Kironde v Phrase Technical Services Limited & Another (Civil Suit 166 of 2022) [2022] UGCommC 189 (30 November 2022)

**THE REPUBLIC OF UGANDA**

**IN THE HIGH COURT OF UGANDA AT KAMPALA HIGH COURT CIVIL SUIT NO. 0166 OF 2022 (COMMERCIAL DIVISION)**

**SARA KIRONDE STRAIN PLAINTIFF**

**(Suing through Samuel John Kihuuka her Attorney Vide Special Powers of Attorney)**

**VERSUS**

1. **PHRASE TECHNICAL SERVICES LIMITED DEFENDANTS** 2. **G & D SECURITY SERVICES (U) LTD**

**BEFORE: HON. JUSTICE CORNELIA KAKOOZA SABIITI**

**JUDGMENT**

The Plaintiff sued the Defendants jointly and severally for a declaration that the 1st Defendant breached their tenancy agreement, recovery of outstanding rental sum of UGX 50,280,000, an order of eviction for the 1st and 2nd Defendants, general damages and costs of the suit.

The facts giving rise to the Plaintiff’s case are that; the plaintiff is the owner and registered proprietor of the suit property comprised in Block 244 Plot 8288 Land at Kisugu, Kampala. On 1st November 2019 the 1st Defendant took possession of the suit property without making any payments towards the rent and without signing a tenancy agreement. The Plaintiff then instructed Mr. Samuel John Kihuuka, her Attorney to take over the management of her property. On the 18th March 2020, the Plaintiffs Attorney acting on behalf of the Plaintiff executed a tenancy agreement with the 1st Defendant for duration of one year, at a monthly rent of US $ 800 payable three months in advance.

The 1st Defendant without the consent of the Plaintiff or her Attorney allowed the 2nd Defendant to take possession of the said premises. The Defendants kept on defaulting in payment of rent and even issued bounced cheques. The Plaintiffs Attorney lodged a case at Kabalagala Police Station against the Defendants for distress for rent. It was agreed that the Defendants vacate the Plaintiffs premises by the end of by 31st December 2021, and to also make payments to cover the outstanding rental arrears as per the agreed payment schedule. On the 24th June 2022, the Defendants vacated the Plaintiff premises with rent arrears in the sum of UGX 55, 500,000 and outstanding utility bills and left the premises in a state of disrepair.

The Defendants were served with the summons to file their defence and a copy of the plaint as per the affidavit of service on court record but did not file a defence. The matter therefore proceeded ex-parte.

**Representation**

The Plaintiff was represented by M/s Kasaija & Co Advocates.

**Issues**

The issues framed and adopted for determination were the following-

1. Whether there is breach of the tenancy agreement/contract by the Defendants? 2. Whether the Defendants are indebted to the plaintiff in the sum of UGX 57,280,000 as claimed? 3. Remedies available to the plaintiff.

**Hearing**

The burden of proof remained on the plaintiff to prove the case on the balance of probabilities as held in the case of **Yoswa Kityo v Eriya Kaddu [1982] HCB 58.** At the hearing the plaintiff led one witness, PW1-Samuel John Kibuuka, the holder of Power of Attorney of the Plaintiff and the Manager of the suit property.

**RESOLUTION**

**Issue No.1**: *Whether the 1st Defendant breached their tenancy agreement with the Plaintiff?*

Counsel for the plaintiff submittedthat PWI testified that the plaintiff is the owner and registered proprietor of suit property comprised in Block 244 Plot 8288 Land at Kisugu, Kampala. That the plaintiff entered into a tenancy agreement/contract (PExh.2) with the 1st Defendant on 18th March 2020 in respect of the suit property and the defendant agreed to pay rent of USD 800 per month. The 1st defendant continued occupying the premises paying rent but later started defaulting as per the several letters from the Manager PExh.4, PExh.5 and PExh.7. Following the failure of the Defendant to clear the outstanding rent a letter dated 5th August 2021 (PExh.9) was sent to the Managing Director of the 1st Defendant to hand over vacant possession of the suit property.

**Section 10(1)** of the **Contracts Act, No.7 of 2010** defines a contract to mean an agreement made with the free consent of the parties with a lawful object with the intention to be legally bound. In the present case the Tenancy Agreement between the plaintiff and the 1st Defendant dated 18th March 2020 is clearly a contract.

In the case of **Ronald Kasibante vs. Shell Uganda Ltd HCCS No. 542 of 2006 [2008] ULR 690**, Hon. Justice Hellen Obura defined breach of contract as:

*"Breach of contract is the breaking of the obligation which a contract imposes, which confers a right of action for damages on the injured party. It entitles him to treat the contract as discharged if the other Party renounces the contract or makes the performance impossible or substantially fails to perform his promise; the victim is left suing for damages, treating the contract as discharged or seeking a discretionary remedy."*

Counsel for the Plaintiff submitted that the law that provides for the Tenancy contractual relationship between the Plaintiff and 1st Defendant is **the Landlord and Tenant Act, 2022** however in the instant case the tenancy agreement between the parties was executed in 2020 prior to the enactment of the said law and it is not applicable. He cited the case of **Erukana Kuwe Versus Damji Vader SCCA No.2 of 2002** where it was held that;

“...it matters not in my view, whether you call this contract a tenancy agreement or a lease the principle is the same, rent as contracted must be paid. The non-payment is a serious default to trigger re-entry.”

It is noted that while there was no re-entry in the instant case, on the 24th June 2022, after this suit had already been filed the Defendants vacated the Plaintiffs property without clearing their rent arrears, water bill and left the suit property destroyed.

