Lubega v Lubega and 5 Others (Civil Appeal No. 49 of 2019) [2023] UGCA 115 (15 February 2023)

Full Case Text

# THE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

(Coram: Catherine Bamugemereire, Stephen Musota and Muzamiru M. Kibeedi, JJA)

# CIVIL APPEAL NO. 49 OF 2019

**................................ APPELLANT** DRAKE LUBEGA ::::::::::::: $10$ **VERSUS** 1. LUBEGA ROBERT $\mathbf{1}$

- 2. MEGAN JOAN NAMÚTEBI 1 - 3. JOSEPHINE NASSALI - 4. EMMA NDUGWA 15

5. MUSA NDAULA

$\mathsf{S}$

] :::::::::::::::::::::::::::::::::::: 6. ALEX BWANIKA

[An appeal from the judgment of the High Court of Uganda at Kampala, Commercial Division, (Lady Justice Elizabeth Jane Alividza) dated the 24th day of January, 2019 in Civil Suit No. 875 of 2014 and 705 of 20141

# JUDGMENT OF MUZAMIRU MUTANGULA KIBEEDI, JA.

## **Introduction**

This is an appeal arising from the judgment and orders of Hon. Justice Elizabeth Jane Alividza made on the 24th day of January, 2019 in Consolidated Civil Suits No. 875 and 705 of 2014 of the High Court of Uganda, Commercial Division at Kampala. The Appellant was the 3rd Defendant in the High Court while the Respondents were the Plaintiffs. The other Defendants did not appeal against the decision of the High Court.

This appeal exposes one of the common challenges associated with subleasing of commercial premises by tenants. The practice of having three or more layers of "subtenants" in respect of the same property is not an unusual practice in what is commonly

referred to as the "downtown" of Kampala Central Business District as this dispute shows.

#### Backqrpund facts

35 The background to this appeal as established by the trial court is that a one Christopher Saazi 12no defendant in the original suit) was a tenant on Plot 6 Nakivubo Road, Kampala. He sublet part of his premises to lVls. Teopista Nabbale (the 1.t defendant in the original suit). Ms. Nabbale sold her space to the 1st respondent as goodwill at the consideration of Ugx 30,000,0007= (Thirty Million Uganda Shillings Only). After receipt of the payment for the goodwill, Ms. Nabbale introduced the 1't respondent to the 2no defendant as the new occupant and successor to her space. The 1't respondent then took over possession of [Vls. Nabbale's former space. He, in turn, let out part of that space to the rest of the respondents who henceforth became his "tenants". They all operated from the same shop on Plot 6 Nakivubo Road, Kampala, known as "Jesus Cares Enterprises". They were dealing in women clothes and other goods, The 2no to 6tt respondents used to pay their rent to the 1't respondent who, in turn, used to pay rent to the 2no defendant, Christopher Saazi. The 2no defendant used to acknowledge receipt of the rent paid to him by the 1.t respondent. The 2no defendant was the tenant of the owner of Plot 6 Nakivubo Road, Mr, Anil Shamji. 40 45

50 On 1Oth June 2014, Anil Shamji wrote a letter addressed to all tenants of Plot 6 Nakivubo Road notifying them that the property comprised in Plot 6 Nakivubo Road was sold to Tesco lndustries Limited and that the company became the effective landlord from 07th June 2014. The letter was copied to the Local Council 1 Chairperson of Nakivubo Business Community. On 27n July 2014, when the respondents reported to work as usual, they found their shop had been locked without being given prior notice by anyone. They contacted the 2no defendant (Mr. Saazi) about the closure. Mr. Saazi informed the Respondents that the building on which the shop was located had changed ownership. They were further informed that the appellant was now the new owner and that he is the one who had closed the shop, The respondents contacted the Appellant who informed them that the rent was increased from Ugx 2,500,000 to UGX. 5,000,000/= per month, and that they should pay six months in advance. The respondents could not afford the revised rent and requested the appellant to open the shop and allow them to remove their goods to another building, but he declined. 55 60

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The respondents subsequently learnt that there were issues between the 2no defendant and the appellant regarding the closed shop and requested the 2na defendant to meet the appellant to resolve them, but the 2no defendant declined to meet the appellant. ln a way, the respondents became the victims of the issues between the appellant and 2no defendant.

65 70 On211012014 the 1st Respondent instituted Civil Suit No. 705 of 2014 against his landlord, Christopher Saazi 12,0 defendant) for the recovery of UGX 170,000,000/= being money that was lost when his shop was unlawfully locked. The 1't respondent claimed that he was making losses of UGX 250,000/= per day for not selling his goods. On '16/'1212014, lhe Respondents filed Civil Suit No. 875 of 2014 against Teopista Nabbale, Christopher Saazi and the Appellant for a declaration that the closure of their shop was unlaMul and an order that the same be re-opened. They also sought damages caused by the closure, Civil suit No.

705 of 2014 and 875 of 2014 were subsequently consolidated by the trial court,

lVls. Teopista Nabale and Mr. Christopher Saazi denied the respondents' claims.

75 As for the appellant, he likewise denied knowing the plaintiffs/respondents or dealing with them in any way or even locking up their shops. He claimed that he never let or othenruise leased out any property to the respondents as he did not own any building at the said suit premises and never locked up any shops belonging to the plaintiffs/respondents.

80 After hearing the suit, the learned High Court Judge found Mr. Christopher Saazi liable for breach of his tenancy arrangement with the 1st Respondent. The trial court further found that the appellant's actions after acquisition of the property which had sitting tenants that resulted in the locking of their shop and eventual confiscation of goods of trade was high handed and unlaMul and held him liable for the loss incurred by the respondents. Court accordingly entered judgment in favour of the respondents and made the following Orders: -

1. That the 2no defendant should refund to the respondents rent, UGX, 5,000,000/= with interest at the rate of 230/o pil annum from June 2014 until payment in full.

