Malkara v Skyrocket Agency Co. Limited & 5 Others (Civil Suit 240 of 2023; Civil Suit 305 of 2023; Civil Suit 345 of 2023) [2023] UGCommC 158 (17 July 2023)

Full Case Text

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA **COMMERCIAL DIVISION**

### CIVIL SUITS NO. 240 OF 2023; NO. 305 OF 2023 AND NO. 345 OF 2023

# **MALKARA BIRLIK SUT** VE SUT MAMULLERI A. S::::::::::::::::::::::::::::::::::::

#### **VERSUS**

- 1. SKYROCKET AGENCY CO. LTD - 2. THE COMMISSIONER OF CUSTOMS **UGANDA REVENUE AUTHORITY** - 3. ADMIRALS TRADING LLC - 4. ADIM FOODS AND FRUITS SUPPLIES CO. LTD - 5. MR. DUMBA HADADI

# 6. GOOD BROTHERS INTERNATIONAL

LIMITED (W04444) :::::::::::::::::::::::::::::::::

#### Before: Hon. Lady Justice Cornelia Kakooza Sabiiti

#### **JUDGMENT**

#### **Introduction**

This is a Judgment in respect of three consolidated suits namely; HCCS No. 240 of 2023; HCCS No. 305 of 2023 and HCCS No. 240 of 2023. The three suits were consolidated by this Court to expedite the hearing since they are in respect of the same subject matter which are perishable goods, involve the same parties and are seeking related remedies. A summary of the three suits is as follows:

- (a) HCCS 240 of 2023: MALKARA BIRLIK SUT VE SUT MAMULLERI A. S against ADMIRALS TRADING LLC, ADIM FOODS AND FRUITS SUPPLIES CO. LTD. Mr. DUMBA HADADI and COOD BROTHERS INTERNATIONAL LIMITED ICD filed on 1410312023. This suit is seeking remedies of declaration of breach of contract, orders to pay the contractual sum of \$82,500, permanent injunction from clearing, claiming or dealing with the goods until full payment, damages, interest and costs - (b)HCCS No. 305 of 2023: SKYROCKET AGENCY CO. LTD against COMMISSIONER OF CUSTOMS, URA filed on 17104/2023. This suit is seeking remedies of orders compelling URA to ltnalize the process of clearance ofthe goods and to release them to the plaintiffon payment ofthe taxes, damages, interest and costs. - (c) HCCS No.345 of 2023: MALKARA BIRLIK SUT VE SUT MAMULLERI A. S filed against SKYROCKET AGENCY CO. LTD and COMMISSIONER OF CUSTOMS, URA filed on 2810412023. This suit is seeking remedies of a declaration that the goods are the property ofthe plaintiff, orders for URA to release the container to the plaintiff for re-export, an injunction stopping URA from breaking the seal, clearing or releasing the consignment to any other party, damages, interest and costs

After reviewing the different claims and defences of the parties and in order to streamline the hearing of the three suits it was agreed among the parties that MALKARA BIRLIK SUT VE SUT MAMULLEzu A. S be the Plaintiff during the consolidated hearing. While the other five other parties are the defendants namely: SKYROCKET AGENCY CO. LTD (l'r defendant); COMMISSIONER OF CUSTOMS URA (2"d Defendant); ADMIRALS TRADING LLC (3"r defendant); ADIM FOODS AND FRUITS SUPPLIES CO. LTD (4'h Defendant); Mr. DL'""r)a

HADADI (5'h Defendant) and GOOD BROTHERS INTERNATIONAL LIMITED ICD (6th defendant). All the claims of the parties were incorporated under the framed issues for determination by the court.

#### Background

The facts giving rise to the claim of MALKARA BIRLIK SUT VE SUT MAMULLERI A. S (hereinafter referred to as the Plaintiffl are that; the Plaintiff was contacted by Admirals Trading LLC, the 3'd Defendant, to supply 25,000kg of Whey protein concentrate 34%o from Turkey to Uganda in favour of the 4th Defendant, Adim Foods and Fruits Supplies. On the l7'h November 2022,the Plaintiff issued a proforma invoice No.220336 in favour of the 3'd Defendant on their agreement for the sale of the consignment. According to the terms specified in the proforma invoice the Plaintiff would supply 25,000kg Whey protein concentrate 34Yo at a unit price of \$3,410, resulting into a total amount of United States Dollars Eighty-Five Thousand Two Hundred and Fifty (\$85,250). The shipment was to be transported from Istanbul, Turkey to Mombasa, Kenya and then onward to Uganda. Subsequently through an email communication, the 3'd Defendant requested the Plaintiff to deliver the consignment and shipping documents directly to the 4th Defendant which was done. To date, the Plaintiff has not received payment from the 3'd Defendant for the delivered goods.

