Lunco Constructors Ltd v Attorney General and Anor (HCT-00-CC-CS 318 of 2004) [2006] UGCommC 3 (23 January 2006)

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\li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11276608 {\b\f36\fs28\insrsid11276608 THE REPUBLIC OF UGANDA \par \par IN THE HIGH COURT OF UGANDA AT KAMPALA \par (COMMERCIAL }{\b\f36\fs28\insrsid6125559 COURT }{\b\f36\fs28\insrsid11276608 DIVISION) \par \par }{\b\f36\fs28\insrsid6125559 HCT-00-CC-CS-0}{\b\f36\fs28\insrsid3425802 318}{\b\f36\fs28\insrsid11276608 OF 2004 \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11276608 {\b\f36\fs28\insrsid11276608 \par LUNCO CONSTRUCTORS LTD ::::::::::::::::::::::: PLAINTIFF \par \par }\pard \qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid9200387 {\b\f36\fs28\insrsid11276608 VERSUS \par }\pard \ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11276608 {\b\f36\fs28\insrsid11276608 \par 1. THE ATTORNEY GENERAL OF UGANDA] \par 2. COMBINE SERVICES LTD ] ::::::: DEFENDANTS \par \par \par BEFORE: }{\b\f36\fs28\ul\insrsid11276608\charrsid8478683 THE HONOURABLE MR. JUSTICE YOROKAMU BAMWINE}{\b\f36\fs28\insrsid11276608 \par \par }{\b\f36\fs28\ul\insrsid11276608\charrsid8478683 R U L I N G: \par }{\b\f36\fs28\insrsid11276608 \par }\pard \qj \li0\ri0\sl480\slmult1\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid11276608 {\f36\insrsid11276608 The Plaintiff is a company with limited liability duly incorporated and carrying on business of construction in Uganda. This Ruling is in respect of the suit it filed against the 1}{\f36\super\insrsid11276608\charrsid11276608 st}{\f36\insrsid11276608 Defendant, the Chief Government Legal Officer being sued in his representative capacity. \par }{\f36\insrsid10314101 \par }{\f36\ul\insrsid10314101\charrsid6228506 Representation: \par }{\f36\insrsid10314101 Mr. David Ndyomugabe for the Plaintiff. \par Mr. Sam Serwanga for the 1}{\f36\super\insrsid10314101\charrsid10314101 st}{\f36\insrsid10314101 Defendant. \par \par As a brief introduction, the 1}{\f36\super\insrsid10314101\charrsid10314101 st}{\f36\insrsid10314101 Defendant through its Ministry of Water, Lands & Environment embarked on Luwero Town Water Supply Project. A contract to undertake the said project was signed with the 2}{\f36\super\insrsid10314101\charrsid10314101 nd}{\f36\insrsid10314101 Defendant, M/S Combine Services Ltd. With the apparent knowledge and approval of the Ministry, M/S Combine Services sub-contracted the Plaintiff to do the work on its behalf. This was in 1999. In December 2000, the Ministry was advised to terminate the contract on account of shoddy work and the contract was accordin gly terminated. \par \par The Plaintiff claims to have imported materials for the said project. The Defendant through its Ministry of Water, Lands and Environment paid for them but declined to pay for the works done because, according to the 1}{ \f36\super\insrsid10314101\charrsid10314101 st}{\f36\insrsid10314101 Defendant, there was no contract between them and the Plaintiff. Hence this suit for recovery of Shs.264,904,018-. \par \par In this Ruling, I have been asked by the parties to determine whether the Plaintiff has a cause of action against the 1}{\f36\super\insrsid10314101\charrsid10314101 st}{\f36\insrsid10314101 Defendant. \par \par Ii have very carefully addressed my mind to the arguments of both counsel as contained in }{\f36\insrsid4200830 their written submissions. It is trite that a plaint which discloses no cause of action against the Defendant must be rejected.