Kengrow Industries v Chandran (Civil Appeal No. 12 of 2000) [2001] UGCA 46 (5 January 2001)

Full Case Text

### UBLIC OF UGANDA THE IN THE COULT OF APPEAL OF UGANDA HOLDEN AT KAMPALA

CORAM; HON. G. M. OKELLO, J. A. HON. S. G. ENGWAU, J. A. HON. A. TWINOMUJUNI, J. A.

## CIVIL APPEAL NO. 12 OF 2000

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# KENGROW INDUSTRIES::::::::::::::::::::::::::::::::::::

## **VERSUS**

## C. C. CHANDRAN::::::::::::::::::::::::::::::::::

(Appeal from the judgment of the High Court at Jinja (Hon. Onega J.) delivered on 17th November 1999 in Jinja H. C. C. S No. 10/99)

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# JUDGMENT OF TWINOMUJUNI, J. A.

This is an appeal against the judgment and decree of the High Courtsitting at Jinja whereby the appellant was ordered to pay to the respondent as follows:-

> US\$ 20,700 being salary areas from May $(a)$ 1. 1999 to October 1999.

- Shs. $3,173,000/$ = being food allowance for the $(b)$ same period as in (a) above - Shs. 4,400,000/ $=$ being housing allowance for $(c)$ same period. - Shs. $540,000/$ = being school fees for the same $(d)$ period. - Shs. $5,000,000/$ = being general damages for $(e)$ breach of contract.

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Air Ticket for respondent, his wife and two children to $\overline{2}$ . India

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- Interest of 6% p.a. from date of judgment till payment $(3)$ in full. - Costs of the suit. $(4)$

The brief facts of the case are that the respondent who had worked for the appellant in India for a number of years was invited by the appellant to come to Uganda to work as General Manager in their Company based in Jinja Uganda. He arrived in Uganda and started the work around the 17th January 1997. The story of his ordeal in Uganda is summarised in the judgment of the learned trial judge as follows:

> "From the evidence on record it is clear that the plaintiff and the defendant entered into an oral contract of employment. Both counsel for the plaintiff and that for the defendant are agreed on this. Other terms of the contract are also not in dispute. The defendant agreed and actually did air lift the plaintiff and his family to Uganda. It is not disputed that at the end of the contract the defendant was to air lift the plaintiff and his family back to India. The plaintiff took up employment with the defendant as a General Manager and at the beginning was paid a salary of USS=800 per month and after the $1^{36}$ 3 months the salary was raised to USS=1150 per month. He was entitled to and was given a furnished house, with a Television inside and his bill for electricity, water and telephone were to be met by the defendant. He was given food or an allowance in lieu thereof and the company was to pay school fees for his children. All these are admitted These were indeed terms of the by shoth sides.

> > $\overline{2}$

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employment. What is not agreed upon is what was the duration of the contract? The plaintiff talks of 5 years while the defendant says there was no specific period agreed upon. Indeed I must say apart from what the plaintiff himself says there is nothing on record to show how long the contract was to last. All we are told is that the defendant secured a work permit for the plaintiff for 2 Vears from the time of his arrival. There is evidence on record to show this. To me this implies that at least the defendant intended that the plaintiff was to work with them for 2 years and the plaintiff also agreed to work with the defendant for at least two years. In the absence of any evidence to show that the contract was to last for some specific period of time and in the light of the defendant's contention that there was no specific period agreed upon while the plaintiff talks of 5 years considering all the circumstances of the case I find that the parties intended that the contract would last for at least 2 years. That is why the defendant processed a work permit for 2 years for the plaintiff who also accepted the same. I shall therefore take the duration of the contract to be 2 years.

It is not disputed that the plaintiff worked with the defendant up to March 1998 and thereafter stopped working for the defendant. The question then is, was there any breach of contract and if so by whom? There is evidence on record to show that on $3/3/98$ when the plaintiff returned from Nairobi where he had been on a

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business trip on behalf of the defendant he found someone else seated in his office. When he enquired he was told to be patient and that matters would be sorted out. According to the defendant a new employee had been brought to occupy a new post of Chief Executive. The defendant says the plaintiff was relocated to another office from where he continued to work. But the plaintiff clearly tells court that from 3/3/98 when someone was put in his office he kept reporting for work but to no avail till he was eventually told to stop disturbing. The company then processed and paid him all that was due to him up to the end of March 98 and even paid him for the month of April 1998. Yet they allowed him to continue occupy the company house up to May 1998 and did not ask post office to disconnect the telephone till December 1998."