On lTrh February, 2023,Mr. Dumba Hadadi, the 5'h Defendant, received the shipping documents for and on behalf of the 4rh Defendant through DHL. On 2nd March,2023, the Sky Rocket Agency Co Ltd, the I '' Defendant, purchased a consignment of a one 40 ft. container of whey Protein Concentrate34Yo (Powdered milk) comprising 1000 bags from the 5th Defendant, Dumba Hadadi trading as the 4th Defendant, Adim Foods & Fruits Supplies. The I't Defendant received the original documents of the title including the Bill of Lading, Packaging List, Analysis report and Invoice. CaU

On 11th March 2023, the Container No. MRSU369933 comprised of the product arrived in Uganda and currently, the Good Brothers International Ltd, the 6th Defendant, holds custody of the container at its premises located at Namanve.

Upon non receipt of payment for the goods, the Plaintiff applied and was granted permission to re-export the goods back to Turkey on $5th$ April, 2023 by the $2nd$ Defendant who after declined the re-exportation.

After the purchase, the 1st Defendant commenced the process of clearing the acquired goods in Mombasa. However, on the 29th of March, 2023 as the 1st Defendant's clearing agent was performing the verification process to deposit the cargo into the bonded warehouse and facilitate the release of the container back to the shipping line, the process was halted by the $2nd$ Defendant's officers following an interim Court Order vide MA No. 373 of 2023 obtained by the Plaintiff directing the $2^{nd}$ Defendant not to release or break the seal of the consignment.

The case of the 1st defendant, SKYROCKET AGENCY CO. LTD, is that under a Sale Agreement on 2nd March 2023, it purchased the suit goods comprising of a consignment of goods described as Whey Protein Concentrate 34% (Powdered milk) comprising 1000 bags in a one 40 ft container from the 5th Defendant, Dumba Hadadi trading as Adim Foods & Fruits Supplies. The seller duly handed over the original documents of title to the 1st Defendant to wit; the bill of lading, Packing list, Certificate of Analysis report, Commercial Invoice and Certificate of Insurance. The 1st Defendant commenced the process of clearing the suit goods that were transported from Mombasa and booked into Good brothers ICD bond W0444 on 11th March, 2023. However, the 2nd Defendant's agents at the said ICD bond frustrated the 1st Defendant's efforts in having the said goods cleared without any justifiable $\mathscr{C}$ cause.

The case of the 2nd defendant, COMMISSIONER OF CUSTOMS URA, is that it claims no legal ownership over the suit goods which are in their in custody by virtue of their mandate as the Government tax collection agent and are being held by the 6th defendant Good Brothers Bond No. W00444 for the same reason. That more than one party is claiming ownership of the suit goods to wit; Malkara Birlik Sut Ve Sut Mamulleri A. S and Sky Rocket Agency Co Ltd. The 2nd defendant adduced evidence vide an Interim Court Order from Misc. Application No. 373 of 2023 arising from HCCS No. 240 of 2023 stopping them from clearing or dealing with the suit goods in container No, MRSU 369933. The 2nd defendant stated that it is awaiting the determination of the three pending suits to establish the rightful owner to enable the 2nd defendant to collect taxes and release the gocds before the same get contaminated/exposed due to their perishable nature.

The 3'd, 4'h, 5'h and 6th defendants did not file defences after proof of service on them as evidenced by the affidavits of service on court record. The court made an order for the suit to proceed exparte as against the 3'd, 4th, 5th and 6th defendants under Order 9 rule I I (2) of the Civil Procedure Rules.

# Representation

The Plaintiff was represented by M/s Nagawa Associated Advocates. The l" defendant was represented jointly by M/s Reeve Advocates and M/s Katuntu & Co Advocates. The 2nd defendant was represented by their Legal Services and Board Affairs Department. C\*J

# Hearing

The burden of proof remains on the plaintiff to prove the case on the balance of probabilities as held in the case of Yoswa Kityo vs Eriya Kaddu 119821 HCB 58.

