[2022] UGCommC 79


### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA

## (COMMERCIAL COURT DIVISION)

### **CIVIL SUIT NO. 951 OF 2018**

ESEZA CATHERINE BYAKIKA..................................

### **VERSUS**

#### 1. AMOTRUST CONSTRUCTION SERVICES LIMITED $10$

2. AMOS MUGISHA

$\mathsf{S}$

- 3. OLANZICON CONSTRUCTION COMPANY LIMITED - 4. OLAM OKECHO NOAH....................................

$15$ BEFORE THE HON. JUSTICE RICHARD WEJULI WABWIRE

### **RULING**

## A. INTRODUCTION

Page 1 of 7

$\Lambda$ Cr

- 1. The $3^rd$ Defendant raised a preliminary objection to the effect that the Plaint does not disclose a Cause of action against it. - 2. The Plaintiff was represented by M/s MMAKS Advocates while the 3^rd Defendant was represented by M/s Kania & Alli Advocates & Solicitors. Counsel addressed Court in written submissions.

### **B. SUBMISSIONS BY COUNSEL**

$20$

3. The 3^rd Defendant's Counsel submitted that the Plaint as filed does not 25 disclose a Cause of action against it because there was no privity of contract between the Plaintiff and the 3^rd Defendant in the Subcontract Agreement between the 3^rd Defendant and the 1^st Defendant dated 28^th September 2018. That the Plaint be rejected under Order 7 rule 11 (a) of the Civil Procedure Rules and Civil Suit No. 951 of 2018 be struck 30 out. That the arrangement between the Plaintiff and the 1^st Defendant was in the nature of a subcontract and not an assignment. That the Plaintiff was only introduced to the 3^rd Defendant as the person who would receive payment from the 3^rd Defendant for and on behalf of the 1^st Defendant for works undertaken under the project, which did not 35 by any means confer any rights upon the Plaintiff. That the proper party whom the Plaintiff should have sued should have been the 1^st Defendant with whom she had a contractual arrangement but not the

Page 2 of 7

$\mathcal{\mathcal{S}}$

3^rd Defendant.

40 4. In reply the Plaintiff's Counsel submitted that the transaction between the Plaintiff and the 1^st Defendant constituted a legal assignment of which the 3^rd Defendant was fully notified and privy to. That Paragraph $7(d)$ and (e) of the Amended Plaint provide that the Plaintiff was appointed by the $1^st$ Defendant to excavate two (2) dams under the subcontract initially for UGX. 180,000,000/ and by a letter dated $5^th$ 45 October 2018 this assignment was communicated by the 1^st Defendant to the 3^rd Defendant. That in a meeting dated 22^nd October 2018, in the presence of all the Defendants a Variation Deed was signed in which the consideration was revised to UGX. 90,000,000/ for excavation of one (1) dam and it was expressly agreed that the Plaintiff should 50 receive the consideration directly from the $3^rd$ Defendant. That according to paragraph 7(i) of the Plaint despite her demand for payment, only UGX. 20, 000,000/ was paid which is a violation of her right for which she brought this suit. Counsel prayed that the 3^rd Defendant's preliminary objection be dismissed with costs. 55

### C. DETERMINATION BY COURT

5. A Cause of action is defined as every fact which is material to be proved to enable the Plaintiff succeed or every fact which if denied, the Plaintiff must prove in order to obtain a judgment. (See; Read vs Brown 22 QBD P.31)

6. As rightly submitted by the 3^rd Defendant's Counsel in the case of **Auto** Garage & Others -Vs- Motokov [1971] EA 514 Court held that for a Plaint to disclose a Cause of action it must show that the Plaintiff enjoyed a right, the right was violated and the Defendant is liable for the violation. Per Justice Yorokamu Bamwine (as he then was) in Professor George William Kakoma v Attorney General, H. C. Civil Suit No. 197 of 2008, Plaint discloses a Cause of action must be determined upon perusal of the Plaint, together with anything attached so as to form part of it, and upon the assumption that any express or implied allegations of fact in it are true.

