Katatumba v Uganda Cooperative Transport Union Ltd (Civil Appeal No. 23 of 1991) [1994] UGSC 52 (22 January 1994)

IN THE SUPREME COURT OF UGANDA

## AT MENGO

CORAM: ODOKI, J. S. C., ODER, J. S. C. & PLATT, J. S. C.

CIVIL APPEAL NO. 23 OF 1993

## **BETWEEN**

GEORGE WILLIAM KATATUMBA $T/A$ TECHNOPLAN

le plus.

::::::::::::::::::::::: APPELLANT

AND

UGANDA CO-OFERATIVE TRANSPORT UNION LDT.

**;;;::::::::::::::::::::::::** RESPONDENT

(Appeal from Ruling and Order of the High Court of Uganda at Kampala (Mr. Justice A. O. Ouma) dated 22nd January, 1993)

IN

HIGH COURT CIVIL SUIT NO. 521 OF 1992

JUDGMENT OF THE COURT

This is an interlocutory appeal brought by the Appellant George Katatumba against the order of the High Court dated 22nd January, 1993, in which the learned Judge struck out paragraphs 5 and 6 of the plaint as well as prayer (b) thereof, because it was said that the contract was illegal, and so the arrangements could not be enforced by the courts. That meant that the Plaintiff Katatumba would be able to continue with his suit against the Respondent the Uganda Co-operative Transport Union Ltd claiming fees for architectural work done in the sum of Shs 2,223,591/- as alleged in paragraph $4$ of the plaint.

The dispute arose out of the appointment of the Appellant as the architect to design and supervise the construction of the Respondent's building at Kawempe. Sometime in 1989 at the special request of the Respondent the Appellant was asked to render architectural

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services to the Respondent for the head office building, the parking area for the car park, junior staff houses and 3 regional workshops. These details are set out in paragraph 5 of the plaint and each item has an estimated cost in United States dollars against which the Appellant has set his fee in U. S. dollars. In paragraph 6 the Appellant alleges that he carried out the instructions, and prepared and submitted to the Respondent, the report of the proposed development and the sketch plan thereof, and submitted his fee note for a total of U. S. $$$ 55,475.05. These documents were annexed to the plaint and marked 'B' and 'F' respectively. However the Respondent neglected or failed to settle the fee inspite of demand for payment. Instead of this, the Appellant contends that the Respondent has handed the Appellant's report and sketch to another firm of architects called Landplan/BMK International Incoporated. The Appellant claims that Landplan together with the Respondent are in breach of the Appellant's copyright and the Appellant claims damages on that account.

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The Respondent in its written statement of defence has denied any liability whatsoever since the Appellant's appointment is denied, and the existence of any work done by him is also denied. The Respondent contended in paragraph 10 that the suit was wholly misconceived and vexatious and that the claim in United States dollars is bad in law.

When the suit came on for hearing Mr. Rezida, Counsel for the Respondent, raised a preliminary point to the effect that insofar as the suit related to paragraphs 5 and 6 as well as prayer (b) those parts were bad in law, in that they violated the provisions of the Exchange Control Act Cap. 158 as amended by Decree 18 of 1972.

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For different reasons paras 3 and 4 were said to be time-barred.

But this objection was overruled. It follows that the issues

before this Court on appeal are related to the striking out of paras 5 and 6 and prayer (b) of the plaint. It would be as well to set them out and they are as follows:-

- In or about 1989, at the special instance $115.$ and request of the defendant, plaintiff rendered architectural services to the defendant for: - head office building of estimated cost $a)$ of US \$ 178,952.00 for fee in US \$ $3,473.80.$ - b) Parking area for trucks of estimated cost of US \$ 789,500.00 for fee of US \$ 19,737.50. - c) Junior staff houses of estimated cost of US \$ 351,000.00 for fee of US \$ 8,775.00. - 3 Nos regional workshops of estimated $\mathbf{d})$ cost of US \$ 697,830.00 for fee of US \$ $17,445.75$ . - Plaintiff carried out the instructions by 6. preparing and submitting to the defendant a report on the proposed developments and sketch plans thereof and rendering a fee note for the work then done for a total of US \$ $55,475.05$ . A photocopy of the report and sketch plans together with that of the fee note are annexed hereto and marked 'B' and 'F' respectively; but the defendant has neglected and/or failed to settle the fee note or any part thereof inspite of demand therefor.

As these parts of the plaint were struck out the Appellant has raised 3 main grounds of appeal which will be dwelt with one by one.

In ground one it is complained that the learned Judge erred in holding that:-

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"Counsel for the Plaintiff admitted in his argument that Annexure 'F' to the plaint would only be documentary evidence to prove the pleadings. He ought to have held according to the Plaintiff, that Annexure 'F' to the plaint was part of the pleadings and should be read together with them."