At the hearing the Plaintiff led one witness, Mahir Hikmet Battal as PWI who gave evidence via an audio-visual link from Turkey. The l't defendant led one witness Dokoria Herbert as DWl. The 2nd defendant opted not to call any witness.

#### lssues

The Court adopted the following issues for determination:

- l. Whether the suit filed by the Plaintiff is competent before this Honorable Court? - 2. Who is the lawful owner of the goods in container No. MRU 369933 and whether the plaintiffholds a lien over the goods? - 3. Whether the 3"r,4th and 5th defendants are liable for breach of contract? - 4. What remedies are available for the parties?

### RESOLUTION

# lssue No.l: ll/helher lhe suit filed by the Phintiff is competenl before this Honoroble Court?

Counsel for the l't def'endant raised a preliminary point of law that was framed as the I't issue to the effect that the instant suit is incompetent before this Court and should be dismissed since it was filed on the instructions of PW1 who is the Foreign Trade Manager of the plaintiff company and not on the authority of a resolution of the directors of the said company. He cited the case of Bugerere Coffee Growers Ltd vs Sebadduka & Anor [19701 lEAl47, where court observed that; "When companies authorize the commencement of legal proceedings, a resolution or resolutions have to be passed either at a company or board of directors' meeting and recorded in the minutes". The said principle was repeated in the cases;fu

Makerere Properties Ltd vs Mansukhlal Ranji Karia; HCCS No.32 of 1994 and Rubaga Building Company Ltd vs Gopal Devsi Vekaria & Virbhai Nanji Bechar Kerai HCCS No.0534 of20l4.

In response, counsel for the plaintiff submitted relying on Order 29 rule I of the Civil Procedure Rules that an entity can act through its principal officer, director and cited the case of Friecca Pharmacy Limited versus Anthony Natif Misc. Application No.497 of 2019 arising from HCCS No.50 of 2019 where it was held that; "... The law presumes that certain categories of employees have ostensible authority to act for the Company' '. That in this instant case PWI the Foreign Trade Director testified that he is responsible for imports and exports in the Plaintiff company where he has worked for the last 20 years, well conversant with the said transaction and that he duly represented the plaintiff company and instructed the plaintiffs lawyers to file the matter in court.

Counsel for the plaintiff, to support the competency of the instant suit plaintiff company that is a foreign company incorporated in Turkey,, cited the case of Krone Uganda Limited Vs Kerilee Investments Limited (Civil Miscellaneous Application No. 306 of 2019) 1202ll UG CommCl6 where Hon, Justice Wamala held that there was no legal requirement for a foreign company to register under the Companies Act,2012 before it could institute legal proceedings or carry out business in Uganda.

During cross examination PWI stated that he was a Director of the plaintiff company and also the Head of the Foreign Trade Department a position he had held for the last 20 years and was conversant with the facts of the case. From the evidence adduced PWI was the official of the plaintiff company corresponding to the 3"r defendant with regards to the transaction making him knowledgeable to depose to the facts of the case. Further the position held by PW I as Director of the Departmtl4f

of Foreign Trade qualifies him as principal officer ofthe said company as provided under Order 29 rule 1 of the Civil Procedure Rules with sufficient authority to instruct legal proceedings to be instituted on behalf of the plaintiff company. There was evidence adduced of the legal status of incorporation of the plaintiff company in Turkey and this supports the legal capacity of the plaintiff company to enforce its rights and claims in Uganda. I therefore find no merit in the objection raised by the I" defendant and it is overruled.

lssue No.1 is answered in the affirmative.

# lssue No.2: Who is thc lawful owner of the gootls in container No. MRU 369933 ond whether lhe plointiff holtls a lien over the gootls?

