Drata Alio v Hydra Homes Uganda Limited (Civil Suit No. 564 of 2014) [2022] UGCommC 26 (22 April 2022)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO. 564 OF 20I4

# DRATA ALIO JEANPAUL::::::::::::::::::::::::::::::::::::::::::::PLAINTIFF

#### VERSUS

HYDRAHOMES (U) LTD::::::::::::::::::::::::::::::::::::::::::::DEFENDANT

## BEFORE: HON. JUSTICE CORNELIA KAKOOZA SABIITI

## JUDGMENT

The plaintifT sued the defbndant for recovery of USD \$26,000 paid fbr the purchase of a Block Making Machine and costs of the suit.

The facts constituting the plaintitls claim are that; on the 1 3th day of June, 201 2, the plaintiff entered into a contract with the defendant fbr the purchase of a Block Making Machine (Hydrautec Block) worth LJSD 52,000 by the plaintifl. On the <sup>I</sup>5'r' day June 2014. the plaintit'f paid half of the rotal amounr ro USD 26.000 on the defendant's Stanbic account 0240566774801 receipt ofwhich the defbndant acknowledged by issuing a receipt vide receipt no.l510612012. The def'endant lailed to deliver the machine to the plaintiff after payment of the said sum UW consequently the plaintiff used hired machines throughout the time of his work. The defendant upon several reminders and verbal communications has ignored or \*)-ll}1[]rrsed to deliver the machine and now the ptaintiff seeks lbr the retund of his money.

1,

The det-endant filed an amended written statement of defbnce and a counterclaim. ln its detbnce, the defbndant pleaded that it is not indebted to the plaintiff in the sum claimed. That sometime in June 2012, it entered into a purchase agreement fbr Hydrautec Block Making Machine with the plaintifl. That according to the agreement the plaintilT was supposed to pay a total sum of US \$ 52,000 as the total cost of machine. That the plaintiff deposited US \$ 26,000 as the installment fbr the value of the machine. That the def'endant on several occasions informed the plaintilT to come, pay lbr and collect the ordered Hydrautec Block Making Machine fiom its olfices but this was ignored by the plaintifT. That the defendant was supposed to hand over the said machine to the plaintiff upon payment of the balance of US \$ 26,000 by the plaintif'f and it has never been done by the plaintilT despite many reminders tiom the del'endant. That the def'endant in f'urtherance of the terms of the said agreement, it hired an M7 Twin with Crusher Machine to the plaintitl, which has never been retumed, nor have the daily hire l-ees for the same been paid by the plaintiff. That the plaintiff is not entitled to all or any ol' the remedies sought in the plaint.

Under the counterclaim, the del'endant contends that upon receipt ol the preordered Hydrautech B lock Making Machine, it infbrmed the respondent on several occasions to come and pick it from its offices. where it is still parked to date, and to pay the last installment of the purchase price but this was ignored by the respondent. That the respondent's machine has never been returned and its daily hire f'ees have never been paid despite the counter claimant's demand of the same. That the said actions ofthe counter-del'endant constitute breach ofcontract, Uk/ for which the counterclaimant prays for special and general damages. The ,^.)\_,ll\*f,unterclaimant pleaded particulars of the special damages and also prayed tbr -f r t lJ general damages, punitive damages, order directing the counter-def'endant to retum the M7 Twin Block Making Machine that he hired, interest and costs of the suit.

In reply to the written statement of defence and counter-claim, the plaintiff pleaded that the def'endant has never intbrmed him ol the arrival of the new, Hydrautec Block making machine. That the defbndant to date has never availed him with the ordered machine despite repeated demands for the same. That he retumed the hired M7 Twin Machine to the def'endant in early February and paid the entire daily hire tbes lbr the said machine. The plaintiff denied the claims in the counter-claim.

### Representations

'l-he plaintifl/counter-def'endant was represented by Okecha Baranyanga & Co and the del'endant/counter-claimant by Akampuriira & Partners Advocates and Legal Consultants.

Proposed issues:

- Whether the det-endant breached the agreement ol'sale? i) - Whether the plaintiff breached the agreement ol' sale? ii) - Whether the M7 Twin Block Machine was retumed to the def'endant? iii) - Whether the plaintiff paid the daily hire fbes for the M7 Twin Block Making Machine liom the defendant"? iv) - v) What other remedies are available?