7. In their submissions, the Plaintiff made reference to Paragraph $7(d) e$ and (i) of the Amended Plaint which provide as follows;

'(d) On October 5^th 2018, with the consent and full knowledge of the $3^{rd}$ Defendant, the $2^{nd}$ Defendant acting on behalf of the $1^{st}$ Defendant appointed the Plaintiff as an independent contractor to perform the sub-contract by carrying out the construction works for the full consideration of UGX. 180,000,000/ stipulated under the sub-contract.

(e) That by a variation deed dated $22^{nd}$ October 2018, the Plaintiff, $1^{st}$ , $2^{nd}$ , $3^{rd}$ and $4^{th}$ Defendants in the presence of Engineer Emmanuel Muko, a director of the $3^rd$ Defendant, Captain Moses Kashaya, security manager on the site and Agaba Peter, the site manager it was unanimously agreed by all the parties that only one dam would be excavated at a cost of Ugx. 90,000,000/ and all payments made to the Plaintiff.'

- 8. The sub-contract from which this suit arises, exhibited as annexure A to the Plaint, was entered into between the 1^st Defendant and the 3rd Defendant. In annexure B to the Plaint, the 1^st Defendant introduced the Plaintiff to the $3^{rd}$ Defendant as the $1^{st}$ Defendant's business associate. In annexure C to the Plaint, an agreement was entered between the Plaintiff, the first Defendant and the 3^rd Defendant to the effect that payments in respect to the project in question were to be made to the Plaintiff and the Plaintiff's account details were accordingly availed. - 9. In the case of Kiga Lane Hotel Limited v Uganda Electricity Distribution Company Limited Civil Suit No. 557/2004 at page 5, it was held that;

"It is trite that the benefit of a contract can be transferred to a

Page 5 of 7

third party by a process known as assignment. This is a transaction between the person entitled to the benefit of the contract (called the creditor or assignor, in our case Rhoda Wanyana) and the third party (called the assignee, in our case Kiga Lane Hotel Ltd) as a result of which the assignee becomes entitled to sue the person liable under the contract (called the debtor, in our case the Defendant). The debtor is not a party to the transaction and his consent is not necessary for its validity...

No particular form is necessary: it need not even be in writing. All that is necessary is that the debtor (in our case the Defendant) should be given to understand that the debt has been made over by the creditor to some third person. If the debtor ignores such a notice he does so at his peril."

$10.$ Annexure C to the Plaint shows that there was an assignment entered between the Plaintiff, the 1^st Defendant and the 3rd Defendant to the effect that payments in respect to the project in question were to be made to the Plaintiff. The above case clearly states that for a subcontract to a third party to bind the principal, the principal must be aware of the sub-contract that exists between the party they dealt with and the third party. Annexure C shows that the $3^rd$ Defendant was

Page 6 of 7

$\sim\,$

made to understand that the debt had been made over by the 1st Defendant to the Plaintiff. This is what entitled the Plaintiff to sue the 3^rd Defendant.

The case of Lunco Constructors Limited V Attorney General 11. & Another, CS No. 318/2004 defines privity of contract as a relationship between the parties to a contract, which makes the contract enforceable between them. The general position is that a stranger to a contract cannot sue upon the contract unless given a statutory right to do so. (See; Kayanja -Vs- New India Assurance Company Ltd (1968) EA 295).

On the basis of the above, the Plaintiff is not a stranger to the $12.$ sub-contract between the 1^st and 3^rd Defendant. As such the Plaint 130 discloses a Cause of action against the 3^rd Defendant.

> The preliminary objection is accordingly overruled. 13.

$14.$ Costs will be in the cause.

I so order.

Delivered at Kampala this 21^st day of June 2022. 135

Richard Weiuli Wabwire JUBGE