Lakeville Investments Limited v MAT & Spencer Limited (Civil Suit 960 of 2018) [2023] UGCommC 243 (15 December 2023)

Full Case Text

### THE REPUBLIC OF UGANDA

### IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION]

#### **CIVIL SUIT NO. 960 OF 2018**

## LAKEVILLE INVESTMENTS LIMITED:::::::::::::::::::::::::::::::::::: **VERSUS**

### MAT & SPENCER LIMITED::::::::::::::::::::::::::::::::::::

# **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI JUDGMENT**

The Plaintiff brought this suit against the Defendant by way of ordinary plaint for breach of contract, reputational damage and economic loss seeking for a declaration that the Defendant breached the contract with the Plaintiff, a declaration that the Defendant's breach caused the Plaintiff economic loss, general damages, exemplary damages, interest and costs of the suit.

The brief facts constituting the Plaintiff's case are that the Plaintiff undertook a project to develop land comprised in Block 562 Kyagwe Plots 23 and 24 totalling 100 acres. That from 2015 to date, the Plaintiff offered portions of the property to the general public for sale and that the Defendant sent quotations for the subdivision of the property and titling 185 plots of land. That the Defendant agreed to complete the work in 59 working days and the Plaintiff made an initial deposit of UGX 35,000,000/. The Plaintiff relied on those promises and offered more plots for sale to several purchasers and assured them on when to expect titles but the

Defendant failed to complete the contracted frames. rk within the stipulated time

That upon the Defendant's insistence and hope th Defendant's performance, the Plaintiff advanced but they did not complete and as a result, th complaints, demands and claims from purchasers to return some of the purchase money occasionin damage, hence this suit. more money would ensure the additional UGX 10,000,000/ Plaintiff has suffered several the plots, and has been forced econornic loss and rePutational

The Delendant filed their Written Staternent of there was never a binding agreement in whi committed to complete the work within 59 days a on, and that they were mere estimations which between the parties given that the quotation was d between them. That with the delays in the Land make such a promise and that it might have been employees as a mere business Puff. fence in which they aver that its Directors or emPloYees alteged in the quotation relied not form a binding contract livered after an oral agreement ffice, the Defendant could not ade by one ofthe Defendant's

They added that the Defendant duly and diligently reasonable period to ensure that deed prints were and that the Defendant kept the Plaintiffupdated a caused by the backlog in Mukono Land Office Def'endant's control. That upon being served with Defendant updated the Plaintiff on the progress ma the suit be dismissed with costs. all times. That the delaYs were d were therelbre beyond the e notice of intention to sue, the e and delays. They praYed that erlormed its mandate within a pteted within reasonable tirne

In reply to the Defendant's Written Statement of its earlier prayers and added that the Defendant efence, the Plaintiff reiterated s estopped frorn denYing the

e quotation for which valuable estopped from claiming the xpertise and knowledge of the en the Defendant's neglect to iness of the deed print plans existence of contract whose terms are reflected in consideration was made. That they are furthe timelines are impracticable given the Defendant's field. That the suit is rightly before the Court g inform the Plaintiff about the availability and re attached to the Written Statement of Defence'

#### REPRESENTATION

es (formerly Apio, BYabazaire, was represented by M/s Imran The Plaintiff was represented by M/s Ivory Advoc Musanase & Co. Advocates) whereas the Defend Advocates & Solicitors.

#### JUDGMENT

e submissions of the Parties as this matter. I have carefully read the pleadings and considered well as listened to the testimonies of the witnesses

sues were agreed upon in the this Honourable Court: During the scheduling conf'erence, the following Joint Scheduling Memorandum lbr detemrination b

- tract between the Parties for ulated in a quotation within st l. Whether there was a valid and binding the delivery and completion of work as 59 working days. - of that contract? 2. Whether the Defendant breached the te r - ned loss of reputation and 3. Whether the Defendant's actions occasi economic loss to the Plaintiff? - 4. What remedies are available to the parties

\..-'

#### Issue I

Whether there was a valid and binding contra delivery and completion of work as stipulat working days. between the pa rties for the in a quotation within 59

It was submitted fbr the Plaintifl' thal since it scheduling memorandum that the Plaintiff ent completion within 59 days. Counsel added that th contract and according to the quotation, the contra days. That the days provided in the quotation wer which were binding, and that payments rnade to th said quotation. That the Defendant cannot now tu etfect of the quotation. Defendant for the sub-division, plotting and titling in Block 562 Kyaggwe Plots 23 and 24, and th 45,000,000/ for the contract, the issue was a s an agreed fact in the joint d into a contract with the f 185 plots of land comprised the Plaintiff had paid UGX eady settled except for the quotation formed part of the was to be completed within 59 not estimates but exact days, Defendant were based on the around to dispute the binding

