Musoke v Merger Technical Services Uganda Limited (Civil Suit 426 of 2022) [2023] UGCommC 21 (19 September 2023)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION] CIVIL SUIT NO. 0426 OF 2022**

10 **MUSOKE PETER ] PLAINTIFF**

**VERSUS**

#### **MERGER TECHICAL SERVICES UGANDA LIMITED ] DEFENDANT**

#### **Before: Hon. Justice Thomas Ocaya O. R**

#### **JUDGMENT**

#### **Introduction:**

The Plaintiff filed this suit against the Defendant for recovery of an outstanding 20 sum of UGX 66,000,000/=; interest on the aforesaid amount at the rate of 12% per annum from date of default until payment in full; General damages, costs of suit and any other relief deemed fit by this Honorable Court.

The brief facts are that the Plaintiff and the Defendant entered into a contract of service, where the Defendant contracted the Plaintiff to carry out survey works to

- 25 demarcate the pathway for the erection of electric poles among others, along different roads in Kayunga District IDBIII Projects. Plaintiff's core obligation under that contractual arrangement was to survey, create drawings of the intended survey works, and to implement the survey works upon approval by the Defendant. - 30 The Plaintiff claims that the work included extra/added work and the Defendant developed a payment tracker for all survey works undertaken in the contract to a


- 5 total amount of UGX 272,571,1118.99/= *(Court has observed an error in this figure which shall be addressed in the analysis)*. In 2019 the Plaintiff executed all the works contracted for under the contract and the Defendant made payments accordingly leaving an outstanding balance of UGX 95,000,000/=. - In November, 2019 having been taken to the LC 1 Court by his employees for 10 unpaid wages, the Plaintiff made a demand to the Defendant who responded on 20th November, 2019 vide a letter acknowledging the outstanding balance of UGX 95,000,000/= and promised to pay when REA (Rural Electrification Authority), the Defendant's contractor makes payment. Later subsequent payment by the Defendant was made in December, 2019 leaving the outstanding balance then at 15 UGX 86,000,000/=.

On 8th September, 2021 the Defendant made an EFT payment of UGX 20,000,000 after the Plaintiff engaged his lawyers to write a demand notice leaving the outstanding balance at its current amount of UGX 66,000,000/=.

The Plaintiff wrote a demand notice and a notice of intention to sue was equally 20 served on the Defendant. The Defendant did not file a Defense statement and has not entered appearance.

#### **Representation:**

The Plaintiff was represented by the law firm of M/s MSM Advocates. The 25 Defendant was not represented and the matter proceeded ex parte as default judgement was entered against it on 20th October, 2022 having failed to file a defense despite being served with summons.

#### **Issues:**

The Plaintiff filed a Scheduling Memorandum on the 20th of April, 2023 and the 30 following issues were framed for Court's determination.

- 5 i) Whether there was a contract for services between the Plaintiff and the Defendant? - ii) Whether there was breach of a contract by the Defendant? - iii) Whether the Plaintiff is entitled to recover the outstanding balance from the defendant, - 10 iv) Whether the Plaintiff is entitled to the remedies sought?

# **Evidence:**

The Plaintiff adduced one witness himself, Musoke Peter. He led his evidence in chief by witness statement which was admitted in court record PW1. The Plaintiff exhibited eight documents, namely the drawing for the project *(PEX1)*, payment tracker for the project *(PEX2)*, Complaint letter from the LC 1 *(PEX3)*, Reply from the Defendant Company to the LC 1 *(PEX4),* Letter from the LC 1 to the Defendant Company *(PEX 5)*, Demand notice from the Plaintiff's Lawyer to the Defendant *(PEX 6)*, Bank statement showing payment of UGX 20,000,000/= *(PEX 7)*, Demand notice cum notice of intention to sue dated 8th October,2021 *(PEX 8).*

## **Analysis:**

- 15 As noted, the Defendant did not enter appearance in this matter and court proceeded to hear the Plaintiff's evidence in chief which was by witness statement as PW1 and the same was admitted, and taken into consideration by court. The Plaintiff resolved issues 1, 2 and 3 co-currently and court shall resolve them in the same manner because resolution of the first issue cascades into the second and - 20 ultimately the third. Court sees no reason to resolve them independently.

## 5 **Resolution of Issues 1, 2 and 3:**

In civil proceedings, the burden of proof lies upon he who alleges and must prove his case on a balance of probabilities if he is to obtain the remedies sought. see *Lord Denning in Miller versus Minister of Pensions (1947)2 ALL ER 372 at page 373*. *See Section 101 and Section 103 of the Evidence Act* When a Plaintiff has led evidence establishing his or her claim, he/she is said to have executed the legal burden. The evidential burden thus shifts to the defendant to rebut the Plaintiff's claims.