2. That the appellant pays the respondents general damages of UGX. 150,000,000/= with interest at the rate of 23o/o per annum from date of Judgment until payment ln full.

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- 3. That the appellant pays exemplary damages of UGX. 350,000,000/= with interest at the rate of 230/o p\$ annum from date of judgment until payment in full. - 90 4, The 2no defendant pays 30% of the costs of the suit while the appellant pays 70% of the suit costs.

The Appellant was dissatisfied with the decision of the High Court and appealed to this Court.

### Grounds of Appeal

- 95 The appellant set out the following grounds of appeal in his Memorandum of Appeal: - - 1. The learned trial judge erred in law and in fact when she failed to evaluate all evidence on record and therefore arrived atthe wrong conclusion. - 2. The learned trial judge erred in law and in fact when she failed to evaluate all evidence on record and concluded that the appellant was liable for the plaintiff s Ioss - 3. The learned trial judge erred in law and in fact when she failed to evaluate all evidence on record and therefore arrived at the wrong conclusion that the appellant needed a special certificate to levy distress for rent. - 4. The learned trial judge erred in law and in fact when she ignored the evidence of the respondenfs where they clearly proved that the property was purchased by M/S Tesco lndustries Ltd and not the appellant. 105 - 5. The learned judge erred in law and in fact when she failed to properly apply the law on lifting the veil of incorporation and held the appellant personally liable.

6. The learned judge erred in law and in fact when she faited to properly appty the law on award of damages and awarded excessive damages against the appellant.

The appellant ended by praying to this court to set aside the judgment and orders of the High Court in Clvll Suits 875 and 705 ot 2O14; dismlss the sult agalnst the appellant with costs in this court and in the High Court.

### Representation

115 When the matter came up for hearing before this court, the Appellant was represented by, Mr. Adam Kirumira. The Respondents were represented by IVlr. Hudson Ssegawa. The Appellant, 1st and 2ro respondents attended court.

Both Counsel sought and were granted leave by this Court to adopt their respective Conferencing notes and Written submissions and the same have been considered.

#### Appellant's Submissions 1.20

ln his written submissions on ground one, Counsel faulted the learned trial judge to have found that the appellant had held out to be the landlord to the respondents in total disregard of the respondents' own documentary evidence, Exhibit PEXZ, to the effect that the suit building had been sold to Tesco lndustries Limited and not the appellant. That this contravened the parole evidence rule provided in Section 91 of the Evidence Act and the authorities of Giuliano v Claudio Casadio SCCA No. 16 of 2014 and Edirisa Karenqet Musiwa v Paul Mtambo HCCS No. 682/2002 to the effect that where words in a document are clear or plain, parole evidence is not admissible to vary it; but where they are unclear, then the clarity can be ascertained by calling parole evidence.

130 Counsel argued that the documentary evidence adduced by the respondents proved that the building in question was sold to Tesco lndustries Limited and not the appellant and, accordingly, the appellant was never personally liable as he is separate and distinct from Tesco industries Ltd.

On ground 2, Counsel faulted the learned trial judge to have found the appellant liable for the 13s loss claimed by the respondents when he was not privy to the tenancy agreement which the trial judge found as having existed between the 1st respondent and the 2no defendant. Counsel submitted that the respondents' witnesses, PW2 and PW3, admitted in their evidence that their landlord was Mr. Robert Lubega, the 1't Plaintiff/Respondent. That the evidence before the trial court showed that none of the respondents had a tenancy 140 agreement with the appellant or Tesco lndustries Ltd, Further, that neither the appellant nor

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Tesco lndustries Ltd ever let the suit premises to anyone of the respondents. That in those circumstances, contended Counsel, there was no contractual relationship between the respondents and the appellant or even Tesco lndustries Ltd or Anil Shamji upon which court could base its decision to make the appellant liable for the respondents' claims. For this submission, counsel relied on the doctrine of privity of contract and cited the authority of Tweedle Vs. Atkinson 1861 1 B & 393 to the effect that privity of contract means and only means that a person cannot acquire rights, or be subjected to liabilities, arising under a contract to which he is not a party.

Counsel further cited the authority of Mwangiv Braeburn Ltd CA Kenya Case No. 12 of 2004 1so and Gottish Food Processors M Ltd & Pan world Co. v Eqvpt Air Corporation T/A Eqyptiar Uqanda SCCA No. 15 of 2001t0 emphasize the point

Counsel concluded that once the trial court found that the respondents enjoyed rights as tenants, then the said rights were against their landlord, the 2no defendant, and not the appellant.

155 160 165 On ground 3, Counsel submitted that the appellant was, in the alternative, cushioned against liability by the Distress for Rent (Bailiffs) Act. Counsel argued that was once the learned trial judge held that the appellant had held himself out as the landlord, she could not, in the same breath, hold that he needed a Special Certificate to levy distress for rent. That even Tesco lndustries Ltd, the proper owner of the property is a Corporation which had to act through its officers who did not need the said certificate to levy distress for rent. Counsel cited Section 2 of the Distress for Rent (Bailiffs) Act which allows the landlord "in person" to distrain for rent without acquiring the said Special Certificate. That the use of the word "in person" in the said Section refers to both natural and legal persons and that Companies as legal persons can do anything in person through their agents or legal representatives just as natural persons. He cited Yoka Rubbber lndustries Vs. -Diamond -Trust Prgeerties SC-CA No. 8 of 2013to support the above submission. He contended that Ronald being an employee of the appellant, in the absence of the evidence to the contrary, acted on behalf of Tesco Ltd in

distressing rent and accordingly his actions were laMul and the trial judge erred to hold the appellant liable in those circumstances.