However, Counsel for the Defendant submitted th by the parties was not valid or binding as it con Contracts Acl which requires that contracts whose five currency points be in writing. Therefore, tha due perfbrmance should fail. Counsel added that th the validity of the quotation but asserts that it s contract. UGX 123,306,000/, it ought to have been in writin paid part ofthe money for the second phase ofthe p held liable as the Plaintifls expectation of the De the oral contract entered into vened Section I0 (5) of the ubject matter exceed twentysince the subject matter was . That since the Plaintiff only ject, the Defendant cannot be ndant's performance without Del'endant does not challenge uld not be referred to as a

) \-/ \,N

I have carefully considered the evidence on rec Counsel and find as follows. A 'contracl'was de Bamwine in Greenboat Enterlainment Ltd v City 580 of 2003 to mean: and submissions from both ed by I lon. Justice Yorokamu ouncil of Kampilu HCCS No.

"ln law, when we talk of a contract, we mean a For a contract to be valid and legally enforcea contract: intention to contrdct; consensus and legality of purpose; and sfficient certainty of ter of them is missing, it could as well be called somet lgreement enforceable at law. le, there must be: caPacitY to dem: valuable consideration, If in a given transaction anY ng other than a conlract."

In this instant case, the Defendant does not deny e Plaintiff and in fact, both parties went ahead wi under the contract. Although not fully given, part Defendant performed two stages of the contract, evidence to suggest that the contract was invalid, between the parties. As to whether or not it is valid that under Section l0 (5) of lhe Contracls Acl Defendant's Counsel, a contract whose subje currency points must be in writing, however, u section, a contract may either be oral or written or tering an oral contract with the performing their obligations nsideration was given and the erefore, in the absence of any find that there was a contract or being oral, it is not disputed 010, which was cited by the matter exceeds twentY-five er sub-section 2 of the same rtly oral and partly written.

In addition, even the Courts have found that oral c fulfil the other requirements of a valid contract. In City Council d Kampala (supra) it was held that: tracts are valid as long as theY recnbout Enlertainment Ltrl v

"ln general, oral contracts are just as valid as wr contract the terms of which have been agreed contrast with a written one, where the contract is ten ones. An oral contract is a spoken contmunication, in wrilten document. ln mY vietv,

whether a contract is oral or written, it must have which I have already spelt above." e essentials of a valid contract,

In the premises, in the absence of any other evide invalid, I find that it was valid and binding on the is settled in the affirmative. e to show that the contract was arties. Therefore, the first issue

#### lssuc 2

#### Whether the Defendant breached the terms of t t contract

Counsel for the Plaintiff defined 'breach ofcontra the quotation to subrnit that the Defendant bre comply with the said timelines. He added that by received feedback or progress update from the De over 60 days into the contract, the Defendant req 10,000,000/ which was paid. He also added that t contract after the Plaintiff engaged lawyers. ' and relied on the timelines in ed the contract by failing to rly 2018, the Plaintiff had not ndant and that in March 2018, ested for an advance of UGX e Defendant only acted on the

In reply, Counsel for the Defendant still referred to Act 2010 and submitted that the subject matter to reduced into writing and therefore that the same event that Court finds that the contract is binding, main obligation was to make timely payment for th That the I't phase was executed in a shorter tim However, that the second phase was fbr UGX 59,8 13,370,000/ was paid until March 2018 when th That the Defendant kept the Plaintiff up to date wi finished progress of the second phase despite 36,440,5001 and subrnitted the deed prints whi ection l0 (5) of the Contracts it UGX 123,306,000/ was not annot be binding. That in the Wl stated that the Ptaintif ls smooth running of the project. because the money was Paid. 0,500/ out of which only UGX UGX 10,000,000/ was added. the progress of the work and e outstanding sum of UGX were acknowledged by the

\$-\*

Plaintifls Counsel in DEX 6 followed by a letter in PEX 5. ritten by the Plaintif ls Counsel

Counsel concluded that Court should find the Pla had substantially performed her obligations as o paid UGX 45,000,000/ out of the UGX 123,600,0 tif'l- in breach as thc Defendant osed to the Plaintill' who only

