Ibero (U) Ltd v Mbale Importers and Exporters Ltd (Civil Appeal 10 of 2007) [2009] UGSC 40 (22 October 2009)

## THE REPUBLIC OF UGANDA

#### IN THE SUPREME COURT OF UGANDA

# **AT MENGO**

# (CORAM: ODOKI, C, J., TSEKOOKO, KANYEIHAMBA, KATUREEBE, OKELLO, J. J. S. C.)

## CIVIL APPEAL NO. 10 OF 2007

## **BETWEEN**

#### IBERO (U) LTD::::::::::::::::::::::::::::::::::::

#### AND

#### MBALE IMPORTERS AND EXPORTERS LTD::::::: RESPONDENTS

[Appeal arising from the judgment and orders of the *Court of Appeal at Kampala (Twinomujuni, Kitumba,* Engwau, J. J. A.) dated 28<sup>th</sup> March, 2007, in Civil Appeal No. 84 of 2005

# JUDGMENT OF KANYEIHAMBA, J. S. C.

This is an appeal from the judgment and orders of the Court of Appeal allowing the respondent's appeal from the judgment and orders of the trial judge (Arach-Amoko, J), who dismissed the respondent's claim with costs in Civil Case No 609 of 2000.

The background to this appeal is well set out in the judgments of both the High Court and Court of Appeal but may be summarized as follows:

The respondent is a company based in Mbale and is in the business of buying and selling coffee. The appellant is another company which engages in the export business of coffee and is based in Kampala. Whereas the respondent buys unprocessed coffee directly from farmers, the appellant

buys partly processed coffee from the likes of the respondent and exports it outside Uganda. The two parties had had coffee deals together before the present one which became the subject of litigation.

The dispute arose from a contract between the parties under which the respondent had agreed to supply the appellant with some 2000 bags of coffee of various types and grades of coffee for which the latter would pay agreed sums of money. It was a term of the contract that the respondent would deliver the contracted coffee at the appellant's warehouse in Kampala. The procedure for delivering and receiving the coffee contracted for was well known to both parties. Apparently, following the fixing of the price of coffee, it was a condition precedent that the quality, quantity and the date of delivery must be known and agreed to by the parties. On delivery by the supplier, samples from the bags would be obtained by use of a spear and removed and tested to ensure compliance with the terms, conditions and traditions of coffee markets.

The respondent claims that it delivered 65O bags of coffee for which it should be paid. The appellant denies that such amount of coffee or any other was delivered to its warehouse and denies liability.

The Memorandum of Appeal in this court contains six grounds framed as follows:

- 1. The l\*arned &stices of Appeal erred ln laut and ln fact uhen theg held that the cofJee, the subJect ,rtdtter of the Appeal uas dellaered. to the Appellant hereln ln accord.ance ulth the contract entered, tnto bg the tuo partles. - 2. The Learned.ftrstlces of Appeal erred ln fact uthen they held that the Respondent hereln co;nnot be sald. to han:c cont lbuted to the dlsappearance oj the toss oJ lts lorry. - 3. The Learned,,ltrstlces of Appeal erred ln laut and ln fact when theg held that the Appellant hereln ra,rrs ballee and thol. as bailee lt talled to dlscharge tts dutg of care.

- 4. The Lcaraed nftrstlces of Appeal mlsconstnred. the law on ballment ln relatlon to the clrcttmstances, facts and euldence leadlng to an erroneous findlng tl@t the Appellant hereln breached. tts dutg of cate, - 5. Alternatttnlg and wlthout derogatlon from the aboue grounds, the Lcanted &stlces of Appeat mlsconstnted the laut on bdllment and ln consequence erred ln prlnclple ln orderlng the Appellant to pag the contract tnlue of the coflee. - 6. The Learned &stlces oJ Appeal dld not lrct Judlctouslg ln auardlng damages o'nd lnterest as theg dtd ho;ulng regard to the clrcumstances oJ the case.

Messrs Nangwala, Rezida & Co. Advocates who represent the appellant filed written submissions in support of the appeal. Messrs KGN, Advocates, for the Respondent also filed written submissions in opposition to the appeal. Counsel for the appellant argued ground 1, 2, 5 and 6 separately and grounds 3 and 4 together.

