Metropolitan Properties Ltd v Mugume (misc. Applic. No. 120 OF 2013) [2013] UGHC 257 (21 August 2013)

Full Case Text

## **THE REPUBLIC OF UGANDA**

#### **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **H. C. C. S NO. 274 OF 2011**

(Originally H. C. C. S NO. 201 OF 2009)

**METROPOLITAN PROPERTIES LTD:::::::::::::::::::::::::::::::::::::::::::::;::::::::pLAINTIFF**

#### **VERSUS**

**OSCAR MUGUME:::::::::::::::::::::::::::::::::::::::::::::::::;::::::;::::::::;::::::::;;DEFENDANT**

#### **JUDGMENT**

### **BEFORE: HON. JUSTICE BENJAMIN KABIITO**

The Plaintiff brought this suit by summary procedure against the Defendant for — I c> recovery of Ug. Shs.100,000,000/= plus costs of the suit. One of the Plaintiff's directors, Haider Somani, deponed an affidavit dated 29th May 2009 in support of the summary plaint.

The Plaintiff is a limited liability company with capacity to sue and be sued, while the Defendant approached the Plaintiff with an offer to secure a lease interest in C. land, for monetary commission.

The Defendant applied for and was granted leave to appear and defend the suit. The Defendant in its written statement of defence raised a counterclaim against the Plaintiff herein for:

- a) Ug. Shs.750,000,000/= (Seven Hundred Fifty Million Shillings) as the commission fee. - b) Refund of Ug. Shs.50,000,000/= (Fifty Million Shillings) for logistical support.

- c) General damages for breach of contract. - d) Costs of this suit.

The Plaintiff in reply to this claim denied that there was any agreement for the payment of any commission.

At the scheduling conference, the following were set out as the agreed facts.

- 1. The Plaintiff and the Defendant engaged in negotiations regarding the offer by the Defendant to obtain land for the Plaintiff at Nsambya from the Registered Trustees of Kampala Archdiocese at Nsambya. - 2. On 20th April 2008 the Defendant presented to the Plaintiff a memorandum of understanding he had signed with the Registered Trustees of Kampala Archdiocese. - 3. The Defendant secured a lease offer though the Plaintiff wanted some amendments done to the memorandum of understanding. - 4. The Plaintiff and the Defendant executed a deed of acknowledgment and undertaking dated 23rd April 2008 under which the Plaintiff paid the Defendant Shs.100,000,000/=.

At the same scheduling conference, the parties framed the following issues for determination by the court.

- 1. Whether the Defendant breached the deed of acknowledgement and undertaking. - 2 Whether the Defendant procured any land for the Plaintiff on acceptable terms.

- 3. Whether the Plaintiff owes the Defendant a commission of Shs.750,000,000/= and a refund of Ug. Shs.50,000,000/= (Fifty Million Shillings). - 4. The remedies available for either party.

As directed by the court, Counsel for the parties filed written submissions, and it is these submissions that I have considered in the resolution of this case.

Upon perusal of the pleadings and documents on record, the facts of this case appear to be the following.

1. A Memorandum of Understanding dated 18th April 2008 was executed between the Registered Trustees of Kampala Archdiocese (therein referred to as "the First Party")and M/S Metropole Limited (therein referred to as the "Second Party"). In the said memorandum, the Registered Trustees of Kampala Archdiocese expressed intention to lease its property comprised in Block 15 Nsambya Central, Land at Nsambya measuring approximately 12 acres for 49 years to M/S Metropole Limited.

It was also provided under Clause l(iii) of the said memorandum that the Second Party, Metropole Limited, had been granted a grace period of 3 (three) months from the date of execution of the said memorandum within which to confirm its ability/readiness to fulfill the terms of the said memorandum including the ability to negotiate and/or compensate the occupants of the land.

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<Rev. Fr>. Godfrey Kalule signed the said memorandum for the Kampala Archdiocese while Ignatius Kakembo Ntambi and Oscar Mugume signed on behalf of Metropole Limited.

2. On 23rd April 2008, the Plaintiff herein through its lawyers Kiboijana, Kakuba & Co. wrote to the Registered Trustee of Kampala Archdiocese requiring certain amendments to the memorandum of understanding to be effected.

The letter read, in part, as follows:

*"2. The name of the 2nd Party should be changed to Metropolitan Properties Limited.*

*6. Payment of the commitment fee of Shs.50,000,000/= shall be made as soon as the proposed changes and amendments are incorporated in a revised M. O. U.*

*7. The revised M. O. U shall be signed by the directors of the 2nd Party."*

There is no indication as to whether this letter was responded to in respect to the matters raised in the letter.

3. On the same date, that is, 23rd April, 2008, Oscar Mugume, the Defendant herein, entered into a deed of acknowledgement with M/S Metropolitan Properties Limited in respect of the intended lease of 12 acres of land comprised in Block 15 Nsambya Central.

