[2023] UGCommC 227

#### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA ICOMMERCIAL DMSIONI

### CIVIL SUIT NO. 88 OF 2012

# AHLUL BArT (A. S.) TSLAMTC FOUNDATION UGANDA LTD (ABIFU) PLAINTIFF VERSUS

# I. UGANDA ELECTICITY DISTRIBUTION COMPANY LTD (UEDCL)

2. UGANDA ELECTRICTY BOARD (UEB) IN RECEIVERSHIP

3. THE ATTORNEY GENERAL: : : : : : : : : : : : : : : : : : : : : : : : : DEFENDANTS

## BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI JUDGMENT

The Plaintiff brought this suit against the Defendants by way of ordinary plaint seeking for a declaration that LIEDCL (l't Defendant) partly succeeded UEB (2"d Defendant) and is legally responsible for anylall liabilities of UEB arising out of, connected with or otherwise related to grid connected power lines and customer deposits entrusted to UEB, a declaration that all assets and liabilities of UEB not expressly vested to any successor company remained the mandate and responsibility of UEB (in liquidation), a declaration that the Rebate Scheme established a valid contract between UEB and the Plaintiff under which UEB was liable to refund monies expended for constructing the 20km Lugolole-Ikulwe 33 KV Sub Transmission Line, a declaration that the said scheme also established a

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valid trust between the Plaintiff, and UEB, UEDCL; under which the Defendants received customer deposits from the Plaintiff equivalent to the total cost of constructing the Suit line.

The Plaintiff further seeks for a declaration that UEDCL as the relevant successor of LIEB has failed to grant the Plaintiff any rebates or refunds, has stolen or misappropriated the Plaintiff s customer deposits previously entrusted to UEB, has violated or threatened the Plaintiffs property rights or interests, and have unjustly enriched themselves at the expense of the Plaintiff; and is therefore liable to refund USD 331,771.00 to the Plaintiff being the amount of customer deposits, an order directing UEDCL or UEB to pay to the Plaintiff the said sum in a lump sum refund, interest at 30yo per annum, damages, interest on damages and costs of the sult.

The brief facts constituting of the Plaintiffls case are that in the fiscal year 1997/1998, UEB embarked on a program to extend the national grid to increase electricity coverage in rural areas. That the Plaintiff entered a contract with UEB to construct power lines, and annuitize their project costs over 6 years by granting rebates or refunds to the project developer in the monthly bill. That upon receipt of expression of interest from the Plaintiff, UEB carried out preliminary costing and advised the Plaintiff. Later, the amount was revised prior to commencement.

That the Plaintiff engaged a private contractor who was vetted by UEB and approved. UEB appointed a technical team to address project issues and inspect the works to ensure standards were met. The Plaintiff had submitted project drawings to UEB and they were approved on l7s July 1998. That upon completion of the works, as was required, the Plaintiff handed over the Suit Line, transformers, L. V. networks and other assets to UEB on 25s August 2000. A customer account was

opened in the Plaintiff s names at UEB's district office in Iganga, energy bills were sent to the Plaintiff on a regular basis. UEB was to refund the actual construction costs of USD 331,700.00 over a period of 6 years through rebate in the monthly bill of the Plaintiff. That UEB and its successor UEDCL failed and neglected to refund the Plaintiff the said sum before 25th August 2006, being the rebates cessation date, hence this suit.

The I't Defendant in their amended Written Statement of Defence denies the Plaintifls claims against them and contend that the I't Defendant was incorporated on or about the 26n March 2001; and therefore that they never dealt with the Plaintiff regarding the Rebate Scheme. Altematively, the l't Defendant averred that the suit is time barred and is legally misconceived. They also denied that the costs incurred by the Plaintiff in the construction of the power lines amounted to loan or credit facilities advanced to the UEB, or customer deposits entrusted to UEB.