- 1.70 Counsel argued grounds 4 and 5 jointly. Counsel faulted the trial judge for failing to appreciate and apply the law on corporate personality and lifting the corporate veil. lt was Counsel's submission that the evidence led by the respondents clearly showed that Tesco lndustries Ltd was the owner of the building. That Tesco lndustries Limited being a separate legal person from the appellant, the trial judge erred to have held the appellant liable when - the evidence before court showed that the owner of the suit property was Tesco lndustries Ltd and not the appellant. Counsel ciled Salmon v Salmon & Co. Ltd 1897 AC 22 for the submission that a company is a separate legal entity from its shareholders and directors. 1.75

Counsel further contended that the respondents never led any evidence to prove the circumstances under which the corporate veil could be lifted as set out under Section 20 of

the Companies Act to wit, upon proof of tax evasion or fraud. As such, it was erroneous for the trial judge to hold the appellant personally liable without the respondents first satisfying the conditions under which the corporate veil of the owner of the suit building, Tesco lndustries Limited, can be lifted. 180

With regard to ground 6, Counsel submitted that the award of the damages to the respondents was based on a wrong principle and thus excessive. Counsel argued that the respondents failed to prove their special damages, and the learned trial judge did not show how he arrived at awarding Ugx 150,000,000/= as general damages. Counsel cited Bank of Uganda Vs. Betty Tinkamanyire SCCA No. 12/2007 where it was held that the appellate court will interfere with the award of damages by the trial court if it is shown that the irial court has acted upon a wrong principle of law or that the amount is so high or so low as to make it an entirely erroneous estimate of damages to which the plaintiff is entitled. 185 190

It was Counsel's contention that the respondents did not prove what they lost and so the trial court had no basis upon which to eetimate the general damages of Ugx 150,000,000/= awarded, Counsel cited the case of G. W Lutava T/A New Park Restaurant & Stores v

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195 Hassam Shami Raujj &2 Ors HCCS No.415 /2005 where the same building was in issue and the defendant locked up the restaurant and store of the plaintiff. He had claimed UGX. 202,408,000/= but the court awarded them 15,000,000/=.

200 On the award of exemplary damages of UGX. 350,000,000/=, counsel submitted that the appellant could only be liable if he was a servant of government who acted oppressively, arbitrary or unconstitutionally or procured himself some benefit at the expense of the respondents which was not the case in the instant matter. For this position he cited the case of )bonqo & Anor v Municipal Council of Kisumu [19711 EA 91.

205 Counsel further argued that it was wrong for the learned trial judge to hold that the appellant's action of closing the shop and confiscating the goods was high handed yet the issue before court related to non-payment of rent. Counsel submitted that the law permits a landlord to distress for rent and since exemplary damages are meant to punish, awarding them against a landlord exercising his legal rights would tantamount to punishing the appellant for exercising his legal rights.

21.0 Counsel concluded by praying that the appeal be allowed, the judgment and orders of the trial court set aside, and the costs of the appeal and the court below be granted to the appellant.

### The Respondent's Replv

275 The Respondent submitted that the appellant lacks the locus standito fault the learned trial judge for not evaluating evidence on the ground that he did not avail the trial court evidence for evaluation, Counsel argued that the word "evaluation" denotes a method/process by which a judge assesses the evidence of one party as against the other. That in the instant case, the appellant's Witness Statement having been expunged from the record on account of his failure to turn up for cross examination, the appellant had no evidence on record on which the trial could base to negate the respondents' facts. Counsel relied on the decision of thls Court ln Kamya Vs llon Makumbl Kamya & Anor (Election Petition Appeal 1O9 of 2016) [2014 UGCA 25 where the appellant's complaint against the trial court for failure to

2ZO

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evaluate the evidence was rejected on the ground that there was no evidence to evaluate since the appellant's Affidavit evidence before the trial court had been expunged for noncompliance with the llliterates Protection Act.

225 The appellant concluded his objection by arguing that after the appellant's evidence had been expunged, what remained was his pleadings yet determination of rights and liabilities depends on evidence and not pleadings, That statements in pleadings unless admitted by the adversary \$ proved by evidence of the party that presents them, the alleged facts remain unproved. He referred John Kisukye Vs. Safi.sh Chandra R. Shah & Ofhers CS

#### 230 No.723 of 2007.

Without prejudice to the above objection, it was Counsel's contention in respect of ground 1 that the respondents led evidence that proved that the acts of closing the shop and confiscating the goods were personally done by the appellant, not as an agent of Tesco lndustries Ltd. That the ownership of the building was not in issue as it was the appellants act and conduct that was and whether he was liable for the losses incurred. That the appellant cannot argue on the basis of PEX2 that since the building was owned by Tesco

lndustries Ltd, he was not liable.

On ground 2, Counsel retaliated his submission on ground 1 and added that the issue of privity of contract was never a subject of investigation in the High Court and is new on

240 appeal. That the issue in contention was who closed the shop and confiscated the goods, not whether there was a contract between the appellant and the respondent. That even then, the doctrine of privity is not a defence for illegal closure and detention of goods and this court should not allow itself to set a bad precedent where someone will illegally close people's business and confiscate their goods and then set up a defence that they have no contract

245 with them,

> On ground 3, it was submitted for the respondent that the question of distress for rent could not arise as the appellant in ground 1 and 2 denies ownership of the building. Therefore, he

> > Poge 9 of 24 cannot, in the same breath, seek to take benefit of the rights of a landlord who did not need a special certificate to levy rent.

- 2s0 Counsel further argued that distress for rent was not an issue at trial but was only brought up when the learned trial judge by way of analogy that in case the appellant wanted rent, he ought to have got a special certificate to distress, Therefore, arguing this point before this court is purely academic or moot. - On grounds 4 and 5, counsel reiterated his earlier submission in grounds 1 and 2 and 2ss submitted that the issue of lifting the corporate veil cannot arise at this stage since there was no evidence produced in the lower court to prove that the appellant was acting on the instructions of Tesco lndustries Ltd and the authorities cited therein were out of context.