Counsel for the plaintiff submitted that whereas the 1't defendant in its pleadings stated that it purchased the goods on 2"d March 2023 under a Sales Agreement with the 51h defendant trading as Adim Foods and Supplies, DWI during cross examination admined that in February 2023, prior to the purchase, the l't defendant conducted a search on Adim Foods and Supplies and leamt that it was not registered and had ceased being a business on 2l't February 2023 as indicated in the certified copy of the notice of cessation of business admitted as PEX. 18. Counsel submitted that Section 2( I ) (b) of the Business Names Registration Act, requires that any person carrying out business in a name that does not consist of his or her true sumame to register the same and cited the case of Chicken Tonight Limited vs Kikomeko Aminah T/a Agro-Tech Enterprises Ltd Misc. Application No, 408 of 2023 arising from HCCS No. 1070 of 2023 where it was held that contracts entered into under unregistered business name are not enforceable. That this rendered the Sales Agreement between the I't and 5th defendant T/A as Adim Foods & Fruits Supplies illegal, and void ab initio and therefore neither party can acquire any rights therefrom. ,H Counsel for the l't defendant in response submitted that evidence was adduced by DWl that the l" defendant bought the suit goods vide a Sale Agreement (DEX.2) comprising of a consignment of goods described as Whey Protein Concentrate 34oZ (Powdered milk) comprising 1000 bags in a one 40 ft container from the 5th Defendant, Dumba Hadadi trading as Adim Foods & Fruits Supplies on 2nd March, 2023. The seller duly handed over the original documents of title to the I't defendant namely; the Bill of Lading (PE3), Packing list (PEX.3), Certificate of Analysis report (DEX.4), Commercial Invoice (PEX.2 and Certificate of Insurance (DEX.5). That DWl in his cross examination testified that the 1't defendant duly carried out due diligence by confirming the authenticity ofthe bill oflading and the existence ofthe goods at Mombasa Port before paying for the same. Counsel cited Section 2 (lXb) of the East African Community Customs Management Act, that defines owner to include any person in possession ofor beneficially interested in or having control of power of disposition over goods. He further submitted that Section 1(l )(b) of the Sale of Goods and Supply of Services Act defines a document of title to include a Bill of lading and cited the case of All American Hardware Uganda Limited V Uganda Revenue Authority TAT Application No. 23 of 2019 and Misc Application No. 39 of 2020, where it was held that once a vendor sells his items to a purchaser, the title passes to the latter.

With regard to the legal implications of a Bill of lading, counsel for the I't defendant quoted the definition in Black's law Dictionary lOth Edition p. 199 that defines a bill of lading as follows.

"A bill oflading may be regarded in three aspects. (l) lt is a receipt given by the master of a ship aclcnowledging that the goods specified in the bill have been put on board, (2) h is the document that contains the terms of the contract for the carriage of the goods agreed and the ship-ow'ner (whose L!!

agent the master of the ship is); and (3) It is a'document of title'to the gnds of which it is the symbol.., "

Counsel further cited the case of Rass T, Smyth & Co. Limiled V T. D Bailey, Sons & Co. (, 1940)3 ALL ER 60 where it was held that the person named as consignee in a bill of lading is deemed to be the owner of the goods listed therein which position was followed in the cases of Rahima Nagita & 2 Others versus Richard Bukenya & 3 others HCCS 389 of 2010 and P&O Nedloyd Uganda Ltd vs Tesco International Ltd C. A. C A,86/2004 where it was held that the general rule is that the owner of the goods is the person named in the Bill of lading as consignee and that a Bill of lading is a document of title. On the strength of these cases counsel for the l't defendant submitted that since the bill of lading is a document of title and ownership and the 1't defendant duly bought the goods from the consignee named in the bill of lading and title passed to the l" defendant who is the lawful owner of the suit goods. That the Sales Agreement indicates that the l" Defendant paid USD 50,000 to the seller who acknowledged receipt by appending his signature and the l't defendant proceeded and paid stamp duty and also paid GGS Logistics USD 6200 fbr purposes of transport from Mombasa to Kampala, Port handling and clearance.

Counsel for the 1't defendant further submitted that a business name is not a legal entity that can contract and this is the reason the l't defendant entered into an agreement with the 5th defendant, Mr. Dumba Hadadi who was trading under the style and name of Adim Foods and Fruits Supplies, as indicated on the bill of lading as the consignee.