The deed of acknowledgement is set out in its entirety.

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- *i) To secure the consent and approval of the Registered Trustee of Kampala Archdiocese to the revision and/or amendment of the attached Memorandum of Understanding dated 18thApril, 2008 to incorporate all the proposals of the said Metropolitan Properties Limited as contained in the attached letter from their advocates M/S Kiboijana, Kakuba & Co. Advocates dates 23rd April, 2008.* - *ii) On behalf of M/S Metropolitan Properties Ltd to initiate negotiations for compensation and vacating the land with the occupants and holders ofleases on the above-mentioned land which the said M/S Metropolitan Properties Ltd intends to lease from the Registered Trustees of the Archdiocese of Kampala as soon as the revised memorandum abovementioned is signed on compensation terms and facilitation terms to be agreed on with M/S Metropolitan Properties Ltd.*

*I UNDERTAKE to refund the said sum of Uq. Shs.100,000,000/= (One Hundred Million) to M/S Metropolitan Properties Ltd if I fail to secure the said revision of the Memorandum of Understanding within 7 days from the date hereof or if having obtained revision I*

*fail to embark on the above mentioned compensation and vacation negotiations within a week of the execution of the revised Memorandum of Understanding between Metropolitan Properties Ltd and Registered Trustees of Kampala Archdiocese.*

The deed was signed by Oscar Mugume on the one part, and a &lt; representative of Metropolitan Properties Ltd on the other party.

This deed addresses the matters that the lawyers for the Plaintiff had raised in their letter referred to herein and addressed directly to the Kampala Archdiocese.

- 4. The Plaintiff's claim in this suit is that the Defendant did not execute any of | 0 the terms of the undertaking and having failed to do so, has not refunded the sum of Ug. Shs.l00,000,000/=within the period provided in the deed, to date. - 5. It is on account of the Defendant's neglect or refusal to do so, that the Plaintiff brought this suit for orders sought.

#### **RESOLUTION OF ISSUES**

# Issue No.lv

*Whether the defendant breached the deed of acknowledgement and undertaking.*

The Plaintiff's directors testified that the sum of Ug.shs.100,000,000/= (One Hundred Million Shillings Only) was advanced under the terms of the deed to the - 2-0 Defendant to do the following acts for the benefit of the Plaintiff.

1) To secure the consent and approval of the Registered Trustees of the Archdiocese of Kampala, being the registered proprietors of the subject

property, to amendments required to be done on the memorandum of understanding within 7 days.

The amendment of the terms of the deed within the time set was a condition to be fully executed by the Defendant before any other thing or event could be done in respect to the intended transaction.

Clearly in the circumstances of this case, the need to properly describe the Plaintiff, in respect to its correct and registered corporate name as the entity that was to acquire and hold the lease interest from the Archdiocese was a condition precedent or *condicio sine qua non-or* "condition without which it could not be" for the intended transaction to be proceeded with.

As it is, the Plaintiff did not derive any legal rights from or bear any legal obligations to perform on the memorandum of understanding as was executed as it was not privy to this agreement nor could the Defendant rely on it to make demands against the Plaintiff, which was a stranger to the memorandum.

Without amendment, the purported memorandum is, null and void and of no legal, effect in regard to the intended offer of the lease interest in the subject property. I find it outrageous for the Defendant to claim as he does during crossexamination, that *"I believe that the lease offer was binding upon the Plaintiff."*

Besides, the Defendant and Ignatius Kakembo Ntambi, by purporting to sign for and on behalf of Metropole Limited, could not and did not bind, the Plaintiff, which is a different entity, in view of the incorrect description of the Plaintiff's registered corporate name.

Secondly, the Defendant and Ignatius Kakembo Ntambi could not and did not act for and on behalf of the Plaintiff as they were not duly appointed and nominated Attorneys of the Plaintiff, vide a duly executed and registered Power of Attorney instrument, with authority and mandate to commit the Plaintiff to the terms and requirements of the memorandum of understanding. On this point, the — \_5 Defendant claimed that he had verbal authority from Mzee Somani to sign for the company, which claim was rejected by the directors of the Plaintiff.

Given the amounts involved, I believe the testimony of the directors of the Plaintiff, that the Defendant was never appointed an agent of the Plaintiff, whether verbally or otherwise. ~

2) It is the case as well that the deed further provided that the Defendant would undertake negotiations with the occupants and holders of leases and the subject land and secure vacant possession of the land.

It is my understanding that such negotiations, in terms of the deed, were a **"condition subsequent"** or **an** event that occurs after the "condition precedent" —1-5 has been fully met. A condition subsequent cannot be performed or undertaken before a condition precedent.