On ground 6, Counsel submitted that the learned trial judge acted on the right principles on the award of general damages and that the award of UGX. 150,000,000/= was on a lower

260 scale compared to the circumstances of the case where the shops were permanently closed, and goods taken. That the reason why the respondents failed to prove the special damages was because during the confiscation of their goods by the appellant, their books of accounts were also taken without taking stock of what was in the shop. That under Section 1 13 of the Evidence Act, court can presume the existence of certain facts and that the award of UGX, 26s 150,000,000/= was fair given the circumstances.

Regarding the award of exemplary damages, counsel submitted that the appellant never pleaded distress for rent as the basis for closing and confiscating the goods and thus the acts of the appellant remain undefended, unexplained and high handed.

Regarding the circumstances under which exemplary damages may be awarded, Counsel 2to submitted that the appellant's conduct was not only high handed but calculated to procure benefits to the appellant as he took the goods and there was no evidence that he returned them. He deprived the respondents of their livelihood. Therefore, the award of UGX. 350,000,000/= was proper and should be maintained as it sends a signal to people like'the appellant who act with impunity.

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275 Counsel concluded by praying that the judgment and orders of the trial court be maintained, and the appeal dismissed with costs.

#### Appellant's submlssions in reioinder

280 ln rejoinder, counsel submitted that the respondents in their evidence proved that Tesco lndustries Ltd bought the building and that the Notice of change of ownership (PEX2) was a crucial document in determining whether the appellant was liable for the losses suffered by the respondent. That the trial judge totally disregarded this crucial piece of evidence and failed to apply the parole evidence rule and disregard other evidence outside the written document,

285 On ground 2, counsel submitted that the learned trial judge made the 2,0 defendant liable basing on the fact that there was a landlord tenant relationship between them, and the judge could not later fault the appellant on the same contract yet he was not a pafty to it. That no relationship was found between the appellant and the respondents that would form a basis for liability by the appellant.

290 On ground 3, counsel submitted that the appellant did not hold himself as a landlord as alleged by the respondents, That he argued this ground in the alternative and stated that Tesco lndustries Ltd was the proper owner of the building which acted through its officer the appellant who, under the law, did not need to acquire a special certificate for distress.

On ground 4 and 5 counsel argued that the issue of lifting the corporate veil did not first arise on appeal. That it arose during the trial court when the trial judge held that court can lift'the veil and hold officers of a company personally liable in cases of misconduct and fraud.

On ground 6, counsel reiterated his earlier submission and contended that the award of UGX. 150,000,000/= as general damages was exorbitant. As for the exemplary damages, Counsel argued that the principle of oppression, arbitrariness' or unconstitutionality applies to government officials and that the principle of financial gain by the defendant is not applicable to this appeal. That the damages awarded amount to unjust enrichment as the appellant did not in his personal capacity take any goods belonging to the respondents.

Counsel reiterated the earlier prayers to this court to allow the appeal with costs.

# Duty of the court as a lst appellate court

305 As a 1st appellate court, it is the duty of this court to re-appraise all evidence that was adduced before the trial court and come to its own conclusions of fact and law while making allowance for the fact that the court neither saw nor heard the witnesses testify. (See: Rule 30 (1)(a) of the Judicature (Courl of AppealRules) Directions, S.l 13-1 0', Fredrick Zaabwe vs. Orient Bank Ltd Civil Appeal No. 4 of 200il.

Similarly, in Kifamunte Henrv vs. Uqanda SCU Cr. Appeal no. 10 of 1997 lhe Suoreme Coutl, o[ U-qanda held that:

"The first appellate couft has a duty to review the evidence of the case, to reconsider the materials before the trial judge and make up lfs own mind not disregarding the judgment appealed from but carefully weighing and considering it."

It is with the above principles in mind that I will proceed to resolve the appeal.

#### 315 Consideration of the Appeal

3L0

A close examination of the appellant's grounds of appeal as set out in the Memorandurn of Appeal, shows that the Appellant's complaints in grounds one to five revolve around the evaluation of evidence by the trial judge before concluding that the Appellant was liable for the loss suffered by the Respondents as a result of the closure or lock up of the shop they were renting, and theirconfiscated merchandise. Accordingly, lwill resolve grounds 1,2,3,4 and 5 jointly. Thereafter I will resolve ground 6 separately.

# Grounds 1,2,3,4 and 5

The above grounds of appeal were couched as follows:

. Ground 1: The learned trial judge erred in law and in fact when she failed to evaluate all evidence on record and therefore arrived at the wrong conclusion.

. Ground 2: The learned trial judge erred in law and in fact when she failed to evaluate all evldence on record and concluded that the appellant was llable for the plaintiff s loss

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- a Ground 3: The learned trial judge erred in law and in fact when she failed to evaluate all evidence on record and arrived at the wrong conclusion that the appellant needed a special to levy disfress for rent. - o Ground 4: The learned trial judge in law and in fact when she ignored the evidence of the respondents where they clearly proved that the property was purchased by MlS lesco lndustries Ltd and notthe appellant. - 33s . Ground 5: The learned judge erred in law and in fact when she failed to properly apply the law on lifting the veil of liable. oration and held the appellant personally

340 345 As I have already stated, the gist of the appellant's complaint in grounds 1 to 5 revolves around the evaluation of the evidence by the trial court as to the liability of the appellant for the loss suffered by the respondents following the closure of the shop rented by them on Plot 6 Nakivubo Road, Kampala and confiscation of the respondents' merchandise which was in the shop. The appellant faulted the trialjudge in holding the appellant liable in total disregard of the documentary evidence on the record which proved that the property on which the respondents' shop was located belonged to Tesco lndustries Limited and not the appellant; the principles of corporate personality under which Tesco lndustries Limited was a different legal person from the appellant; the principles of privity of contract; and the law as to distress of rent which entitled Tesco lndustries Limited to levy distress for rent through the appellant, as its officer, without first obtaining a certificate of Distress.

350 The respondents disagreed. They supported the trial court's findings. However, they contended that the appellant did not have locus sfandi to fault the evaluation of the evidence by the trial court in so far as he had not adduced any evidence before the trial which the trial could base to negate the respondents' facts.

ln the circumstances above, I will first resolve the objection of the respondent before resolving the substanco of groun ds 1,2,3,41n0 S.

