Ntozi v Out Media International Limited & Another (Civil Suit 1076 of 2023) [2024] UGCommC 330 (29 October 2024)

Full Case Text

#### THE REPUBLIC OF UGANDA

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

## (COMMERCIAL DIVISION)

#### CIVIL SUIT NO. 1076 OF 2023

ALEX NTOZI::::::::::::::::::::::::::::::::: **.....................................**

#### VERSUS

## 1. OUT MEDIA INTERNATIONAL LIMITED

$2.$ MUHINDA KARAMBUZI ELIAS::::::::::::::::::::::::::::::::::::

## Before the Hon. Lady Justice Patricia Kahigi Asiimwe

## Judgment

## Introduction

- The Plaintiff's claim against the Defendants is for breach of a hire $1.$ purchase agreement. The Plaintiff seeks an order for recovery of UGX 294,000,000, interest, general, special, punitive and exemplary damages, and costs of the suit. - $2.$ The background to the case is that on the $12^{th}$ day of September 2022, the Plaintiff entered into an equipment hire agreement with the Defendants. Under the agreement, the Defendants hired two of his excavators for the purposes of breaking hardcore rocks and loading stone aggregates and quarry products at the Defendants' site in Kween District. The Plaintiff commenced the work but was not paid.

# Representation

The Plaintiff was represented by M/s Erisata & Erisata Advocates $3.$ who filed written submissions. The Defendant did not file a written statement of defence despite being served and the matter was set down for formal proof.

# The issues

- 4. The issues for resolution are as follows: - Whether the Defendant breached the contract $\mathbf{I}$ . - What remedies are available to the parties? II.

## Evidence

- At the hearing, the Plaintiff (PW 1) and PW2 Katumba Ibrahim $5.$ testified. PW 1 testified that he entered into an agreement where the Defendants agreed to hire two excavators from the Plaintiff. The Plaintiff and Defendants agreed on daily hire charges of UGX. 2,900,000 for the Excavator 320 with a hammer, UGX. 1,100,000 for excavator 320 with a bucket. - The Plaintiff transported its equipment to the Defendant's 6. at Chepsikonya Village in Kween District and worksite commenced its duties as had been agreed in the equipment hire contract. It had been agreed that the payment would be effected within three days after submission of the invoice. The Plaintiff submitted its invoice for payment after 30 working days however the Defendant did not pay the Plaintiff. - The Defendant convinced the Plaintiff that they were expecting $7.$ payment from the sub-contractors and thereafter they would pay the Plaintiff. The Plaintiff continued executing his mandate under the contract while waiting for payment till 2023 when he decided to terminate the contract and transported his equipment from Kween back to Kampala. The unpaid contractual sums had accumulated to UGX. 260,000,000 at the time the Plaintiff terminated the contract. The Plaintiff on several occasions

$\mathcal{A}$

demanded payment from the Defendant however the Defendants refused to settle the outstanding claims.

#### Resolution

*Issue 1: Whether the Defendants breached the contract*

- 8. The Plaintiff adduced in evidence an equipment hire agreement between the Plaintiff and the 1st Defendant dated 12th September 2022 (PE 1). The $2^{nd}$ Defendant is not a party to the agreement. It is therefore not in dispute that the Plaintiff and the 1st Defendant entered into an agreement. - 9. The Black's Law Dictionary 11th Edition page 232 defines breach of contract as a violation of a contractual obligation by failing to perform one's own promise. - 10. The Supreme Court in the case of **Hajji Asumani Mutekanga V Equator Growers (U) Ltd CS No 7 of 1995** noted that where an interlocutory judgment has been entered in favour of the Plaintiff, and that matter came for formal proof, breach of the agreement was no longer an issue. - 11. The Plaintiff's evidence has not been controverted by the Defendants. I find that there was a breach of contract by the $1^{st}$ Defendant. Therefore, this issue is answered in the affirmative.

*Issue II: What remedies are available to the parties?*

- *Recovery of the contractual sums* $\langle a \rangle$ - 12. The Plaintiff adduced in evidence invoices addressed to the $1^{st}$ Defendant (PE 5). The Plaintiff also adduced in evidence 3 interim Payment certificates issued by the $1^{st}$ Defendant in favour of the Plaintiff in respect to the equipment hire agreement (PE 6).

