[2003] UGSC 53

### THE REPUBLIC OF UGANDA

$F$ *MAR*

# IN THE SUPREME COURT OF UGANDA AT MENGO

## (CORAM: ODOKI, C. J., ODER, TSEKOOKO, MULENGA, KANYEIHAMBA, J. J. S. C.)

## CIVIL APPEAL NO. 8 OF 2002

#### **BETWEEN**

## B. M. TECHNICAL SERVICES LTD. ::::::::::::: APPELLANT

#### AND

# CRESCENT TRANSPORTERS CO. LTD. ::::: RESPONDENT

[Appeal from the judgment and decisions of the Court of Appeal at Kampala (Kato, Okello, Mpagi-Bahigeine, J. J. A.) of 7^th, April, 2001, in Civil Appeal No. 25 of 2000].

## JUDGMENT OF KANYEIHAMBA, J. S. C.

This is an appeal from the judgment and orders of the Court of Appeal dated 7^th, April, 2001, in which the appellant's appeal against the judgment of the High Court was allowed with costs.

The background to this appeal may be stated as follows:

Crescent Transportation Company Limited, the present respondent, sued B. M. Technical Services Limited, the present appellant for breach of contract of carriage of goods

from Mombasa to Kampala. The contract bet\$'een the appellant and the respondent rvas partlv u'ritten and partl1' oral. The terms of the rvritten part of the contract provided that the respondent \\'as to clear the appellant's container from Mombasa and deliver it to Kampala. The respondent \\'as to notit- the appellant of the date of arrivai of the container upon u'hich the appellant s'ould pa]' to the respondent a sum of US \$4,050 to cover the freight and clearing charges. It u'as part of the same agreement that the appellant u'ould collect the container from the respondent's premises s'ithin four da-vs of receipt of the notice of the container's arrival. In default of such collection on the part of the appeilant, the appellant u'ould pav the sum of US \$ 150 each da,r' that the container remained on the respondent's trailer. According to the orai part of the contract, the respondent rvas obliged to return the container to Mombasa rt'ithin a month of deliven- of the container in Kampaia and in default of that return, the respondent s-ould pa1' the sum of US \$20 per da1' of detention of the trailer.

The contarner \\-as delivered in Kampala on 1 1. 1 1. 1998. The respondent notified the appellant of the delivery on 12.11.1998. The appeliant paid to the respondent the sum of US \$2,767 and promised to pa)' the balance on 10.12.98. The promise \\'as not fulfilled. Hou'ever, the appellant failed to take the container from the respondent's premises. Ultimatel,r , the respondent \\'as forced to drop the container

from the trailer at its premises on 28.5.1999. Thereafter, the respondent filed a suit in the High Court claiming a total balance of US \$35,820 as the cost of the freight charges and accum ulated container cietention charges.

In its t'ritten statement of defence, the appellant admitted the contract but contended that deliven' of the container had not been effected at the agreed destination u'hich it claimed to be Mbarara and not Kampala as aileged b-r. the respondent. When the time for hearing of the suit came, the appellant failed to turn up and u'as not represented. The court heard the case ex parte.

The learned trial judge au,arded freight and clearing charges in the sum of US \$1,883 but rejected the claim in respect of the container and trailer detention. The respondent u.as also au'arded costs and the trial judge allorved interest on the au'arded amount at 4o/o. Dissatisfied u'ith the judgment, the respondent appealed to the Court of Appeal challenging the relusal b1, the learned trial judge to allou' respondent's claim for container and trailer detention and the lo\\' rate of interest as-arded. The Court of Appeal allos'ed the appeal and au'arded an interest on the amount allorved at the rate of 229" from the date of fiiing the suit till pa,\-ment of the judgment debt in full. It is against the judgment and orders of the Court of Appeal that this appeal has been filed.

a

I

There are four grounds of appeal framed as follot's:

- The learned Justices of Appeal erred in fact and in lau.t when they found that the respondent tuas entitled to special damages uhich u)ere not properlg pleaded or proued. 1 - The learned Jusrrces of Appeal ened in lctut and in fact when they found that the respondent utas entitled to darnages uhtch tt could haue mitigated. ) - The learned Jusnces of Appeal erred in laut uhen theg fowtd that an allied request constitttted a cotTtract between the parties. J - 4 The learned Jusfrces of Appeal erred in lanu uthen theg auarded an excessiuely high and unlustified interest rat e

Dr. B\_r'amugisha, counsel for the appellant argued the four grounds together. Counsel's submissions \\.ere of a general nature. He contended that the onll' amount of monersupported b-r' the evidence adduced before the learned trial judge u'as the sum of US \$1.883 u'hich \\'as the balance on the costs of freight from Mombasa to Kampala. He contended that u'hen the learned Justices of Appeal au'arded further sums u'hich thev said u'ere container

storage charges and retention of trailer, the-\' u'ent be,\'ond the evidence adduced before the trial court.