To prove his case, the plaintiff called Pwl Grace Nuwagaba, Pw2 Muhamood Khalifa and Pw3 the plaintiff, on the other hand, the defendant called one witness to defend against the claims and prove its counterclaim. At closure of the def-ence's case, this court directed parties to file their submissions in the timelines provided. Both parties have their submissions on 1lle.

#### Resolution of the iss ues.

# lssue l: whether the defendant breached the agreement of sale?

Counsel lbr the plaintitT subrnitted on the prerequisites of a valid and enfbrceable contract cited the case of William Kasozi Vs DFCU Ltd HCCS No. 1326 of 2000; where it was held thal "once o controct is volid; it creates reciprocal rights and obligations behveen the parties to it. I think it is lay, that when a document containing controctual terms is signed, then in the absence of fraud, or misrepresentation, the party signing it is bound by its ternts. " counsel continued to state that breach of contract is the breaking of the obligation which a contract imposes on a party and this conf'ers a right of action for damages on the injured party. counsel ref-erred to the case ol Ronald Kasibante Vs Shell Uganda Ltd HCCS No. 542 of2006.

Counsel argued that when a party to a contract fails kr perform his or her obligations or perlbnns them in a r.vay that does not correspond with the agreement, the guilty party is said to be in breach ofthe contract and the innocent party is entitled to a remedy. That the plaintifl'and det-endant entered into an agreement for sale and purchase of Hydrautec Block making machine worth USD 52,000. The plaintifTwas in immediate need, he made an initial deposit of USD 26,000 leaving a balance ol \$26,000 USD, to be paid later upon which the def'endant would deliver the block machine to the plaintifl. That under Section 2(4) of the Sale of Goods Act, the contract was a mere agreement to sale because the property was to pass to the plaintitl later and the said machine was a future good in accordance to Section 6(1) of the Sale of Goods Act. the machine was to be acquired by the defendant after execution of the purchase contract.

Counsel submitted that it was never the intention of the def'endant to tlrst receive C\*4 the balance of the purchase price of the machine and then import the machine. - That as per the plaintiff-, the defendant was to import the machine prior to >) ql>receiving the balance of the purchase price. That there was never any machine imported or intended to be delivered to the plaintifTand the def'endant accordingly

delbulted on perfbrmance of the contract despite their express knowledge of the plaintifls need to use the ordered machine as indicated under the agreement.

On the contrary, delbndant counsel asserted that the plaintiff complied with clause I of the agreement but t'ailed to comply with clause 2 and 3 of the Memorandum ol understanding. That accordin-e to the testimony of'Prvl and Dwl, the plaintifl'has never paid the balance of USD 26,000. The supply of the machine was upon payment of balance of USD 26,000. This was a condition precedent and f'ailure to comply rvith this condition constitutes breach of contract on the part of the buyer. Counsel cited the case of Cargo World Logistics Ltd Vs Royale Group Africa HC Commercial Division Civil Suit No. 157 of 2013.

I have considered the argument by counsel. The plaintitl and def'endant entered into an agreement that was rather simple and brief. It ran along these lines.

" Whereas Mr. Drata Alio Jean Paul is desirous of purchasing a block rnaking machine worth USD 52,000 from Hydrahomes Ltd: considering that Mr. Drata is not in position to pay the whole amount at ago; further considering that despite these facts, Mr. Drata has immediate need to use the block making machine: two parties agreed thus;

- i) That Mr. Dratq effects a deposit in I above of \$26,000 for the new machine (Hydrautec Block Making Machine). - That upon effecting the deposit in I above, Hydahomes Ltd releases <sup>a</sup> block making machine (M7 Twin with Crusher) to Mr. Drato for temporary use in he Democralic Republic of Congo on daily hire at \$ I 00 per day. ii) - That upon payment of the balance of \$26,000 by Mr. Drata, Hydrahontes Ltd will deliver to him (ClP Kampola) the brand netp Hydrautec Machine, upon which he will immediately return the M7 Twin Machine to Hydrahomes premises. Mr. Drata will then pay (in iii)

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arears) the daily hire fees stated in 2 above considering the duration he will have used the M7 Twin machine."