35s

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# Failure of appellant to add evidence before trial court.

The term "Locus standf' is simply a Latin expression for "place of standing". The term has been defined by Black's Law Dictionary, 8th Edition, to mean "the right to bring an action or to be heard in a given forum".

360 ln the context of appeals, the right to institute an appeal is a creature of statute. See: Attorney General Vs Shah (No.\$ [19711 EA 50. Therefore, the appellant's "Locus Standi" before this court is inextricably intertwined with his right to institute an appeal to this court against the impugned decision,

365 370 The appellant was a party to the original proceedings in the High Court as the 3'o defendant. The High Court passed judgment against him on 24th January 2019. The appellant being dissatisfied with the judgment and orders of the High Court had a right to appeal to the Court of Appeal by virtue of Section 66 of the Civil Procedure Act, Cap.71, and Section 10 of the Judicature Act, Cap. 13. The right is not conditional upon the appellant having adduced evidence in the High Court in support of his case. Failure to adduce evidence does not, by itself, automatically deny a party the right to fault the manner in which the trial court evaluated the evidence. The respondents having been the plaintiffs in the trial court had the burden of proof of their case to the prescribed standard and the absence of the appellant's evidence did not render the burden and standard of proof any less. See: Mufekanga Vs

375 Upon instituting the appeal, the appellant is entitled to move this court to invoke any or all its powers in his favour. Such powers include auditing the High Court's evaluation of the evidence before it and confirming whether the trial court in discharging its mandate met the standards of the law and that its findings as to facts and law were justified. This by virtue of Rule 30 of the Court of AppealRules which requires this court to re-appraise all the evidence before the High court and arrive at its own conclusions of fact and law.

Equator Growers (U) Ltd [1gg5 -lggS1. 2 EA 219.

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I would accordingly reject the objections raised by the respondents as to the /ocus standi of the appellant to raise the grounds of appeal faulting the trial Judge in her evaluation of the evidence before on account of his failure to adduce his own evidence before the trial cout1.

## Resolution of the substance of qrounds 1,2,3,4 and 5

- 385 The respondents' claim against the appellant which the trial court was required to investigate was for declarations and consequential damages for unlawfully closing their shop and conversion of their goods which were in the shop at the time of closure. The respondents set out their claim in the Amended Plaint filed in the trial court thus: - " 4(a) The [respondents] are buslness men and women who have been operating a shop on Plot 6, Nakivubo Road Known as Jesus Cares Enterprises dealing in women clothes, jewelries, boots and other merchandise...

a@ On 27th of July 2014 the [respondents] who had come to operate their shop as Ltsual, found the shop c/osed without notice from anybody.

4(e)The [Respondents] contacted the 2nd Defendant who was their Landlord about the closure and [he] informed them that the building where the shop is had changed ownership to the [Appellant] and he was the one who c/osed the shop.

> a(fl The [Respondents] contacted the [Appellant] who informed them that the rent was increased from 2,500, 000ft to 5,000,000/= and they should pay 3 (Three) months in advance, an amount which the [Respondents] could not afford.

40s 4(g) The [Respondenfs/ asked the [Appellant] to open the shop and remove their goods to another building but the [Appellant] declined to open the shop saying that he had lssues with the 2na Defendant concerning the very shop which had to be resolved first. However, the 2no Defendant declined to meet the [Appellant] to resolve fhe rssues though contacted by the [Respondents] in a bid to rescue their busrness. 400

> afi) The [Respondents] reported the [Appellant and the other] Defendants to various offices including KACITA, Police, Ministry of Trade and lndustry, and UTENSA but with no success.

410 5) The [Respondents] aver that the relationship and disputes between [the Appellant and the otherl Defendants were never disc/osed to them and the same cannot be the reason for closing their shop and taking away their merchandise.

> 6) As a resu/f of the [appellant's] unlavtful actions, the [respondents] have lost their stock in the shop, busrness, cusfomers, profits, job and respect from the society plus mentalanguish."

> > Poge 15 of 24

- 415 The respondents sought general, special and exemplary damages on top of the following remedies: - a) "A declaration that the closure of the [respondenfsJ shop and business knouvn as Jesus Cares Enterprises was unconstitutional, illegal and unlavtful. - b) A declaration that the confiscation of all the [respondents'] merchandise and subsequent relocation to unknown place by the [Appellant] was illegal and unlav'rful."

425 430 ln the appellant's Written Statement of Defence to the Amended Plaint, the appellant simply denied the respondents' claims. He also denied being liable for the loss suffered by the respondents. Nowhere did he plead - whether in the alternative or otherwise - any of the points of mixed law and facts which he has raised on appeal as a basis to fault the trial court's evaluation of the evidence namely: that the actions complained about were executed by the appellant in his capacity as a director or agent of the owner of the suit building, Tesco lndustries Limited, which is a different legal person from its shareholders and directors which shielded him against personal liability; or that he was not privy to the contract pursuant to which the respondents got to occupy the suit building; or that his closure of the premises was on behalf of and in the name of Tesco lndustries Limited, in exercise of the landlord's power to distress for rent. The appellant's Defence to the respondents' claims was simply stated

> ' ...5(t) The [appellant] has never let any busrness premises to the [respondents] and they are not known to him.

S(ii) The fappellant] does not own any building on Plot 6 Nakivuboa Road, the alleged place where the [respondents] carry out fheir bustness,

S(iii) The [appellant] has never locked any shop belonging to the [respondents] nor retained any goods belonging to the [respondents],

S(iv) The [appellant] has never dealt with [the respondenfsJ in regard to their alleged tenancy and the [respondenfsJ sha// be put fo sfrrct proof of their allegations.