Dr. Bvamugisha submitted that the Court of Appeal ought to have accepted the findings of the trial court that the respondent had failed to mitigate its loss. Counsel contended that for a considerabil' long period of time, the respondent had retained both the container and the trailer \$'ithout an\_\- attempts to mitigate its losses. He further contended that the respondent could easill. have unloaded the container off the trailer and returned the latter to Mombasa u'ithout s'aiting for so long to hear from the appellant.

Dr. B-r'amugisha submitted that the contract betu.een the parties did not impose anv obligation on the respondent to retain both the container and the trailer if the appellant defaulted.

Counsel contended that the Court of Appeal erred in holding that it \\'as an implied term of the contract that the respondent s'as under an obligation to take reasonable care of the goods u'hile thel \\'ere rn its possession. He contended that 's'hereas such an obligation ma,\, arise in the case of an importer, it does not arise in the case of ^a clearing house. He further contended that the accumulation of storage and retention fees for seven months \\'as unreasonable and the learned Justices of Appeal ought

not to have au'arded unreasonable amounts of monev u'hich u'ere contractuall)' illegitimate.

Lastll , Dr. B1'amugisha submitted that b1- raising the interest rate from 47o a\*'arded b1' the learned trial judge to 22"1,, the Court of Appeal not only, erred in interfering u'ith a judge's discretion to au'ard interest but u.ere unreasonable to fr-r it at such a high rate of interest \*'hen the contract \\-as not a commercial one but a clearing and carriage of goocls contract. He argued that no interest rvas proved b-r' e'"'idence. Therefore counsel submitted that the aq'ard of interest at 1o/o b1' the learned trial judge should not have been interfered rvith. Counsel cited the Ruies of this Court and "McGregor on Damages" in support of his submissions and on the basis of those submissions, he praved that the appeal be allot'ed and the judgment of the High Court restored.

Mr. Benson Tusasinr-e, learned counsel for the respondent, opposed the appeal. He contended that Dr. B1'amugisha had not fullv argued ground one since he had not made an\' submissions on the issue of special damages. He confined his submissions to the rest of the grounds of appeal. Counsel contended that Annexture 'A', (exh. P1), constituted a s ntten contract and containecl the essential ingredients of the terms and conditions of the agreement betq'een the appellant and the respondent. He contended that moreover those terms and conditions l\'ere admitted b,r' the appellant

in the various exchanges o{ communication bets'een the parties inciuding attempts b-r' the appellant to pa)' r"'hat it o\*'ed to the respondent. Counsel submitted that the Court of Appeal \$'as correct to hold that the demand of US \$ ¹⁵⁰ per da-r \\'as part of that contract and constituted ^a foreseeable loss for each da-r- that the appellant did not honour its obligations under the contract after four da1's of being notified. The US \$20 per da1' pa-r'able for the trailer detention \\'as covered b1' the oral part of the contract. Counsel submitted that therefore the claims of US \$150 and US \$20 per da1' respectivel]- had been improperll' rejected b1' the learned triai judge and for \\'rong reasons. Counsel finall-r submitted that the respondent had fulfilled its obligations uncier the contract r.l'hile correspondingh' the appellant had failed to perform its orvn part ri'ith consequences that \$'ere clearlv predictable to both parties. Counsel contended that it is not enough for the appellant to state that the respondent ought to have mitigated its losses uithout shos'ing clearl-r' hou' this could have been done.

I s'ill lirst consider grouncls I , 2 and 3 of this appeal. In m1' vieri', ri'ith the pleadings disciosirlg u'ritten and admitted terms and conditions of agreement bets-een the parties, this appeal revolves around the execution of a clear and simple contract. The terms and conditions of the contract are clearl,r' set out in an agreement described as Allied Request No. B dated 15/ 10/ 1998 signed on behatf of both parties and marked as exh. P1 and in the oral agreement admitted

by them. The appellant has not made any attempts to deny the existence and terms of this contract which by nature is a clearing and carriage of goods contract. The only bone of contention between the parties is what meaning should the court give to the contract's terms and conditions.