The learned Judge did make the following comment:-

"As counsel for the Plaintiff admitted in his argument Annexure 'F' would only be documentary evidence to prove the pleadings."

Looking at the record of the arguments in Court, it is not exactly clear to what the learned Judge was referring. The only passage that seems to be relevant, as attributed to Dr. Byamugisha, is as follows:-

> "The counsel should have waited for evidence to see if the pleadings would be rebutted. Claims under paras 5 and 6 of the plaint are supported inter alia by Annexure 'F' to the plaint (see Note 81.1). Clearly the claims are for payment in Uganda shillings although denominated in U. S. A. dollars."

We do not see any other reference in the submissions by Dr. Byamugisha that he admitted that Annexure 'F' would only be documentary evidence to prove the pleadings. What Counsel was saying was that the preliminary objection should not have been taken, and that the suit should have gone for trial, so that evidence would be called, which would or would not support the pleadings. Then Counsel turned to paras 5 and 6 of the plaint which he says are supported by Annexure 'F'. As a result of annexure 'F' being part of the pleadings it would be seen that the claims are for payment in Uganda shillings although denominated in United States dollars. Looking at annexure 'F' it is stated at the bottom:-

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"Fees are paid in Uganda shillings at the ruling rate of exchange at the time of settlement."

It is not clear how the learned Judge misunderstood the record, but there is no doubt that Counsel for the Appellant is right, when he submitted that Annexure 'F' had supported paras 5 and 6 of the plaint. Indeed Counsel read them together to conclude that payment was to be made in Uganda shillings.

In ground 2, the Appellant complains that the learned Judge held that the pleadings concerned the payment of a fee in US dollars both in paragraphs 5 and 6, and consequently in prayer (b). That is factually true as will be seen from the wording of those paragraphs and prayer set out above from the plaint. Several questions, however, call for consideration, and the matter which caused the greatest argument was the existence of Annexure 'F'.

Mr. Rezida contended strongly that the Appellant had not served the plaint with any of the annexures. The plaint had originally been served on Mr. Rezida's clients and not himself. Apparently Mr. Rezida did not receive them from that source. He stated from the Bar that he had checked the record in the registry and the annexures were not attached. Consequently Annexure 'F' was not annexed to the plaint, and could not be read as one with it; JERAJ SHARIFF V CHOTAI FANCY STORES (1960)EA 374. Therefore the Appellant's argument, that claims under paragraphs 5 and 6 were supported inter alia by Annexure 'F' to the plaint was unsound. Equally the claims for payment in prayer (b) arising out of paragraphs 5 & 6 in Uganda shillings although denominated in US dollars would not be tenable.

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Counsel for the Appellant has stated that all annexures were $% \left\vert \mathcal{L}\right\vert$ filed with the Plaint, and served on the Defendants. On looking at the record, there they are, indeed. Mr. Rezida $\mathcal{L}$ seemed to impute that something underhanded had happened. The

situation is simple. The record speaks for itself. The annexures $\frac{1}{2}$ are there. If Mr. Rezida had wished to challenge the record, $% \left\vert \mathbf{r}\right\rangle$ he should have done ${\rm SO}$ in a straightforward manner and protest the impropriety of the record, so that the matter could be sent back to the High Court for investigation by the Judge and Registrar. This Court is not to be put into the situation of judging between $% \mathcal{L}_{\mathcal{A}}$ conflicting statements from the $\mathop{\rm Bar}\nolimits$ . Nor is this Court prepared to be astute to draw fine inferences from the wording of the ${\tt judgment}$ to support the Respondent's Counsel's statements from the Bar, which would challenge the record. Indeed Counsel had not checked the record at the time that the preliminary objection was taken. Nor was it his first preliminary objection, that annexure $|F|$ had not been served upon him, nor indeed had it been filed. In the defence $\frac{1}{2}$ the Respondent alleged that annexure $'F'$ was not annexed to the plaint. When was that: on filing or on service of the plaint? Counsel must act in a straightforward way. This Court is not prepared to have the record challenged by implication. A clear challenge must be presented. We conclude therefore that annexure $|F|$ was filed, and was part of the plaint. Counsel for the Appellant appears to this Court, to have argued in the High Court on that basis, and there was no clear argument to the contrary from Counsel $% \mathcal{L}_{\mathcal{A}}$ for the Respondent in the High Court. $7/$ ...