The memorandum of Appeal contains the following thirteen grounds of appeal:-

That the learned judge erred in law and fact in accepting the Respondents evidence that his employment with the appellant continued up to the date of the judgment or October, 1999 without due evaluation of the evidence and the framed issues in regard to:-

> Whether there was breach of contract. $(i)$

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#### Whether the plaintiff is entitled to any $(ii)$ remedies.

- That the learned judge erred in law and fact to find $(2)$ and hold that there was breach of contract when the evidence on record showed that the plaintiff voluntarily left the employment of the respondent and was paid all his dues which he acknowledged. - That the learned judge erred in law and fact to find $(3)$ for the plaintiff in respect of salary arrears, arrears of food allowance, arrears of house allowance, arrears of school and general damages when the evidence if properly evaluated showed that the respondent stopped to work at the end of March, 1998. - That the learned judge erred in law to find and $(4)$ hold that the plaintiff/respondent was entitled to general damages because he was made to wait for 1 $M/s$ **SANKARI** and his company vear INDUSTRIES LTD had failed to fair well in business. - $(5)$ That the learned judge erred in law and fact to find for the respondent in breach of contract and to award damages for breach of contract having also found that the respondents employment with the appellant continued up to October 1999.

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(6) The learncd judge erred in law and fact to arvard general d:rmage; for breach to the plaintiff when evidence showed that the respondent had received pa],ment in full and final settlement up to April 1998 and had rc'ceived and acknowlcdged payment as such.

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- (7) That the lcarned judge errcd in lan' and fact in failing to find for the Defendant that the plaintiff was estoppet from suing and claiming further paYments upon his leaving the emplol'ment of the appellant and upon h:rving opened his companl' called Sankari lndustries Ltd. as an alternative to his former employment with the appcllant. - (8) That thc lea.rned j udge erred in lax' and fact to lind thrt therc was brcach of contract while no evidence of breach or n'rongful or unlan'ful dismissal, or termination of the contract was adduced. - (9) That the learned judge erred in lan' and fact to award damages of Shs. 5,000,000/= when the lau' provides that the remedies for breach in " emplovment is payment in lieu of noticc andbenefits as per the terms of the contrac(.

- That the learned judge erred in law and fact to fail $(10)$ to find that the respondent could resign from employment voluntarily as he did in this case. - That the learned judge erred in law and fact to find $(11)$ that the appellant was supposed to pay all dues under the employment contract from May, 1998 to October 1999 while also finding that specific performance is not a remedy available in the circumstances of the case between the appellant and respondent. - The learned judge erred in law and fact to hold $(12)$ and find for the respondent that he was entitled to salary and all other dues up to the date of the judgment i.e. May 1998 to October 1999 when he had already found that the contract was for two years ending on 25/6/1999. - That the learned judge erred in law and fact to find $(13)$ that there was no evidence of a farewell party in the absence of contrary evidence and considering the evidence on record the finding should have been that there was a farewell party.

At the hearing, Mr. James Mukasa Sebugenyi, learned counsel for the appellant, argued the grounds of appeal under three consolidated broad grounds as follows:-

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That the learned trial judge did not properly evaluate $(a)$ the evidence which led him to arrive at wrong conclusions $(1,2,10$ and $13)$ .

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- That the learned trial judge erred in fact and law to $(b)$ hold that there had been a breach of contract contrary to the evidence on record. (Grounds $3, 4, 6, 7, 8$ , and 9) - That the learned trial judge mishandled the issue of $(c)$ damages. (Grounds 5,11, and 12).

Mr Sebugenvi submitted on the evaluation of evidence that the trial judge was wrong to find that the agreed salary per month of the respondent was US\$1150 whereas there was evidence on record showing that he had accepted as his salary US\$1050. In his view this was a result of a confusion which arose from the fact that at the time the respondent was being paid, the dollar equivalent in Uganda Shillings was Shs.1,150 per dollar. His second argument on this was that the trial judge wrongly evaluated the evidence when he failed to hold that the respondent had voluntarily left the appellant's employment in March 1998. The third argument of counsel on this ground is that the trial judge came to wrong conclusion when he held that the contract of employment continued up to October 1999 whereas he had already found that the respondent was given a contract for two years expiring on 25th June 1999.