Clearly, the intended acquisition by the Plaintiff of the lease interest as was offered by the Registered Trustees of Kampala Archdiocese could not be effected without the memorandum of understanding being amended to properly describe —Jp the Plaintiff and for its directors'to execute any such documents as would give legal effect and purpose. In any event, the deed expressly provided that the Defendant would refund the Ug. Shs.100,000,000/= to the Plaintiff under two specified events of defaults. The first event being, if the Defendant failed to secure the revision of the memorandum of understanding within 7 days of the execution of the deed of acknowledgment and undertaking.

$\mathbb{Z}$ $\mathbb{Z}$ $\mathbb{Z}$ $\mathbb{Z}$

The second event being, if the Defendant had obtained the revision(which is not the case herein), but failed to embark on the compensation and vacation negotiations, within a week of the execution of the memorandum of understanding between Metropolitan Properties Limited and the Registered $-10$ Trustees of Kampala Archdiocese.

During cross examination, the Defendant did not dispute that he signed the deed of acknowledgment and undertaking or challenge any of its terms. In fact he categorically stated that; "I accept the contents of this document which I signed."

The defendant admitted during cross-examination, that "I did not secure the \_\_I\_S revision of the lease offer. The compensation was to be paid by the Defendant and I did not do the said negotiations."

The irony is that, later on in his testimony, the defendant changes his testimony to claim that, "I have fulfilled most of the conditions of the deed. This involved the list of squatters. I fulfilled Item 2 substantially. Item 1 was not completed on $-20$ account of the plaintiff's part."

With respect, I do not find that the Defendant could have moved to negotiate with squatters or to make any payments on behalf of "Metropole Limited" before

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36卦

securing the required amendments of the memorandum of understanding within the set period of 7 days.

As it is the Defendant failed to secure the amendment of the terms of the memorandum of understanding within the time stipulated and the intended transaction fell through. '— —

In the result and for the reasons stated, I hold that fhe Defendant breached the terms of the deed of acknowledgement and undertaking and must refund the sum of Ug. Shs.100,000,000/= to the Plaintiff.

## Issue No,2

*Whether the defendant procured any landfor the plaintiff on acceptable terms. —* { O The Defendant asserts that he procured land fordhe Plaintiff on acceptable terms because he entered into a memorandum of understanding for an intended lease and also made negotiations with squatters on the land.

I have considered the pleadings and the evidence on the record and make the following observations. ' '

First, the memorandum of understanding contained a wrong description of the intended lessee under its terms other than the Plaintiff. The intended lessee was represented therein as "Metropole Ltd" instead, of "Metropolitan Properties Limited." It is for this reason that the Plaintiff sought for a rectification of its name in its proposal for the revision of the memorandum of understanding. —-

Second, the Defendant without requisite authority of the Plaintiff, such as a duly executed and registered Power of Attorney, purported to enter on the Plaintiff's

ehalf a memorandum of understanding with the Kampala Archdiocese in respect to the acquisition of a lease interest.

Third, the Defendant did not procure the revision of the memorandum of understanding in terms of the deed of acknowledgment and undertaking. Instead the Defendant claims to have entered into negotiations with squatters and to have paid some monies pursuant to the said memorandum without first fulfilling the condition precedent contained in the said deed.

In the circumstance and for the reasons stated, the Defendant did not procure any lease interest for the Plaintiff to hold on the basis of the memorandum of understanding as executed which as is noted herein is null and void. —

## Issue No.3

*Whether the plaintiff owes the defendant a commission of Shs.750,000,000/= and a refund of Ug. Shs.50,000,000/= (Fifty Million Shillings).*

The Defendant filed a counterclaim wherein he claims that the relationship between him and the Plaintiff was that of an agent for the acquisition of a lease — l\_S offer for 12 acres for land comprised in Block 15 Nsambya from the Registered Trustees of Kampala Archdiocese for a commission of Ug. Sh.750,000,000/=. The Defendant ass-erts that he obtained the lease offer on the Plaintiff's behalf and is entitled to the commission and refund of the commitment fee paid by the Defendant to Kampala Archdiocese.

During cross examination, the Defendant provided the circumstances under which the commission of Ug. Shs.750,000,000/= fees arose. He explained that the

managing director had agreed that the Defendant would earn a mmission of Ug. Shs.750,000,000/=once he obtained a lease offer f.rom the Archdiocese of Kampala for the subject property.

The Defendant claims that he secured the lease offer in the terms satisfactory to the Plaintiff when he signed the memorandum of understanding of 18th April, ~ 2008. The Defendant demands the sum of Shs.650,000,000/= as balance due and owing to him, the plaintiff having been paid to him the sum of Ug. Shs.100,000,000/= under the deed of acknowledgment and undertaking.

