Milton Obote Foundation v Kennon Trading Ltd (Civil Appeal 25 of 1995) [1996] UGSC 22 (19 June 1996)

REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO

(CORAM: ODOKI, J. S. C., ODER, J. S. C. & TSEKOCKO, J. S. C.) CIVIL APPEAR NO 25 DF 1855<br>BETWEEN

A N D

MILTON OBOTE FOUNDATION

APPELL ANT

RESPONDENT

KENNON TRADING LIMITED

(Appeal from the judgment and decree of the High Court of Uganda at Kampala (Rajasingham O. C. J.) dated 27th Sept., 1994

## I N

## CIVIL SUIT NO. 2233 OF 1985

## JUDGMENT OF THE COURT:

The Sappeal is against the decree of the High Court by which the appellant was ordered to pay the respondent US \$ 59.250 with interest thereon at the rate of 12% claimed as the price of goods sold and delivered.

We will set out the basic facts of this case.

During May, 1983 a political party known as Uganda Peoples Congress (UPC) desired to acquire UPC Party flags, UPC Party Book Hatches, UPC Party Calendars and UPC Party Caps for its use on its functions. Some UPC officials who were also officials of the appellant Milton Obote Foundation (MOF) agreed with an official of the respondent called Sudhir Kumar Vidgarthi (P. W.1) with whom UPC and MOF had had some working relationship in 1960's and 1970's to supply certain quantities of the aforementioned items. Following some verbal negotiations between the UPC officials and the officials of the appellant on the one hand and P. W.1 on the other hand, the respondent made out its proforma invoice dated 16th May, 1983 addressed to the Appellant and one other Company called Uganda Schools Suppliers Ltd. The proforma invoice is exh. SKV1. In it the respondent quoted specified quantities of the four items and their prices totalling \$ 59250 and sent it to the appellant. On 20th May, 1983, one John Wafula who described himself as Secretary

- If lastes (1) and (2) are abswered in the affirmally such the $7.$ defendant in making the contract and accepting delivery acting as agent for the Uganda Peoples Congress to the anomalize of the plaintiff. - If issue (3) is answered in the affirmative is the lamintiff $4.$ entitled to recover the cost of those items from the lefendant? - If issue (3) is answered in the negative what an ant, if any, is $5.$ the plaintiff entitled to recover from the defender to

After hearing evidence from both parties, the trial judge answered issues 1 to 4 in favour of the respondent and according. We have judgement in favour of the respondent for 5 59,250 with increat at the rate of 12% p.a. from $11/\epsilon/1983$ . Hence this appeal.

The memorandum of arreal contained seven grounds. Lat Lr. Sserwanga, who appeared for the appellant, abandoned grounds 4 and 5 kuring the hearing of the appeal. With leave of court he amended poind three which he argued separately.

Hr. Sserwanga argued grounds 1, 2 and 7 together. I ase grounds complain that -

- The learned trial judge erred in law and fact by finding that there $1.$ was a valid contract entered into between the appellant and the res ondent. - The learned trial judge erred in law and fact when he held that $2.$ materials costing US \$ 59,250 (........) were ordered by the appellant and were delivered to Transocean (U) Limited as instructed by the ai pellant. - The learned trial judge erred in law and fact in evaluating the 7. evidence and coming to the conclusions he did.

The substance of Mr. Sserwanga's submissions is thin. Biat the trial judge did not make any finding that he believed P. M.1; that there was no conclusive evidence that a contract had been made between the appellant and the respondent; that the contract, if any, was between

$\overline{3}$

UPC and the appellant and that the learned trial judge erred in holding that Goods had been ielivered to the appellant.

Mr. Katuntu, Counsel for the respondent referred to exhs. SKV1, SKV2, SKV3 and SKV5 and contended that there was a valid contract between the parties. He submitted that the evidence of P. W.1 together with the contents of exh. SKV3 show that the goods were delivered to the appellant's carriers in Nairobi and that by virture of S. 33(1) of the Sale of Goods Act, delivery to the appellant carrier had thus been effected.