Counsel fbr the 2nd defendant supported the submissions ofthe 1't defendant and stated that the Plaintiff sold the suit goods to the 3'd Defendant and handed over original shipping documents to wit Bill of Lading, Packaging List, Analysis report and Invoice to the 5th Defendant for and on behalf of the 4th Defendunt ut O"rrtfuf instructions of the 3'd Defendant. That the Bill of lading specifically named the 4,h Defendant as the consignee, forming the basis on which on which the l,tdefendant purchased the consignment from the 5th Defendant T/A the 4rh Defendant. He cited the case of Copy Lines Ltd Versus Rapid Shipping and Freight Uganda Ltd and another HCCS NO.3l 4 of 2007 where it was held that a Bill of lading is considered a document of title and Section 1(l) (b) of Sale of Goods and Supply of Services Act,20l8 defines documents of title to include bills of lading. That in the instant case by virtue of possessing the bill of lading, the consignee obtains the right to dispose of the goods, transfer ownership, or exercise control over the goods. That the only duty of the buyer is to ascertain the authenticity of bill of lading and existence ofgoods before making the purchase, a duty that the I "t defendant fulfilled. That since the 4th defendant was the consignee and the 5tr'Defendant was claiming to trade as the 4th Defendant and possessed the original Bill of lading as a document oftitle he passed on title to the l't defendant.

I have reviewed the Sale Agreement dated 2"d March 2023 (DEX.2) and the two parties are the Dumba Hadadi T/A Adim Foods & Fruits Supplies as the "Seller" and the l't defendant, Sky Rocket Agency Co. Ltd as the "Buyer". The contract also states that the Seller is the owner of the consignment of the suit goods and the Buyer has paid consideration of USD 50,000 to the Seller who has assigned the property in the goods to the Buyer and has handed over to the Buyer the original Bill of Lading, Invoice, Packaging List, Analysis report and all other supporting documents.

The general rule in the practice of International trade is that the Bill of lading is the document of title and as was held in the case of Biddell Bros Lttl v E. Clemens Horst & Co Ltd ll9l lJ I KB 934,956-7 where court noted that;

"Byf., the most important type of document of title is the bill ,^\*ZU

When goods are shipped, the ship owner or his agents deliver to the shipper a bill of lading, and this document in law and in fact represents the goods. Possession of the Bill of lading places the goods at the disposal of the purchaser."

The said Sale Agreement is also governed by the law of contract. S.l0 of the Contracts Act,2010 provides that a contract is an agreement made with the free consent of parties with capacity to contract, for a lawful consideration and with a lawful object, with the intention to be legally bound. In the instant case, evidence was adduced as PEX.18 of a Notice of Cessation of Business from Uganda Registration Services Bureau (URSB) stating that the 4th defendant, Adim Foods & Fruits Supplies, ceased to carry on business from 2l'r February 2023. This was eight days before the Sale Agreement. In his testimony under cross examination, DWI the holder of powers of attomey of the I't defendant admitted that as a purchaser they carried out due diligence with URSB and found out that the 4'h defendant was not registered.

This means that at the time the Sale Agreement was executed the purported Seller did not legally exist and this was a fact in the knowledge of the Buyer. The argument by counsel for the 1" defendant that the reason the l" defendant entered into an agreement with the 5th defendant, Mr. Dumba Hadadi was because a business name is not a legal entity that can contract is not tenable since the same non-existent business name was included underthe Sale Agreement. The Bitl of lading mentioned the 4th defendant as the consignee and not the 5'h defendant. Likewise I do not agree with the argument by counsel for the 2nd defendant that since the 5th Defendant who possessed the original Bill of lading was claiming to trade as the 4tr' defendant who was the consignee then he passed good title to the l'r defendant. du

Under the common law basic principle of Nerzo dat quod non habet (no one gives who possess not) a seller/transferor cannot give a better title to property than he or she possesses. This principle is reflected in Section 29 of the Sale of Goods and Supply of Services Act, 20 I 8 that provides-

#### Sale by person not the owner:

(l)Subject to this Act, where goods are sold by a person who is not the owner of the goods, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his or her conduct precluded from denying the seller's authority to sell.

Therefore, since the 4th defendant who was the consignee mentioned in the Bill of Lading had ceased to exist prior to the Sale Agreement, the 5th defendant could not purport to be trading as the 41h defendant that was a non-existent entity and claim to have capacity to contract and pass on good title to the l't defendant and the 1'1 defendant could not acquire a better title to the goods if the 5th defendant did not have any title in the first place. Section 4 (c) of the Sale of Goods and Supply of Services provides for capacity to contract that a person has capacity to buy and sell goods or supply services. "Where that person is not disqualified from contracting by any law."