The second batch of grounds of appeal is about whether the trial judge was correct to hold that there was a breach of contract to justify damages to the respondent. In my view this too is about whether the trial judge correctly evaluated the evidence on record or not. Mr. Sebugenyi

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submitted that the evidence showed that the parties parted ways mutually in March 1998, and the respondent ought to have construed from the conduct of the appellant that the contract of employment came to the end in March 1998 and the trial judge should have so held. This is despite the fact that the appellant did not report to Immigration Department the fact that the work permit of the respondent had expired and despite the fact that the respondent was allowed to continue enjoying the facilities of the appellant.

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On the issue of damages, Mr. Sebugenyi submitted that the respondent should have been only awarded:-

- Salary for one month in lieu of notice. $(a)$ - Repatriation i.e. the air tickets. $(b)$ - $(c)$ Arrears of housing, food and school fees allowance for only one month. - Interest of $6\%$ p.a. and the costs of the suit. $(d)$

According to him all other awards made by the trial judge were erroneous and should be disallowed.

In reply Mr. Shaban Muziransa, learned counsel for the respondent submitted that the question as to how much the respondent was to be paid was agreed in the pleadings as US \$1150 and was not an issue at the trial. That even the evidence of the respondent at the trial on the matter was not challenged and therefore the trial judge arrived at a correct conclusion. On the submission that the trial judge should have found that the respondent voluntarily left the appellant's employment in March 1998, he submitted that there was ample evidence which the trial judge evaluated

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properly that the respondent was only stopped from working from his office but he was allowed to remain enjoying some facilities of the appellant while waiting for his fate

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Counsel conceded that it was wrong for the trial judge to hold that the contract of employment continued up to October 1999 whereas he had found as a fact that the contract was for two years ending 25/6/99.

On the evaluation of other evidence generally learned counsel supported the findings of the trial judge because, in his view, there was enough evidence to support them.

On damages counsel conceded that the trial court should have only awarded special damages up to June 1999 but thereafter the trial court should have awarded general damages up to judgment. He submitted that in light of his concession, general damages awarded in the trial court should be revised upwards, to which request counsel for the appellant responded that since there was no cross-appeal, general damages awarded could not be revised upwards.

In my judgment, on the evidence which was before and accepted by the learned trial judge, the decision in this appeal must hinge on giving a correct answer to the following questions:-

> What was the contract salary? $(a)$ US\$ 1150 or US\$ 1050?

When was the contract of employment terminated? $\triangledown$ $(b)$

$\overline{10}$ $(c)$ Since it was conceded that the respondent was entitled to some damages, what is the correct measure of the 'damages?

This court, as a first appellate court, is entitled to re-evaluate the evidence that was before the trial court and to determine for itself whether the decision arrived at can be supported allowing for the fact that this court did not have the opportunity the trial court had of seeing the witnesses give evidence. See Pandya Vs R [1957] E. A. 336 and Peters Vs Sunday *Post [1958] E. A. 424.* It is now incumbent upon me to evaluate the evidence on record and to determine whether the findings of the learned trial judge on the above three questions posed should be upheld.

What then was the contract price? This contract of employment was oral. It was never reduced in writing. However, there is evidence on record that the respondent was paid his salary in United States dollars equivalent at the rate of US\$ 1050 per month for the period of June 1997 to April The respondent accepted the payment as final settlement of his 1998. salary for the relevant period. On the other hand the respondent claimed in the plaint and in the evidence in court that the agreed salary was US\$ 1150 per month. At no stage did the appellant challenge this claim and indeed, it was not an issue in the trial court. It is only in this court that the challenge came up. Since it was not made an issue in the trial court, the respondent was never given opportunity to explain why he seems to have accepted less payment than what he was claiming in court. The findings of the trial judge that the agreed salary was US\$1150 is supported by the law of pleadings. It would be an injustice to attempt to alter that finding at this stage I would hold, in agreement with the trial judge that the contract salary was US\$ 1150.

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When did the contract of employment terminate? According to the evidence and arguments of counsel, there are three possible dates on which the contract of employment could have terminated:-

- March 1999, the time the respondent stopped working for the appellant. - June 1999, the time the respondent work permit expired. - October 1999, the time these proceedings terminated in the trial court in favour of the respondent.