The Plaintiff adduced his Witness statement as PW1 whereupon he took stand on the 21st October, 2022 and led his evidence that he has been engaged in business with the Defendant for over 10 years and that in 2017, the Defendant company hired him for works on survey and erection of electric poles on Kayunga road and 10 he did the initial part of the work which is drawing survey and exhibited the same in court as *PEX 1* and that the works involved extra work totaling UGX 272,571,1118.99 *(Court has noted that there is an apparent error on the digits of the stated amount in words first then also a discrepancy in figures and the wordings of the amount in both the pleadings and as stated in paragraph 9 of the witness*

- 15 *statement. The correct figure must be UGX 272,571,118.99 that is (Uganda Shillings Two Hundred Seventy-Two Million, Five Hundred Seventy One Thousand, One Hundred Eighteen and Ninety Nine cents only).* As evidenced by the payment tracker *PEX 2* on court record, to that the Defendant company made payments leaving an outstanding balance of UGX 95,000,000/=. - 20 Thereafter the Defendant company made two other payments one in December, 2021 bringing the outstanding balance then to UGX 86,000,000/= and the last payment of UGX 20,000,000/= via EFT bringing the outstanding balance to date at UGX 66,000,000/= and he adduced a bank statement in support of that marked as *PEX 7*.

- 5 Counsel for the Plaintiff submitted that there is no dispute as to the existence of a contract between the Plaintiff and the Defendant, in any case the Letter from the Defendant company to the LC 1 chairperson *PEX 4*, in defense of the plaintiff and in that letter the defendant company acknowledged that the Plaintiff did work for the Defendant company and that the Defendant company was indebted to the - 10 Plaintiff to a tune of UGX 95,000,000/= which clearly indicates the existence of a contract and admittance of indebtedness.

The Plaintiff has adduced evidence to show that he did work and offered his services to the Plaintiff, whereas there is no written contract of engagement, by both entities actions it can be inferred there is exchange of consideration and the 15 performance of both or lack thereof.

The Plaintiff filed this case after demand notice and notice of intention to sue was served on the Defendants vide PEX 8.

The Plaintiff did not adduce a tailored contract of engagement but none the counsel for the Plaintiff submitted section 10 of the Contracts Act, 2010 defines a 20 contract, section 11, 12 and 13 of the same on ingredients of a valid of contracts.

It should be noted that nonetheless section 10(5) of the Contracts Acts provides for contracts whose subject matter exceeds twenty-five currency points to be in writing.

Be that as it may, this can only be an issue when one party disputes the existence 25 of a contract but it does not in itself nullify a contract or an understanding where parties intend it to be binding and go ahead to trade considerations as well as perform the same. The Plaintiff provided his end of the bargain and the Defendant acknowledged this when he confirmed to the LC1 about his indebtedness to the Plaintiff vide *PEX 3* and the Electronic Funds Transfer (EFT) to the Plaintiff vide 30 *PEX 7*.

Page **5** of **10**

- 5 In **Dr. Vicent Karuhanga v NIC and URA (2008) ULR at pg. 666** court stated that exchange of considerations for an agreement amounts to a contract. In the instant case, in the absence of any evidence to the contrary, there can only exist one fact from the evidence adduced by the Plaintiff that there existed a contract of service between the Plaintiff and the Defendant. - 10 Counsel for the Plaintiff in proving the breach of the said contract by the Defendant, defined breach of contract as was defined in **MOGAS(U) LTD VBENZIMA (U) LTD H. C. C. S No. 88 of 2013** that,

*"Breach of contract is the breaking of the obligation which a contract imposes which confers a right of action for damages on the injured party. It entitles* 15 *him to treat the contract as discharged if the other party renounces the contract or makes performance impossible or substantially fails to perform his promise; the victim is left suing for damages, treating the contract as discharged or seeking discretionary remedy, "*

The Plaintiff testified in his Written Statement of Defense that the Defendant 20 company acknowledged that the he, the Plaintiff did some work for them in their correspondence to the LC 1 which is evidence of a contract, while at it, they also admitted being indebted to the Plaintiff. *See PEX 4*, and went on to make part payment of the same. see *PEX 7*.

**Evidence Act section 101 and 103 (supra)** in essence puts the burden of 25 disproving the Plaintiff's claim on the Defendant now, however, the Defendant did not enter defense in this case either personally or through a representative.

Failure to file a defense is a presumption of constructive admittance of an allegation and therefore, the said allegation must be taken as the truth**. See Sylar Kakugu Tumwesigyire v Trans Sahara International General TRDG L. L. C** 30 **HCT-00-CC-CS-0095 of 2005.**

**Order 9 rule 6** of the Civil Procedure Rules provides that -

- 5 *"where the plaint is drawn claiming a liquidated demand and the defendant fails to file a defense, the court may, subject to rule 5 of this Order, pass judgment for any sum not exceeding the sum claimed in the plaint together with interest at the rate specified, if any, or if no rate is specified, at the rate of 8 percent per year to the date of judgment and costs."* - 10 I therefore find there existed a contract between the Plaintiff and the Defendant and the Defendant breached the said contract by failing to pay the Plaintiff the outstanding balance of UGX 66,000,000/=.

