Mustapha Ramathan Ta Bombo Wholesalers and Another v Century Bottling Company Limited (Civil Appeal 40 of 2010) [2019] UGCA 2096 (19 August 2019)

Full Case Text

## THE REPUBLIC OF UGANDA

$\tilde{g} = -\tilde{g}$ .

#### IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

(*Coram: Egonda-Ntende, Musoke & Obura, JJA*)

## Civil Appeal No. 40 of 2010

(Arising from High Court Civil Suit (Commercial Court Division) No. 431 of 2006)

#### **BETWEEN**

1. MUSTAPHA RAMATHAN T/A Bombo Wholesalers 2. OSMAN KASSIM RAMATHAN}= ===============APPELLANTS (Suing as beneficiary to the estate of the late Kassim Ramathan)

**AND**

CENTURY BOTTLING COMPANY LTD= ======= RESPONDENT

(An Appeal from the Judgment and Decree of the High Court of Uganda, [Kiryabwire, J. (as he then was)], dated $25th$ March 2010)

#### JUDGMENT OF FREDRICK EGONDA-NTENDE, JA

#### ntroduction

- The appellants instituted High Court Civil Suit No. 431 of 2006 against the defendant 1] for a claim of damages for breach of contract, special damages of UGX 404,720,567.00 for unpaid sums of money, loss of business and profits, interest and costs of the suit. - As special damages, they claimed a refund of UGX 166,100.00 for soda and empties, $2]$ UGX 5,520,000.00 as refund in respect of 600 crates of soda ordered and paid for, UGX 1,739,867.00 being VAT payments, UGX 6,319,800.00 being loss of gross profits, UGX 5,520,000.00 being refund for soda paid for and delivered, UGX 250,000.00 being transport and telephone costs, UGX 1,800,000.00 being salaries paid to members of staff, UGX 35,356,800.00 being payment in lieu of notice and UGX 353,568,000.00 being loss of future earnings for ten years.

Page 1 of 9

- The background of this case is that on 29th June 1999, Bombo Wholesalers, a $\overline{3}$ partnership comprised of three brothers that is, Mustapha Ramathan, Ahmed Ramathan and Kassim Ramathan executed an agency agreement with the respondent. In the agreement, the respondent granted an exclusive agency to the partnership to distribute its products over a defined territory. On 25th April 2005, Kassim Ramathan registered another entity called M/s Top Bombo Wholesalers which in the same year executed a Manual Distribution Centre agreement with the respondent. The appellants alleged that the respondent had breached the contract premised on the1999 agreement causing the loss mentioned above. However, the respondent denied liability for the stated sums. The respondent averred that the relationship between the parties was premised on a 2005 MDC agreement which the respondent had not breached. - In his decision, the learned trial judge found that the relationship between the parties $\overline{4}$ was governed by the 2005 MDC agreement which had rendered the 1999 agency agreement inoperative. However, he found that the respondent terminated the agreement without written 7 days' notice contrary to clause 6.2 of the MDC agreement. He awarded the appellants general damages of UGX 5,000,000.00 for the breach of the agreement, half the costs and special damages of 5,520,000.00 for the 600 crates which the appellants had ordered and paid for, which the respondent had admitted to having received. The appellants were not awarded the remaining sums claimed as special damages. - Dissatisfied with the decision of the trial court, the appellants have appealed to this court $51$ on the following grounds:

$(1)$ The learned trial judge erred in law and fact in holding that no evidence had been adduced and/or led by the Appellant to support a claim of special damages for lost revenue and income.

(2) The learned trial judge erred in law and fact in not properly evaluating the evidence on record regarding lost income and revenue thus arriving at a wrong conclusion that no evidence was adduced and/ or led by the Appellant to support a claim for special damages for lost income and revenue because the audited accounts were in the name of Bombo wholesalers and not Top Bombo Wholesalers.'

6] The respondent opposes the appeal.

# iubmissions of Counsel

- 7) At the hearing, the appellants were represented by Ms. Priscilla Agoe and the respondent by Mr. Ernest Kalibala. The appellants adopted their conferencing notes as submissions and the respondent adopted its written subrnissions on record. - 8] With regard to ground no.1, counsel for the appellants submitted that the trial judge in fis decision recognized that the Ramathan brothers often used different names to refer to the same business. Ms. Agoe submitted that PW1 testified that the appellants used the same documentation for their business enterprises. It was counsel's submission that in essence, Top Bombo Wholesalers and Bombo Wholesalers are the same entities, ran by the Rarnathan brothers operating with the same bank accounts. She argued that the trial judge ought to have considered the fact that the appellants at times interchanged the names of their entcrprise while assessing damages. - 9l Counsel for the appellants cited Kampala City Council vs Nal<aye [1972] EA 446 for the proposition that special damages must be specifically pleaded and strictly proved. Ms. Agoe submitted that special damages were pleaded under paragraphs 5(f), 6, 8, 9, Il, I 3 and I I of the plaint and proved by the evidence of PW1, PW2 and PW3. Counsel l}r the appellant further argued that the evidence of PWI and PW3 shows that the appellant's business was a going concem and profitable and that the loss of income and profit was the direct result of the reduction of the appellants' distribution routes orchestrated by the respondent. - t0] Ms. Agoe relied on Victoria Laundry (Windsor) Ltd vs Newman Industries Ltd & Coulson & Co. Ltd il94912 KB 528 and Musoke vs DAPCB il990-19941EA 419 for the argument that the respondent knew that their nature ofbusiness was dependent on