In her lead judgment, Mpagi-Bahigeine, J. A. said,

"The contract to carry the respondent's goods clearly spelt out the precise terms including the place of delivery, which was Kampala. According to the uncontroverted evidence on record, the goods arrived in Kampala on The respondent was notified of 11.10.98. their arrival the following day within the terms of the contract. The respondent did 21.11.98. $not$ take delivery. $On$ the respondent made a cheque for the sum of Shs.5,000,000/= which was dishonoured. $On$ 30.11.98, the respondent wrote the to appellant acknowledging its indebtedness and promising to pay for the container on On $15.12.98$ , the respondent 10.12.98. tendered another cheque for Shs.3,900,000/= which was also dishonoured. On $6^{th}$ January, 1999, the respondent paid the appellant the equivalent of US \$2,174 for clearing and No evidence was adduced to transport. indicate that the respondent had reminded the appellant that the agreed place $of$ delivery was Mbarara and not Kampala. The respondent still failed to take delivery at Kampala."

It is clear and I agree with the findings of the learned Justice of Appeal on this matter that from 12^th November, 1998 to 6'h Januarl', 1999, the completion of the execution of the contract u'as in the exclusive hands of the appellant u'hich had alread\_r- accepted its terms and conditions as binding. This is evidenced by' the appellant's endeavours to honour it. The respondent having rvaited for some four months for the appeliant to fulfil its part of the bargain u-as eventuallv forced to sue. ln an1- event, it is an implied term of a contract of carriage of goods that the career must take reasonable care to protect the goods in its possession. in m-r' vierr', there never \\'as an)' period of time betu'een notificatron that the container had arrived in Kampala and Ma-r, 1999, rvhen the respondent filed its action in court, for the respondent to mitigate its losses. The admission of the contract bv the appellant and its attempts to make good its part of the bargain prohibited the respondent from contemplating loss, iet alone its mitigation.

I have not found the authorities cited for the proposition that the respondent should have mitigated its losses helpful. For these reasons, grounds l, 2, and 3 of this appeal ought to fail.

I nou. turn to ground 4 of the appeai. The contention in this ground is that the learned Justices of Appeal not onl-\' unreasonablf interfered u'ith the exercise of the learned trial "1udge's discretionary po\\'ers to au'ard interest but also unjustifiablv au'arded excessive interest at 22o/o.

Dr. B1'amugisha contended that the provisions of s'26(2) of the Civil Procedure Act provide that interest on a judgment award is at the discretion of the Court. On this basis, counsel submitted that it \\ as therefore an error for the Court of Appeal to interfere "r'ith the decision of the learned trial judge u'ho fixed the rate al 4o/o. He cited the cases of Ecta(U) Ltd. v. Geraldine S. Namirimu & Josephine Namukasa, Civil Appeal No. 29 of 1994, (S. C.), (unreported), and Sietco v. Noble Builders(U) Ltd. (S. C.), (unreported), rn support of his submissions. He contended that in dollar terms, interest of 22oh is too high.

Mr. Tusasinve, learned counsel for the respondent contended that u'hereas it is true that the au'ard of interest rate is at the discretion of the trial judge, there are occasions u'hen an appellate court ma)' be justified to interfere rvith the exercise of that discretion. In counsel's opinion, the contract \$'as a commercial one u'here the normal rate of interest ma1' be as high as 307o. In this contract, the pavments lvere expressed in US dollars. Hos'ever, it s'as counsel's contention that even then the rate of interest at 1o/o allou'ed b1- the trial judge \$'as too lorr' to be .lustified. Counsel submitted that therefore the rate of interest al 22o/o flxed b1' the learned Justices of Appeal lvas under the circumstances, reasonable and this Court ought not interlere ttith it. Mr. Tusasint'e cited Ecta(U) Ltd' v' Geraldine Narnirimu & Another (supra) in support of his submissions.

In his short judgment, Mr. Okumu Wengi, Ag. J, as he then rlas, flxed the interest on the sum arvarded at 4o/o per annum from the date of filing the suit till settlement u'ithout grving anv reason therefor.

This transaction \\'as a clearing and carriage of goods contract and not an ordinan' commercial transaction in u'hich goods are normall,r' exchanged for mone\- or some other consideration t'ith parties contemplating to make ^a profit or an interest on the business as the expected reu'ard.

The 4'lo interest per annum a\$'arded b,r- the learned trial judge does not seem to have a basis in lau' and the trial ludge did not give reasons for it. Be that as it ma-r', in m1 vrerr', compensaton' sums even though unrelated to commercial transactions should still often carry higher rates of interest than that ordered b-r' the learned trial judge. On the other hand, it is m-r' vie.rv that an interest at 22o/o per annum in a non-commercial transaction of the nature ^I have described is on the high side.