From the evidence adduced I find that the 51h defendant had no capacity to contract which rendered the Sale Agreement illegal. In the case of Makula International Ltd vs Cardinal Nsubuga, Civil Appeal No. 4 of 198I, it was held that

"A court of law cannot sanction that which is illegal. Illegality once brought to the attention of court overrides all questions of pleadings, including any admissions made thereon. No court ought to enforce an illegal contr,act orc)21>

allow itself to be made an instrument of enforcing obligations alleged to arise out o/'a contract or transaction which is illegal if the illegality is duly brought to the notice of the court."

Since the resultant Sale Agreement is tainted by illegality it is a nullity and unenforceable. I find that the plaintiff company remains the rightful owner of the suit goods.

### (b) Whether the plointiff holds a lien over the gootls?

PWI during cross examination testified that the plaintiff company released the Bill ofLading and other supporting and the consignment in honest beliefthat they would receive payment for the goods from the 3'd defendant. That however they received a forged telegraphic transfer (PEX.7 & PEX.8) and the agreed amount of USD 82,500 was credited nor reflected on the plaintiff s account to-date. He further testified and adduced in evidence emails from the 3'd defendant confirming the failure to make payments and advising the plaintiff company to get a new buyer or sell off the suit goods. Counsel for the plaintiff submitted that the plaintiff being an unpaid seller, the Plaintiff remains the lawful owner of the suit goods in container No. MRU 369933 and that the Plaintiff has a right to retain the goods in line with Section 5l ofthe Sale ofGoods and Supply ofServices Act.

Counsel for the I't defendant submitted that under Section 25 (0 of the Salc of Goods and Supply of Services Act provides where, under the contract, the seller delivers the goods to the buyer or to a carrier or other bailee whether named by the buyer or not, for the purpose of transmission to the buyer, and does not reserve the right of disposal, he or she is taken to have unconditionally appropriated the goods to the contract. Further that Section 54 (2) (b) Sale of Goods and Supply of Services Act provides for termination of right of lien and provides thus; C)/4f

"The unpaid seller of goods shall lose his or her lien or right of retention on the goods-

(a) when he or she delivers the goods to a carrier or other bailee Jbr the purpose of transmission to the buyer without reserving the right of disposal ofthe goods;

(b) when the buyer or his or her agent lawfully obtains possession of the goods. "

He further submitted that since the plaintiff did not reserye any right of disposal under the Commercial Invoice with the 3'd defendant in the event that the 3'd Defendant did not pay for the suit goods the plaintiffunconditionally appropriated the suit goods. Further that the plaintiffhas no right oflien over the goods anymore, the same having been delivered to the carrier and the same transmitted to the consignee without reserving any right ofdisposal.

Counsel for the 2nd defendant Counsel for the 2nd defendant cited that case ofcase of Karim Moding Vs Sulaiman Kabega HCCA No.35 of 2015, where it was held that the Plaintiff could only exercise the lien if they were still in possession of the goods/ consignment or if the goods were with the 3'd Defendant, provided the retention of lien was specifically provided for in the sale agreement. Since the Plaintiff delivered goods to the carrier for purposes of transmission to the 4th Defendant and handed over the original documents of title to them, the Plaintiff lost their lien over the goods. He relied on Section 58 (2) of Sale of Goods and Supply of Services Act that provides that an unpaid seller's right of Iien or retention or stoppage in transit shall be defeated where a document of title to goods has been lawf'ullv transferred to any person as a buyer or owner and that person, by way of sale transfers the document to a person who takes the document in good fuirn ry)fof for valuable consideration. In the instant case, as discussed earlier the circumstances under which the l.t defendant acquired the original Bill of lading as document of title to the suit goods were tainted by illegality since the holder was a nonexistent entity and the buyer was already aware of this fact having admined to have found out during due diligence prior to the purchase. The l'1 defendant did not therefore acquire the suit goods in good faith and the documents of title were not lawfully transferred to the I st defendant.

Issue No.2 is answered in the affirmative.