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On that basis, Counsel for the Appellant explained the plaint in terms of the wishes of the Donor who had or would contribute money for this building purpose. But as annexure 'F' explained, payment would be in Uganda shillings although denominated in US dollars. This provoked unfavourable comment from Counsel for the Respondent and the learned Judge. Their common complaint was that annexure 'F' could not override prayer (b) in the plaint. Order 6 rule 1 of the Civil Procedure Rules was resorted to, in order to demonstrate that the Appellant should have pleaded (a) the amount sued for in the currency of Uganda; and (b) that it was contemplated that permission to convert that money to US Dollars would be sought or had been sought. This is rather out-of-date after the general discussion on this matter in MILIANGOS VS GEORGE FRANK LTD (1975) 1AIL E. R. 1076, which has broadened the approach to allow judgment in a foreign currency. But even if we take CONTINENTAL AGENCIES VS A. C. BERRILL & CO. LTD (1971) E. A. 205, relied on by the Respondents, which was an action on bills of exchange drawn and payable in London and expressed in pounds sterling, it was held that judgment must be given in Tanzania shillings and exchange control permission sought to convert that money into pounds sterling. All that the learned Judge had to do here, was to determine how much work had been done, if any, the fees chargeable, express the amount to be paid by the Respondent in Uganda shillings and allow the Appellant to apply for exchange control permission because that would be an implied term. in the contract, as we shall see presently. It may be noted that the exchange control regulations in Tanzania at that time were precisely the same as obtained in Uganda at the time of the transaction in this case. The situation now is, that a claim can

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be laid in foreign currency, the effect being that the equivalent value of local currency is calculated in order to produce the foreign currency through the open market.

The learned Judge held that annexure 'F' could never override prayer (b). The pleadings in paragraphs 5 and 6 were such that -

- $a)$ there was no averment in the plaint that the claims are for payment in Uganda shillings, so that payment could not be made in Uganda shillings; - $b)$ the relief claimed was in US dollars so the relief could not be Uganda shillings. This is too narrow an interpretation, with great respect. Of course with hind sight it would seem to have been better for the Plaintiff to have put in an alternative claim for payment in Uganda shillings. But the general practice was to deal with claims in local currency and allow permission to be sought or refused from the Minister. It will be recalled that at first the view taken in England was that claims had to be made in pounds sterling. But then that was abandoned and claims in foreign currency were admitted (See Maliangos supra). The Tanzanian case represented the older procedure (i.e. Continental Agencies vs Berrill supra), but still illustrated

how the claim should have been dealt with. We pass on to the last aspect of this ground of appeal, that some pleading should have been attempted to show that the parties had not contemplated performance of the contract in contravention of the Exchange Control Act. This line of argument was developed from Section 33 (1) of the Act and the proviso thereto. The short answer to this point is that annexure 'F' annexed to the plaint clearly showed that as payment could be in Uganda Shillings, there

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was no contemplation by the parties to evade the Exchange Control Act.

Turning, then to ground 3, it is said that the whole contract was illegal because it infringed Section 1 of the Exchange Control Act as amended by Decree No. 18 of 1972. It was said that the plaint showed that the appellant was to hold US dollars without permission from the Minister. The implied condition that the performance of any term of the contract shall not be performed without permission or consent given (Sec. 33 (1) of the Act), shows that there was nothing illegal ab initio in this contract. When payment came to be made, no payment could be made in US Dollars without the Minister's permission. Similarly, under the Fourth Schedule, paragraph 1, it is an implied term in the judgment that any sum ordered to be paid to which the provisions of the Act apply, shall not be paid except with the permission of the Minister. It is argued, on the strength of SCOTT V BROWN (inter alia) $1982$ 2QB $724$ that where an action is based upon an illegal contract, it could not be maintained, so in this case, the contract was illegal and could not be maintained. It appears also that Ongom J. had held in Moses Bulenzi vs Judith Kayemba and Another/that the suit before him was illegal and could not be enforcei. Apparently, the Plaintiff in that case, had lent shillings $5,000,000/$ to the Defendant in Uganda for payment to the Plaintiff of £7000 in Britain. This judgment has not been shown to this Court. For some reason, the judgment was at one stage, locked in the Judge's Chambers and could not be used in these proceedings in the High Court. At least it can be said that this present appeal relates to an entirely different situation, and was not illegal ab initio. The contract was for work done here, and payment was to be made here, the $10/...$

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reference to payment in dollars being inspired by a Donor, but payment in shillings was acceptable.

Consequently, the conclusion must be that this appeal must be allowed. The order of the High Court is set aside, paragraphs 5 and 6 and prayer (b) restored to the plaint, and the suit should proceed to hearing as speedily as possible before another Judge. The costs of the appeal will be the Appellant's costs, and the costs of the preliminary objection proceedings will be the Plaintiff's costs in any event.

Delivered at Mengo this ..... day of March.... 1994.

l'in Acusui B. J. ODOKI

JUSTICE OF THE SUPREME COURT

i illivi A. H. ODER

JUSTICE OF THE SUPREME COURT

. Astha H. G. PLATT

JUSTICE OF THE SUPREME COURT

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