Sudhir Ruparella v Magezi and Another (Civil Appeal 61 of 1999) [2001] UGCA 26 (24 July 2001)

Full Case Text

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

#### HON. JUSTICE G. M. OKELLO, JA. CORAM: HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA. HON. JUSTICE A. TWINOMUJUNI, JA.

#### CIVIL APPEAL NO. 61 OF 1999

#### **BETWEEN**

#### SUDHIR RUPARELLA::::::::::::::::::::::::::::::::::

#### AND

#### (1) GODFREY MAGEZI} .................................... (2) BRIAN MBABAZI }

(Appeal from the decision of the High Court (Musoke-Kibuuka, J.) dated 19th July, 1999 in HCCS No. 1076 of 1996)

#### JUDGMENT OF G. M. OKELLO, JA

This is an appeal against the decision of the High Court dated $19/7/96$ , whereby it gave judgment for the respondents and ordered the appellant to pay to the respondents Shs. $20,000,000/=(\text{twenty million})$ , interest thereon at 6% per annum from date of filing the suit until payment in full and costs of the suit.

The facts which gave rise to the case are as follows: the respondents were shareholders and directors of a company called "Parking Control **Systems Ltd.**" That company had on 5th December, 1995, entered into an Agency Agreement (Exh. P2) with Kampala City Council. Under the Agreement which was amended on $31/5/96$ , the company was to install, operate and manage parking metres of a specified type, or as they agree

$\mathbf{1}$

on with Kampala City Council, on the streets within Kampala city. The project was divided into three terms: the first term was the installatron of the parking metres, educattng and sensittzing the public. This was to cover a period of six months from I16196.

The second term was a period of six years commencing from the date of signing this agreement inclusive of six months mentioned in term I . The third term was the renewals of the agreement after the expiration of the six years period. Notification of intention to renew was to be made in writing, 90 days prior to the exprry of the six years period mentioned in phase two.

The company had started some preparatory work when on 417196 rt executed a Sale Agreement, Ex. Pl, with the appellant. By this time, it had not yet installed the metres nor sensitized the public Under the agreement, the company sold to the appellant all its rights and obligations under its agreement, Exh. P2. with Kampala City Council. The purchase price was Uganda Shillings one hundred and twenty million (120.000,000/:1 One hundred million shillings thereof was to be paid on execution of the agreement. This was done. The balance of twenty rnillion shillings was to be paid, "within a period of four months after the commencement of the operations of the business." After four months from the date of execution of the agreement, the respondents demanded llom the appellant the balance of the purchase price. The appellant however, refused to pay. He reasoned that the operations of the busrness had not yet commenced. That prompted the respondents to institute the head suit claiming from the appellant the recovery of the balance of the purchase price, rnterest thereon, general damages for breach of contract and costs of the surt The appellant denied liabilitv

The High Court heard the case and decided against the appellant. Hence this appeal.

The rnemorandum of appeal comprised two grounds, namely.-

- (l) the learned trial judge erred in law and fact when he made a finding to the effect that the defendant had commenced the operations of the business and; - (2\ the learned trial judge erred in law and in fact when he held that the balance of consideration was due for payment when the company had not commenced the operations of the business.

Counsel for both parties filed wriften submissions. I propose to consider these grounds separately in the order they were framed.

On ground one, the appellant's complaint revolves around the trial ludge's construction of paragraph 2 (ii) of the Sale Agreement, Exh. Pl It was contended that the trial ludge erred in finding that the operations of the business had commenced when it had not. Mr. William Byaruhanga, learned counsel for the appellant. blamed the error on the trial ludge's failure to consider the surrounding circumstances of the agreement when he construed the general words used in that paragraph to ascertain the intention of the parties. He relied on GI nn and oth rs Vs Marletson &Co ll893l AC 351. ln his view. the intention of the parties, as gathered tiom the surrounding circumstances of the agreement, was that the operations of the business would commence after the parking metres were installed and became operational. He argued that as these had not been

accomplished, the operations of the business could not be said to have been commenced. He pointed out that the evidence of the appellant (DWl) and of Mathew Odyambo Owor (DW2) show that the parking metres had not yet been installed and made operational. The management and control of streets parking had not commenced. He criticised the trial ludge for relying on the amended agreement. Exh. P2, between the company and Kampala City Council to find that the operations of the business had commenced. He argued that that agreement binds the appellant and Kampala City Council as to the terms of operations of the business.

On the other hand, the respondents contended that the trial judge was right to find that the operations of the business had commenced. They supported the trial judge's argument that when the appellant bought the business proJect, it was a going-concern. lts operations had already commenced and the appellant merely continued with its operations.

The trial ludge dealt with this point in his ludgment as follows:-

"l am unable to agree with Mr. Byaruhanga's submission to the effect that the defendant has not, within the meaning of clause (ii) of paragraph 2 of the Agreement between the parties (Exh. Pl ) commenced the operations of the business. On the contrary, mv firm finding is that the operations of the business were regulated by Exh. P2, the Agreement between Kampala City Council and Parking Control System Ltd,, and not by the Agreement of Sale of the company between the parties to the suit. The operations of the business commenced in accordance with the Agreement between KCC and the company on 116196. When the company was taken over by the defendant, on 417196, the operations of the company were already on-going and the take over did not affect the position. The defendant assumed contractual obligation to continue the operations of the company uninterrupted and in accordance with the provisions of article 2 of the Agreement between KCC and the company which continued to be binding on the company and indeed the defendant who had taken over all the obligations of the plaintiffs. There is no evidence that there was ever any renegotiation or amendment of the terms set out in article 2 of Exh. P2."