- 13. The Interim payment certificates are dated 22nd November 2022 for a sum of UGX. 79,200,000, 24th November 2022 for a sum of UGX. 104,300,000 and 10th January 2023 for a sum of UGX. 85,500,000. The total amount of money in the interim certificates is UGX. 269,000,000. - 14. In the case of Thomas Construction (Pty) Ltd. (in Liquidation) versus Grafton Furniture Manufacturers (Pty) Ltd. [1988] 2 All SA 228, the Supreme Court South African held the that legal effect of an interim payment certificate is that it is an acknowledgement of a debt in favor of the contractor. The Court further held that "if an interim payment certificate duly issued in terms of the contract is not paid within the stated time limits, it creates a debt due and as such it affords the contractor a distinct cause of action in which he could sue immediately without going beyond the certificate." - 15. In the English case of Dawnays Ltd. Vs. F. G. Minter Ltd. and Trollope and Colls Ltd. [1971] 1 W. L. R. 1205, Lord Denning $\mathbf{MR}$ held that an interim certificate is regarded as cash and once it is issued it must be paid. - 16. In the circumstances, the Plaintiff is entitled to UGX. 269,000,000 as the sum of the money due on the interim certificates issued to the 1st Defendant. - *General damages* $b)$ - 17. Section 61 (1) of the Contracts Act, Cap 284, provides that "where there is breach of contract, the party who suffers the breach is entitled to receive from the party who breaches the contract, compensation for any loss or damage caused to him or her".

- 18. In the case of Thunderbolt Technical Services Ltd versus Apedu Joseph & Another HCCS No. 340 of 2009 Kiryabwire **J.** (as he then was) held that general damages are intended to make good to the sufferer as far as money can do so, the losses he or she has suffered as the natural result of the wrong done to him. - 19. In the case of Luzinda Marion Babirye Vs. Ssekamatte & Others C. S No. 366 of 2017 Ssekaana J held that "...it is trite law that general damages are awarded at the discretion of court. Damages are awarded to compensate the aggrieved, fairly for the inconveniences accrued as a result of the actions of the defendant. It is the duty of the claimant to plead and prove that there were damages, losses or injuries suffered as a result of the defendant's actions." - 20. In the case of **Zebra Associates Ltd v Linksoft Communication** System Civil Suit No. 569 of 2012 court declined to grant general damages where there was no evidence of any injury suffered by the Plaintiff, and held that:

The general rule is that whenever there is breach of a contract by one party, the other is entitled to bring an action for damages. I must however point out that each case must be determined according to its peculiar facts and circumstances. *In a case where it is shown that the plaintiff has actually* suffered no loss from the breach, then such plaintiff would only be entitled to nominal damages, that is damages which simply recognize he has suffered a legal infringement of his right. This view is based on the proposition that damages are only awarded to compensate the plaintiff. Therefore, damages are based on the loss to the plaintiff and not the gain to the defendant.

- 21. According to **Black's Law Dictionary 11th Edition** page 1177, nominal damages are awarded if the plaintiff establishes a breach of contract but fails to establish a loss caused by the wrong. - 22. As already found under issue I there was a breach of contract however the Plaintiff has not proved general damages. I, therefore, award the Plaintiff nominal damages of UGX. 5,000,000. - *Special damages* $c)$ - 23. In Kyambadde versus Mpigi District Administration [1983] **HCB 44**, it was stated that special damages must be specifically pleaded and strictly proved however they need not be supported by documentary evidence in all cases. The Plaintiff pleaded special damages of UGX. 16,000,000 for transportation of the excavators from Kampala to Kween District and back from Kween District to Kampala however he did not submit receipts in evidence. - 24. The Plaintiff testified that the 1st Defendant had an obligation to pay the transportation fees. I note that under clause $7(c)$ of the agreement, the 1st Defendant had the obligation to pay for the transportation of the excavators from Kampala to the site in Kween. The Plaintiff testified that the 1st Defendant did not pay the transportation costs. - 25. It is not in dispute that the equipment was transported to the site otherwise the interim certificates would not have been issued. As noted above the agreement provided for transportation costs which were spelt out. I, therefore, find that the Plaintiff is entitled to special damages of UGX. 16,000,000 as transportation costs. - 26. In conclusion therefore judgment is entered for the Plaintiff and it is ordered as follows:

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- The 1st Defendant pays the Plaintiff UGX. 269,000,000 $a)$ being the outstanding contractual sums; - The 1st Defendant pays nominal damages of UGX $b)$ $5,000,000;$ - The Plaintiff is awarded interest at a rate of 18% per annum $c)$ on (a) and b) above from the date of judgment till payment in full; and - That the 1st Defendant pays the costs of the Plaintiff. $d$

# Dated this 29th day of October 2024

$12$

Patricia Kahigi Asiimwe Judge Delivered on ECCMIS

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