Whether the contract of employment terminated in March 1998 depends on whether the version of the appellant that the respondent voluntarily accepted the termination of his contract. On the evidence on record, the learned trial judge rejected that version and I do not see how that finding can be faulted. There is overwhelming evidence that the respondent was thrown out of office without any notice at all and was never told of his fate up to the time judgment in court was delivered in his favour. I agree with this finding and hold that the respondent contract of employment was not terminated in March 1998.

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Since the contract was never terminated during its lifetime, it must be deemed to have come to the end when its duration expired. There is no serious dispute on either side against the finding of the trial court that the contract was to last for "at least" two years ending on 25/6/99. I would agree with learned counsel for the appellant, and counsel for the respondent conceded, that the contract could not have continued after that date. I would hold that the respondent's contract of employment came to $\chi^2$ an end on 25/6/1999.

Following the above two conclusions I have arrived at, it follows that the basis on which damages were assessed was not correct and they have to be re-assessed on the basis of those conclusions I do not accept the argument that they cannot be re-assessed because the respondent did not $\sqrt{}$ cross-appeal. It must be done as a direct consequence of re-evaluation of the evidence.

In the circumstances of this case the respondent is entitled to the $20$ following remedies:-

- The benefits he was entitled to under the contract from $(a)$ April 1998 to June 1999. - General damages for any loss or damage suffered by $(b)$ the respondent between July 1999 to the date of Judgment. - $(c)$

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Interest and costs of the suit (if any).

I would therefore award the remedies as follows:-

## A - SPECIAL DAMAGES

Arrears of salary for 14 months $@$ US\$1150 = $(a)$ US\$16.100

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date. I would hold that the respondent's contract of employment came to $\cancel{\ast}$ . an end on $25/6/1999$ .

Following the above two conclusions I have arrived at, it follows that the basis on which damages were assessed was not correct and they have to be re-assessed on the basis of those conclusions. I do not accept the argument that they cannot be re-assessed because the respondent did not cross-appeal. It must be done as a direct consequence of re-evaluation of the evidence.

In the circumstances of this case the respondent is entitled to the $20$ following remedies:-

- The benefits he was entitled to under the contract from $(a)$ April 1998 to June 1999. - $(b)$ General damages for any loss or damage suffered by the respondent between July 1999 to the date of Judgment. - $(c)$ Interest and costs of the suit (if any).

I would therefore award the remedies as follows:-

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### A - SPECIAL DAMAGES

Arrears of salary for 14 months $@$ US\$1150 = $(a)$ US\$16,100

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- I would award no rent since the respondent remained $(b)$ in the appellant's rented house till October 1999. - Food allowance of Shs. 167,000/= for 15 months $(c)$ $2,505,000/=$ - Fees of $120,000/$ = for three terms for two children $(d)$ each = Shs $720,000/$ = - Air tickets to India for the respondent, his wife and $(e)$ two children, or equivalent monetary cash in case of the wife and children who have already returned to India. However we were told from the bar that this item has been covered in respect of the wife and the children.

## $(B) - GENERAL$ DAMAGES

The respondent was never told that his contract had been terminated. He remained in Uganda in the house rented by the appellant since he had a dispute with his employer, he stayed in the country hoping that the dispute would be resolved. Even at the end of his contract period in June ' 1999, he was neither paid nor offered an air ticket to return him to India. He therefore suffered unemployment and the burden of maintaining himself here and his family in India. Before he came to Uganda he had worked for the appellant in India and they knew his worth. His worth to them can be reflected from the salary and other allowances they agreed to pay him in Uganda. The learned trial judge assessed the general damages at Shs, $5.000,000/$ = but he did not say how he arrived at the figure. He

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was at time labouring under a mistaken belief that the respondents contract of employment had subsisted up to the time of judgment. In assessing the employment value of the respondent using the vardstick of the appellants themselves. I would take into account the salary of US\$1150 they had agreed to pay him, the Shs 167,000/= food allowance per month, the Shs 250,000/= per month as house allowance and the fees allowance of Shs $60,000/$ = per month (720,000/= for 12 months). The total of the above is about the equivalent of USS 1500 per month. For a period of 5 months between the termination of the contract and delivery of judgment, he was rated at about US\$ 7500 which is about UG. Shs. $20 \text{ }\downarrow$ 14,000.000/= (current exchange rate is UG Shs. 1,800/= | US\$). $\mathcal{\mathcal{K}}$

I would therefore award to the respondent Shs. $14,000,000/$ = as general damages.