In m-r' opinion, the learned Justices of Appeal u,ere in error to label the contract in this case commercial. S.26(3) of the Civil Procedure Act ma-r' be considered as a guide in this matter. It provides that u'here a decree is silent as to the pa-\'ment of interest, the court shall be deemed to have ordered rnterest at slx per centum per annum. In the

ll

Ecta(U) Ltd. case (supra), this Court altered the order of the trial judge fixing the rate of interest on the decretal amount at 25"/c, per annum to 8ozi, because 2 59'o r"'as considered too high. In Sietco v. Noble Builders(U) Ltd., Civil Appeal No. 31 of 1995 (S. C.), (unreported), Wambuzi, C. J., as he then \\'as, \\'rote the lead judgment in \$'hich he observed that. "The court's discretion is to be exercised iJ sufficient cc:use is shourn to exist," and proceeded to confirm the interest rate of 12oh in that case from the date of filing the sr-rit till pa]'ment in full

Taking the facts and circumstances of this case and the authorities revies'ed above into account, I am satisfied that the rate ol interest al 22o,/o a\$'arded b1' the learned Justices of Appeal is too high. I u'ould therefore allorv ground 4 of this appeal.

I u'ould order that the decretal amount carry interest at the rate of l07o per annum from the date of filing this suit till I.u11 pavment.

In the result, this appeal ought to partially succeed. I would order that the respondent be awarded 3/4 of the costs in this court and in the courts below.

Dated at Mengo this day of October, 2003.

$2\alpha$

G. W. KANYEIHAMBA JUSTICE OF THE SUPREME COURT

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA AT MENGO

(CORAM: ODOKICJ, ODER, TSEKOOKO, MULENGA, KANYEIHAMBA, JJ. SC.)

## CIVIL APPEAL NO.8 OF 2OO2

### BETWEEN

B. M. TECHNICAL SERVICES TD APPELLANT

ANO

CRESCENT TRANSPORTERS CO. LTD RESPONDENT

(Appeal from the Judgment of the Court of Appeal at Kampala (Kato, Okello, and Mpagi-Bahigeine, JJA) dated 7th April 2001, in Civil Appeal No.25 of 2000).

### JUDGMENT OF ODOKI, CJ

I had the benefit of reading in draft the judgment of my learned brother, Kanyeihamba JSC, and I agree rvrth it and the orders he has proposal.

As the other members of the Court also agree, this appeal partially succeeds. The order of the Court of Appeal awarding the appellant interest at the rate of 22o/o on the decretal amount is set aside and substltuted with anr order awarding interest thereof at the rate ot 10o/o. The appellant will have three - quarters of the costs in this Court and Courts below.

..day of ssNihl . . . ..2003. Dated at Menoo .........1 I

B J Odoki CHIEF JUSTICE

## THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA

### AT MENGO

(CORAM: ODOKI, CJ, ODER, TSEKOKO, MULENGA, AND KANYEIHAMBA, JJ. S. C.

### CIVIL APPEAL NO. 8 OF 2002

### **BETWEEN**

# B. M. TECHNICAL SERVICES LTD::::::::::::::::::::::::::::::::::::

#### AND

# CRESCENT TRANSPORTERS CO. LTD::::::::::::::::::::::::::::::::::::

## (Appeal from the judgment of the Court of Appeal in Kampala (Kato, Okello, and Mpagi-Bahigeine, J. J. A) dated 7.4.2001 in Civil Appeal No. 25 of 2000)

### JUDGMENT OF ODER

I have had the benefit of reading in draft the judgment prepared by Kanyeihamba, JSC. I agree with him that the appeal should partially succeed. I also agree with the orders proposed by him.

I have nothing further to add.

$\sim$

Dated at Mengo, this ....................................

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA **AT MENGO**

## (CORAM: ODOKI, CJ, ODER; TSEKOOKO; MULENGA AND **KANYEIHAMBA, JJ. S. C)**

## CIVIL APPEAL No.8 OF 2002

### **BETWEEN**

## B. M. TECHNICAL SERVICES LTD. ..................................

### AND

## CRESCENT TRANSPORTERS LTD....................................

[Appeal from the judgment of the Court of Appeal at Kampala (Kato, Okello and Mpagi - Bahigeine JJ. A.) dated 27^th April, 2001, in Civil Appeal No. 25 of 20007

JUDGMENT OF TSEKOOKO, JSC: I have read, in draft, the judgment prepared by my learned brother, the Hon. Mr. Justice G. W. Kanyeihamba, JSC and I agree with his conclusions that the appeal should succeeds in part. I also agree with the orders he has proposes as to costs and the rate of interest.

Dated at Mengo this....................................

$\mathbf{L}$

$\sim$ $\sim$

J. W. N. TSEKOOKO JUSTICE OF THE SUPREME COURT