}{ \f36\insrsid10314101 \par }{\f36\insrsid4200830 \par To say that a plaint discloses a cause of action, it must s how that the Plaintiff enjoyed a right; that the right was violated; and that the Defendant is liable for that violation. There is a wealth of authorities on this point, including the often cited }{\b\i\f36\insrsid4200830 Auto Garage & Others \endash Vs-Motokov (No. 3) [1971] EA 514. \par }{\f36\insrsid1209153 As regards privity of contract, this refers to a relationship between the parties to a contract, which make the contract enforceable between them. The general position is that a stranger to a contract cannot sue upon the contract unless given a statutory ri ght to do so: }{\b\i\f36\insrsid1209153 Kayanja \endash Vs- New India Assurance Company Ltd [1968] EA 295.}{\b\i\f36\insrsid3934887 \par }{\b\i\f36\insrsid1209153 \par }{\f36\insrsid1209153 In considering whether a cause of action is revealed by the pleadings, Courts consider what right of the Plaintiff has been allegedly violated. In other words, the Plaintiff must f rom the pleadings as a person aggrieved by the violation of the right and Defendant as a person who is liable. \par \par Applying the above principles to the issue now before Court, there is no dispute that the contract, the subject matter of this suit, was entered into between the 1}{\f36\super\insrsid1209153\charrsid1209153 st}{\f36\insrsid1209153 Defendant through its Ministry of Water, Lands and Environment on the one hand, and M/S Combine Services Ltd, on the other. The Plaintiff was only contracted by the latter to execute the contract}{\f36\insrsid5383824 on its behalf. The Plaintiff was not party to the impugned contract. }{\f36\insrsid1209153 \par }{\f36\insrsid5383824 \par From the pleadings, the Plaintiffs enjoyed a right, that is, the right to be paid for the work done. However, in as far as they purport to hold the 1}{\f36\super\insrsid5383824\charrsid5383824 st}{\f36\insrsid5383824 Defendant liable for that violation, and they base their claim on a contract to which they are a stranger, they are, in my view, at the wrong end of the law; the law that provides that only a person who is a party to a contract can sue or be sued on it.

\par I have considered counsel\rquote s argument}{\f36\insrsid11556936 that the 1}{\f36\super\insrsid11556936\charrsid11556936 st}{\f36\insrsid11556936 Defendant made repr esentations to them which they acted upon to their detriment. If this is so, then the cause of action would not be breach of contract but making a false representation. They would be entitled to a remedy in law or equity other than what they are asking for herein.}{\f36\insrsid5383824 \par }{\f36\insrsid11556936 \par Counsel has also argued that the sub-contract to the Plaintiff by the 2}{\f36\super\insrsid11556936\charrsid11556936 nd}{\f36\insrsid11556936 Defendant with the knowledge and consent of the 1}{\f36\super\insrsid11556936\charrsid11556936 st}{ \f36\insrsid11556936 Defendant amounted to an assignment of the 2}{\f36\super\insrsid11556936\charrsid11556936 nd}{\f36\insrsid11556936 Defendant\rquote s rights under the contract to the Plaintiff. Counsel thinks that the principle of Novation is applicable. \par \par I have addressed my mind to that argument as well. The issue in this case is liability under a contract to which the Plaintiff is a stranger. The general rule is that liability under any contract cannot be assigned. However, it can be assigned with the consent of the other party to the contract, a situation known as novation in law. \par }{\f36\insrsid9076351 \par Generally speaking, the parties may make liabilities under a contract assignable, expressly or impliedly. \par \par In the instant case, there is no dispute that the work to be done under the contract was for the benefit of the 1}{\f36\super\insrsid9076351\charrsid9076351 st}{\f36\insrsid9076351 Defendant. Likewise there is no dispute that the contract to do the work was between M/S Combine Services Ltd and the 1}{\f36\super\insrsid9076351\charrsid9076351 st}{\f36\insrsid9076351 Defendant. Clearly, the issue of t he sub-contract was a matter between the Plaintiff and M/S Combine Services Ltd. The 1}{\f36\super\insrsid9076351\charrsid9076351 st}{\f36\insrsid9076351 Defendant was a stranger to that arrangement, whether or not he gave a blessing to it or whether or not he purchased the materials from the Plaintiff upon}{\f36\insrsid12194416 termination of the contract. He could have got them from }{ \f36\insrsid4922514 an}{\f36\insrsid12194416 y other source.