The 1't Defendant further denies that all assets and liabilities of UEB, as the ones vested in the l't Defendant were spelt out in the Third Schedule to the Vesting Instrument. Therefore, the 1't Defendant is not liable to seftle the liabilities of UEB under the Rebate Scheme. That UEB still exists and is under liquidation under the Office of the Official Receiver of the Govemment of Uganda; and that the sole purpose of its continued existence is to attend to and dispose of all the liabilities of UEB such as those arising under the Rebate Scheme. They further deny acknowledging the claim, therefore the claim ought to have been lodged against the Govemment of Uganda. The l't Defendant therefore contends that the Plaint does not disclose a cause of action against the I't Defendant, the alleged claim for breach of fiduciary duty is misconceived and untenable in law, and is not liable for the alleged loss and damages suffered by the Plaintiff.

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The 2nd and 3'd Defendants filed a joint Written Statement of Defence wherein they contend that the 2nd Defendant is not a proper party to the suit; and also that the amended Plaint is barred in law, misconceived and should be dismissed with costs. That the Plaintiff is not entitled to any prayers sought under the amended plaint. They further contend that the Public Enterprise Reform and Divestiture Act (Cap 98) provides for divestiture and reform of public enterprises; and IIEB was divested in the First Schedule in Class II. That the assets and liabilities were vested by Regulation 2 of Public Enterprise Reform and Divestiture (Vesting of undertaking of the Uganda Electricity Board) S.l 2 of 2002. They prayed that the suit be dismissed with costs.

#### REPRESENTATION

During hearing, the Plaintiff was represented by IWs Muganwa, Nanteza & Co Advocates whereas M/s H & G Advocates (formerly M/s Kateera & Kagumire Advocates) appeared for the l't Defendant and the Legal Department, Uganda Registration Services Bureau and the Attorney General's chambers represented the 2"d and, the 3'd Defendants respectively.

#### JUDGMENT

I have read the pleadings in this matter and considered the written submissions of all the parties herein. The following issues were agreed upon in the Joint Scheduling Memorandum for determination by the Court:

- l. Whether the Plaintiff s claim or any part thereof is time barred? - 2. Whether the Plaintiff is entitled to a refund of USD 331,770? - 3. Whether the Defendants are liable for the reliefs sought by the plaintiff? - 4. What remedies are available to the parties?

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### Issue One: Whether the Plaintiffs claim or any part thereof is time barred?

It is not disputed that this issue was resolved by this Honourable Court in its ruling dated 9th September 2015 delivered by Honourable Lady Justice Anglin Senoga, artd is therefore no longer an issue for this Court to address.

### Issue Two: Whether the Plaintiff is entitled to a refund of USD 331,770?

Counsel for the Plaintiff submitted that during scheduling it was agreed by all parties that the Plaintiff handed over the suit line upon completion and has never been compensated under the rebate scheme the sum ofUSD 331,770 spent on the project. He added that PWI explained in paragraphs 14 to 2l of his witness statement how the amount accrued, and that they are supported by exhibits Fll to F21. He further added that none of the Defendants challenged the Plaintiffls evidence in cross examination regarding the sum spent on construction; and therefore that the Plaintiff is entitled to a refund of the same.

In reply, Counsel for the 2nd Defendant in his submissions referred to the witness statement of DW2 and admitted to the fact that Plaintiff invested in the construction of the power line; and that UEB had promised compensation for the cost in form of annuitized rebates in the monthly bill, but that UEB was dissolved prior to fulfilling the promise. He added that the only issue is verification of the cost of the materials by the Auditor General under Article 163 of the Constitution of the Republic of Uganda.