On ground I counsel for the appellant contend that the Court of Appeal erred in both law and fact in holding that coffee of the contractual description was delivered by the respondent in accordance with the terms and conditions of the contract. In counsel's view, the terms and conditions of the contract were not complied with and further there is no evidence that any coffee was delivered at the appellant's warehouse. Counsel contend that whereas the respondent claimed that the truck allegedly carrying the coffee left Mbale on Friday the 17d, December, 1999, the truck covered with tarpaulin apparently originating from the respondent's premises did not appear at the appellant's premises until three days later, that is on the 19ttr December, 1999 which happened to be a Sunday. Counsel contend that there is no evidence that the truck broke down between Mbale and Kampala. Counsel for the appellant further contend that, when the truck arrived at the appellant's gates, it was covered in tarpaulin and it

disappeared that same night without the appellant having opportunity to find out what that truck contained.

On ground 2, Counsel for the appellant contend that the finding by the learned Justice of Appeal that the respondent cannot be said to have contributed to the loss of the truck is erroneous. It is Counsel's further contention that the respondent failed to deliver coffee by the contractual date, namely the 17s of December, 1999, which was a working day and chose instead to deliver it on Sunday the 19e which was a non-working day. It is therefore the contention for the appellant that anything that occurred to the truck or coffee, if any, outside the contractual hours cannot be blamed on the appellant. According to counsel for the appellant, the respondent should not be rewarded for being in breach of the contract.

On ground 3 and 4, counsel for the appellant denied that liability could arise under the principles of bailment because there was no contract of bailment between the parties either by agreement or ostensible. Counsel contend therefore that the Court of Appeal erred in holding that once the appellant accepted the coffee it became a bailee of the coffee and therefore owed a duty of care to the respondent. Counsel further contend that the appellant did not, at any time accept in bailment the coffee or the truck. The act of the security guards in letting the covered truck enter the appellant's premises was a decision of their own without actual or ostensible authority to imply a contract of bailment on behalf of the appellant. Counsel distinguish this case from those in which a servant's acts may bind his or her master. Counsel pointed out that the evidence of the security guard who was called to testify at the trial denied that he was authorized to allow the truck into the premises of the respondent. He testilied that he only opened the gates out of sympathy with the truck driver who said that he, the driver, had run out of money and had nowhere else to park. Counsel further pointed out that throughout the years the respondent had been in the business, no coffee had even been delivered on a Sunday, weekend or public holiday and therefore there was no precedent

that the appellant's security guards had any authority they could exercise on a Sunday to bind the appellant.

On ground 5, counsel for the appellant submit that the Court of Appeal erred in holding that the market value of 650 bags of coffee was not disputed. Counsel contend that for a price to be fixed on any quantity of coffee, it is important that certain criteria, such as quality and moisture of the coffee must be measured first before the price can be determined. Quantity of the coffee alone is not enough.

On ground 6, counsel for the appellant contend that the Court of Appeal erred when it awarded general damages in the sum of Shs. 5,000,000 and interest by using incorrect criteria and without taking into account the circumstances of this case.

Counsel cited Itostey v Hgman (1920) 3K8,475, Annaga Ltd v Mundogas S. A. (1986) 2 ALL ER 385, @urer,s Prlnclples o! Modern Compang laur, No. 6. Vol. 1), Wrlghtson v McAr-thur and Hutclurlsons Ltd, The Sale of Goods Act, Cap 82 and Halsbury's Laws of England, No 1 Vol. 1.

For the Respondent, Counsel argued grounds I and2 separately 3 and 4 together and grounds 5 and 6 together.

On ground 1, counsel for the respondent support the findings and decisions of the Court of Appeal. They contend that the learned Justices of Appeal were entitled to assume and believe as the Respondent did, that considering the past business relationships between the parties, once the appellant admitted that a truck was driven and allowed into its premises, it must have contained the amount of coffee as claimed by the respondent.

In counsel's opinion, the fact that the truck was covered with tarpaulin and no one could see what was inside and therefore it contained no coffee is wrong and misleading.

On ground 2, counsel for the respondent support the holding of the Justices of Appeal and justify the same by citing a number of cases including Sectlon 19(2) of the Sale of Goods Act and tlnlversal Cargo

)

Carrlers Corpora'tlon a CltatT,(19571 2Q8,436, No. 13. They conclude that the contract was not repudiated by the appellant.

On grounds 3 and 4, counsel for the respondent agree with the contention by the appellant that bailment is based on the contract between the parties but contend that in this particular case, bailment arose constructively following the appellant's security guards' acceptance of the truck carrying coffee from the respondent to the appellant's premises. Counsel contend that the act of opening the warehouse gate and directing the truck where to park was within the course of the guards' employment and gave rise to the contract of bailment.

In further submissions, counsel for the respondent state that by writing a letter after the theft entitled " Re Coflee Thefr, at lhero Premlsesl the appellant was admitting liability and it cannot be heard afterwards to deny responsibility. It is liable by the doctrine of estoppel.

