Manibhai Devidas Patel v Waduwa and Another (Civil Suit 3 of 1997) [1997] UGHC 10 (19 November 1997)

THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA HOLDEN AT MBALE HIGH COURT CIVIL SUIT NO 3 of 1997

PLAINTIFF versus MANIBHAI DEVIDAS <sup>j</sup> PATEL <sup>J</sup>

DEFENDANTS A STEPHEN WADHWA FLAVIA WADUWA

• BEFORE: THE HONOURABLE T. TR.' JUSTICE AUGUSTUS KANIA

## JUDGMENT

The plaintiff Manibhai Devidas Patel sued the defendants Stephen V/aduwa and Flavia Waduwa for the recovery of shs 10,000,000= , general damages for breach of contract, interest and costs of the suit\* The defendants denied liability and counterclaimed for shs 10,000,000=.

\*• \*'

and Road The background of this suit is briefly as follows. Before 1.12.1995 the plaintiff managed administered a building comprised in Plot 45 Naboa Mbale on behalf of the registered Proprietors who were then resident in London. The latter decided to sell the said property through an agent called Praful Chandra Ranchhobhai. The Plaintiff on his part identified the defendants as prospective buyers and negotiated the purchase price at shs 35,000.000=, and charged good will, which in my opinion should have been a commission for negotiating the deal. On 1.12.1995 Praful Chandra Ranchhobhai and the defendants entered into a sale agreement in respect of the said property. The completion of the sale and eventual transfer were dependent on a number of acts to be fulfilcd by Praful Chandra Ranchhobhai. On the same day 1.12.1995, he received shs 10,000,000= as part payment of his goodwill or commission however one would wish to call. By the document acknowledging receipt of the above sum the Plaintiff undertook to refund the said sum to the defendants if the sale of the said property was not completed within six months thereof.

of Plot the sale is PI and by the sum was not completed within six months from On 8.7\*1996 the same parties to the said agreement in respect of the same property, the witness Ranchhodbhai On 1.12.1995 in respect of the said property between Praful Chandra . Ranchhodbhai the agent of the registered proprietors on the one hand and the defendants and one Martin lalinga on the other part. On the same day the plaintiff acknowledged on a separate document the receipt of shs 10,000,000= as part payment of shs 20,000,000= due to him as goodwill from the defendants for the part he played in negotiating of the said property. This document by it the plaintiff under took to refund sum so advanced if the sale 1.12.95. sale On 9.7.96 received a letter from Praful Chandra informing him that from then on the rent in respect of the same property was no longer to be collected by PWI but by the defendants who were now the 2landlords and on 19\*7-1995 the property was handed over to the defendants. It was fl'<sup>s</sup> evidence that no duty was imposed on him to complete the sale and that, he concluded, the sale and hade been completed on the basis of the letter from Praful Chandra dated 9\*7-1995 and that is why he demanded to be paid the balance of shs 10,000,000= which the defendant's had undertaken to pay. The case for the plaintiff as put accross by PWI Manibhai Devidas Patel, the plaintiff is that prior to 1.12. 1995 he was the manager 45 Naboa Road Mbale where the defendants were tenants. On 1.12.1995 an agreement of sale, P5 was concluded

DWI Stephen Waduwa, the first defendant testified that he was approached by the plaintiff some time before 1.12.1995 who represented himself as the owner of property comprised in Plot 45 Naboa Road Idbale. The Plaintiff informed him he was desirous of selling the said property and that the documents relating to the same were in London.

He eventually informed DWI that he was not really the owner of the property but that Praful Chandra Ranchhodhai who held powers of Attorney for the Registered Proprietors lived in Kampala. After agreeing with the plaintiff that the purchase price for the property was she 35.000.000 with an additional. shs 20,000,000= $\pi$ payable to the plaintiff they proceeded to Kampala and on 1.12.1995 a sale agreement for the said property was concluded between Praful Chandra Ranchodbhai on the one part and the defendants and one Martin Malinga on the other part. On the same day shs 10,000,000= was paid to the plaintiff as part payment by way of good will. The balance of shs 10,000,000= was payable on the completion of the sale transaction which had to be within six months from the date of the agreement. DWI further testified that the agreement was not implimented so another sale agreement was executed on $8.7.1995$ with a provision that the defendants were to be given vacant possession on their paying 50% of the purchase price. Recuase they paid the 50% agrees to between the parties, the defendants were put into vacant possession on 19.7.1996 and they have been in post casion since It was DWI's evidence that as at the hearing of then. this suit the sale has not been completed because the title deed to the property had not yet been obtained, the lease on the property has expired and because Barclays Bank (U) Ltd has an encumbrance on the property. $\mathtt{DWI}$ prayed that the suit be dismissed with costs and judgment be entered against the plaintiff on the counter claim with costs.