According to PWI who clearly elaborated how the Plaintiff entered into a contract with the 2nd Defendant, proof of the same was shown by the back and forth communication with the Plaintiff in annexures Fl to Fl0. The 2nd Defendant does not deny entering such contract. PWI goes on to illustrate that they contracted NEK Consults to render services in the design phase, tender phase as well as the

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construction phase for USD 15,000. This is seen in their contract in Fl2. In paragraph 15 and 16 of his witness statement, PWI further stated that they contracted IWS Sabuka Investment Limited at a contract fee of USD 316,700 to construct the line. The various payments made to them are evidenced by the receipts and acknowledgement marked as annexures Fl6 and F17. That upon completion of construction, the power line was handed over to the 2nd Defendant and that the Plaintiff opened up several consumer accounts with the 2nd Defendant and deposited electricity bills marked as annexure 21 . That by virtue of Instrument No. 2 of 2002 (F22),the 2nd Defendant's liabilities vested in the l't Defendant.

I have noted that from both the pleadings and submissions ofthe 2nd Defendant, the Plaintiffs claim is not denied. In fact, the only contention raised by the 2nd Defendant is that it ceased its existence before the Rebate Scheme was finalised. Therefore, I have also looked at the witness statement of PW2, an engineer with NEK Consults conforming the work they did for the Plaintiff and the payment of USD 15,000, plus annexures Fl2, Fl6 and F17, and I find that the Plaintiff has proved and is entitled to the claim of USD 331,770 as costs incurred in the construction of the 20km Lugolole-lkulwe 33 KV Sub Transmission Line.

## Issue Three: Whether the Defendants are liable for the reliefs sought by the Plaintiff?

Counsel for the Plaintiff submitted that the lst and 2nd Defendants are the ones mainly liable because the contract was executed with the 2nd Defendant; and that by virtue of The Public Enterprises Reform and Divestiture (Vesting of Understanding of Uganda Electricity Board) Statutory Instrument No. 28 of 2002, liability passed on to the I't Defendant. He added that Regulation 2 (c) vests the assets and liabilities specified in the 3'd Schedule on the 1't Defendant; and that the Rebate Scheme is an asset passed on to the l't Defendant under Part t item No. 7.

0, Counsel argued that the only question for determination is whether the liability relating to that asset was passed on to the l't Defendant.

He further submitted that the Rebate Scheme can be referred to as an undertaking or customer deposit; referred to under the Third Schedule Part IA and Part II of the Instrument respectively. That under the definition in those sections, the scheme was a promise, pledge and engagement in connection with the ownership, use, repair and/ or maintenance of all electricity supply lines, which was properly appreciated. He added that under Schedule Three, Part II, B of the Instrument, liabilities of UEB that transferred to the l't Defendant included all existing consumer deposits; and that it had been agreed that the sums would be repaid through annuitized monthly consumption bills, therefore the sums expended of the construction of the suit line, converted into consumer deposits which liability was transferred to the l't Defendant.

I have perused the submissions and authorities of all the parties herein and I am of the firm view that it is not in dispute that, following the various agreements between the Plaintiff and the 2nd Defendant seen in Fl to F1l of the Plaintiff s trial bundle, the 2d Defendant agreed to repay the Plaintiff the cost of the materials used to construct the Lugolole-llukwe Power line through rebate in the monthly bills. It is also not disputed that by virtue of the Public Enterprises Reform and Divestiture (Vesting of Understanding of Uganda Electricity Board) Statutory Instrument No. 28 of 2002 (F2zlDl), under Regulation 2 (c) all assets and liabilities specified in the Third Schedule which belonged to the 2nd Defendant, were transferred to the I't Defendant.

The Third Schedule Part I paragraph A lists all the transferred assets, among which at No.7 is the 33-11 Kv Substation at Iganga, which powers the Lugolole-llukwe

Power line, constructed by the Plaintiff. DWl in paragraph 6 of his witness statement confirmed the same, admitting that the l't Defendant is in possession of the said Power line. PW2 also confirmed that the said Power line is a 33Kv and is among the assets transferred to the l't Defendant. Still from the instrument, of particular interest on liabilities, Part II paragraph B of the Third Schedule transfers all existing consumer deposits to the l't Defendant. It is no doubt that the costs expended by the Plaintiff were to be repaid in monthly bills. Particularly, from paragraph 6 of F8, a letter written by the 2nd Defendant to the Plaintiff, it was agreed as follows:

"ln your case, when the extension is completed, you will be expected to open an energ) consumption account at our District Office, lganga. The energt bills will be sent to you on a regular monthly basis at the rate of selected prevailing tarff...... "

Going by the above, it is my considered opinion that the Plaintiff s rebate scheme was to be treated as a consumer deposit, therefore, it is clear that the Rebate Scheme is one of the liabilities transferred to the l't Defendant by the 2nd Defendant under the existing consumer deposits in the Third Schedule Part II, B of F22. Whilst DWl in his witness statement argued against it saying that the Plaintiffs claim is not a consumer deposit, DW2 in paragraph 10 of his witness statement confirmed that the Plaintiffs claim falls within consumer deposits, thereby falling within the category of liabilities inherited by the 1't Defendant.

It follows therefore, that the I't Defendant is liable to refund the costs expended by the Plaintiff in the construction of the power line. However, as was the agreement, the refund is not to be made in form of cash, the l't Defendant should have continued with the arrangement of rebating the electricity bills of the Plaintiff deposited on the Plaintiffs consumer accounts until the construction costs are set-

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off. It is only after that arrangement is done, that the Plaintiff will be expected to start paying electricity bills.

## Issue Four: What remedies are available to the parties?

## a. Special damages

It is trite law that special damages must be specifically pleaded and proved. I agree with Counsel for the 2nd Defendant that the Plaintiffs have not proved their claim for special damages against the 2'd Defendant and I, therefore, decline to award the same as prayed.

## b. General damages, aggravated damages and exemplary damages.

General damages arise from direct, natural and probable consequence of the act complained off (See Uganda Commercial Bank V Deo Kigozi [20021 E. A 293). Exemplary damages on the other hand are awarded where there has been an oppressive, arbitrary or unconstitutional action by the servants of the govemment; or where the defendant's actions were calculated to make profit or where some law for the time being in force authorises the award of exemplary damages (See Rookes V Barnard 1964 All ER 347). Lastly, aggravated damages are extra compensation to the plaintiff for injury to his feelings and dignity caused by the defendant's action, in wanton disregard to the plaintifls rights (See Fredrick J. Zoabwe V Orient Bank & Others SCCA No. a of 200Q.

In this case, the Plaintiff has not benefitted from their investment in the construction of the power line. In spite of opening up a consumer account as agreed, no rebates were given on their energy bills; and the Plaintiffhas had to pay for its energy consumption like other customers. The Plaintiff said they continued to receive monthly electricity bills with threats of disconnection from the l.t Defendant; and yet the Defendants continued to benefit from the Plaintiffs investment.

I find that the above caused the Plaintiffuntold suffering, and yet the 1't Defendant continued benefitting from the same. However, despite the above, I have also considered the fact that the Plaintiff was allowed to continue using the electricity. No evidence of disconnection was availed in court and this therefore mitigates the damages the Plaintiff is entitled to.

In the circumstances, I find that it is only fair and equitable that the plaintiff be awarded general damages of UGX 30,000,000/ and aggravated damages of UGX 20,000,000/ for the inconveniences caused. I find no grounds for awarding exemplary damages.

## c. Costs of the suit.

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It is trite law that costs follow the event and that the successful party is awarded costs. Therefore, the Plaintiff is awarded costs of this suit, to be paid by the I't Defendant.

In conclusion, judgment in the suit is entered in favour of the plaintiff in the following terms:

- The I't Defendant is liable to refund the construction costs incurred by the Plaintiff in the sum of USD 331,770, to be refunded in form of rebates of bills on the Plaintiff s account. I - 2. The I't Defendant is to pay general damages of UGX 30,000,000/ to the Plaintiff

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- 3. The 1^st Defendant is to pay aggravated damages of UGX 20,000,000/ to the Plaintiff. - 4. Costs of the suit to be paid to the Plaintiff by the 1^st Defendant.

Dry Britane

HON. LADY JUSTICE ANNA B. MUGENYI

**DATED**....................................