The decision of the case in the High Court hinged on the evidence of P. W.1. As the record of the trial court shows, P. W.1 was the only witness who testified about the various stages leading to and resulting into the disputed contract. He discussed the purchase of the goods with, among others, Dr. Milton Obote who was President of both UPC and Uganda, P. W.1 discussed the purchase and delivery / the goods with John Wafula who was an official of UPC as well as of the appellant. P. W.1 discussed the purchase with other officials of UPC. According to the evidence of this witness although the eventual beneficiary of the goods was UPC, it was the appellant who agreed to pay for the goods. The witness produced, inter alia, his company's (Respondent's) proforma invoice (SKV1) and the appellant's letter dated 20/5/1983 (exh. SKV2) which John Wafula signed to confirm the order for the goods and the undertaking of payment for those goods. Further P. W.1 also produced exh. SKV 3 dated 11th August, 1983. This is a letter addressed to the Managing Director of the respondent by one M. G. Abola, Managing Director of Trade Supplies Ltd. and copied to the UPC. This last letter referred to discussions between P. W.1, Mr. Abola and Mr. Wafula. We will shortly produce the contents of these exhibits. These exhibits were produced in evidence with the consent of Mr. Omunyokol, the then advocate representing the appellant at the trial. The appellant did not call Mr. John Wafula, Mr. M. G. Abola or any other official of the appellant

or $\cdots$ /5

or UPC to contradict the evidence of P. W.1 or the contents of any of the exhibitted documentary evidence or to explain circumstances about how Mr. Wafula wrote exh PSKV2.

$5$

It will suffice for us to reproduce the contents of SKV2 and SKV3.

We first quote SKV2 whose letter head reads "Milton Obote Foundation".

> 37/39 Fifth Street Industrial Area P. O. Box 4615 Telephone 34024/7<br>Kampala, Uganda.

Date: 20th May, 1983.

Messrs Kennon Trading Ltd., 18 Kent Court, Graham Park West Estate, LONDON MW9.

Dear Sirs,

RE: UPC PARTY MATERIALS: YOUR PROFORMA DATED 16TH MAY, 1983 FOR US \$ 59,250

We take pleasure in informing you that UPC Headquarters has approved the purchase of the following form (sic) yourselves:-

| 1. | 250,000 UPC Party Flags without stick @ \$ 6950.00 | | |----|----------------------------------------------------|---------------| | 2. | 2 million UPC party Book matches | @ $$31700.00$ | | 3. | 50,000 UPC Party Calendar 83/84 | @ $$13400.00$ | | 4. | 150,000 UPC Party Caps | @ $$7200.00$ | | | Total amounting to US $$$ $52,250.00$ | |

We have already received the import licence No. 057997 dated 16th May, 1983 authorising us to import the above items.

A phototcopy of the same is enclosed herewith for your records.

We request you to immediately dispatch the goods as these are required for the forth anniversary of the return of the President at Bushenyi on the 27th May.

We hereby agree to remit the amount of your invoice i.e. US \$ 59.250.00 within sixty days (sic).

We would like to thank you for your co-operation in the above matter.

Yours faithfully,

John Wafula, Secretary MOF TASK FORCE.

C. C: Secretary General UPC. c.c: National Treasurer UPC, c.c: Chairman MOF Task Force, c.c: Deputy Chief Administrative Secretary, UPC, $99$ c.c: Ag. Group Co-ordinator, MOF.

We think that though from the contents produced above there is a possibility that the appellant may have acted as an agent of UPC, in the absence of any other evidence to contradict P. W.1 and exh. SKV2 the reasonable conclusion to be drawn is that by placing the order (exh. SKV2), and agreeing to pay the price of the goods the appellant did so as the contracting party and undertook to pay for the items ordered as a party to the contract.