With regard to the first issue whether in view of the defence the sale of the property that is comprised in Plot 45 Naboa hoad Mbale was completed within the stipulated time, Mr. Emoru learned Counsel for the defendants submitted that it was not completed in FI within six months from the late of the rule agreement. A jointed out that according to the evidence of FT Himself the stipulated six months lapsed on 31.5.1996 and yet the original sale agreement had to be replaced by that of $3.7.96$ because the agreement of 1.12.1995 was not completed. $\mathbf{L} \mathbf{L}$ Emoru submitted that even at the time of the kearing of this case the sale had not been completed induces result the plaintiff can not benefit under 7. I since the payment of his shs 10,000,000= as good will was dependant on balance the sale between Praful Chandra Ranchodbhai as Attorney

— 43 —

for the registered p^^ietors and the defendants.

Mr. Owori learned counsel for the plaintiff submitted that the 31.5-1996 was not anymore relevant as the time within v/hich the sale was to be complete in order to entitle the plaintiff to the balance of shs 10,000,000= . Accoxding tc him the reason for this is that the defendants did not rescind the contract of sale when the sale failed to be completed on 31-5-1996. He submitted the sale agreement was completed when the defendants were given vacant possession and consequently carried out extensive repairs which could only be consistent with the sale having been completed. It was his view that the plaintiff rightly, basing his claim on the above facts correctly considered the sale having been completed then.

annum months ink ( the plaintiff did not question of this writing) shs 10.9)0-000= In order to answer the first issue either way, it is essential to understand exhibit PI by which both the plaintiff and the defendants made undertakings. By this acknowledged receipt of shs sale of to refund documents the plaintiff 10,000,000= as payment of good will for the Plot 45 ^aboa Load Mbale. Xxe also undertook' to the defendants the above sum with 20 *'■* interest per if the said sale was not accomplished .ithin six from 1.12-1995- The defendants on their part in the authenticity undertook to pay a further sum of on the completion of the sale.

The basic cardinal principle of the interpretation of written contracts and, I venture to say documents generally is that the parties or the authors thereto are presumed to have intended what they have in fact said in the agreement /document.

The defendants on their part on the same document undertook to pay to the plaintiff the balance of shs 10,000,000= as his "goodwill" on the completion of the entire sale. On 8.7.1996 more than eight months from the first sale agreement the defendants and Praful Chandra Ranchhodbhai executed a fresh sale agreement which gave possession to the defendants. The Plaintiff claims that this signified that the sale is completed and as such he is entitled to being paid his balance of shs 10,000,000= as the defendant had undertaken to do and the defendant's are in breach of contract by not complying. The defendants on their part argue that the sale was not completed within the six months as stipulated to entitle the plaintiff to the remaining shs 10,000,000 $=$ and thereof he should refund the shs 10,000,000= advanced to him as a "goodwill." Hence this suit and the Counterclaim of the defendants.

At the commencement of the hearing of the suit the following issues were framed and agreed to by the parties for determination by the court;

- Whether in view of the defence the sale $1.$ of the property at Plot 45 Naboa Road was completed within the stipulated time. - Whether the plaintiff is entitled to the $2.$ relief of shs $10,000,000=$ - Whether the defendants are entitled to the $3.$ return or refund of shs 10,000,000=

CHIEF MAGISTR

is not completed merely by the of the sale agreement and payment of the purchase 1'his is evidence from the provisions of Section What then is understood by completion of the sale as meant by both parties? Both parties have given as reasons for not completing the sale things like failure to obtain the special Certificate of Title, the duplicate copy having been lost, the lease of the property having expired and the fact that there is an encumbrance on the property. In competing a sale of land or property that falls under the provisions of the Registration of Titles Act Cap 205 sale execution price. 51 of the Registration of Titles Act;

> " <sup>51</sup> No instrument until registered in manner herein provided shall be effectual to pass any estate or interest in any land under the operation of this Act or to render such land liable to any mortgage; but upon such registration the estate or interest comprised in the instrument shall pass or, as the case may be, the land shall become liable in manner and subject to the covenants and conditions set forth and specified in the instrument or by this Act declared to be implied in instruments of like nature; and if two or more instruments signed by the same proprietor end purporting to affect the same estate or interest aie at the same time presented to the Registrar for Regi- tration he shall regiser and endorse that instrument which is presented by the person producing the duplicate Certificate of Title."