According to the evidence adduced, it is undisputed that the plaintiff and the defendant entered into a contract, where the plaintiff was to purchase a brand new Hydrautec block making machine worth \$52,000 from the defendant. It is also not rebutted that the plaintiff made an initial deposit of \$26,000 for the said new machine. It is further undisputed that the plaintiff hired another machine (M7) Twin with Crusher) for temporary use from the defendant. This implies that clauses (i) and (ii) of the parties' contract are not in issue.

Factual controversies in this suit mainly revolve around clause iii of the agreement.

That upon payment of the balance of \$26,000 by Mr. Drata, Hydrahomes Ltd will deliver to him (CIP Kampala) the brand new Hydrautec Machine, upon which he will immediately return the M7 Twin Machine to Hydrahomes premises. Mr. Drata will then pay (in arears) the daily hire fees stated in 2 above considering the duration he will have used the M7 Twin machine."

A plan regard of the above term, the payment of \$26,000 by the plaintiff preceded the delivery of the brand new Hydrautec Machine, however, a review of the evidence, there were further silent terms agreed upon by the parties in relation to the above. Pw1, the then manager of the defendant testified that; the defendant did not have the said machine but the same had to be imported, in the mean-time, $\frac{c}{c}$ the plaintiff would hire the M7 twin block making machine from the defendant for temporary use at USD 100 per day in DRC. That it was the understanding between the parties that upon importation and arrival of the new block machine, the defendant would inform the plaintiff to inspect and satisfy himself with the

$6$

imported machine, complete payment on the new machine, takes the same and return the hired machine upon payment ofthe rent arrears.

Pw3 corroborated Pw I 's statement and told court that the machine he had purchased was not available fbr viewing to satisly himself whether indeed it was the machine of his specifications in order to pay the balance. That one o1'the of'ficials of the def'endant told him that the machine was still in voyage to Karnpala and he would be contacted when it arrived so as to pay the balance and take the same. That he waited lbr the defendant to invite him to view the machine and also remined the def'endant of the urgency to acquire the said machine but in vain.

Dwl, director to the defendant, does not dispute that the machine had to llrst be imported, but rather asserts that the delbndant company imported the hydrautec block making machine tbr delivery to the plaintilland immediately informed the plaintitl. That the def-endant infbrmed the plaintilT to pick the machine liom its olfice where it is still parked but this was ignored by the plaintifl-. During cross examination, he said that the machine was imported and delivery of the same was to the def'endant's ot'flce. That he had no receipt fbr the purchase of the imported machine by the delbndant and he had no evidence of the purchase of the same. That the delivery evidence ol inrportation was also not available. That he communicated to the plaintifl physically and had no evidence ol any writings to the plaintitT informing him.

Section 2(4) & (5) of Sales of Goods Act is to lhe ef fect that:

OYT 4) ll'here under a contract of sale the property in the goods is transferred from the seller to the buyer, the controct is called a sale; but where the \*1 qt 7+ontf", of the property in rhe goods is to take place at afurure time or subject to some condition to be fulfilled later, the contract is called an agreement to sell.

(5) An agreement to sell becomes a sale when the time elapses, or the conditions are fulfilled subject to which the property in the goods is to be transferued.

The agreement in this instant case was one of an agreement to sell. In my view, it was an implied terrn in the contract that the defendant flrst imports the machine, have it at its premises. then upon seeing it the plaintifIpays the balance, that's when it is delivered. Upon this, the property in the machine would pass. An implied term is that in the eyes oleither ofthe parties rvould obviously not need inclusion in the written terms of the contract because it is sornething that would be taken as obvious. See: Pan Afric Impex (U) Ltd Vs Barclays Bank Ltd HCMA No.804-2007. Justice Egonda Ntende cited the holding by of Mackinnon L. J. in Shirlaw v Southern Foundries (1926) Ltd and Federated Foundries Ltd [939f (2) All ER l13 at page 124, "Primafacie that y,hich in ony contract is left to be inplied and need not be expressed is something so obvious that it goes without soying. "

The del-endant did not dispute that he had an obligation to import the machine for the plaintit'f to complete his payrnent. It in-fact contended that ir imporred the same but with no evidence of importation.