In the instant case the Plaintiff has adduced evidence that the 1st Defendant and Plaintiff entered into a written contract of tenancy agreement that was extended by consent but the defendant breached the contract by defaulting on his obligation to fully pay the agreed rent and eventually vacated the suit premises without fulfilling this obligation. The breach is further evidenced by the agreement made between the parties in the presence of the Community Liaison Officer at Kabalagala Police Station following the complaint for distress for rent. Under that agreement the Administrator of the 1st Defendant, Mr. Tumukunde Emmuanuel, undertook to vacate the premises and make staggered payments to cover the outstanding rent which they still failed to comply with.

Further, under clause 1 (b) of the Tenancy Agreement, the 1st Defendant covenanted to honour the rental obligations which they failed to do. Further under clause 1 (c) of the Tenancy Agreement, the 1st Defendant covenanted to pay all charges (utility bills) in respect of water, electricity and telephone, fax services on the demised premises. The Plaintiff has adduced evidence that the 1st Defendant did not clear an outstanding water bill of UGX 720,783 which amounts to a breach of the terms of the Tenancy Agreement.

In the instant case, the 1st Defendant also breached the Tenancy Agreement by sub- letting or allowing the 2nd Defendant, M/s G & D Security Services, to also take possession of the suit property without the consent of the Landlord contrary to clause 1 (f) of the Tenancy Agreement. This is evidenced by the two bounced postdated cheques issued by the 2nd Defendant in the names of the Plaintiff to settle the outstanding rent (PExh.7) which were declined by the bank because they did not have sufficient funds.

Given the evidence above I find that the 1st Defendant is in breach of their contractual obligations with the Plaintiff under the Tenancy Agreement.

Issue No. 1 is answered in the affirmative.

**Issue No.2**: *Whether the Defendants are indebted to the plaintiff in the sum of UGX 57,280,000 as claimed?*

**Issue No.3**: *Remedies available to the Plaintiff*

Issues 2 and 3 will be resolved concurrently.

Under the plaint the plaintiff prayed for the following remedies;

1. A declaration that the 1st Defendant breached their tenancy agreement, 2. A declaration that the Plaintiff is entitled to payment of rent in the sum of UGX 50,280,000, 3. In the alternative to pay all outstanding rent until such a time that they vacate the suit premises 4. A declaration that the Defendants are illegally occupying the Plaintiff’s property. 5. An order for eviction for the 1st and 2nd Defendants, 6. General damages for breach of contract 7. Costs of the suit.

It is noted that the instant suit was filed in March 2022 when the defendant had not yet vacated the suit property. Subsequently, the defendant vacated and handed over the suit property on 24th June 2022 i.e. an additional three months later. This renders the prayers in (d) and (e) overtaken by events. Therefore, the submission by the plaintiff’s counsel for rent arrears to cover UGX 57, 280,000 above the initial UGX 50,280,000 in the plaint is justifiable using the outstanding monthly rate of USD 800 per month.

It should be noted however that the Plaintiff did not establish a cause of action against the 2nd Defendant since they had no contractual relationship and there was no trespass pleaded under the plaint. The entry/possession of the 2nd defendant onto the suit premises without the consent of the plaintiff was a breach by the 1st Defendant of the Tenancy Agreement and falls under general damages. Therefore the sum of UGX 57,280,000 as the outstanding rent is hereby awarded to the plaintiff as special damages to be paid by the 1st Defendant.

The Plaintiff counsel in his submissions also claimed special damages of UGX 720,783 for the unpaid water bill and renovation costs of UGX 12,643,000. It is trite that special damages should be specifically pleaded and proved. The plaintiff counsel introducing these new figures in his submissions that were never pleaded under the plaint amounts to amending the prayers in the plaint without leave of court and for this reason they are not awarded.

The plaintiff also prayed for general damages. **Section 61 of the Contracts Act 2010** provides for Compensation for loss caused by breach of contract to the party that suffers the breach. The settled position is that the award of general damages is in the discretion of court, and is always as the law will presume to be the natural and probable consequence of the Defendant’s act or omission. In the case of ***Uganda Commercial Bank Vs Kigozi [2002] 1 EA 305***court held that;

*“In assessment of the quantum of damages, courts are mainly guided by the value of the subject matter, the economic inconvenience that a party may have been put through and the nature and extent of the breach or injury suffered”.*

It is the plaintiff’s submission that the breach by the defendants have subjected her to great inconvenience which has grossly affected her current and prospective income, resulting into colossal loss of revenue. Taking into consideration the facts of the instant case, I award the plaintiff general damages of UGX 10,000,000 for the breach of contract.

Counsel for the plaintiff in his submission claimed for interest on the special damage of the outstanding rent arrears as well as the general damages awarded. **Section 26 (1) of the Civil Procedure Act, Cap 71** provides that where interest was not agreed upon by the parties, court should award interest that is just and reasonable. I award the interest of 20% per annum on the outstanding sum of UGX 57,280,000 from the time of filing the suit till full payment. I also award interest at the court rate on the general damages awarded of UGX 10,000,000.

With regard to the costs of the suit, the general established principle of law under **Section 27 (2) of the Civil Procedure Act** is that costs of any action, cause or matter shall follow the event unless court for good cause orders otherwise. The Plaintiff being the successful party in this case is entitled to costs of the suit.

In the final result, judgment is entered for the Plaintiff against the 1st Defendant on the following terms.

1. The 1st defendant is to pay the plaintiff UGX 57,280,000 being the outstanding rent arrears on the suit property. 2. Interest of 20% per annum on the above sum from date of filing this suit till payment in full. 3. General damages of UGX 10,000,000 awarded to the plaintiff. 4. Interest is awarded on the general damages at the court rate from the date of judgment till payment in full. 5. Costs of the suit to the plaintiff.

It is so ordered.

**CORNELIA KAKOOZA SABIITI**

**JUDGE**

**Date: 30th November 2022**