The above passage in the trial tudge's ludgment clearll- shows, with respect, that he rnisdirected himself as to which contract regulated the terms and conditions of the contract of sale. lt must be the Sale Agreement, Exh. Pl because it is the agreement they freely entered into The tenns and conditions of that sale must be within the four corners of that agleement document, unless the document itself states otherwise. In the instant case, the document of sale does not provide that other terms of the sale were to be found elsewhere.

Paragraph 2 (ir) of Exh. Pl provides that:-

'-the balance of Lig. Shs.20,,000,000/- (Twenty million shillings only) will be paid within a period of four (4) months after commencement of the operations of the business"

It was stated by Lord Herschall LC in Glvnn and others Vs Marsetson &Co and others {l89 that

"where general words are used in a printed form which are obviously intended to apply, so far as they are applicable, to the circumstances of a particular contract, which particular contract is to be embodied in or introduced into that printed form, I think you are justified in looking at the main object and intent of the contract and in limiting the general words used, having in view that object and intent."

I respectfully agree with the above view. The phrase:- "within a period of four (4) months after commencement of the operations of the business," in the instant case, contains words of general application which are intended to apply to the circumstances of the agreement of sale, Exh. Pl. It is therefore, lustified to look at the rnain object and intent of this contract The main object and intent of the contract was sale of the Parking Metres Control business in the city of Kampala to the appellant. To the knowledge of the parties, this business entailed the installation and operationalization of Parking rnetres of specified type on the streets of Kampala City. This is borne out by the evidence of Godfiey Magezi. the first respondent, who testified at the trial as PWl. His evidence, as is relevant to this point, went as follows -

> "By the time we signed the agreement with Sudhir, we had started on the part of the work, we had surveyed the streets, we had obtained Police authorify for permission

to start designation of the streets we were moving with the Engineering Department of Ci(v Council to plan the work

Mr. Ruphararia had to start where we stopped."

Later the witness stated.

# "After the sale, I was asked by Mr. Ruphararia to help them with the installation stages."

This is supported by the evidence of the appellant and of DW2. Owor

It is clear therefore, that the installation and operationalization of the requisite Parking Metres on the streets of Kampala City had not been effected even though the agreement, Exh. P2, stipulated that they were to be concluded bv l16196.

Applying the above phrase to these circumstances of the contract of sale, the intention of the parties becomes clear. It was that the balance of the purchase price would be paid four months after the parking metres had been rnstalled and made operational. Any other construction without regard to these circumstances would lead to absurdity.

The trial ludge stated that the operations ofthe business are regulated by the terms of the agreement. Exh. P2, between Kampala City Council and the company which the appellant took over. I agree, only as between Kampala City Council and the appellant as the person who took over the rights and obligations under the agreement from the company. It does not

regulate the terms of the sale agreement between the respondents and the appellant.

I find merit in this ground and I would allow it.

The complaint on ground 2 is against the finding of the trial judge that the balance of the purchase price was due since the operations of the business had commenced. It was argued for the appellant that the operations of the business had not commenced and purchase price was not due.

I have adequately dealt with this issue when I considered ground 1. In view of my finding on ground 1 that the operations of the business had not commenced, ground 2 would also succeed.

In the result, I would allow the appeal, set aside the orders of the High Court, and substitute them with an order dismissing the respondents' suit. I would grant the costs here and in the High Court to the appellant. As Justice Mpagi-Bahigeine and Justice Twinomujuni both agree, the appeal shall and is hereby allowed on those terms.

34Th day of Suly, 2001. Dated at Kampala this...

G. M. OKELLO.

**JUSTICE OF APPEAL.**

#### THE REPUBLIC OF UGANDA

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

#### CORAM: HON. JUSTICE C. M. OKELLO, JA. HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA. HON. JUSTICE A. TWINOMUJUNI, JA.

#### **CIVIL APPEAL NO.61 OF 1999**

#### **BETWEEN**

SUDHIR RUPARELLA :::::::::::::::::::::::::::::::::::

AND

1. **GODFREY MAGEZI**}

2. BRIAN MBABAZI } :::::::::::::::::::::::::::::::::::

[Appeal from decision of the High Court (Kibuuka-Musoke, J.) dated 19th July, 1999 in HCCS No.1076 of 1996].

#### **JUDGEMENT OF A. E. MPAGI-BAHIGEINE, JA**

I have read in draft the Judgment of Okello J. A. I agree with it and

have nothing more to add.

Dated at Kampala this $\ldots$ . . day 2001. **A. E. MPAGI-BAHIGEINE** JUSTICE OF APPEAL

### THE REPUBLIC OF UGANDA

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

### CORAM: HON. JUSTICE C. M. OKELLO, JA. HON. JUSTICE A. E. MPAGI-BAHIGEINE, JA. HON. JUSTICE A. TWINOMUJUNI, JA.

## CIVIL APPEAL NO.6I OF I%L

### BETWEEN

SUDHIR RUPARELLA .. APPELLANT

#### AND

## 1. GODFREY MAGEZI) 2. BRrAN MBABAZT).. .... RESPONDENTS

(Appeal from decision of the High Court (Kibuuka-Musoke, J) dated l9'h July. 1999 in HCCS No.l076 of 1996)

### JUDGMENT OF A. TWINOMUJUNI JA.

I have had the benefit of reading in draft the judgment of my brother the Hon. Justice G. M. Okello, JA. I agree with it and I have nothing useful to add.

Dated at Kampala this .....20001 I /t OS Inot]lu ICE O PEAL