5(v) The [appellant] denies receipt of communication from Kacita, Police, h/linistry of Trade and lndustry or Utensa and shall put the [respondenfsJ to sfrrcf proof of the same."

ln those circumstances, the appellant is barred from raising matters which were neither 445 pleaded in his Defence nor evidence led by the parties in respect thereof, See.' Geresom

thus: -

Rwabogo Vs Tereza Kyatifu, Court of Appeal Civil Appeal No. 55 of 2009; lntertreight Forwarders (U) Ltd ys. Easf African Development Bank, Supreme Court Civil Appeal No. 33 of 1992; and Monday vs Attorney General, Supreme Court Civil Appeal No. 16 of 2010 (both unreported).

450 The aforesaid notwithstanding, the trial Court in its judgment held that the closure of the business premises and the taking away of the respondents' goods were unlaMul and amounted to conversion. I note that the appellant has not challenged this aspect of the court's decision by way of appeal. The appellant's focus on appeal is about the finding of the trial court that the appellant was liable for the loss arising from the unlawful closure of the respondents' shop and conversion of their merchandise. 455

I have closely examined the pleadings before the trial court. As I have already stated, the respondents pleaded that their shop was unlaMully locked by the appellant and that the conversion of the respondents' goods in the closed shop was done by the appellant. That the said actions had resulted in the loss which they set out in detail in the Amended Plaint and sought to recover from the appellant, The respondents thus bore the burden of proof of their claims before the trial court on a balance of probabilities.

I have also closely reviewed the respondents' evidence in proof of their claims. The trial judge aptly set it out in detail in her judgment. But in summary, after the closure of the respondents' shop, they and the appellant had meetings in which the appellant required them to pay the revised rent before he could re-open the closed shops for them. This fact was proved by the evidence of PW1, PW2 and PW7 which the trial court found to be credible.

The 2no defendant also told the trial court that it was the appellant who had closed the shop. The trial court found the 2no defendant's evidence as corroborating that of the preceding witnesses.

the appellant's manager, in the company of the Police, were seen by PW4 removing the

There is also evidence to show that the shop remained locked till 26th February 2015 when

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merchandise from the locked shop and taking them to an unknown place. The trial court found PW4 to be a fairly independent witness and his evidence credible.

475 480 Further, PW1 stated that while they were in court, he got information from Lubega Sseninde Robert, one of the tenants on Plot 6 Nakivubo Road, that the appellant's Manager, Ronald Muhwezi, had gone to the building with the Police and were removing the respondents' merchandise from the premises. That he immediately rushed to Plot 6 and found Ronald Muhwezi parking their goods, That he knew Muhwezi as the appellant's manager. That the goods were taken to an unknown location. Clearly, PW1 was an eyewitness to the conversion of the merchandise and his evidence was direct and admissible.

ln those circumstances, the respondents discharged their burden to prove that the appellant was liable for the loss arising from his actions. Thereafter, it was incumbent upon the appellant to adduce evidence to prove his contention that his actions were in the capacity as 48s an agent or officer of Tesco lndustries Limited, The appellant completely fell short in that aspect. He neither pleaded no adduced any evidence to rebut the respondents' evidence of personal liability, lnstead, the appellant opted to raise those issues in the Written Submissions filed before the trial court. Submissions by themselves are inadequate for the task in the absence of pleadings and/or supporting evidence on the part of the appellant.

4e0 ln the premises, the trial court cannot be faulted for finding the appellant liable for the unlaMul closure of the respondents' shop and conversion of their merchandise. Not being an owner of the building as claimed, could not, by itself insulate the appellant against being liable for the unlawful closure of the shop and/or the conversion of the goods of the respondents. I am not aware of any law, and neither does it make any logical sense, that 4es only the owner of the building on which the respondent's shop was located was competent to be liable for the unlaMul closure of the shop and conversion of the goods found in it.

Needless to add, unlaMul detention of goods and conversion being torts, the general rule is that both the principal and agent are liable jointly and severally as joint tortfeasors for the entire damage resulting from the tort in circumstances where the principal is liable for the tort

Poge 18 of 24 #### of the agent. See: Halsbury's Laws of England, Fourth Edition Rerssue, Vol. 45(2), at paragraphs 346 and 347 500

The doctrine of joint and several liability of joint tortfeasors was summarised by Winfield on

## Tort (8th edn.) Ps. 661lhus'.

"The liability of joint tort feasors is joint and several, each may be sued alone, or jointly with some or all the others in one action; each is liable for the whole damage, and judgment obtained against allof them jointly may be executed in full against any one of them. At common law, final judgment obtained against one joint tort-feasor released allthe others, even though it was wholly unsafisf,'ed, Ihis rrvas esfab/lshed in Brinsmead v. Harrison ([1892] 2 Q. B,D. 511) and the reason put by Blackburn J., was /nferest reipublicae ut sff finis litium ... lt has long been seff/ed that the release of one joint tortfeasor releases all the others, because the cause of action is one and indivisible.' 505 510

As such, even for argument's sake, even if the appellant were to succeed in proving that his impugned actions were executed as an agent and/or officer of Tesco lndustries Ltd, a separate legal person, still the appellant would not escape personal liability in tort whether separately or jointly with his principal. 5L5

ln a nutshell, the appellant has no valid basis in law and fact to fault the trial judge for holding him personally liable. Grounds 1,2,3,4 and 5 would accordingly fail,

#### Ground 6:

s2o Ground 6 was couched as follows:

The learned judge erred in law and in fact when she failed to properly apply the law on award of damages and awarded excessive damages against the appellant.

525 A perusal of the judgment of the High Court indicates that the trial court awarded the respondents the sum of UGX. 150,000,000/= as general damages and UGX. 350,000,000/= as exemplary damages. The appellant's complaint is that the damages awarded by the trial Court were based on a wrong principle of law and excessive.

The respondent dlsagreed and prayed to thls court to uphold the damages as awarded.