A review olthe evidence, I am convinced that the property in the machine never passed to the plaintifl. The evidence adduced points to the t'act that the def-endant never imported the Hydrautec block machine for the plaintiff to complete his payment ofthe remaining \$26,000. Breach ofcontract is violation ofa contractual , lt t obligation. either by failing to pertbrm one's own promise or by interfering with U/lJ another party's obligation. See: Blacks law dictionary, Tth Edition at page 182. \*lql>the defbndant breached the contract.

This issue is answered in al'firmative. ## Issue 2: Whether the plaintiff breached the agreement of sale?

Counsel strongly submitted that the plaintiff pertbrmed his obligations to the contract. That the plaintiff executed his obligation to pay the initial deposit of \$26,000 on the purchase price. That when the plaintiff hired a block making machine, he made payments of the daily hire fee of \$100, Pwl, the manager ol the def'endant banked the same on the defendant's account. That it was also confirmed by Pwl that hydrautec block machine (M7 Twin with crusher) that was rented by the plaintif'f tbr temporary use in DRC was returned into the control and ownership of the del'endant. Counsel contended that, the plaintiff did not renege on his obligation but was merely frustrated by the del'endant's failure to import the machine hence loss of business, reason and interest to purchase the machine.

On the other hand, counsel fbr defendant contented that the def'endant counterclaims against the plaintiff fbr failure to pay the balance ol USD 26,000 and the hiring charges fbr the second rnachine of USD 75,000. That the testimony of Prv I was to the ef tect that the hiring charges have not been paid and conllrmed by Dwl. The machine has never been retumed to the det-endant. That the contract in clause 2 was clear on fees for hire and failure ol'which constitutes a breach.

According to the contract between parties. given that the plaintill'urgently needed the Hydrautec block nraking machine, it was agreed that the plaintif'f hires an M7 twin block making machine with a crusher liom the def'endant 1br temporary use at a rate of USD 100 per day lbr use in DRC till arrival of the machine he had purchased. These tacts were undisputed by both parties. Dwl testifred that the machine hired by the plaintiff has never been returned by the plaintifT despite the --)lt \*f'endant's demand lbr the same. That the plaintiff has not paid the daily hire fbes for the M7 Twin Block Making Machine despite the delbndant demanding the same. That the outstanding amount as daily hire f'ees fbr the machine from I't

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July 2012 - 3l't July 2014 is \$75.400. This was the main controversy raised in defence's counterclaim.

Pw3, testitled that Dw I and Pw I travelled to DRC to get business for the company but failed and Dwl left DRC leaving the manager Pwl to ensure that the machine he had hired is taken back to Kampala. That the manager Pw <sup>I</sup> escorted the rnachine to Arua and a one Muhamood Khalil'ah retumed the hired machines to the def'endant and Heifbr Intemational respectively. He stated that he paid the entire hiring f'ees of the machine hired fiom the defbndant. This testimony was corroborated by Pwl who conflrmed that the plaintiff gave her USD 7,500 as rent f'ees fbr the hired block making machine and she banked it on the del'endant's bank account. That in early 2013. herself and Dw1 wenl to DRC to inspect on the machine, but Dwl was not happy with the state of the machine so he instructed that the same be returned to the del'endant's premises in Kampala.

2)) ri;"an and the gentlernan responsible fbr the machines. During re-examination he IEstitles that on reaching. the gentleman in charge olthe machine called a u,oman and informed her and the woman directed they oflload the machine. That Pwl and the plaintiff computed the amounts due and the plaintilf paid <sup>a</sup> further USD 4,200, which were received by Pwl on behalf of the det'endant. In Cross-examination Pw I told court that she banked the USD 4,200 onto the def'endant's account in Tropical bank but had no deposit slip. That the plaintif'f transported the machines he hired tiom DRC to Kampala and while in voyage, she communicated with the def-endant's employee who confirmed that the tnachine was delivered at a garage in Kibuli. Pw2, Muhamud Kalifa, a driver testilled that he was contacted to deliver two machines f'rom Arua to Kampala. That the plaintilT directed that one machine is delivered along Nakaseero Hill Road and the other in a garage in Kibuli next to Shell in the company of a turn

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On analysis of the above evidence as a whole, I am convinced on a balance of probability that the machine M7 Twin with a crusher was delivered to the defendant, considering this was also confirmed by Pw1, the then manager for the defendant.

