by the 1st Defendant 49 to dispute that the original bill of lading is with Ming Yang Solar Co. Ltd, the 1st Defendant is in possession of stolen goods which are owned by Ming Yang Solar Co. Ltd. Therefore, the 1st and 2nd issues are resolved in favour of the Plaintiff being an agent authorized by Ming Yang Solar Co. Ltd in the above quoted letter to investigate the issue.

## Issue 3

## What remedies are available to the parties?

- It is prayed for the Plaintiff that this honourable court declares the 1st 50. Defendant as being in constructive possession of illegally stolen cargo in container number OOCU8383761. The Plaintiff's counsel further prayed that a permanent injunction be granted. Counsel referred to the case of Sudhir Ruparelia & Another v. Crane Bank in Receivership & Another, M. A No. 39 of 2023 at page 11. Counsel also prayed that a mandatory injunction be granted returning the said container to the Plaintiff. - The Plaintiff's counsel added that the status of this matter is that the 51. Plaintiff's principal is an unpaid seller whose rights to lien and repossession of the goods are enabled under section 58 of the Sale of Goods Act. That the 1st Defendant has not paid for the goods in transit, the substance of this matter and that in that regard the Plaintiff's right of lien and to repossession of the goods is as of right. - The Plaintiff's counsel prayed for general damages for the Plaintiff 52. and contended that by its actions, the 1st Defendant breached the contract, acted in bad faith and deliberately intended to deny the Plaintiff the

opportunity of conducting its business and trade for which it seeks compensation. Counsel stated that the award of general damages lies within the discretion of court. Counsel invited this honourable court to consider the anguish and inconveniences the Plaintiff has suffered as pleaded in the plaint and verified in the witness statement. That the 1st Defendant's actions have caused the Plaintiff a litany of expenses in hiring counsel, storage and demur-rage charges, and a lot of mental anguish and anxiety that the 1st Defendant is liable. Additionally, that the Plaintiff lost time, premises, and money. That a sum of UGX. 300,000,000/= would suffice as general damages given the humiliation and anguish suffered.

- The Plaintiff's counsel averred that court has discretion to award $53.$ interest adjudged on the principal sum from any period prior to the institution of the suit or from the date of filing the suit to the date of the decree or on the aggregate sum adjudged from the date of the decree to date of payment in full. Counsel prayed that for the unlawful actions and for losses suffered as a direct consequence of the 1st Defendant's acts, this honourable court be pleased to award commercial interest at 22% from the date of closure of the case till payment in full. Counsel further prayed for costs of the suit. - The 2nd Defendant's counsel on the other hand prayed that having $54.$ submitted that the 1st Defendant is the rightful owner of the goods listed in the bill of lading, a declaration be made to that effect. It was averred for the 2nd Defendant that it is the Plaintiff's evidence that the suit goods belong to Ming Yang Solar Co. Ltd, the exporter in this matter. That Ming Yang Solar Co. Ltd is not a party to this suit and that during cross examination of PW1,

it came to light that the Plaintiff does not have authorization from Ming Yang Solar Co. Ltd. to institute this suit to recover the goods on its behalf.

- In addition, the defence counsel argued that the Plaintiff does not 55. have authorization from the said Ming Yang Solar Co. Ltd. for the goods to be released to it. Counsel prayed that should this honourable court find that the 1st Defendant is not the rightful owner of the goods listed in the bill of lading, the Plaintiff be directed to execute an insurance guarantee in favor of the 2nd Defendant before the goods therein can be re-exported. - On the award of costs, the 2nd Defendant's counsel contended that 56. the discretion is given to the trial Judge to consider the case and justly determine which party should be entitled to costs. Counsel prayed that the $2nd$ Defendant is awarded costs of the suit. - The 3rd Defendant's counsel prayed for damages and interest thereon 57. against the 1st Defendant. Counsel argued that a prayer for costs by the Plaintiff against the 3rd Defendant is untenable. He moved court to exercise its discretion not to award costs against the 3rd Defendant. - It is the 3rd Defendant's contention that it is not in dispute that the suit 58. container is in its custody. That in his testimony, Minaz Karmali testified that its claim in respect to the suit container is in recovery of accumulated storage charges which by the 5th day of February, 2024 was at UGX 4,028,900 (four million twenty-eight thousand nine hundred Uganda shilling) as per the proforma invoice admitted as DEx.2 and shall stand at UGX 7,332,900(Seven millions three hundred thirty-two thousand nine

hundred Uganda shillings) by the 31st day of May, 2025. The 3rd Defendant's counsel prayed that this honourable court pronounces itself on the issue of storage charges.