On grounds 5 and 6, it was the contention of counsel for the respondent that the Court of Appeal correctly awarded the sum of US g. B4,2O6,9OL.6 as the value of the coffee that was stolen. Counsel also supported the findings and conclusions as well as the awards of the general damages and the rate of interest on the compensation and damages awarded as both being in the discretionary powers of the court and commercial transactions, respectively. Counsel for the respondent cited a number of authorities in support of their submissions including provisions of the SaIe of Goods Act (supral, Hasteg v Hgmans (192O)3KB 4>5, Iuuronge u Attonteg @nera,l (1967)E. A. 17, Uganda Llmlted. u Tanzanlte Corporatlon (2002) 2 EA.33, Mutekanga u Dqudtor Growers (U)Ltd, 1995 - t999l, 2 E. A .219, unlted Garmcnts Industry Ltd v Notco (Kla) Ltd., (1977 HCB 128, and Masembe v Sugar Corporatlon & Anor (2OO2) 2 E. A. 434.

In my opinion, this appeal hinges on two issues namely, whether the contract for the sale of coffee was ever performed and whether there was ever any contractual relationship between the appellant and the respondent to bring them within the principles of bailment.

Although none of the grounds is framed specifically to challenge the manner in which the learned Justices of Appeal reevaluated the evidence, it is my view that grounds 7 and, 2 of this appeal raise the question of whether their Lordships reevaluated the evidence properly.

At the commencement of the trial in the High Court, the learned judge framed, correctly in my view, issues upon which judicial determination was called for. These were:

- (a) Whether 65O bags of coffee were delfinred bg thre platntlfl fiout respondent) to the premlses of the defendant (nout appellant) ln a'ccorda,nce wlth tle contract the pa;rtles had entered. lnto earller. - (b) Whether the traller and the coffee utere kept at the appellant's premlses wlth lts consent/sd,nctloft . - (c) Whether the thefi, of the traller and. the colfee uas as a result oJ the appellant's serttant's negllgence. - (Q Whcther the appellant oued. the respondent a dutg of care and tf so, uthether that duty of eare was dlscharged.; a:nd - (e) Whether the defendant ls llabte for the damages sought lor bg the respondent.

Counsel for both parties filed le ngthy submissions littered with authorities in support or against the listed issues.

On issue 1, in her judgment, the learned trial judge having cited Sectlon Zz oJ the Sale of Good.s Act that provides:

> olt ls the dutg of the seller to dellver the goods, and the buger to accept and. pag tor them, ln accord,ance wlth the tenns of the contract", held that it was clear from the evidence that the respondent had not delivered coffee in accordance with the contract. She therefore answered issue No I in the negative.

On issue No2, again having thoroughly considered and reviewed the evidence and submissions of counsel, the learned trial judge found that there was no contract of bailment between the two parties.

It appears to me that the learned Justices of Court of Appeal ignored the findings of the learned trial judge and relied heavily on past contractual relationships between the appellant and the respondent. In his lead judgment, TWinomujuni J. A, states:

"I thlnk there ls no doubt uhatsoeoer that the appellant and the respond.ent entered lnto a contract wherebg the appellant underaook to delluer speclfied 650 bags of cofJee. The cotJee uas to be dellaered betureen 3,4 a,nd 77h Decem.ber, 7999. At the beglnnlng of the trlal, the partles agreed tha,t the appellant's lorry was drluen lnto the respondent's premlses on Sunda,g 79th December, 7999. Whetler the lorry contalned coflee or not utc's acknoutledged bg the respondent (appellant) and Group 4 Securltg Ltd, a compdng hlred bg the respondent (appellant) to guard hls (slc) premises crs.,foltorus:

uDear Slr,

We ho:ue been advlsed to hold gou responslble for all the costs, damdges o,nd consequences due to thefi of the tntck and cargo Jrom Ibero M Ltd pretnlses, Vh Street Industrlal A?ed, Ka;ryro'lrr on the nlght of 7 &hfigth' December,7999."

I am afraid this message alone illustrates quite clearly that the learned Justice of Appeal failed to appreciate the facts as presented by the parties and found to be material by the learned trial judge in her judgment.