}{\f36\insrsid9076351 \par }{\f36\insrsid12194416 \par When the Plaintiff did not do the work to the 1}{\f36\super\insrsid12194416\charrsid12194416 st}{\f36\insrsid12194416 Defendant\rquote s satisfaction, the first Defendant terminated the contract. Much as the actual work on the ground was being done by the Plaintiff, the contract that was terminated was between the 1}{\f36\super\insrsid12194416\charrsid12194416 st}{\f36\insrsid12194416 Defendant and M/S Combine Services Ltd. Upon its termination, M/S Combine Services Ltd was entitled to sue for quantum maruit and upon being paid meet the Plaintiff\rquote s claim, if any. Therefore the Plaintiff cannot proceed against the 1}{ \f36\super\insrsid12194416\charrsid12194416 st}{\f36\insrsid12194416 Defendant as if there existed a contract between them. As I understand the principle of Novation, parties to a contract enter into a fresh one substituting it for the old one, thereby discharging the old one. In oth er words, the same parties agree that the old contract be abandoned in favour of the fresh one. In the instant case, to the extent that the Plaintiff\rquote s claim is based on an agreement to which it is a stranger and to which it supplied no consideration, counsel\rquote s argument based on Novation is misplaced. \par }{\f36\insrsid7081660 \par This Court is also cutely, aware that a right or benefit under a contract can indeed be assigned by legal assignment; equitable assignment; or by operation of law. None of the above is pleaded in the plaint. The plaint merely paints a p}{ \f36\insrsid3757759 icture of a person who is not party to a contract seeking to enforce it. The Law says No. It can sue on the sub-contract but not the main contract. To sanction the suit on the pleadings as they are before Court would be to allow the Plaintiff to enforce a right against a wrong party.}{\f36\insrsid7081660 \par }{\f36\insrsid3757759 \par In the result, I hold that the plaint does not disclose a cause of action as against the 1}{\f36\super\insrsid3757759\charrsid3757759 st}{\f36\insrsid3757759 Defendant. I make no finding in respect to the 2}{\f36\super\insrsid3757759\charrsid3757759 nd} {\f36\insrsid3757759 Defendant. There is therefore merit in the point of law raised by Mr. Serwanga. I allow it. \par \par Under 0.7 r 11 (a) of the Civil Procedure Rules, a plaint which does not disclose a cause of action against the Defendant must be struck out. It is accordingly struck out as against the 1}{\f36\super\insrsid3757759\charrsid3757759 st}{ \f36\insrsid3757759 Defendant. \par \par As regards costs, although the usual result is that the loser pays the winner\rquote s costs, I am in the unique circumstances of this case inclined to the view that each party should bear its own costs. I order so. \par }{\b\f36\fs16\insrsid2712513\charrsid2712513 \par }{\b\f36\insrsid3757759\charrsid2712513 \'85\'85\'85\'85\'85\'85\'85\'85\'85\'85\'85 \par Yorokamu Bamwine \par J U D G E \par 24/1/2006 \par }{\f36\insrsid3757759 \par }{\b\f36\insrsid3757759\charrsid2712513 Order:}{\f36\insrsid3757759 This Ruling shall be delivered by the Registrar of this Court on a date to be fixed by him and thereafter in consultation with my clerk fix a date for a scheduling conference in respect }{\f36\insrsid2712513 of the claim against the 2}{\f36\super\insrsid2712513\charrsid2712513 nd}{\f36\insrsid2712513 Defendant. A hearing notice shall be issued accordingly.}{\f36\insrsid3757759 \par }{\f36\insrsid2712513 \par }{\b\f36\insrsid2712513\charrsid2712513 Yorokamu Bamwine \par J U D G E \par 24/1/2006}{\b\f36\insrsid2712513 \par }{\b\f36\insrsid4922514 \par }{\b\f36\insrsid4922514\charrsid4922514 \par }}