### Issue No,3: ll/hether lhe 3'd, 4'h and 5'h defendants are liable for breach of conlract?

A breach of contract occurs when a party neglects, refuses or fails to perform any party of its bargain or any term of the contract, written or oral, without a legitimate legal excuse. This was held in the case of United Building Services Ltd Vs Yafesi Muzira T/A Quickest Builders and Co. [20061 UGComm l5 where court held that;

## "A breach of the contract occurs when one or both parties .fail to .fulfill the obligations imposed by the terms of the contract."

It was the evidence of PWI that the Commercial Invoice dated 25th January 2023 (PEX.2) contained the major terms of the agreement of the parties between the Plaintiff and the 3'd Defendant. It stipulated under Payment Terms that"25 days after B/L date". The Bill of Lading (PX.3) was dated 2nd February 2023 making the deadline for payment by the 3'd defendant 28th February 2023. PWI further testified the Plaintiff was never paid for the goods after almost three months as evidenced by PEX.8, and PEX. 16. Counsel for the 1'1 defendant submitted that since the 3'd to 5'h defendants did not file defences it should be taken that they agreed with each and every content of the plaint as regards the breach of contract. 'Zf

, - ,-

From the evidence adduced I find that the 3'd defendant breached the terms of payment as agreed under the Commercial Invoice. However, notwithstanding the omission/failure of the 4th and 5th defendants to file defences, I find that there was no breach by the 4th and 5'h Defendants since the plaintiff had no contractual relationship with them.

Issue No.3 is answered in the affirmative with respect to the 3'd defendant only.

### lssue No.4: Remedies available

Malkara Birlik Sut Ve Sut Mamulleri A. S, under HCCS No.240 of 2023 and HCCS No.345 of2023, is seeking remedies ofdeclaration ofbreach ofcontract, orders for payment of the contractual sum of \$82,500, declaration that the goods are the property of the plaintiff, orders for URA to release the container to the plaintifffor re-export, an injunction stopping URA from breaking the seal, clearing or releasing the consignment to any other party, damages, interest and costs

Sky Rocket Agency Co Ltd, under HCCS No. 305 of 2023 is seeking remedies of orders compelling URA to finalize the process of clearance of the goods and to release them to the plaintiff on payment ofthe taxes, damages, interest and cost\$.

Following the findings under the issues I -3 above, the claim by Sky Rocket Agency Co Ltd under HCCS No. 305 of 2023 is found to have no merit and their suit is accordingly dismissed. They may however proceed to recover any moneys they paid from the 4th defendant, Dumba Hadadi, who appears to have defrauded them by purporting to trade as the non-existent seller.

The Commissioner of Customs URA (2"'r defendant) and Good Brothers International Limited ICD (6th defendant) were sued by Malkara Birlik Sut U"

UA L7

Mamulleri A. S and Sky Rocket Agency Co Ltd who were both claiming ownership of the goods. However, the 2nd defendant did not make any legal claim over the suit goods which were in their in custody by virtue of their mandate as the Covernment tax collection agent and were being held by the 6th defendant for the same reason. Funher the 2nd defendant adduced evidence vide an Interim Court Order from Misc. Application No.373 of 2023 arising from HCCS No. 240 of 2023 stopping them from clearing or dealing with the suit goods in container No, MRSU 369933. In light of this evidence I find that the claims against the 2nd and 6th defendants have no merit.

I find that the plaintiffhas proved its case on the balance ofprobabilities as against the other defendants. Accordingly, the plaintiff is entitled to some of the remedies prayed for.

In the llnal result, Judgment is entered for the Plaintiff with the tbllowing orders-

- l. Adeclaration is made that the suit goods in container No. MRSU 369933 are the property ofthe plaintiff. - 2. A declaration that the 3'd defendant breached the contract with the plaintiff under the Commercial Invoice. - 3. The 2nd and 6rh Defendants are ordered to release the suit goods to the plaintiff and/or facilitate their re-export by the Plaintiff after payment of the requisite taxes. - 4. A permanent injunction is issued restraining the 2nd Defendant from releasing the suit goods in container No. MRSU 369933 to the l" Defendant or any other person party claiming an interest in the goods save for the plaintiff. - 5. General damages of UGX 10,000,000 are awarded to the plaintift. - 6. Interest is awarded on the general damages until payment in m. ,/rf 7. Costs of the suit to the plaintiff.

It is so ordered

# CORNELIA KAKOOZA SABIITI . IUDGE Date: 7th July 2023