On his part, DW2, one Ignatius Kakembo Ntambi, the Defendant's business associate, testified that the commission fee for Ug. Shs.750,000,000/= arose from what he called **"a gentleman's agreement."**

PW1, Haider Somani and PW2 K.- Somani denied that there was ever an agreement for commission to be.paid.

The fact that the parties executed a deed of acknowledgment and undertaking for Ug. Shs.100,000,000/=, makes it unlikely that a "promise for payment of monies to—t the sum of Ug. Shs.750, 000,000/=" by the Plaintiff to the Defendant would not be reduced into writing as well. '

I have considered all the circumstances of this case to the question as to whether :he Defendant is entitled to any commission as a broker in this case.

Counsel for the Defendant cited the case of **LUKYAMUZI JAMES VS. AKRIGHT — 'ROJECT & ANATOLIA KAMUGISHA H. C. C. S No.319 of 2002,** to justify the Jefendant's claim for commission. Justice Arach Amoko held,

*That a broker is entitled to a commission in estate agency after he has accomplished his duties."*

In this case, the Defendant failed to secure the amendment of the memorandum of understanding as required by the Plaintiff within 7 days and as such did not accomplish his duties as required and no commission is payable in the —Jb circumstances.

Besides, the terms of the deed of acknowledgment and undertaking are quite clear and in'terms of the provisions of Section 91 of the Evidence Act, Cap 6, cannot be altered by oral evidence as the Defendant purports to do so.

**Section 91 of the Evidence Act** provides, —- ( O

*"When the terms of a contract or of a grant, or of any other disposition of property, have been reduced to theform of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence, except as mentioned in section 79, shall be given in proof of the terms of that contract, grant or other disposition of — /\_£> property, or of such matter except the document itself, on secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained."*

It was held by JSC Karokora in **URA Vs. STEPHEN MABOSI** S. C. C. A No.26 of 1995 thus,

*"When as provides by S.90 (now 91) of the Evidence Act, the terms of a contract or other disposition of the property have been reduced to the*

*form of a document no other evidence is admissible to exclude or add onto what is contained in the document."*

In the interpretation of documents, it is the case that the words or phrases used, should be given their plain and ordinary meaning unless to do so would lead to absurdities. -—

Under the terms of the deed, the Defendant expressly and unequivocally undertook **"to refund the sum of Ug. Shs 100, 000,000/= to M/S Metropolitan Properties Limited, if I fail to secure the said revision of the memorandum of understating within 7 days from the date hereof."**

It is the case therefore that the Ug. Shs:100, 000,000/= was to be refunded upon failure of the Defendant to secure amendment of the deed in the terms set out. This provision for refund of the sum of Ug shs 100,000,000/- to the Plaintiff on account of a defined event of default completely negates the Defendant's claim that the sum of Ug Shs 100 million had been advanced to him as part of commission payable.

With respect, a commission is earned "once a particular assignment is executed and cannot be paid in advance for no work done.

In these circumstances, the Defendant cannot turn around and claim the Ug Shs 100, 000,000/= as part payment for commission in the sum of Ug. Shs 750, 000,000/= which would have been due but for a verified event of default on his part as has been referred to in this judgment.

In the result and for the reasons stated, I find that the Plaintiff does not owe the Defendant a sum of Ug. Shs.750,000,000/= as commission fee or otherwise.

In regard to the refund of Ug. Shs.50,000,000/=, it is alleged that'the Defendant and his business associate, DW2, paid the Shs.50,000,000/= as commitment fee to the Registered Trustees of Kampala Archdiocese allegedly in fulfillment of Clause No.2(i) of the memorandum of understanding of 18th April, 2008.

The Defendant produced before court a receipt of 5th May, 2008, DExl, showing payment of commitment fee for the lease in Block 15 Nsambya Central, Land at Nsambya. This receipt is in the names of Mugume Oscar, the Defendant herein, and Ignatius Kakembo Ntambi and not in the names of the Plaintiff. — —- / C

I hold that in the circumstances of this case, the Defendant having failed to execute the terms of the deed of acknowledgment and undertaking, as set out, the sum of Ug. Shs.50,000,000/= that the Defendant paid as coiTimitment fee to Kampala Diocese, in his personal names, in terms of an memorandum that this court has held to be null and void, was paid at his own sufferance. *—— Iff*

In the result and for the reasons stated I hold that the Plaintiff does not owe the Defendant the sum Ug. Shs.50,000,000/=.

I accordingly dismiss the counterclaim and all claims made thereunder.

## Issue No.4

*What remedies are available for either party? -----*

For the reasons stated in this judgment, it is directed that the defendant.shall refund to the plaintiff, the sum of Ug. Shs.l00,000,00C)/=, within 14 days from the date of this judgment.

It is ordered that the Defendant shall bear the costs in this suit and counter-claim.

**BENJAMIN KAB1IT0 JUDGE 16th December, 2013**