I have carefully considered the evidence and sub note that whereas the Defendant now alleges bre same was not pleaded in their defence and neithe that effect. Instead, despite the Defendant deny contract between them, they averred that the suit more time to complete the work under paragrap Defence. That notwithstanding, the issue here is contract by the Defendant, so I will restrict myself issions fiom both Counsel and on the part of the Plaintifi the did they file a Counterclaim to g the existence of a binding that. as premature and requested for 8 of the Written Statement of hether there was breach of the

Breach of contract was defined in Ronald Kosi HCCS No. 542 of 2006 the Court defined breach o snte v Shell Ugando Limited contract as:

"breach of a contract is the breaking of the obli which confers a right oJ'action for damages on th treat the contract as discharged if the other party its performance impossible or substantially.fails to is left with suing for damages, treating the cont discretionary remedy. " nounces the contract or make,s tion v)hich a controct imposes, injured party. It entitles him to rform his promise. The victim ct as discharged or seeking a

Whereas it is true that the parties entered into an o is the only written document conceming the c different stages with the amount due properly stip on when the payments should have been made. I contract, PEX I the quotation tract; and whereas it has the ated, it does not have anything this case, the alleged breach is

\--\ failure to complete the work within the 59 days. work should have been completed in 59 working made in on 8'h December 2017, the 59 working da March 2018. At the time of filing the suit in prints nor Titles had been delivered to the Plainti prints were acknowledged by the Plaintifls Coun a year after the 59 working days had expired. Th breach by the Defendant. ccording to PEX l, the entire ays and since part payment was s would run until on or about 7th ember 2018, neither the Deed According to DEX 6, the Deed I on the I lth day of April 201 9, efore, it is clear that there was

However, even when there is no Counterclaim fil unjust and unfair to ignore the fact that the Pl contract by failing to make payments. It is not 123,600,000/ of the contract, the Plaintitf only p outstanding sum. Even if the Plaintilf were to ar complete the work, the Defendant completed th concluded late. Therefore, up to the second p outstanding balance of UGX 36,440,5001. by the Defendant, it would be tiff has equally breached the isputed that out of the UGX UGX 45,000,000/ leaving an that they paid someone else to econd phase, although it was se, the Plaintiff still has an n d d S

I therefore, tlnd that there was cross breach by ei who comes to equity must come with clean han not fully executed its obligations under the said stated, it could have contributed to the delay in co was never raised in the beginning, the Defend liability. They only asked for more time within answer to the question at hand, despite the fail Plaintiff, there was breach of contract by the De answered in the affirmative. er party. It is trite law thal 'he '. The Ptaintiff in this case had ntract, therefbre, just as DWI to complete payment by the ndant. Therefore, this issue is pletion of the work but since it t cannot rely on it to escaPe hich to complete the work. In

\N'U

### Issue 3

# Whether the Defendant's actions occasioned loss of reputation and economic loss to the Plaintiff?

The Plaintiff's Counsel relied on PW1's evidence of angry messages on their customers' WhatsApp group saying they were fraudsters for failing to provide their titles. He added that PW2 also said their reputation was tainted in the eyes of their clients, customers, development partners and that the project development was delayed causing them economic loss. He added that several customers terminated their purchase agreements and demanded for a refund as well as lost potential clients. He concluded that the Plaintiff suffered reputational damage.

In reply, Counsel for the Defendant relied on the evidence of DW1 who stated that the plots were offered to the public in 2015, before this project commenced and that he was not aware of the offer. He added that as a professional he would not have advised them to go on with the offer before the definitive plots had been finalised considering the huge chunk of land. That the said loss cannot be imputed on the Defendant except if the offers were made upon the advice of the Defendant. He relied on the case of *Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963] 2* ALL ER where a duty of care arises where someone possessing special skill undertakes to apply that skill to assist another person who relies on that skill.

Counsel submitted that the Plaintiff undertook an investment decision before and without consulting the Defendant, and that they are looking for an escape route in the Defendant. He also added that the Plaintiff failed to substantiate the buyers whose money was refunded and how many had bought the land.