A P. I. Considering the evidence of DWI, that was not seriously challenged, that up to now Plot 45 Naboa Road has not been transferred to the defendants because among other reasons the lease has expired, the special certificate of title had not been secured and because of an encumbrance on the property I find it as a fact that the sale was not completed within six months from the sale agreement on or by 31.5\*1996 as stipulated in the undetaking by the plaintiff in P. I. Por that matter it has not been

completed envisaged by Section 51 of the Registration of as Titles Act by having the interest of the defendants registered The first issue is therefore answered in the negative.

With regard to the second issue whether the plaintiff is entitled to the relief of shs 10.000.000= reference must be made against to P. I. In it the defendants undertook to pay shs 10,000,000= to the plaintiff on the completion of the entire sale, which in my view meant on the defendants being registered as propritors of Plot 45 Naboa Road Mbale in terms of Section 51 of the Registration of Titles Act. This undertaking by the defendants must as discussed above, be read independently of the plaintiff's own undertaking, since the latter was not a party to it. While the plaintiff undertook to refund shs 10,000 $\div$ 000= paid to him if the sale was not completed within six months, the defendants undertook to pay sha $10,000,000=$ on the entire completion of the sale without any limit of time. That their payment was not dependent on the passage of six months in clear from the contents of paragraphs 4 of Exhibit P4 dated 1.12.95 in which they agreed with the vendor as follows:-

"4 The vendor under takes to obtain the said Powers of Attorney within six months from the date hereof."

As securing the Powers of Attorney from the registered Proprietors was to form the basis for the vendor Praful Chandra Ranchhodbhai to secure a special Certificate of title, remove the encumbrance on the property and to execute a transfer, the defendants could not have intended the sale to be completed by 31.5.1996 which was the deadline for Praful Chandra Ranchhodbhai to obtain the said powers of Attorney. In collecting the intentions of parties to a contract the words used must be taken in the whole context of the transaction see Chitty on Contracts -General Principles 25th Edition Paragraph 300 at page 152. From the context of Exhibit P4 and the undertaking by the defendants in P. I it is clear that the defendants intended to the additional she 10,000,000= to the plaintiff on the pay sale being completed irrespective of a time frame.

If the clauses in the contract are very clearly expressed and there is nothing to enable the court to put upon then a different construction from what the words import. the words must prevail. Chitty on Contracts, General Principles 25 TH Edition Sweet and Maxwell Page 144 Paragraph 286.

With the above canon of contract construction I have no doubt in my mind whatsoever that in PI the plaintiff and the defendants intended the natural meanings of the wording of that document. To my understanding the defendants undertook. to pay in full and final settlement the goodwill due to the plaintiff by paying him an additional shs 10,000,000= on the sale agreement between themselves and Praful Chandra being completed. The plaintiff on his part undertook to refund the shs 10,000,000= paid to him by the defendants if the completion of the sale did not materialise within six months from the time of such undertaking.

Both undertakings are on the same document but none of the parties is a party to the others undertaking. For this reason the two agreements or undertakings have to be taken separately. Whereas the plaintiff's undertaking has a time limit within which to comply, the defendants' undertaking is left open to the entire completion of the contract.

Mr. Owori submitted that PWI should be, construed against the defendants, because it was essentially their document, on the doctrine of contra preferentem. $\scriptstyle \texttt{Simolv}$ put this doctrine means that a document will ordinarilly be more strictly construed against its maker and it is applicable in case where there is an ambiguity in the meaning ascribed to such a document and where other rules of wonstruction fail. See Chitty On contracts- General Frinciples 23 Edition paragraph 636 at page 636. I don't think PI the four corners of this doctrine. It can falls within not be said to have been authored by the defendants merely because it was drawn by counsel for the defendants since the plaintiff signed his own undertaking in his own right so did the defendants. Further still the two undertakings by both

parties and the document itslef is not ambigous.