the distribution routes of its products and knew that the appellants would lose profits by reducing the distribution routes which was a breach of contract.

- II ] ln relation to ground no.2, counsel fbr the appellants submitted that the leamed trial judge did not properly evaluate the evidence on record in regard to lost income and revenue. She argued that the leamed trial judge failed to evaluate PWI's evidence in regard to the use of one bank account for all the business enterprises. It was Ms. Agoe's submission that PW1 in his testimony stated that the businesses of the appellants that is; Bombo Wholesalers, Top Bombo Wholesalers and Bombo Wholesalers Ltd operated using documentation relating to all the business which was sometimes in one way or the other involved in the partncrship busincss with the respondent. Counsel for the appellants submitted that all accounts and payments remained in the names of Bombo ]holesalers to which fnct thc rcspondcnt acccptcd. - 12] In reply, counsel for respondent agreed with the general principle of larv stated in Kampala City Council vs Nakaye t19721 EA446 and therefore was of the view that where no proof of special damages is provided, the claim should be, as in this case, rejected. Mr. Kalibala relied on the case of Musoke vs DAPCB & another 11990-19941 EA,419. He submitted that nothing in the evidence of PWl suggested or proved any part of the special damages claimed. - 13] Counsel for the respondent further submitted that no evidence was adduced to prove the claim of UGX 166,100.00 for bottles and shells. He argued that no claim can arise from jre document at page 3l of the record of appeal as it merely relates to the hand cover tf 'CBC's Properly.' With regard to the claim of UGX 1,739,867 .00 for the alleged tax payments, Mr. Kalibala argued that the documents adduced in court in relation to this do not refer to the respondent and do not bear sufficient proofthat such payments were made on behalf of Bombo Wholesalers. Further, he submitted that the computation of the total figure contained in exhibits E1,F2,E3 and E3 does not add up to UGX 1,739,867.00 as claimed by the appellants. - t4] Counsel for the respondent further submitted that no evidence was adduced in relation to the claim of UGX 250,000.00 for transport and telephone costs and that the claim of

UGX 6,3 19,800.00 relating to the alleged gross profit loss in the month of April, May and June 2006 was equally not proved. Mr. Kalibala argued that the computation of this figure was based on a gross profit of UGX 2,946,400.00 allegedly earned in February 2006 which was not proved. He submitted that this figure is at variance with the record at page 53 of the record of appeal that contains an alleged analysis of revenue and purchases which shows a gross profit of UGX I,895,75 1 .00.

- 15] Mr. Kalibala submitted that although the claim of salaries for former employees was pleaded in detail, no supportive evidence was adduced to prove the claim. It was his submission that the entities that allegedly paid the salaries are different from Bombo Wholesalers in whose name the suit was bought. With regard to the sum of UGX 35,356,800.00 claimed for l2 months payment in lieu of notice based on an average Jonthll gross profit of UGX 2,946,400.00. Counsel for the respondent argued that the 1999 agreement did not provide for such notice. Further, he contended that the claim of UGX 353,568,000.00 is sirnply a multiplication by ten of the claim for the alleged 12 month's payment in lieu of notice. - l6] Counscl for rcspondent contended that the evidence adduced to suppoft the clairns for special damages was speculative, inadequate and implausible and could not be relied on by the trial court. He argued that the audit report was not credible evidence as it was prepared during the pendency of the suit and the auditor was making reference to the plaint as one ofthe documents he used to guide the report and that the auditor's signature pre dates that of the owner of the accounts on the balance sheet. Further, Mr. Kalibala submitted that the audit report relates to Bombo Wholesale which had long ceased doing ]siness in 2005. He submitted that the accounts show that they are for the period of I sl January 2006 to 30th June 2006 whereas PW3 stated that his accounts were for July to December. Further, counsel for the respondent argues that while the accounts suggest a net profit, PW3 stated that no tax was payable on this profit and the accounts did not consider the previous financial performance of the entity. He also argued that the audit report did not bear reference to performance of the previous reporting period. - t7] Counsel for the respondent further contends that the evidence adduced by the appellants was hazy, incoherent and unrelated. He was of the vieu, that no connection was established by the appellants between Top Bombo Wholesale, Bombo Wholesale and

Page 5 of 9

Bombo Wholesale Limited. Counsel for the respondent maintained that the finding that there was no evidence to prove the special damages was not borne out of failure to properly evaluate the evidence but a direct and inevitable result ofproper evaluation of the evidence that was adduced.