Poge 19 of 24

It is now settled that an appellate court will not reverse a decision of the trial court on the s30 question of damages unless the appellate court is satisfied that the trial judge acted on a wrong principle of law or that the amount awarded was so extremely high or so very small as to make it, in the judgment of the appellate court, an entirely erroneous estimate of the damage to which the plaintiff is entitled. See: Bank of Uganda Vs Masaba & Others [19991 I EA 2; Uganda Breweries Ltd Vs Uganda Railways Corporation, Supreme Court Givil s3s Appeal IVo. 6 of 2001; and Ahmed lbrahim Bholm Vs. Car and General Ltd, SCCA No.12 oF 2002,.

It is with the above legal principles that I will now proceed to analyse and resolve the appellant's complaints about the trial court award of damages.

#### General damaqes of Uqx 150.000.0000/=

s40 From the judgment of the trial court, the respondents were awarded the sum Ugx 150,000,000/= as general damages. The appellant's complaint about the sum awarded is that the respondents having failed to prove what they lost as special damages, the trial court had no basis upon which to estimatethe general damages of Ugx 150,000,000/= awarded. The appellants did not refer to any law or court decision which barred the trial court from s4s awarding the respondents general damages after they had failed to prove the special damages claimed by them.

I have closely reviewed the pleadings and the proceedings before the trial court. ln their Amended Plaint, the respondents sought, inter alia, to hold the appellant liable for the lost stock, business, customers, profits, jobs and respect from the society plus mental anguish sso arising from the appellant's unlawful acts (See: Paragraph 6). Thereafter the respondents set out the "particulars of /oss" which covered the merchandise lost by each respondent. These particulars of the goods lost, and their values were repeated in the Witness Statement of each respondent. The respondents were cross-examlned and re-examlned on thelr respective Witness Statements, The trial court found that the respondents did not meet the sss standard set by the law for pleading and proving special damages, However, in my view, this

Poge 2O of 24

did not mean that the respondents suffered no loss at all as a result of the unlawful closure of their shop and conversion of the goods in it by the appellant. The trial court still had the duty to fairly compensate the respondents. In the circumstances of this case, the award of the general damages of Ugx 150 Million was not a manifestly erroneous estimate of the loss and damage suffered by the respondents, and neither was it arrived at based upon wrong principles of law. I, thus, find no reason to fault the exercise of the learned trial judge's discretion in deciding the way she did. I would accordingly reject the appellant's complaint in respect thereof.

## Exemplary Damages of Ugx. 350,000,000/=.

As I have already stated, the trial judge awarded the respondents exemplary damages of 565 UGX. 350,000,000/=. The appellant's complaint about the award is that it was wrongly made against the appellant without proof that he acted to procure himself some benefit at the expense of the respondents. Second, that the sums awarded were so high that they even doubled the general damages awarded to the respondents which was tantamount to unjust enrichment. 570

The justification of the award of exemplary damages against the appellant was stated by the learned trial judge in her Judgement thus:

"I find the [appellant's] actions of closing the shop and later confiscating the goods of the [respondents] were high handed. I award exemplary damages of 350,000,000/= payable at interest rate of 23% per annum from date of judgment until payment in full."

There is no doubt that exemplary damages are penal damages awarded over and above the usual compensatory damages with the objective of expressing court's censure of the defendant's conduct in certain situations and to serve as an example to others. In his oftenquoted dicta in Butterworth Vs. Butterworth & Englefield [1920] P 126, McCardie J. described

exemplary damages thus:

"Simply put, the expression exemplary damages means damages for 'example's sake'. These kinds of damages are clearly punitive or exemplary in nature. They represent a sum of money of a penal nature in addition to the compensatory damages given for the pecuniary or physical and mental suffering."

One of the circumstances under which the court can award exemplary damages against a private person is where the defendant's conduct has been calculated by him to make a profit which may well exceed the compensation payable to the plaintiff. See: Rookes Vs. Barnard t19641 ALL ER 367 at 410, 411 (HL) and Obong & Another Vs Municipal Council of Kisumu [1971|-EA 91

s90

Lord Devlin stated the above principle in Rookes Vs. Barnard (op cit)thus:

"When a defendant with a cynical disregard for a plaintiff's nghfs has calculated that the money to be made out his wrong-doing will probably exceed the damages at rsk, tt is necessary for the law to show that it cannot be broken with impunity. This category is not confined to money making in the sfrrcf sense. ft ertends to cases in which the defendant rs seekrng to gain at the expense of the plaintiff some object perhaps some' propefty which he covets, which either he could not obtain at all or not obtain except a price greater than he wants to put down. Exemplary damages can properly be awarded whenever ff ls necess ary to teach a wrong-doer that tort does not pay."

600 605 610 The profit motive underlying the impugned conduct of the appellant can be inferred from what subsequently took place soon after the unlaMul closure of the respondents' shop and conversion of their goods: From the evidence of PW7, the Chairperson of the Local Council 1 of the area, and PW1, the old building which was housing the respondents'shop was erased soon after the unlaMul eviction of the respondents and conversion of their goods. A new building was immediately erected by the appellant in the same place and baptised "Katonga". There is no doubt that from the new building the appellant would earn higher rental income and that the implementation of the appellant's plans to erect the new building would have been delayed if he were to follow the laMul procedures to get the respondents vacate their shop. ln those circumstances, the trial court cannot be faulted for finding the instant dispute as qualifying for the award of exemplary damages. And this takes us to the second leg of the appellant's complaint, namely the quantum.