The truth of the matter is that the contract between the parties was dated 3rd December, 1999 marked Exhibit "A" in the record of proceeding by which the respondent undertook to deliver not just 650 bags of coffee, but over 2O00 bags. These were to be delivered by 17.t, December, 1999, and not on the Sunday of 18th/ 19tt', December. The contract indicates that no sale would be effected unless the following conditions were fulfilled namely, delivery as per contract, moisture content of the coffee at maximum l3%o, application of UCDA standards and quality of each type sample. The coffee had to be fully handpicked.

tt The learned trial judge correctly in my view, applied these contractual requirements and concluded that the contract had not been performed by the respondent (then plaintiff) and that is why she dismissed the claim and in my view rightly so.

With great respect, learned Justice TWinomujuni, J. A, erred in finding that the respondent then (now appellant) actually acknowledged liability. The letter the learned Justice of Appeal cited was not written by the appellant who was the addressee but by the plaintiff who is now the respondent, attempting to make a demand against the then respondent and hoping to pin liability on the same. It is therefore, erroneous on the part of the learned Justice to suggest that the respondent (who is now the appellant) accepted a liability.

The learned Justice of Appeal continues to assert that it was right to assume that the truck contained coffee and that the respondent delivered at the premises of the appellant a lorry full of coffee on facts not admitted or proven. It is not true either for the learned Justice of Appeal to surmise that any of the appellant's security guards testified that they were expecting the coffee or indeed, that by the time the truck disappeared from the premises the appellant had already received and accepted coffee from the respondent. With the greatest respect, these observations and conciusions are either conjectural or based entirely on the claims of the respondent. In any event, it cannot be said seriously, that the learned Justices either reevaluated the evidence or took the findings of the trial judge into account. They do not fault her either.

For these reasons I have given I would allow ground 1 of this appeal. I now turn to ground 2.

The evidence presented by counsel for the appellant and conceded by counsel for the respondent is that there was no any contractual arrangements between the parties to give rise to any obligations under the principles of bailment.

The evidence in support of the appellant's case is, in my opinion, overwhelming. The contracted coffee should have been delivered on Friday, the 17tL of December which was a working day. The respondent must have known or ought to have known that officials of the appellant do not work on Sundays. Nor did the respondent make any effort to ascertain whether its coffee would be received on a Sunday which apparently had never occurred before. Nor did it give any notice that it had altered the agreed date of delivery.

In my opinion, if any issue of bailment were to rise at all, it was overwhelmingly shut out by the clear and credible evidence of the appellant's security guard, who testihed thus:

\$When I told. the drfinr that for us we do not allout vehlcles on Sundag, he requested me to forglae hlm because eoen the truoney tleg had gloen them ho,d got finlshed, dnd they had also slept on the wag. Mbale lrryrorters Ltd ha,d brought coffee for about 3- 4 tlmes. ?hat is how I got to knout hlm. That ls uthg I dldn't doubt the drluer uhen he told me that he uas trom there. That vehlcle has neuer brought any colJee betore. The uehlcles that used. to brlng coffee were d{Jerent. I had neter seen the drlaer and the turn bog before. Euen the coffee theg used to brlng lt durlng worklng dags not ueekends or publlc holldays. I d.ld not see the co,ffee because the traller utas coaered ulth tarpaulln. When the dritrer explalned to me the problem.s on the wag, and tltat they uould abandon the uehlcle lf I retused to allout them ln the prernlses, He uas supposed to reuerse the uehlcle o.nd. park lt near the store. It mdkes the offloadlng easg, We do not olfload coffee on Sundags. Afier parklng the rlehlcle he locked the doors of the oehtcle as he uas golng autag. I asked hlm for hls tdentitg card. He refused. He dld not glve m.c the kegs oJ the tlehlcle. In fact the man didn't glve me or ang of mg securltg

## personnel angthlng beJore lea vlng. I personallg checked on the vehlcle and. found that the doors were securelg locked,"

This evidence was hardly contradicted.

,

In my view, if there had been any speculation as to whether this transaction and its strange episodes could be the subject of bailment, the evidence of this witness dispels it entirely.

In my opinion therefore, ground 2 of this appeal ought to succeed. With the success of grounds 7 arrd 2, the other grounds which are essentially consequential, should succeed also. I will therefore not endevour to deal with them as I believe such an exercise would be unnecessary.

I would allow this appeal and restore the findings and orders of the learned trial judge.

I would award costs in this Court and in the Courts below to the appellant with interest in this Court and in the Court of Appe al at 6Vo

Dated at Mengo ,n\*.23.ll.ary ot... O. 7.......2OO9

,b G. W.