18] In reply to ground no.2, the counsel for the respondent submitted that there is no appeal against the finding that the 1999 agreement was breached. He was of the opinion that any claim based on that agreement cannot hold. Mr. Kalibala submitted that there was no finding that the respondent breached the 1999 agreement by reducing the appellant's area of operation. In conclusion, counsel for the respondent prayed that the appeal be dismissed with cost.

# rrO.i.

- l9] As a first appellate court, it is our duty to re-evaluate the evidence on record as a whole and arrive at our own conclusion bearing in mind that the trial court had an opportunity to observe the demeanor of the witnesses which we do not have. See Rule 30 of the Judicature (Court of Appeal Rules) Directions S I I 3- I 0, Banco Arabe Espanol v Bank of Uqanda [999] UGSC l, Rwakashaiia Azarious and others v Uganda Revenue Authority [2010] UGSC 8. - 201 The two grounds of appeal will be handled jointly since they are related. The appellants content that the trial court came to a wrong conclusion when it found that no evidence jas adduced to support the claim of special damages for lost income and revenue. The Xpecial damages that rvere claimed in the plaint and not granted by the trial court include; UGX 166,100.00 as a refund for sodas and empties, UGX 1,739,867.00 for VAT payments, UGX 6,3 19,800.00 as loss of gross profit, UGX 250,000.00 as transport and telephone costs, UGX I,800,000.00 as a refund of salaries paid to members of staff, UGX 35,356,800.00 as payment in lieu of notice and UGX 353,568,000.00 being loss of future eamings for ten years. - Z1] The general rule is that special damages must be specially pleaded and strictly proved. Sec Kampala City Council vs Nakave ll972l 1 EA 446. In Musoke vs De arted Asians Propertv Custodian Board & Anor. t1990-19941EA 419 at page 4242, Seaton JSC stated:

> 'lt is clear that special damage, as was claimed by the plaintiff to have been sufl'ered, is such a loss as the law will no1 presume to be the consequences of the defendants' act. Such damage, as the leamed editors of Odger's Principles of Pleading and Practice (21ed) point out; (at 164): "... depends in part, at least, on the special circumstances of the case. It must therefore always be explicitly claimed on the pleadings, and at the trial it must be proved by evidence both that the loss was incurred and that it was the direct resuh ofthc defendant's conduct..."'

- 22) There is no evidence on record to support the claim of UGX I 66,100.00 for soda and empties. The annexure marked 'C' indicates the property of the respondent that was handed over upon termination of the contract. These are the items from which the Cppellants draw the above amount as claimed. Annexure 'D' indicated the respondent was to refund a sum of UGX 79,700.00. The figure of UGX 166,100.00 does not arise in any ofthe evidence that was adduced. At page 158 ofthe record ofappeal, upon cross examination, PWI stated that upon handover of the respondent's property, they were expecting money from the machine halves that was not refunded. There is no evidence that the respondent refunded the sum of UGX 79,700.00 and neither did the respondent rebut PWl's testimony. However this is not the sum that was claimed for soda and empties in the plaint. - 23] With regard to the claim of UGX 250,000.00 for transport and telephone costs, no evidence was adduced on record to support such a claim.

Z+fifrere is no sufficient evidence on record to prove that the respondent owes the appellant the sum of UGX 1,739,867.00 that allegedly covered VAT payments. The evidence adduced for the alleged VAT payments is contained in annexures marked 81, 82, E3 and E4 (exhibit Dl1). First and foremost, annexures E3 and E4 do not have a bank stamp to indicate that payments were made and are in the names of Bombo Wholesale Limited. According to annexure E2, the payment was made on behalf of Bombo Wholesale Ltd not Bombo Wholesalers which had ceased to exist at the time of payment as seen in exhibit D6. The payment evidenced by annexure El u,as made on behalf of Top Bombo Wholesalers that is not a party to this suit. It should be noted that this suit was brought in the name of Bombo Wholesalers. The appellants' contention that the

three entities that is; Bombo Wholesalers, Top Bombo Wholesalers and Bombo Wholesalers Limited are the same entities ran by the Ramathan brothers operating with the same bank accounts is indefensible.

