Topista Achora v Namungoma Transport & Produce Dealers Co. Op. Society Ltd. (Civil Suit No. 563 of 1990) [1992] UGHC 82 (12 May 1992)

## THE REPUBLIC GF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA

## CIVIL SUIT NO. 563 OF 1990

TOPISTA ACHORA PLAINTIFF

VERSUS

NAMUNGOMA TRANSPORT.& PRODUCE } DEALERS CO. OP. SOCIETY LTD. <sup>5</sup> : . : : : : : : : DEFENDANT BEFORE: THE HON. MR. JUSTICE G. M, OKELLO

## JUDGMENT; . . • . <sup>M</sup> '

By this action the' Plaintiff: seeks t-o reedver fram the Defendant General Damages for breach of contract, recovery of the Principal sura and profits which accrued from it,:interest thereon and cost'-of the acHctfi.

From the sole testimony of the Plaintiff' on record, the back'ground r. to this case'may be stated as follows:- At the instance of the defendant society adting throngh its chairman--one-Paddy ^utalo, the-Plaintiff verbally entered into a sale of -produce venture with the defendant society. Under the venture, the Plaintiff paid to the defendant society shs. 580,000/=. The defendant acknowledged receipt of this amount of money by issuing a receipt which was later received in evidence as Exh. Pl. Under the venture, the defendant was to Use this money for the purchase of coffee from farmers. The coffee so purchased would be processed by the defendant society and later to be sold to the Coffee Marketing Board-. From the profits which would be realised from the sale, the Plaintiff was to be paid a share of profit of 50,000/= per week as from January 1989\* The Plaintiff accepted this term.

Early in <sup>1989</sup> however, the plaintiff declined\*- to receive her weekly profit and told the defendant that her weekly profits for the whole of 1989 was to be ploughed back into the venture in order to increase her •-capital. The defendant accepted that arrangement. Profit payable on the increased capital was not worked out.

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However, by about October 1989 when the Plaintiff was faced with an unforeseen problem, she demanded to be paid a sum of shs. 50,000 = to enable her meet that problem. The defendant failed to meet that demand on the ground that it had no money.

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In January 1990 the Plaintiff decided to repudiate the agreement as it was proving unbeneficial to her. She demanded from the defendant payment of her original capital plus the whole of her accumulated profits. When the defendant refused to pay her any part of the money claimed, the plaintiff brought this suit.

At the commencement of the hearing of the suit, the Plaintiff and her advocate appeared. But neither the defendant nor her advocate appeared. After I satisfied myself that there was evidence of due service of hearing Notice on counsel for the defendant and as there was no known reason for the absence of the defendant and her counsel, allowed the hearing of the case to proceed ex-parte under 0.9 r. 17(1) (a) of the $C. P. R.$

Three issues were framed as under:

- (1) Whether or not the plaintiff and the defendant entered into a contract. - (2) Whether there has been any breach of such a contract - (3) What remedies are available to the Plaintiff if issue No. 2 is in affirmative.

In the course of the hearing, evidence was given only by the Plaintiff in an effort to prove her case. Arguing issue No. 1 above, Mr. Owiny Dollo Counsel for the Plaintiff, contended that there was a contract between the parties. That the evidence of the plaintiff supports, this view.

It is trite law that to form a binding simple contract, three essential elements must be present. These are offer, acceptance and consideration.<br>it simply, there must be an offer from one side setting This offer must be accepted Putting out the terms of the proposed agreement.

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by the other side. And there must also be consideration moving from either side.

Mr. Owiny-Dollo argued that in the instant case, the transaction between the parties constituted a binding simple contract between them. That at the instance of the defendant society, the plaintiff parted with her $580.000/$ which the defendant society was to use for the purchase of Coffee from farmers, process it and later to sell the processed Coffee to Coffee Marketing Board. That in consideration for the use of the Plaintiff's money, the defendant society was to pay to the Plaintiff a weekly profit of shs, 30,000/= on her said capital. The alleged agreement between the parties was oral. It was not reduced into writing. The existence or otherwise of such an agreement $T_{\ell}$ : Even the contents of such agreement are is a matter of oral evidence. $\mathcal{E}:=\{x_1,\dots,x_n\}$ matters of oral evidence,

The evidence of the Plaintiff shows that following that Agreement, she gave to the defendant society shs. 580,000/= which receipt was acknowledged by the defendant society. A receipt Exh. Pl. was received in evidence. The evidence further shows that the plaintiff paid the said amount to the defendant society on the $\cdots r_{i-1} \mathbf{a} \mathbf{a}^{i+1}$ understanding that she would in return be paid a weakly profit of 30,000A

From the available evidence, I fully subscribe to the above. $\mathcal{A} = \{A_1, \ldots, A_n\}$ argument of counsel for the Plaintiff. The evidence of the Plaintiff shows that the transaction between the parties contain all the three essential elements required to constitute a binding simple contract. In consequence, I find that there was bunding simple contract between This there fore answers the first the plaintiff and the defendant society. issue in the affirmative.

