Okullu and Another v Ocepa (Labour Dispute Reference 9 of 2022) [2023] UGIC 70 (24 March 2023)

Full Case Text

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## **THE REPUBLIC OF UGANDA IN THE INDUSTRIAL COURT OF UGANDA AT LIRA LABOUR DISPUTE REFERENCE NO. 09 OF 2022** *(Arisingfrom Labour Dispute No. LCC/LDC/06 of2022)*

# **1. OKULLU PAUL::::::::::::::::::::::::::::::::::::::::::::::::::::::::CLAIMANTS 2. KANA JOHN BOSCO**

## **VERSUS**

**OCEPA ANDREW:::::::::::::::::::::::::::::::::::::::;::::::::::::::RESPONDENT**

#### **BEFORE:**

1. THE HON. JUSTICE ANTHONY WABWIRE MUSANA

### **PANELISTS:**

- 1. Mr. JIMMY MUSIMBI, - 2. Ms. ROBINAH KAGOYE & - 3. Mr. CAN AMOS LAPENGA.

### **RULING**

### **Introduction**

[1] On 22nd February 2023, when this matter came up for scheduling, Mr. Joseph Okwi appearing together with Mr. Denis Awol and Mr. Hamis Obua, for the respondent, notified us oftheir intention to raise a preliminary objection to the jurisdiction of this Court to entertain, hear and determine the Claimant's claim. We directed Counsel to address us by way of written submissions and the Court is grateful for the succinct arguments.

#### **Submissions of the Respondent**

**[2]** Counsel for the Respondent contended that the matter before us, arose from a contract for service and not a contract of services. It was submitted that this Court has no jurisdiction to hear and determine the matter.

- Counsel also contended, on the authority of Ozuu Brothers Enterprises Ltd $[3]$ v Ayikoru Milka1 that the filing of a written statement of defence was a submission to procedural jurisdiction and not substantive jurisdiction. - On the strength of the definitions of an employee under Section 2 of the $[4]$ Employment Act 2006 (from now EA) and Section 2 of the Labour Disputes (Arbitration and Settlement) Act 2006 (from now LADASA), it was submitted that the 2nd Claimant was not an employee of the Respondent and that contract between them was not a contract of service but that the $2^{nd}$ Claimant was an independent contractor. The Claimants were construction workers contracted at a sum of 25% of the costs of materials. The claim is for a balance of the contract sum for construction work for which the Claimants engaged their own skill without the direction of the Respondent. The Respondent relied on the case of Ready Mixed Concrete v Minister of **Pensions2** for the tests to determine whether this was a contract of service or contract for service. Applying the control test, the Respondent invited us to find that the contact between the Respondent and $2nd$ Claimant was a contract for service and as such this Court did not have jurisdiction. It was asked that the claim be dismissed with costs.

#### **Submissions of the Claimant**

- Ms. Bridge Kusemererwa, appearing for the Claimant, joined issue with $[5]$ Respondent on the procedure for raising a preliminary point on jurisdiction. Counsel for the Claimant relying on the Ozuu Brothers case (*op cit*) submitted that by filing a written statement of defence3 they had submitted to the jurisdiction of this Court. - Relying on the case of Godfrey Kyamukama v Makerere University $[6]$ **Business School4** for an exposition of the control test, it was submitted that the Respondent had absolute control of the $2nd$ Claimant, provided the tools, equipment and supplies and agreed to pay wages equivalent to 25% of the cost of construction materials. The Respondent supervised all the work, paid a portion of the wages and a balance was outstanding. Counsel invited us to guard the Court's jurisdiction jealously.

&lt;sup>1 H. C. Civil Revision No. 0002 of 2016

&lt;sup>2 (1967)OBD 433

&lt;sup>3 Under Rule 5(4) of the LADASA Rules, a Respondent files a memorandum in reply to a memorandum of claim and, $n_c^2$ **d** written statement of defence.