From the judgment of the trial court, it is not demonstrated as to how the discretion of the trial court was exercised in order to arrive at the sum of Ugx 350 Million as the appropriate award against the appellant. ln the case of Esso Sfandard (U) LTD Vs. Semu Amanu Opio SCCA

Poge 22 of 24

3/1993, the Supreme Court of Uganda went to great length to show how the court's 615 discretion to award exemplary damages should be exercised in the befitting cases. The court confirmed the dictum in *Rookes Vs. Barnard [1964] ALLER 367 at 410, 411* and relied on Cassell Co Ltd Vs. Broome (1972) 1 All E. R. 801 below: -

"The difference between compensatory and punitive damages is that in assessing the former the jury or other tribunal must consider how much the defendant ought to 620 pay. It can only cause confusion if they consider both questions at the same time. The only practical way to proceed is first to look at the case from the point of view of compensation to the plaintiff. He must not only be compensated for proved actual loss but also for any injury to his feelings and for having had to suffer insults, indignities and the like and where the defendant has behaved outrageously very full 625 compensation may be proper for that so the tribunal will fix in their minds what sum would be proper as compensatory damages. Then if it has been determined that the case is a proper one for punitive damages, the tribunal must turn its attention to the defendant and ask itself whether the sum which it has already fixed as compensatory damages is or is not adequate to serve the second purpose of 630 punishment or deterrence. If they think that that sum is adequate for the second purpose as well as for the first they must not add anything to it. It is sufficient both as compensatory and as punitive damages. But if they think that sum is insufficient as a punishment then they must add to it enough to bring it up to a sum sufficient as *punishment."* [Emphasis added] 635

Upon review of the evidence before the trial court, I am of the view that the amount of Ugx 350 Million awarded by the trial court as exemplary damages was so high as to make it an entirely erroneous estimate of the exemplary damages to which the respondents were entitled. Applying the above principle upheld in the case of **Esso Standard (U) LTD Vs.**

**Semu Amanu Opio** (op cit) to the instant matter, I would reduce the amount awarded to the 640 respondents as exemplary damages from Ugx 350 Million to Ugx 150 Million. I would however maintain the trial court's order that the said amount be shared equally between the respondents since there was no cross- appeal in respect thereof.

#### **Conclusion**

- 1. I would dismiss grounds $1,2,3,4$ and 5 of the appeal. 645 - 2. I would partially allow ground 6 of the appeal in the sense that:

- a) lwould uphold the trial court's award of Ugx 150 Million as general damages with interest of 23oh per annum from the date of the High Court judgment of 24rn January 20'tg till full payment. - 650

- b) However, I would reduce the amount awarded to the respondents as exemplary damages from Ugx 350 Million to Ugx 150 Million. The same shall likewise attract the interest awarded by the trial court of 230/o per annum from the date of the judgment of the High Court of 24rn January 2019 till full payment, - 3. Since the appeal failed on most of the grounds, and succeeded on only part of ground 6, - I would award the respondents three quarters (3/4) of the costs before this court. - 4. I would uphold the trial court's order as to the costs in the High Court.

Signed, delivered, and dated at Kampala this .l.f [-y of 2023.

MUZAMIRU MUTANGULA KIBEEDI Justice of Appeal

Poge 24 of 24

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA (*Cordm: Bamugemereire*, *Musota*, *Kibeedi*, *JJA*) CIVIL APPEAL NO. 49 OF 2019

DRAKE LUBEGA :::::::::::::::::::::::::::::: ......................................

## **VFRSUS**

- 1. LUBEGA ROBERT - **2. MEGAN JOAN NAMUTEBI ]** - **3. JOSEPHINE NASSALI** - 4. EMMA NDUGWA - 5. MUSA NDAULA

<table>

| RESPONDENTS 6. ALEX BWANIKA

[An appeal from the Judgment of the High Court of Uganda at Kampala, Commercial Division, (Lady Justice Elizabeth Jane Alividza) dated the 24th day of January 2019 in Civil Suit No. 875 of 2014 and 705 of 2014]

## JUDGMENT OF CATHERINE BAMUGEMEREIRE JA

I have read the Judgment of my Learned Brother Kibeedi JA, and without going into much detail, I agree that this appeal should fail on Grounds No.1,2,3,4 and 5 and should partially succeed on Ground No.6.

Since my learned brother Musota JA also agrees with the Judgment of our Learned Brother Kibeedi JA, there will be orders that,

- 1. Grounds No.1,2,3,4 and 5 of the appeal are dismissed. - 2. Ground No.6 of the appeal partially succeeds, specifically that; - a) The Trial Court's award of Ugx 150 million as general damages with interest of 23% per annum from the date of the High Court judgment of 24th January 2019 till full payment be upheld.

- b) However, the amount awarded to the respondents as exemplary damages is reduced from UGX 350,000,000 to UGX 150,000,000. The same shall likewise attract the interest awarded by the Trial Court at 23% per annum from the date of Judgment at the High Court effective 24th January 2019 till full payment. - 3. Three quarters $(3/4)$ of the costs before this court are awarded to the respondents. - 4. The orders of the Trial Court as to the costs in the High Court are upheld.

Dated this $13^{\prime}$ day of $\leftarrow$ felmion 2023.

HON. LADY JUSTICE CATHERINE BAMUGEMEREIRE JUSTICE OF APPEAL

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

## CIVIL APPEAL NO. 49 OF 2019

*(Arising from the judgment of the High Court at the Commercial)* Division before Elizabeth Jane Alividza, J in Civil Suit No. 875 of 2014 delivered on 24th January 2019)

DRAKE LUBEGA ::::::::::::::::::::::::::::::::::::

#### **VERSUS**

- 1. LUBEGA ROBERT - 2. MEGAN JOAN NAMUTEBI - 3. JOSEPHINE NASSALI - 4. EMMA NDUGWA - 5. MUSA NDAULA - 6. ALEX BWANIKA ::::::::::::::::::::::::::::::::::::

CORAM: HON. JUSTICE CATHERINE BAMUGEMEREIRE, JA

### HON. JUSTICE STEPHEN MUSOTA, JA

HON. JUSTICE MUZAMIRU MUTANGULA KIBEEDI, JA

## JUDGMENT OF HON. JUSTICE STEPHEN MUSOTA, JA

I have had the benefit of reading in draft the judgment by my brother Hon. Justice Muzamiru Mutangula Kibeedi, JA.

I agree with his analysis, conclusions and the orders he has proposed.

proposed. Dated this 15 day of February $2023$ (D) multing.

**Stephen Musota** JUSTICE OF APPEAL