- In a nutshell, the 3rd Defendant's counsel submitted that the Plaintiff's 59. case shows that the 3rd Defendant has no liability whatsoever since it was merely contracted by the agents of the 1st Defendant to offer storage services of the suit container pending clearance of taxes. Counsel stated that it was wrong to drag the 3rd Defendant to court where it has suffered unnecessary damages and costs in defence. That the 3rd Defendant was acting on instructions of the 1st Defendant to offer safe storage and as such it would still be bound by court orders even if it was not made a party to this suit. Counsel prayed that the suit is dismissed with costs to the 3rd Defendant. - The Plaintiff's counsel reiterated their earlier prayer in the main 60. submissions and added that since the parties who have participated in these proceedings are nominal parties, costs be deferred from them and only be awarded against the 1st and 4th Defendants.

## **Court's consideration**

A permanent injunction is a restraint remedy for preventing wrongs 61. and preserving rights so as to restrain or repair an injury of the successful party. It is a remedy granted against continued infringement or violation of another's right which has been proved at trial. Having found that the 1st Defendant is in possession of stolen cargo, it is not entitled to repossess the same from the 3rd Defendant's storage premises.

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- General damages are said to be "at large," that is to say, the court, 62. taking all the relevant circumstances into account, will reach an intuitive assessment of the loss which it considers the injured party has sustained. It is a legal principle that the injured party has to be restored as nearly as possible to a position he or she would have been had the injury complained of not occurred. The quantum of general damages is based on the same principle. In the case of Johnson and another v. Agnew [1979] 1 All ER 883. Lord Wilberforce held that an award of general damages is compensatory and is intended to put the innocent party as far as money can do so in the same position as if the contract had been performed. - The award of general damages is at the discretion of court in respect 63. of what the law presumes to be the natural and probable consequence of the Defendant's act or omission. (See the case of James Fredrick Nsubuga v. Attorney General, H. C. Civil Suit No. 13 of 1993). - In the instant case, the 1st Defendant used a forged bill of lading to 64. defraud the Plaintiff and its principal Ming Yang Solar Co. Ltd which is the owner of the goods in the subject container which has been confirmed by court to be under the storage of the 3rd Defendant. When an illegality is brought to the court's attention, the matter must be resolved by the court. - This position of the law is well expounded in Civil Appeal No. 4 of 65. 1981 – Makula International Ltd v. His Eminence Cardinal Nsubuga & Anor [1982] UGSC 2 which enjoins the Court before which any issue of illegality is raised, to treat it as one of utmost gravity, because the issue

overrides all matters before the Court, including any issue of pleadings; notwithstanding any admissions or agreements made by the parties, which would otherwise render the issue of illegality uncontested. In National Social Security Fund & W. H. Sentongo v. Alcon International Ltd., **SCCA No 15 of 2009**, Justice Odoki, CJ. emphasized that:

"One of the principles of law stated in **Makula International** (supra) is that as long as there is an illegality, it can be raised at any time as a Court of law cannot sanction that which is illegal. ........ "

In Ham Enterprises Ltd & Anor v. Diamond Trust Bank (U) Ltd & 66. Anor, Supreme Court Civil Appeal No. 13 of 2021 it was held by Justice Owiny - Dollo, CJ. at page 32 of the court's judgment thus:

> "...... a plea of illegality can be raised at any stage of the proceedings without the need to amend the pleadings for that purpose; as long as the adversary in the suit is accorded the opportunity to exercise the right to be heard on the matter, which would ensure they do not suffer the prejudice and miscarriage of justice that would result there from.