Regarding payment of the hired machine, on record, there is evidence (PEx4) of payment of USD 7500 dispatched to the defendant as was testified by Pw1 & Pw3. However, I have closely looked at the PEx5, acknowledgement of the balance of \$ 4,200 received by Pw1, there is no indication that the money was dispatched to the defendant on the face of it. I am not convinced that it was paid to the defendant, also considering that during cross-examination it was brought out that Pw1 had resigned from working with the defendant at the time. To this end, the plaintiff is also in default of the car hire arrears to a tune of $$4,200$ .

## Issue: 3 and 4.

.

Counsel averred that, these issues have been answered in the affirmative while submitting on issue 2.

Issue 3 was that; whether the M7 Twin Block machine was returned to the defendant? I agree with plaintiff counsel, this issue was answered in affirmative in issue 2 above.

Issue 4 is that; whether the plaintiff paid the daily hire fees for the M7 Twin Block making machine hired from the defendant. As already determined under issue two, there is clear evidence of payment of USD 7,500 to the defendant but no $\frac{1}{2}$ evidence of payment of the balance of USD 4,200 as monies owed to the defendant as rent due from the time the plaintiff hired the machine to the time the machine was delivered back.

Issue: what remedies are available to the parties?

$i)$ Refund of \$ 26,000 paid as the initial deposit on the purchase price.

Counsel submitted that section 6(1) of the Contracts Act, 2010, is to the effect that; where there is breach of contract, the party who suffers the breach is entitled to receive from the party who breaches the contract, compensation for any loss or damage caused to him or her. Counsel also relied on the case of **Dies Vs British** & International Mining (1939) 1KB 724 Stable where it was held that where there is a sale of goods and a part payment for the goods is made, but no goods are delivered or tendered by reason of the default of the buyer, the seller's only remedy is to recover damages for the default, while the buyer, not withstanding that it is only by reason of his default that the contract has not been performed, is entitled to recover the purchase price that he has paid, subject possibly to the right of the seller to set off against that claim the damages to which he can establish his title.

In relation to the above, counsel contended that the plaintiff paid \$26,000 on the machine and the defendant undertook to deliver, which it defaulted, it is only fair that the defendant returns the deposit of USD 26,000 to the plaintiff for the Hydrautec Block making machine he did not import.

It was undisputed that the plaintiff made an initial deposit of \$26,000 on the Hydrautec machine out of its purchase price of \$5,200, PEx2. **Denning L J in** Stockloser vs Johnson (1954) I. A. E. R 630 at 637, held thus:

"...if money is handed over in part payment of the purchase price, and then the buyer makes default as to the balance, then, so long as the seller keeps the $\mathcal{A}$ contract open and available for performance, the buyer cannot recover the money but once the seller rescinds the contract or treats it as at an end owing to the buyer's default, then the buyer is entitled to recover his money by action at law, subject to a cross claim by the seller for damages.....".

In this case, the defbndant being in breach, It is only just that it refunds the \$26,000 to the plaintiff as the initial part payment of the machine that was never imported.

ii) General damages.

ivJ

Counsel argued that the del'endant was aware ol'the urgency with which the plaintif'f required the machine, but six months later, the del-endant had not irnported the Hydrautec Block making machine. That eventually the work for which it was needed was flnished and the plaintif'f lost intercst in acquiring the said machine. That the plaintiff sufl'ered loss as he could nor efficiently deliver on his obligations in DRC as the machine needed was never imported. The plaintilT seeks general damages fbr the loss, inconvenience and embarrassment befbre his clients. In support of his argument. counsel relied on the case of

## Ewadra Emmanuel Vs Spencon Services Limited HCCS No. 22 of 2015.

This Court is aware thal "in assessment of the quantum of damages, courts are mainly guided by the value of the subject mafier, the econontic inconyenience that a porty may have been put through and the nature and extenl of the breach or injury sufered ". See Uganda Commercial bank Vs Kigozi [20021 I EA 305. And that "a plaintiffwho suffers damage due to the wrongful act of the Defendant musl be put in the position he or she would have been if she or he had not.suffered lhe wrong".