#### **Analysis and decision ofthe Court**

- **[7]** There was a broad unanimity of agreement on the restatement of the law on jurisdiction in the *Ozuu Brothers* case (op cit). Both Counsel cited this case and the principle accurately. We wish to simply emphasize the point that the primary requirement of the system ofjustice is that a Court adjudicating a dispute must be clothed with jurisdiction. In a passage extracted from a Kenyan case[5](#page-2-0) Nyarangi JA, opined that a court of law downs its tools in respect ofthe matter before it the moment it holds the opinion that it is without jurisdiction. The Appellate Division of the East African Court of Justice[6](#page-2-1), borrowing from the dictum of Nyarangi J. (ibid) observed that jurisdiction is a most, if not the most, fundamental issue that a court faces in any trial. It is the very foundation upon which the judicial edifice is constructed; the foundation from which springs the flow of the judicial process. Without jurisdiction, a court cannot take even the proverbial first Chinese step in its judicial journey to hear and dispose of a case. - **[8]** The fundamental question for determination therefore is whether this Court has jurisdiction to hear the present matter. The narrower question leading to resolving the fundamental question, is whether the contract between the Respondent and Claimants is a contract for service or a contract of service. But there was the preliminary point raised by the Claimants to the effect that by filing a memorandum in reply, the Respondent had submitted to the jurisdiction ofthis Court. - **[9]** Counsel for the Claimants highlighted an extraction from pages 3-4 of the ruling in the *Ozuu Brothers case* in support of her proposition. The import of the extract was that under Order 9 rule 3 CPR, a defendant who wished to raise an objection to jurisdiction was required to file notice of intention to defend and follow that up with an application for a declaration that the Court had no jurisdiction in the matter. Counsel submitted that under Order 9 rule 6 CPR, the Respondent would be treated as having submitted to the jurisdiction ofthis Court. We think that it would have been important to consider a fuller text ofHis Lordship Justice S. Mubiru's ruling on the point. We take this view because at page 4 ofthe ruling, the Learned Judge qualifies the provision of Order 9 rule 6 CPR by reading it together with Order 9 rule 2 CPR. In his Lordship's words, the conclusion is inevitable that filing a defence is a submission to the procedural rather than substantive jurisdiction ofthe Court. A party who files a defence is not precluded from raising the issue of jurisdiction in the defence or as a preliminary point oflaw. We are of a similar

5 Owners ofMotor Vessel Lillian "s" v Caltex Oil Kenya Limitedfl989]KLR 1

6 Attorney General ofthe United Republic ofTanzania v African Network ofAnima Welfare Appeal No. 3 of 2011 EACJLR 2005-2011 395 at 399

persuasion that the Respondent was not precluded for raising the preliminary objection in the pleadings, as it did in paragraph 2 of the memorandum in reply, or before us at the scheduling conference. We will now return to the matter ofsubstantive jurisdiction.

- **[10]** In paragraph 3 ofthe memorandum of claim, the Claimants filed a claim for wage arrears. At paragraph 3(a), the Claimants classified themselves as construction workers who had "an agreed wage equivalent to 25% ofthe cost of construction materials". They plead that they diligently carried out their work and were entitled to UGX 6,335,000/= of which UGX 1,800,000/= was outstanding. The Claimants filed two affidavits in support oftheir claim. By an affidavit sworn at Lira on the 11th day of April 2022, the 1st Claimant deposed to having been engaged as a construction worker at an agreed wage rate of UGX 3,167,500/= of which UGX 900,000/= was outstanding. By an affidavit sworn on the same day, the 2nd Claimant also deposed to having been engaged as a construction worker at an agreed wage rate equivalent to 25% of the cost of construction material. That he diligently performed his work and was entitled to UGX 3,167,500/= ofwhich UGX 900,000/= was outstanding. - **[11]** In his memorandum in reply, the Respondent denied having employed the Claimants at an agreed wage equivalent to 25% of the cost of construction materials. In his affidavit in support of the memorandum in reply, the Respondent denied knowledge of the 1st Claimant and averred that he subcontracted the 2nd Claimant to roof a building and agreed to pay the 2nd Claimant 25% of the material cost quoted which would be the sum of UGX 6,335,000/=. It was the Respondent's case that the 2nd Claimant brought the 1st Claimant to the site. The Respondent further averred that the contract was split into two phases; Phase 1 consisted of welding ofZ-shaped shed purlins on the building and Phase 2 required the fastening of iron sheets onto the purlins. He averred that upon completion ofPhase 1, he paid the 2nd Claimant UGX 4,535,000/=. The Second Claimant abandoned the site and the Respondent contracted one Sam Okello to complete Phase 2 for which he paid the said Sam Okello UGX 1,800,000/=. He reiterated his denial of any contract of employment ofthe Claimants. - **[12]** In support of their respective positions, Counsel cited the case of **Ready Mixed Concrete** *(Supra)* for an exposition of a contract of service versus a contract for services. In that case, which was cited with approval, in the case of **Godfrey Kamukama v Makerere Business School7** where Mackenna J held that; .

*"there were three conditionsfor a contract ofservice:first that \ the employee undertakes to provide his or her own work or skill* **/Al**

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to the employer in return for a wage or other payment, secondly the employee agrees to be subject to the employer's control to a sufficient degree" to make that other master" and thirdly that the other provisions of the contract are consistent with it being a contract of service in the end"

What is discerned from the above passage is that a contract of service involves work for wages and control by the employer. We agree with the submissions of the Respondent that control is very key in the employment relationship. It is essentially master-servant in the sense that the master decides what needs to be done, the manner in which the task is to be performed, the means to be employed, the time and place in which it is to be executed.