Upon careful consideration of the submissions and evidence on record, I find that for this issue to be proved, there must be a direct link between the defendant's

actions and the loss suffered by the Plaintiff, in o one to be liable for loss of reputation to another, malice is presumed to exist when there is intentio that the matter in question could bring disreput Odongo & Another Civil Suit No. 65 of 20ll). er words, causation. In law, for ice should be established, and o bring disrepute or knowledge to the person (See Angwee v

ln this case, no evidence was produced to s that the delay was from the Lands Office of Muko were not aware that the Plaintiff had made public that had he known, he would never have advis huge chunk ofthe land. maliciously in delaying to acquire the titles so as or that they had intention to do so because from ow that the Def'endant acted o. In fact, DWI stated that they ers for the said land, he added them to do so considering the bring disrepute to the Plaintiff e evidence of DW l, it appears

In relation to the economic loss, whereas the Plai the duration of time of 59 working days cited by t is also true that the WhatsApp group according to before this project came into existence. Also fr contract between the Plaintiff and its customers in is evident that the Plaintiff had sold to them the la before they entered this contract with the Defen failure to deliver the said titles within 59 working said economic loss and reputation damage' iff contends that they relied on Defendant in the Quotation, it Wl was created in 2016, waY the dilferent termination of ab W ofthe PTB pages 8-19, it d between 2015 and 2016 waY t, theretbre, the Del'endant's ays cannot be the cause of the

Even though one argued that there is a possibitity the problem, the Plaintifls own failure to fully ignored therefore, the Defendant cannot be entirely the premises, this issue is answered in the negative. hat the delay further escalated ay lbr the services cannot be liable for the economic loss. In

e-b

#### Issue 4

## What remedies are available to the parties?

On the remedies available to the parties, the Plain remedies; 1T had prayed 1br the following

- a. A declaration that the Def'endant breached in the affirmative. Therefore. a declarat Defendant was in breach of its contract with contract, which was answered n is hereby issued that the e Plaintif l. - b. The Plaintiff also prayed for a declarati Defendant's breach, the Plaintifl' sul tered Ioss which was answered in the negative, th this effect. that the as a result of the utation damage and economic fore no declaration is made to - c. General damages.

It is trite law that the award of the general damage fiom the direct, natural and probable conseque omission in breach of the contracl (See Uganda [20021 E. A 293, and James Fredrick Nsubugo v Civil Suit No. 13 of 1993). is a discretion of Courl arising ce of the defendant's act or mmerciul Bunk v Deo Kigozi ttorney General, High Court

The Defendant in this case failed to deliver the tit Whereas the delay may have been beyond their follow up swiftly as the letter that was written to Officer to expedite the process was written on l0 after the 59 working days had expired in March. also not completed payment towards completion o probably have enabled the Defendant to expedite c s within 59 days as projected. ontrol, the Defendant did not e Principle Land Management August 2018, several months t then again, the Plaintiff has he second phase which would pletion of the said work.

q-\$

In the circumstances, I find this is an appropriat damages of UGX 1,000,000/: to the Plaintiff be been infringed, it has not sustained any actual d submission that has not been disputed' The Defen challenges at the Ministry of Lands/ Mukono L arises from the Plaintiff s conduct in delaying to the Defendant and actually owes them a bal control and resulted in further delays in completi have been prudent for them to inform the Plaintiff tllne. case for the award of norninal use while its rights may have ge and, if at all, the same also ant also appears to have faced nd offlce that were out of its ake the requisite payments to ce of Ugx 36,400,000/:, a the assignment, but it would the same and request for more

d. Exemplary damages

that punitive damages are awarded to punish the repeating the wrongful act. Further, in the case of ln Fredrick Zaabwe v Orient Bank & 5 Othets anrl another lt965l I EA 484,the Court elaboratel under which exemplary damages are awarded and wrong complained of was an oppressive, arbitrary servant of the government, and cases in which th calculated by him to make a profit for himsel compensation made to the defendant. 071 HCB Vol. 29, it was held efendant and deter him frorn unji Nartn Pstel v Noor Essu laid out the two circumstances ese include: cases in which the or unconstitutional action bY a Defendant's conduct has been which may well exceed the

In this instant case, it is apparent that the De govemment therefore it does not fatl within the fi has not adduced evidence to show that the Defend self-enrichment. In the premises, this prayer for ex dant is not a servant of the category and also the Plaintiff t's conduct was calculated for plary damages fails.

s\*\b

e. Interest on general damages at commercial date ofjudgment till payment in full. te of30% per annum m the

The award of interest is provided for under Seclio Cap 71. Having awarded nominal damages as abo prayed by the Plaintiff. 26 of the Civil Pro Act , I decline to award tas

f. Costs of the suit

The law on costs is in S.27 (2) ttf the Civil Proc e Act which provides:

"...costs of any action, cause or matter shall follo reason orders otherwise " . event unless court good

Given the circumstances of this case, each party wi bear their costs ol the

'{L,\ \*(^^r'

# HON. LADY . IUSTICE ANNA B. I\TUGENYI

DATED: l5ll2l2023