On whether the Plaintiff is entitled to the outstanding balance, Counsel for the Plaintiff submitted that the contractual sum was supposed to be paid at the end of

- 15 the project, this was not done by the Defendant company and following some correspondences, the balance was reduced to UGX 86,000,000/=. upon further correspondences, the Defendant company made a payment through EFT on 21st December 2019 to the Plaintiff as seen from *PEX7* which left a balance of UGX 66,000,000/ = which the Defendant company refused to pay. - 20 Having found issues 1 and 2 herein for the Plaintiff, I am inclined to agree with the Plaintiff that the Defendant ought to complete his end of the bargain and that means clearing whatever balance that remains, thus the Plaintiff is entitled to the UGX 66,000,000/= owed by the Defendant.

I accordingly find issues 1, 2 and 3 for the Plaintiff.

## 25

# **Issue 4: Whether the plaintiff is entitled to the remedies sought?**

# *General Damages:*

The Plaintiff prayed for General damages for the breach of the contract by the Defendant and counsel for the Plaintiff submitted that it is the Plaintiff's case that 30 since 2018 to date; the Plaintiff has been inconvenienced by the Defendant


5 company's default and by the complaints to the LC 1 by the employees, the Plaintiff has spent valuable time in following up on the payment from the Defendant company. The Plaintiff has also been deprived of the right to use his money.

In **Principles Governing the Award of Damages in Civil Cases, A paper by Bart**

10 **Katurabe [Justice Emeritus]** stated on General damages that, according to Lord McNaughten in the oft-cited case of **Stroms V. Hutchinson [1905] AC 515**, are such as the law will presume to be the direct natural or probable consequence of the act complained of.

As it is trite law that the award of General Damages is at the Court's discretion and 15 its intention is to compensate the aggrieved party for the inconveniences suffered as a result of the Defendant's actions.

The Plaintiff has proved that he suffered inconveniences by the Defendant's actions of refusing to pay the outstanding balance. For instance, the act of being dragged to the Local Council 1 court by his employees for unpaid wages was an 20 embarrassment for the Plaintiff as a person and for his business reputation.

I accordingly find that the Plaintiff has proved the Inconveniences suffered by him and his business and as such I award General Damages of UGX 20,000,000/=.

## *Interest:*

The Plaintiff prayed for interests of 12% per annum on the outstanding balance 25 from the date of default to payment in full.

**Section 26 (2) of the Civil Procedure Act**, provides for awarding of interests by court at its discretion.

Bart Katurabe [Chief Justice Emeritus] in Principles Guiding awarding of Damages(supra) quoted a passage of Oder, JSC in **Premchandra Shenoi & Anor**

30 **v. Maximov Oleg Petrovich**, **Supreme Court Civil Appeal No. 9 of 2003**


5 **"***In considering what rate of interest the respondent should have been awarded in the instant case, I agree that the principle applied by this Court in SIETCO v. NOBLE BULDERS (U) Ltd Supreme Court Civil Appeal No. 31 of 1995 to the effect that it is a matter of the Court's discretion is applicable. The basis of awards of interest is that the defendant has taken and used the* 10 *plaintiff's money and benefited.*

In the instant case, the Defendant in failing to pay the Plaintiff the remaining balance likely benefited from keep the money in either, directly using it the company or leveraged it for some direct or peripheral benefit of the company.

As the Plaintiff has only prayed for interest on the outstanding amounts. I 15 accordingly award interest of 12% per annum on the UGX 66,000,000/= from the date of filing the suit to payment in full.

## *Costs:*

**Section 27 of the Civil Procedure Act** provides that costs follow the suit unless there is a strong reason to suggest the contrary and are awarded at court's 20 discretion.

The Plaintiff having filed this suit for breach of contract and recovery of UGX 66,000,000/=. Therefore, having found for the Plaintiff, I equally award him costs of the suit.

## **Conclusion:**

- 25 I accordingly make the following orders, - a) There was a contract of service between the Plaintiff and the Defendant. - b) The Defendant breached the contract of service between them and the Plaintiff. - c) The Plaintiff is entitled to recover the outstanding balance of UGX 30 66,000,000/=

- 5 d) The Plaintiff is awarded General Damages of UGX 20,000,000/= - e) The Plaintiff is awarded interest of 12% on (c) from the date of filing the suit to payment in full. - f) The Plaintiff is awarded costs of the suit.

I so order.

**Judge,**

Delivered electronically this\_\_\_\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_2023 and uploaded on ECCMIS. 19th September

15 **Ocaya Thomas O. R**

**19th September, 2023**