JUSTICE OF THE SUPRME COURT

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA **AT MENGO**

#### (CORAM: ODOKI C. J., TSEKOOKO. KANYEIHAMBA, KATUREEBE AND OKELLO, JJ. SC)

#### CIVIL APPEAL OF NO 10 OF 2007

#### **BETWEEN**

IBERO (U) LTD :::::::::::::::::::::::::::::::::::

#### AND

### MBALE IMPORTERS AND

EXPORTERS LTD :::::::::::::::::::::::::::::::::::

{Appeal from the decision of the Court of Appeal at Kampala (Twinomujuni, Kitumba and Engwau, JJA )dated 28<sup>th</sup> March 2007, in Civil Appeal No.84 of 2005}

#### JUDGMENT OF ODOKI, C. J.

I have had the benefit of reading in draft, the judgment prepared by my learned brother, Kanyeihamba JSC. I agree with him that this appeal ought to be dismissed with orders he has proposed.

As the other members of the Court also agree, this appeal is allo dismissed with orders proposed by the learned Justice of Supreme Court.

Dated at Mengo this 22<sup>nd</sup> day of 6 do ben 2009

**J Odoki**

CHIEF JUSTICE

# THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO

[CORAM: ODOKI, C. J, TSEKOOKO, KANYEIHAMBA, KATUREEBE AND OKELLO, JJ. S. C.

# CIVIL APPEAL NO. 10 OF 2007

#### BETWEEN

**IBERO (U) LTD::::::::::::::::::::::::::::::::::::**

AND

MBALE IMPORTERS & EXPORTERS LTD:::::::::::::::::::::::::::::::::::: [Appeal from decision of the Court of Appeal at Kampala (Engwau, Twinomujuni and Kitumba, JJ. A) dated 25<sup>th</sup> March, 2007 in Civil Appeal No. 84 of 2005].

## **JUDGMENT OF TSEKOOKO, JSC.**

I have had the benefit of reading in draft, the judgment of my learned brother, Kanyeihamba, JSC, which he has just delivered. I agree with his conclusions and orders.

Delivered at Mengo this....................................

JUSTICE OF THE SUPREME COURT

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA AT MENGO

# GIVIL APPEAL OF NO 10 OF 2OO7

#### BETWEEN

IBERO (L) LTD:: : : : : : : : : : : : : : : : : : : : :: : : : :: : : : : : : : : :: : : : : : : APPELLAIT{T

#### AND

## MBALE IMPORTERS AND EXPORTERS LTD RESPONDENT.

(Appeal from the decision o{ the Court of Appeal at Kampala (Twinomujunt, Kitumba and Engwau, JJA) dated 2gh March 2007, in Civil Appeal No. 84 of2005).

## JUDGMENT OF KATURCEBE. JSG.

I have had the benefit of reading in draft the judgment of my learned brother, Kanyeihamba, JSC. For the-reasons he has given, I agree with him that this appeal ought to U i#ffiCl I also agree with the orders he has 7-../f---4' proposed.

nd Dated at Mengo this .... day or. . 19.q:t\$gg>2009.

A{z;:

Bart M. Katureebe Justice of the Supreme Court

#### **REPUBLIC OF UGANDA**

## IN THE SUPREME COURT OF UGANDA AT MENGO

ODOKI, CJ, TSEKOOKO, KANYEIHAMBA, (CORAM: KATUREEBE AND OKELLO JJSC).

### CIVIL APPEAL NO. 10 OF 2007

#### **BETWEEN**

**IBERO (U) LTD:** APPELLANT $\begin{array}{cccccccccccccccccccccccc} \multicolumn{3}{c}{\textbf{000000} & \textbf{000000} & \textbf{000000} \\ \hline \multicolumn{2}{c}{\textbf{000000} & \textbf{0000000} & \textbf{000000} \\ \hline \end{array}$

#### AND

**MBALE IMPORTERS & EXPORTERS LTD: RESPONDENT** $\cdots\cdots\cdots\cdots\cdots$

{Appeal from the decision of the Court of Appeal at Kampala (Engwau, Twinomujuni, and Kitumba, JJA) dated 28<sup>th</sup> March 2007, in Civil Appeal No. 84 of 2005}.

#### JUDGMENT OF OKELLO, JSC:

I have had the opportunity to read in draft, the judgment of my learned brother, Justice Kanyeihamba, JSC, and for the reasons he has given therein, I agree that the appeal must succeed. I also concur with his orders as to costs.

Dated at Mengo this: $\mathcal{P}$ day of: $\mathcal{O}$ $\mathcal{O}$ $\mathcal{O}$ $\mathcal{O}$ $\mathcal{O}$ $\mathcal{O}$ .

Budino

G. M. OKELLO JUSTICE OF THE SUPREME COURT