I note that the plaintilf never prayed fbr damages in his pleadings but this brought up in subrnissions, however, considering it is a matter on breach of contract, Section 6l ( <sup>I</sup>) of the Contracts Act is bome in mind. The section empowers q)qlZtun to award compensation for any loss or damage caused to one party due to - ' " another's breach ofcontract. And in estimating the loss coun has to consider the means of remedying the inconvenience caused by the non-performance ol the contract that exist at the time. 5.6l (4) Contracts Act.

It has already been held by this Court that the Defendant breached the main term in the contract. From the onset, the urgency of plaintil'fs need of the hydrautec machine was intimated in the contract, the plaintiff had to hire a machine to be used in a meantime as he waits for the importation. The plaintiff contended that due to the delay by the defendant, the purpose he needed the machines fbr was completed and he lost interest in the machine. That he sufl'ered loss as he could not elficiently deliver his obligations in DRC for the machine he needed rvas never imported. The lbct that the plaintilfhas suffered inconvenience and loss as a result of the breach can be discemed fiom the fact that the Def-endanl never imported the machine and yet it was urgently needed tbr him to perlbrm his duties.

For this reason, I tind general damages of 20,000,000 (twenty million shillings) as suf'licient in these circumstances.

iii) Interest

Counsel submitted that according to Black's Law Dictionary, 9th Edition P.887, interest is allowed by law as compensation fbr delay in paying a fixed sum. Counsel also relied on Section 26(2) of Civil Procedure Act. That interest on both the refund of \$26,000 and general damages liom the date ofjudgment till full payment should be awarded.

The plaintiff onlv prayed lbr interest on the refund of USD 26.000. This interest was never agreed upon. Under S. 26 (l) of the Civil Procedure Act rvhere interest was not agreed upon by the parties, Court should award interest that is AA just and reasonable. Ret'er also to the case of Mohanlal Kakubhai Radia Vs . Warid Telecom Ltd, HCCS 23412011 rvhere it was held in determining a.iust 4"1l>\*reasonable rate, courts take into account "the ever rising inflation antl drastic depreciation of the currency. A Plaintiff is entitled to such rate of interest as t'tould nol neglecl the prevailing economic value of ntoney, but at the satfie time one which would insulate him or her agoinsl ony further economic vogaries and the inJlation and depreciation ofthe cutency in the event that the ntoney avtarded is not promptly paid when it falls due ".

For this reason. Court will grant interest to the PlaintifIon the \$26,000 at the rate of 50% per annum from the date olliling the suit until payment in full. Court takes into account the f'act that the Defendant has kept the money of the Plaintiff since 2012.

ir,) Costs of the suit

According to Section 27 (2) of the Civil Procedure Act, costs of any cause lbllow the event unless otherwise ordered bv court.

Plaintif'f being the successf'ul party in this case is theretbre entitled to costs of the suit and they are allowed.

The Def'endant had sought fbr dismissal of the suit with costs and also put in a counter claim lbr breach of contract, special damages tbr the daily hire lees for the machines, general damages, punitive damages, interest and costs. However, the Defendant did not prove the special damages as required by law; he only stopped at mentioning the same in its pleading. And since he was in breach of the major term in the contracl he is not entitled to general damages or costs either. The def-endant is however entitled to a balance of \$4,200 that the plaintiff lailed to prove that they paid as rental arrears olthe hired machine.

In the result, Judgment is entered for the plaintifT against the Defendant in the fbllowing terms:

UU l. The def'endant retunds back USD 26,000 to the plaintifl.

. 2. Interest is awarded on the sum at the rate of 5% per annum from the date %'l "il2 of filing the suit until payment in tull.

- 3. The Plaintiff is awarded general damages of Shs. 20,000,000/- - 4. Costs of the suit are also awarded to the Plaintiff. - 5. In relation to the counterclaim; the defendant is only entitled to USD 4,200 payable by the plaintiff. The parties are at liberty to off-set the same. No costs awarded to the counterclaimant.

It is so ordered.

$\bullet$

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CORNELIA KAKOOZA SABIITI **JUDGE**

Date: 22<sup>nd</sup> April 2022