# C-INTEREST $\forall$

In the plaint, the respondent had claimed payment of interest of 30% p.a. The learned trial judge awarded interest at the rate of 6% p.a. It is not clear why he rejected the rate claimed in the plaint. It is trite that the rate of interest to be awarded is in the discretion of the court but the discretion must be used reasonably and the rate to be applied should take into account the current commercial value of money. Taking into account those considerations, I am of the view that a rate of interest of 6% p.a. awarded in November 1999 was unreasonably low since the ruling commercial rate of interest in our commercial banks was about 20% p.a. I would hold that the decretal amounts be subject to a rate of interest of 20% p.a. from the date of judgment till payment in full.

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## $D - COSTS$

Although the efforts of the appellants in this appeal have resulted into substantial re-evaluation of the evidence and consequent review of the remedies awarded, the end result remains the same and the respondent remains the successful party. In the result I would award him the costs of this suit here and in the court below.

In the conclusion the summary of the remedies awarded is as follows:-

Salary US\$ $=16,000=$ . $(1)$

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- Food allowance Ug. Shs. $2,505,000/=$ . $(2)$ - Fees Allowance Shs. $720,000/=$ . $(3)$ - Air Tickets for respondent, wife and two children (or $(4)$ equivalent in cash). - General damages of Shs. $14,000,000/=$ . $(5)$ - Interest at the rate of 20% p.a. from date of judgment $(6)$ till payment in full. - Costs of the suit. $(7)$

John day of Januar y 2000. Dated at Kampala this

# THE REPUBLIC OF UGAND IN THE COURT OF APPEAL OF UGANDA HOLDEN AT KAMPALA

CORAM: HON. G. M. OKELLO, JA. HON. S. G. ENGWAU, JA. HON; A. TWINOMUJUNI, JA.

### CIVIL APPEAL NO. 12 OF 2000

# KENGROW INDUSTRIES LTD:::::::::::::::::::::::::::::::::::: **VERSUS**

C. C CHANDRAN::::::::::::::::::::::::::::::::::

(Appeal against the decision and orders of the High court (Onega J) dated 17.11.99 at Jinja in HCCS No. 10 of 1999)

# JUDGMENT OF S. G. ENGWAU, JA.

I have read the judgment of Twinomujuni, JA in draft form and I agree with his decision and orders. I have nothing more useful to add.

Dated at Kampala this....................................

$\mathcal{L}_{\mathcal{L}} \mathcal{L}_{\mathcal{L}} \mathcal{L}_{\mathcal{L}}$ S. G. ENGWAU JUSTICE OF APPEAL.

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA HOLDEN AT KAMPALA

CORAM: HON. G. M. OKELLO, J. A. HON. S. G. ENGWAU, J. A. HON. A. TWINOMUJUNI, J. A.

### CIVIL APPEAL NO. 12 OF 2000

### **BETWEEN**

### KENGROW INDUSTRIES LTD.::::::::::::::::::::APPELLANT

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#### C. C. CHANDRAN::::::::::::::::::::::::::::::::::

(Appeal from the decision of the High Court (Onega J.) dated 17/11/99 at Jinja in HCCS No. 10/99.)

### JUDGMENT OF G. M. OKELLO, J. A.

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I have read in draft the judgment of Twinomujuni, J. A and I agree with his reasoning and conclusions.

With regards to the interest on the aggregate sum adjudged, from the date of judgment till payment in full, I would add for emphasis that the law gives the court discretion to determine the rate as it deems reasonable. (See section 26 (2) of the Civil Procedure Act Cap. 65). In the instant case, the respondent had asked for 30% per annum but the trial court gave him 6% per annum without subscribing reasons for rejecting the respondent's prayer. The principle governing award of damages is *restitutio* in *intergrum*. Considering the fact that the respondent had been deprived of the use of his money for a long time, coupled with the high rate of depreciation of our currency, that rate of 6% per annum awarded by the trial court was clearly unreasonably low. It would not achieve the above principle. I agree with my brother Twinomujuni, J. A that the rate of 20% per annum is appropriate.

As Engwau, J. A also agrees, the appeal is substantially dismissed on the terms proposed by Twinomujuni, J. A.

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Date at Kampala, this OS day of analy 2001.

$\mathcal{C}$ G. M. OKELLO.

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JUSTICE OF APPEAL.