- In the Kamukama case (supra), the Industrial Court, citing the case of Charles $[13]$ Lubowa and Scovia Ayikoru v Victoria Seeds Ltd8 where it held that the distinction between an employee and an independent contractor is primarily governed by the control test. That an independent contractor was a person who works under a contract but is not in the same state of dependence on the employer as an employee is. Whereas the independent contractor controls the means and the manner in which work is performed, the employee on the other hand, is subjected to the organization's procedures, is expected to perform part of the regular business of an employer and he or she must follow specific instructions on how to perform work. An independent contractor usually has a fixed task and is paid on completion of the said task and is free to delegate work to other workers of his choice without the knowledge and consent of the employer. - $[14]$ The facts in the instant case are quite telling: - First, the $1^{st}$ and $2^{nd}$ Claimant describe themselves as construction $(ii)$ workers. They admit that the work to be performed was in respect of a roof. We think this would be a fixed task. - Secondly, they are both seeking the same remuneration being 25% of $(ii)$ the cost of materials. They admit to having been paid UGX 4,535,000/ $=$ and are seeking a balance. We think this would be a fixed payment for a fixed task. - Thirdly, the Respondent suggests that he does not know the 1st Claimant $(iii)$ who was brought upon the site by the $2^{nd}$ Claimant. In this regard, the Respondent had no control over who the 2nd Claimant chose to work with. In terms, the 2nd Claimant would be at liberty to delegate the work without the consent or knowledge of the Respondent.

&lt;sup>8 LDR 185/2016

- (iv) Fourthly, the Respondent admits to having paid the 2nd Claimant for completion of phase 1 of the work. This would be a fixed task which was paid for upon completion. - (v) Finally and perhaps more significantly, the record before the Labour Officer contained facts reflecting the 2nd Claimant having subcontracted the 1st Claimant and varying figures in relation to the agreed labour cost, what was paid and what was outstanding.

From these observations, our inescapable conclusion would be that the Claimants were not employees ofthe Respondent. The 2nd Claimant exercised independence in recruiting the 1st Claimant. He did not claim to have done so with the full knowledge and consent of the Respondent. The Respondent denies knowledge of the 1st Claimant and the 1st Claimant did not offer any explanation for the Respondent's disclaimer. We are unable to accept the Claimants' assertion that they are seeking payment of unpaid wages. In attempting to foster an employment relationship, we think that the Claimants were trying to square a circle. We accept the Respondent's contention that this was a contract for service and not of service. We hold that the 2nd Claimant was an independent contractor and the 1st Claimant a delegate of the 2nd Claimant.

**[15]** In regard to jurisdiction, we are ofthe persuasion that a Court oflaw derives itsjurisdiction from its establishment statute or constituent law. In the case of the Industrial Court, it was established under **Section 7 of the car Labour Disputes (Arbitration and Settlement) Act, 2006** *(from now LADASA).* Under **Section 8 of LADASA,** the Industrial Court shall arbitrate on labour disputes referred to it and adjudicate upon questions of law and fact arising from references to the Industrial Court by any other law. In the case of**Kyaka Fred & Others V Attorney General Labour Dispute Reference No. 128 of 2016** this Court held that it is a specialized Court dealing with matters to do with Employees and Employers regarding the Employment relationship between them. Its jurisdiction extends only to labour dispute directly connected with Employment and arising from the Employment relationship as provided for under the Employment Act. This decision is illustrative ofthe provisions of **Section 2 of the LADASA,** which defines a labour dispute as any dispute between an employer and an employee. Having found, as we have, that the Claimants did not enjoy an employment relationship with the Respondent, we would hold that there is no labour dispute to hear and determine. a

**[16]** It is our conclusion, therefore, that the preliminary objection to the jurisdiction of this Court to hear and determine a matter of a contract for service is meritorious. It is, accordingly and in all circumstances, upheld. Labour Dispute Reference No. 09 of 2022 is dismissed with no order as to costs.

| XLT this of Delivered at Kampala March 2023 J_day | | |---------------------------------------------------------------------------|---------| | SIGNED BY: THE HON. JUSTICE ANTHONY WABWIRE | MUSANA, | | THEPANELISTS AGREE: Mr. CAN AMOS LAPENGA, 1. | | | 2. Ms. ROBINA KAGOYE & | | | 3. JIMMY MUSIMBI. Mr. | | | | |

Delivered in open Court via Zoom in accordance with the Judicature (Visual-Audio) Rules 2016 - on Zoom meeting ID No. 92674364210 Passcode 759001

Topic: Ruling:

- (i) Mr. Denis Awon for the Respondent - (ii) Ms. Bridge Kusemererwa for the claimants

Court Clerk: Ms. Matilda Nakibinge.