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As to issue Nc. 2, which is whether there was a breach of that contract, Mr. Owiny Dollo contended that there was a breach of that contract by the defendant society. That the breach occured either when the defendant society failed to pay the Plaintiff the sum of shs, 50,000/ in October 1989 when she demanded for such payment from her accumulated profit or in January 1990 when she repudiated the agreement and demanded payment of her original capital and all the accumulated profits and the defendant society failed to pay.

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As pointed out earlier, the said agreement was a was not reduced into writing. The terms of such a contract can only be gathered from oral evidence to that effect. In the instant case there is no other oral evidence regarding the contract. Before the court, there is only the arat evidence pr the plaintiff PWI. I take her evidence as accurately stating the terms of the contract. There is nothing obviously falsehold about her evidence.

According to the evidence of the plaintiff, the terms of the con ct was that the defendant society would pry the plaintiff a weekly profit of 30,000/= for the use of the plaintiff's money (580,000/=).

The testimony of the Plaintiff also shows that she had stopped the defendant from paying her, we said weekly profit for the whole of the year 1989 and that the amount was to be ploughed back into the venture. Having told the defendant society that much the plaintiff can not subsequently be meand to say that the defendant has committed a breach of the term of the contract when it failed to pay her weekly profit before the end of 1989. She is estopped from saying so The defendant therefore can not be said to have committed a breach of the contract when it failed and/or refused to pay the ple intiff shs. 50,000/in October 1989.

The evidence of the plaintiff further shows that in January 1990 when she demanded payment of her profit. the defendant society did not pay her and she at once demanded for the payment of her original capital plus the whole of her accumulated profit, thus repudiating the agreement.

Mr. Owny - Dollo submitted that the above failure by the defendant to pay to the plaintiff her weekly profit on demand amounted to a breach of the contract. I respectifully agree with that view because the failure by the defendant to pay to the plaintiff her weekly profit on demand amcunted/a breach of the term of the contract This entitles the Plaintiff to treat the contract as having been discharged by the breach. This answer issue No. 2 also in the affirmative. This now brings me to consider the third issue which is what remedies are available to the plaintiff if issue No, 2 is in the affarmative.

Mr. Owiny Dollo submitted that the defendant society had lured the plaintiff to invest her shs. $580,000/$ = for a weekly profit of shs. 30,000/= which the defendant herself calculated. That since the defendant failed to honour her obligation under the contract, it was only fair that the Plaintiff recovers her original capital plus the accumulated profit as from January 1989 to January 1990.

The Plaintiff as the innocent party to the breach of the centract is entitled to treat the contract as having been discharged by the breach and an principle sue for damages for breach of contract. (see Chity on contract 23rd Ed. Paragraph 1335).

Where however, he has paid money to the guilty party under the contract, he can only recover the money by action for money had and received provided that consideration for the payment has totally failed. (see Chity on contract 23rd Ed. Paragraph 1335).

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In the instant case, the action is not for money had and received. It is for damages for breach of contract. In the circumstances the Plaintiff can not recover the money she paid to the defendant by this action. The claim under this heading therefore must fail.

The Plaintiff also claimed General damages for breach of contract. Counsel prayed, that an amount in the region of one million shillings under this heading would be reasonable.

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As I have already stated carlier in this Judgment, the Plaintiff's remedy lies in claim for General damages for breach of contract. The principle governing grant of General damages is to put the plaintiff as far as money can do, to the position-he had been before the injury he complained of had been committed (see Philips ys. Wards (1956) IAER (74) In the instant case, the Plaintiff lost her weekly profit

of 30,000/= as from January, 1909 to January 1990. To put her to the position she was in before that loss, the measure of damages must be the loss of her weekly profit. This is $30,000x52 = 1.560,000/x$ I therefore allow the plaintiff General Damages to the tune of shs. $1,560,000/=$ .

. The plaintiff also prayed for interest on that amount at the rate of 50% as from January 1990 until payment in full.

The principle which governs the award of interest is to compensate the plaintiff for being deprived of the use of her money from the mement when she incurred her loss. Interest should therefore be payable from the date of the loss.

In the instant case; the plaintiff has been deprived of the use of her money from January 1990 when she demanded for it but the defendant did not pay. This is a commercial transaction and the rate of the interest should correspond to the Bank Rate. This is 40%. Consequently I allow the Plaintiff interest on the General Damages at the rate of 40% as from January 1990 until payment in full.

The defendant is also to pay cost of this suit. Judgment is thu entered in favour of the Plaintiff in these terms.

G. M. OKELLO

JUDGE;- ' 12/5/92.