contract is advanced to him of the court disagreed and that the frustration frustration of the other. As for the third issue whether the defendants are entitled to the return of shs 10,000,000= paid to the plaintiff on 1.12.1995 Mr. ^wori submitted the goodwill independent of the sale agreement and that the performance of the lattei' was tkx not the duty of the plaintiff to refund the shs 10,000,000= should not be made conditional on failure to perform it. He referred me to Shah vs Attorney eneral /T963? EA-, 261 for this proposal. I am entirely in agreement with this submission. In the case cited by Owori there were two contracts involved, one between Mr. Shah and the Buganda Government and Shah for a commission for finding a financier and the other between the Financier and Buganda Government. Following the two contracts the Buganda Government was abolished. The Attorney Greneral argued that the contract between the Financier and Buganda Government was frustrated therefore Shall could not make a valid claim on his own contract for commission. The and held that the two contracts were separated of one did not lead to the In the instant case the plaintiff undertook to pay back the shs 10,000,000= if the sale agreement was not accomplished within six months The sale agreement had no time limit except for P4 which compelled the vendor to secure the Powers of Attorney within six months . The plaintiff knew he had no duty under the sale agreement and in fact he could not enforce its performance. But he conciously went ahead and undertook to refund the money in the event the sale was not completed within six months . His undertaking must be taken on its face value as an independent contract by which he ought to be bound. His duties were not connected with whether the contract between the defendants and the vendor succeeded or not. In fact it is irrelevant that the defendants took vacant possession of the premisses because it was they entered the premises under a contract the frustration of which did not necessarily affect the obligations Plaintiff to the defendant.

The case of Suisse Atlantanue /1967? TAG 361 cited, by My uwori referred to one signle contract of carriage between only parties and so its breach made the whole contract flounder. But here is a case of two contracts which could each stand on its own. Sussie Atlantique is not.very useful to ihe plaintiff therefore.

if was based on it. Mr. Emoru raised the issue why the plaintiff chose to proceed only, against the defendants and to leave out one Martin Malinga. The sale agreement P5 of the 1-22.95 described the purchasers of Plot 45 Naboa Road Mbale as tenants in common with a quarter interest going to each of the defendants and the other half to be held by Martin ^alinga. Plough the sale agreement dated 8.7-1996 P3 describes the three purchasers as tenants in common with equal shares in the property, P5 is the relevant agreement on which Pi since the commission or goodwill payable was based It is trite in common as opposed th •that the interests of tenants those of joint tenants are severable. In suing the defendants the plaintiff has made a claim only against the interests or shares of the two defendants. The claim does not touch the interests or shares of Martin Malinga who is stated in P5 to have owned half of the shares in the property. It transpired during the hearing that Martin Malinga is deceased. Even so the plaintiff, as rightly pointed out by Mr. Emoru, could still have sued the personal representative of Martin Malinga. Not having done so, he has a remedy it can only be against the shares of the defendants. Likewise the remedies available to the defendants are only limited to their won interests or shares in the property which total to half. The plaintiff and the personal representative of the late Martin are at liberty to bring separate suits to sort out the other half of the property.

till payment in full In the result it is declined that upon completion of the sale the plaintiff is entitled to being paid shs 5,000,000= reflecting 1/2 shares in the property with interest at Bank rate from date of completion of such sale until payment in full. Judgment is entered for the defendants on the counterclaim and the plaintiff is hereby ordered to pay shs 5»000,000= reflecting 50^ shares of the defendants in the property together with interest at 20?' per annum from the 31st May, 1996 and the costs of thio suit.

sgd. Augustus Kania

# $-51 -$

#### THE REPUBLIC OF UGANDA

#### IN THE HIGH COURT OF UGANDA AT MBALE

# DR. H. C. C. S. NO. 03 OF 1997

M. D. PATEL .................. PLAINTIFF $\cdots$

#### VERSUS

STEPHEN WADUWA | $\mathbf{1}$ . 2. FLAVIA WADUWA $\mathbf{1}$ ........ DEFENDANTS

# DECREE

THIS SUIT coming on this day for final disposal before His<br>Lordship AUGUSTUS KANIA, J., and in the presence of F. MUDHANGA Esq., counsel for the plaintiff and in the presence of V. L. EMORU counsel for the defendant.

THIS COURT DOTH MAKE the following orders:-

- $\mathbf{1}$ . It is declared that upon the completion of the sale of Plot 45 Naboa Road, Mbale Municipality, the plaintiff is entitled to being paid shs. 5,000,000= with interest at bank rate from the date of the said completion until payment in full. - $2.$ Judgment is entered on the counterclaim and the plaintiff is ordered to pay shs. 5,000,000= to the defendants with interest of 20% p.a from the 31st day of May 1996 until payment in full, and the costs of this suit.

GIVEN under my hand and the seal of the court on this the day of $lec<sub>o</sub>$ 997. $\varphi$

**IS TRATE, MEALE**

$19.11.94$

H. For C/M

$21/814$


WE APPROVE DISTRICT KELISTRY 10 ALF

$M/S$ OWOR & CO. **ADVOCATES**

1197 $a<sub>8</sub>$

DECREE EXTRACTED BY:-M/S EMORU & CO. ADVOCATES, PLOT 3/5 BOMBO ROAD, P. O. BOX 3155, KAMPALA.

196 words.