> Indeed, a plea of illegality need not be raised only where it was pleaded. The issue of illegality may become apparent much later from evidence adduced before Court, without it having been pleaded. Court before which such revelation occurs is under duty to deal with the issue; notwithstanding that it had not been pleaded."

It has been proved to the satisfaction of this court that due to the 1st 67. Defendant's illegal act, the Plaintiff had to labour to file this case for recovery of the stolen cargo on behalf of the principal. The evidence

adduced through PEx4 shows that the Plaintiff was authorized to investigate the issue of the stolen cargo. Therefore, it is entitled to award of general damages for the inconveniences caused to it by the 1st Defendant. I hereby award general damages to the Plaintiff to the tune of UGX. 80,000,000/= payable by the $1^{st}$ Defendant.

- The law on award of special damages is that not only must special 68. damages be specifically pleaded but they must also be strictly proved. (See the cases of Masaka Municipal Council v. Semogerere [1998-2000] HCB 23 and Musoke David v. Departed Asians Property Custodian Board [1990-1994] E. A. 219). Special damages compensate the aggrieved party for quantifiable monetary losses such as lost earnings, past expenses among others. Calculation of special damages is much more straightforward because it is based on actual expenses. In the instant case, though special damages have been prayed for by the Plaintiff, they have not been strictly proved. Therefore, the Plaintiff is not entitled to an award of special damages. - Section 26 (2) of the Civil Procedure Act, Cap. 282 provides for award 69. of interest. It states thus:

"Where the decree is for the payment 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 adjudged from the date of the suit to the date of the 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 thinks fit."

- The section gives the court wide discretion to award interest from the 70. date of the suit as well as from the date before the suit was filed, that is, from the date when the cause of action arose. In each case, the essence is to compensate the successful party for deprivation of the money he or she is entitled to. - In the case of Riches v. Westminster Bank Ltd [1947] 1 All ER 469 71. **HL**, Lord Wright held at page 472 that:

"...the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or, conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation...."

- In light of the above authorities, my conclusion is that the Plaintiff is 72. entitled to an award of interest on the general damages. Hence, it is awarded interest at 15% on general damages from the date of this judgment until payment in full. - The 3rd Defendant prayed for recovery of accumulated storage costs 73. for the storage of the suit container. DW1 testified that the 3rd Defendant is an inland container depot engaged in the business of cargo handling in Uganda especially safe storage of cargo and other merchandise pending

URA clearance. That on the 11th day of October, 2023, the 3rd Defendant received the suit container vide No. OOCU8383761 for storage pending clearance of the $2^{nd}$ Defendant's taxes from the $1^{st}$ Defendant.

- DW1 further stated that before clearance by the 2nd Defendant, the 74. 3rd Defendant was contacted by CID Headquarters Kibuli, Interpol Uganda and Kenya that the suit container is subject of fraud and that shortly thereafter, court issued an interim order prohibiting the 3rd Defendant from releasing the suit container to the 1st Defendant. That the suit container is still in the 3rd Defendant's custody. - It is DW1's evidence that the 3rd Defendant's claim is for recovery of 75. storage costs which had accumulated to the tune of UGX. 4,028,900/= as of the 5th day of February, 2024 and costs of the suit. It is not in dispute that the suit container is within the 3rd Defendant's premises for storage purposes. This was also confirmed by court during locus visit on 25th April, 2024. This entitles the 3rd Defendant to storage costs. PW1 testified that the containers both in Uganda and Kenya are accruing demurrage and storage charges to the detriment of the plaintiff. Therefore, in order for the suit property to be released, the Plaintiff has to clear the storage charges and claim reimbursement from the 1st Defendant who fraudulently brought the suit container into Uganda. - During the hearing at the locus in quo, CW1 (Court witness 1) Mr. 76. Ronald Mugumya, a customs officer with Uganda Revenue Authority, testified that the suit container was in the 3rd Defendant's storage facility for safe custody pending further court orders as they had received a court

order directing them not to proceed with clearing procedure. He testified that the declaration documents indicated that the suit container had solar panels. When the court asked him "Whom are you expecting to pay taxes for this container?" he testified thus:

"Synthomer Trading Ltd who is the importer of goods in this container who made a choice to have these goods to be brought to Uganda and have them cleared under Liberty ICD Bond. With clearance I mean they will prepare documents leading to payment of taxes or prepare the goods for re-export."