As to the contention about delivery of the goods we are satisfied that the following contents of exh. SKV3 leaves no doubt that the items were received by or for the appellant. Exh. SKVJ reads as follows -

> "Trade Supplies Ltd. Plot 104/106 Sixth Street P. O. Box 197 KAIPALA, UGANDA TEL. 33515 & 59039. TEL. 61147 & 61253.

Date: 11th August, 1983

Our Ref: $TSL/21/1$

The Managing Director, Kennon Trading Ltd., 9th Vivian Avenue, LONDON.

Dear Sir,

## RE: ADVERTISMENT (SIC) FOR UPC

We wish to confirm the discussion which the undersigned had with you in our offices to day 11th August, 1983 with the Secretary for Finance Bureau in the UPC Secretariat, Mr. John Wafula. We explained

to you our position in matters relating to payment of U. : 59,250. Our company only took responsibility of these materials after they arrived in Kampala and it is regretted that up to the present time we have only handled small quantity of the materials. The rest of the materials are still in the Transocean (U) Limited.

The prupose of this letter is to confirm that:-

- (1) We agreed that Trade Supplies Ltd. will pay you by the end of September with full value of the advertising materials. - (2) The prices of the match boxes is reduced to Shs. $4/$ = per match box. It is understood that the amount which you have reduced from the original price will be held by you and used to pay for materials we may wish to order from you. - (3) Trade Supplies Limited will arrange to take delivery of these goods from M/S Transocean (U) Limited after paying them charges related to the clearing of the goods. - (4) Trade Supplies Limited will trace the original document from Uganda Advisory Board of Trade and Bank of Uganda in order to enable remittance to be effected.

We hope the above convey the correct understanding on the matter. We take this opportunity to assure you of our co-operation at all times.

Yours faithfully,

TRADE SUPPLIES LTD.

M. G. Abola, MANAGING DIRECTOR.

c.c: Secretary for Finance Bureau, UPC Secretariat ."

We have underlined the words

"after they arrived in Kampala" for emphasis.

Since $\cdots$ /8

Since the goods had been ordered by the appellant and the same had been delivered to a carrier appointed by the appellant before exh. SKV3 was written, the relation of the appellant and respondent did not change.

The testimony of the four witnesses who testified for the appellant did not in our opinion advance the appellant's case in any way.

It is obvious from the above contents that the items ordered by the appellant reached Kampala. It is also clear that Trade Supplies Ltd. probably and associate of the appellant as claimed by P. W.1, promised to pay for the goods at the end of September. It is not stated as to which September of which year was meant. Join Wafula who signed the order for the goods on behalf of the appellant clearly participated in the discussions relating to the payment for the goods. In the absence of any evidence to contradict $P. W.1$ and the contents of exh SKV3, we have no doubt at all that the goods ordered in the appellant were delivered and that the appellant and later Trade Suppliers Ltd. undertook to pay the respondent for the goods. But as we have observed Payment by Trade Supplies Ltd did not exclude the appollant as a contract<sub>wparty</sub> from liability to the contract.

We accordingly hold that the learned trial judge was correct on the facts in his conclusions that there was a contract between the appellant and the respondent.

The judge adopted his own style of avaluating the evidence but we are satisfied that on the facts he could not arrive at different conclusions other than that the appellant was the correct party to the contract and that the appellant should pay for the goods.

We think there that grounds 1, 2 and 7 must fail. These findings would dispose of this appeal on the merits. Therefore we find it unnecessary to consider arguments on the third ground in any detail.

The $\cdot \cdot \cdot \cdot /9$

The complaint in ground three is in effect that the appellant acted as agent for UPC and since the respondent knew of this, the respondent should not have sued the appellant. The learned trial judge considered this matter somewhat compassionately but we think that on the facts of the case, making the appellant liable on the contract was proper and in any case has not occasioned any miscarriage of justice.