- 251 Further, the amount of UGX 6,3 19,800.00 is a summation of the alleged gross profit loss attained in the months of April, May and June 2006. There is no evidence on the record to prove such a claim. The appellant did not explain how they came up with this figure. - 261 The sum of UGX 1,800,000.00 relates to a claim of costs incurred by the appellants in payment of salaries to employees for four months as a result of the termination of the -contract. The payment vouchers adduced into evidence are in the names of Top Bombo Grhol.rrl"r, uni no, Bombo Wholesalers. PW2 on cross examination testified that at the time of the alleged payments, he was working for Bombo Wholesalers Limited and not Bombo Wholcsalcrs in whosc name the suit was brought. In my opinion, there is no sufficient proof on record for such a claim. The claim of UGX 35,356,800.00 as payment in lieu of notice was equally not proved. - 27) The claim of UGX 353,568,000.00 being loss of future eamings for ten years as future income and profit/commission for ten years is purely speculative. Paragraph l4 of the plaint indicates that this amount was arrived at by using UGX 2,946,400.00 as gross profit per month. Again the appellants did not adduce evidence as to how they arrived at the stated figure. - a28] The appellants brought the original action based on what I refer to as the 1999 agreement. This agreement provided that it shall be automatically terminated in event of any of the following events:

'(a) Being a Partnership, shall be dissolved for any cause or. .. (b), (c), (d)..

- Bombo Wholesalers ceased to exist on the 8th July 2005 with the filing of a notice of cessation of business. Bombo Wholesalers was a partnership. It in effect dissolved. The learned trial judge had found that it had been dissolved as far back as 1994 with the death of one of the partners bringing its life to an end. - 30] In fact a new partnership known as Top Bombo Wholesalers was then registered. Top Bombo Wholesalers entered into a new MDC agreement with the respondents. It would follow that the action that is premised on the 1999 agreement cannot succeed as that agreement was terminated on 8th July 2005. The events complained of occurred in 2006 and if any cause of action was to arise it would arise under the 2005 MDC agreement. This action is not based on that agreement. I am afraid that the original action as framed had no chance of success. As there was no cross appeal I shall say no more. - 31] In my view I am unable to fault the learned trial judge when he held that no evidence was led by the plaintiffs to support the above claims. I would dismiss the appeal with costs.

#### )ecision

32] As Musoke and Obura JJA, agree this appeal is dismissed with costs.

igned, dated and delivered at Kampala this

$|Q$ day of

2019.

**Justice of Appeal**

alger. Mia Kitooro miel omogle Lompier

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

(Coram: Egonda-Ntende, Musoke & Obura, JJA)

## C]VIL APPEAL N(). 40 OF 2O1()

(Aising from High Court Avil Suit (Comnercial Coul Division) No. 431 of 2006

# BETWEEN

# 1. MUSTAPHARAMATHAN }

T/A Bombo Wholesalers

2. OSMAN KASSTM RAMATHAN) APPELLANTS

(Suing as beneficiary to the

Estate of the late Kassim Ramathan)

### AND

# CENTURY BOTTLING COMPANY LTD RESPONDENT

(Appeal from the Judgmenl and Decree of the High Coutt of Uganda [Kryabwire, J (as he then was)], dated 28h March 20101

# JUDGMENT OF HELLEN OBURA, JA

I have had the benefit of reading in draft the judgment of my learned brother Egonda-Ntende, JA. I concur with his conclusion that this appeal be dismissed with costs.

Dated at Kampata tnis..l. 1\*oay of.... S. Y -.................201 s.

Hellen Obura

# JUSTICE OF APPEAL

#### rHE REPUBLIC OF UGANDA

# IN THE COURT OF APPEAL OF UGANDA AT KAMPALA (Corom: Egondo-Ntende, Musoke and Oburo, tJA) CIVIL APPEAL NO,40 OF 2O1O

(Arising from High Court Civil Suit (Commercial Court Division) No. 437 of 2006) BETWEEN

1. MUSTAPHA RAMATHAN T/A Bombo Wholesalers

2. OSMAN KASSIM RAMATHAN APPELLANTS (Suing as beneficiary to the estate of the late Kassim Ramathan)

#### AND

CENTURY BOTTLING COMPANY LTD RESPONDENT

(An Appeolfrom the Judgment ond Decree of the High Court of lJganda, [Kiryobwire, J (as he then wos], doted 25th Morch 2070)

#### JUDGMENT OF ELIZABETH MUSOKE JA

I have had the benefit of reading in draft the lead judgment of my learned brother Fredrick Egonda- Ntende, JA.

Iconcur with the reasoning and conclusions therein with nothing usefulto add.

Dated at Kampata this .....lghry "f .. AY 2019

Eliza M usoke

JUSTICE OF APPEAL