(Ex8 is the re-export document)

He further testified that

"There are a number of documents that accompany cargo. The first document is T1 which moves the cargo from the port up to its destination. It is used at Mombasa Port. When the cargo reaches a warehouse like Liberty ICD, URA processes the warehouse declaration called IM7. It is used to hold the cargo within the bond awaiting the client's decision to pay taxes using IM4 (Import regime form) or re-export the goods if he or she has got market for the goods in another country."

It is clear from the above evidence that once goods are not for 77 business in Uganda, they can be re-exported without any taxes being payable. However, the importer has to pay the storage charges. As the Plaintiff has pleaded that the cargo which was wrongly brought into Uganda needs to be re-exported, the Plaintiff has to pay the storage charges subject to recovery of the expenses from the importer (the 1st Defendant) who has eluded court in this suit.

78. Under Section 27 of the Civil Procedure Act, costs are awarded at the discretion of court. It provides thus:

> "(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent those costs are to be paid, and to give all necessary directions for the purposes aforesaid.

(2) The fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of the powers in subsection (1); but the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order.

(3) The court or judge may give interest on costs at any rate not exceeding 6 percent per year, and the interest shall be added to the costs and shall be recoverable as such."

In section 27(2) of the Civil Procedure Act it is stated that costs follow 79. the event, unless for some reasons court directs otherwise. It was also held in the case of Uganda Development Bank v. Muganga Constructions [1981] HCB 35, that a successful party can only be denied costs if it is proved that but for his or her conduct, the litigation could have been avoided, and that costs follow the event only where the party succeeds in the main suit

In the instant case, I have not found any special reasons that justify 80. a departure from the rule in awarding costs to the Plaintiff being the successful party in this suit. The $2^{nd}$ and $3^{rd}$ Defendants who were also dragged into this suit as nominal parties as a result of the 1st Defendant's illegal act are also awarded costs of this suit payable by the 1st Defendant.

- Pursuant to the foregoing analysis, judgment is hereby entered for 81. the Plaintiff against the 1st and 4th Defendants with the following orders: - (a) the 1st Defendant is hereby declared to be in possession of stolen cargo vide container No. OOCU8383761, having received it from the Plaintiff using a forged bill of lading; - (b) an order of permanent injunction is doth issued against the $2^{nd}$ and 3rd Defendants restraining them, their employees or agents from releasing the suit container No. OOCU8383761 to the 1st and 4th Defendants: - (c) general damages in the sum of UGX. $80,000,000/$ = is awarded to the Plaintiff against the 1st Defendant; - (d) interest of 15% per annum on (c) from the date of this judgment till payment in full is awarded to the Plaintiff, payable by the 1st Defendant: - (e) the 3rd Defendant is hereby ordered to release the suit container *vide* No. OOCU8383761 to the Plaintiff upon payment of full storage costs to be calculated from the 11th day of October, 2023 till the date of re-

export of the suit container and the storage costs are payable by the Plaintiff subject to recovery from the 1st Defendant;

- (f) no order is issued for payment of taxes to the $2^{nd}$ Defendant in respect of the goods in the suit container since it is for re-export and falls under EX8; and - (g) costs of the suit and of the counterclaim are awarded to the Plaintiff, the $2^{nd}$ and $3^{rd}$ Defendants payable by the 1st Defendant.

I so rule and order accordingly. This judgment is delivered this .................................... $\ldots$ 2024 bv

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FLORENCE NAKACHWA

JUDGE.

In the presence of:

- (1) Counsel Joel Phillip Olweny from M/s Adsum Advocates, for the *Plaintiff:* - (2) Counsel Kintu from M/s George Kintu & Co. Advocates, for the 3rd Defendant: - (3) Mr. Mulumba Mathias, the Human Resource Manager of the 3rd Defendant: and - (4) Ms. Irene Lwantale, the Court Clerk.