We will now consider the sixth ground which is a complaint that the judge erred in granting the respondent interest on \$ 59,250 and that the interest of 12% p.a. is exhorbitant. A.r. Serwall a took a somewhat simplistic view that the trial judge should not have awarded interest on an award made in foreign currency because of the provisions of the Currency Reform Statute, 1987. Counsel's alternative contention is that the rate should have been at court rate; and that any interest, if payable at all, should be as from the date of judgment.

In response Mr. Katuntu submitted that the interest of 12% p.a. is reasonable bearing in mind the fact that the trial judge did not award any general damages for breach of contract.

We know of no authority to support Mr. Sserwanga's contention that no interest can be awarded on damages recoverable in forei in currency. There are now authorities to the contrary: $\text{Eilian}_{\text{LOS}}$ ... vs.& George Frank (Textiles) Ltd. (No. 2) (1977) O. B. 489, Helmsingh Schiffahrts.. vs. Malta Drydocks Corporation (1977) 2 Lloyds Rep. 444 and McGregor on Damages 14th Edition, Paragraphs 477B and 477C. Se think that the decisions of this court in Civ. Appeal No. 4/95 - J. H. Patel ...vs. Spear Fotors Ltd. (unreported) and Civil Appeal No. 9/91 - Attorney General vs. Oriental Construction Co. Ltd. (unreported) show that our courts can award interest on foreign currency. The Currency Reform Statute, 1987 has no provisions to support Mr. Sserwanga. That Statute was concerned with transactions in Uganua currency, both, old and new.

The law which governs the award of interest by court on damages is Section 26 of the Civil Procedure Act. For our pruposes, subsection 2 of Section 26 which is relevant reads as follows -

There $\cdots$ /10

$''(2)$ There and in so far as a decree in for the payment of money, the court may, inadecree, order interest at such rate as the court deems remainable to be paid on the principal sum adjudged from the late of the suit to the date of the decree in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit. ...........".

Thus the award of interest and its rate unless the same is fixed by agreement between the parties is left to the discretion of the court. This discretion is exercised judicially. That is to say it has to be justified by reasons. Normally in the pleading a party would pray for interest and there should normally be interial by way of evidence to justify a certain rate and the date from minch the rate begins to run.

By paragraph 3 of its plaint the respondent averred that -

"The plaintiffs claim against the defendent is for recovery of US \$ 59.250."

Then in its prayer part of the plaint the respondent averred-

"........ plaintiff prays that judgment be entered against the defendant as follows:-

$(a)$ The sum of US $$$ 59,250.

$(b)$ Interest on (a) above at the rate of $12.1$ .

These prayers do not show the period when the interest should commence. As there was no fixed rate of interest by agreement between the parties the respondent should have explained to Court why it claimed for 12%. Further either by evidence or in submission of its counted during the trial, there should have been an explanation by the regument about the rate and commencement date of the interest. In the absence of this we think that the learned judge acted unjudicially by awarding interest at the rate of 12% p.a. from 11/8/1983 without giving any reasens. In circumstances such as these the court should resort to Section $26(3)$ of the Civil Provision Act and award interest at the rate of 6% p.a. from the date when the suit was filed till payment in full. In this case the suit was filed on $3/12/1985$ . The therefore, order that the damages of \$ 59,250 will carry interest at the rate of 6% p.a. from 3rd December, 1985 till payment in full. To this extent

the 6th r und succeeds.

We accordingly dismiss the appeal on the merits int vory the decree of the trial court to read that judgment is entered for the plaintff in the sum of US \$ 59,250 with interest thereon at the rate of 6% p.a. from 3rd December, 1985 till payment in full.

The respondent will get the costs of the lower court and four-fifth $(4/5)$ of the Costs of the appeal since the appellant has succeeded on the rate of interest.

Delivered at Mengo this $\frac{19 \text{th}}{1 \text{cm}}$ .

$200m$ to Court.

ione Court Justice of

Justice of

19/2/96. Mr. Stensange for the appellet.<br>Mr. Kalima objentiva<br>por the Respondent Am. Enna Menera Const cleres I read and delivered nog the parties. $768.$ $\n *By*\n$ $19/7196.$