[2025] UGCommC 75


# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPAIA (COMMERCIAL DMSION) Civil Suit No. 378 OF 2016

## DUBAI CLICKTRADING CO. LTD..... ...... PLAINTIFF

### YERSTIS

## DAMCO LOGISTICS UGANDA LTD...... DEFENDANTS/COUNTER CLAIMANT

### AND

1. DUBAI CLICKTRADING LTD.........1ST COUNTER DEFENDANTS

2. GULF COMMODITIES (U) LTD......2Nt) COUNTER DEFENDANTS

## BEFORE THE I{ON. MR. JLTSTICE RICHARD WEJI-ILI WABWIRE

## ¹⁵ JTTDGMENT

I

#### **JUDGMENT**

#### **PARTIES**

The Plaintiff, M/S Dubai Click Trading Co. Ltd, is a limited liability company incorporated in Uganda and engaged in commercial trade activities.

The Defendant, DAMCO Logistics Uganda Limited, is a limited liability company incorporated in Uganda, operating as a freight forwarding, inland haulage, warehousing, and logistics service provider.

The Second Counter-Defendant, Gulf Commodities (U) Ltd (GCL), is a limited liability company incorporated in Uganda, involved primarily in importing and 30 trading commodities such as sugar.

#### BACKGROUND AND BRIEF FACTS

This case has had a lengthy and complex procedural history. It was initially filed in 2012 as Civil Suit No. 259 of 2012 before the High Court Circuit at Nakawa, where

an interim order was issued for the release of the sugar. However, by consent of the 35 parties, that order was set aside, and the matter proceeded under the same suit number. Concurrently, the Defendants (DAMCO) filed a counterclaim against the Plaintiffs and Gulf Commodities.

On 18th November 2015, the Plaintiffs filed an Amended Plaint. In May 2016, the suit was transferred to the Commercial Division of the High Court and re-registered 40 as Civil Suit No. 378 of 2016. It was fixed for hearing on 9th November 2016. After a year of largely preliminary proceedings, the matter was last heard on 2nd November 2017, before the trial judge was elevated to the Court of Appeal. The Case file was re-assigned and hearing resumed on 13th November 2018. On 17th

February 2023 hearing closed and the parties were given timelines to file written 45 submissions. The matter was then set down for Judgment to be delivered on notice.

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All the parties were provided with the typed record of proceedings to assist in preparing their respective submissions.

Only the Plaintiffs complied with the Court's directive regarding filing of submissions.

### THE PLAINTIFF'S CASE

The Plaintiff's claim against the Defendants is for recovery of damages for the loss that was allegedly suffered as a result of the Defendants" refusal to release the Plaintiff's sugar.

- The claim arises from a transaction involving sugar initially imported by $M/s$ Gulf 55 Commodities (U) Ltd (GCL) but transported and stored by the Defendant, DAMCO Logistics Uganda Limited, the 2^nd Counter-defendants. The Plaintiff contends that on 27th August 2012, the Plaintiff agreed to purchase this sugar from GCL, after verifying with the Defendant that the sugar belonged to GCL and confirming any outstanding charges owed to the Defendant. 60 - That following notification by GCL of the sale to the Plaintiff and confirmation by the Defendant of outstanding charges (USD 14,084), the Plaintiff promptly settled these charges and obtained clearance from the Uganda Revenue Authority to reexport the sugar to South Sudan. - That, when the Plaintiff requested the Defendant to release the sugar, the Defendant 65 refused, wrongfully asserting a lien. This unlawful withholding, the Plaintiff contends, forced them into litigation to secure release of its goods. That the Defendant's actions led to considerable financial loss, including cancellation of the onward sale contract to M/s LNGNASA Limited in South Sudan, resulting in - the Plaintiff refunding the purchase price with 30% interest (USD 68,904). That 70 additionally, the Plaintiff incurred losses due to a forced sale at reduced prices, totaling USD 55,250.

Consequently, the Plaintiff seeks special damages totaling USD 124,154, declarations, general and exemplary damages, interest, and costs of the suit, arising

from the Defendant's unjustified and negligent conduct. 75

$P(1)$ (1) Page 3 of 24

#### THE DEFENDANT'S CASE

The Defendant denies any wrongdoing, asserting that $M/s$ Dubai Click Trading **Company Limited's** suit is frivolous, vexatious, and discloses no valid cause of action against it. The Defendant denies having any contractual relationship or obligations towards the Plaintiff. That its contractual obligations were strictly with

M/s Gulf Commodities Uganda Limited (GCL), from whom the Plaintiff purportedly bought the sugar.

According to the Defendant, GCL contracted DAMCO to transport, warehouse, and handle imported sugar from Mombasa to Kampala, Uganda. Under their

agreement, GCL was obligated to clear all freight, forwarding, inland haulage, 85 warehousing, and administrative charges before any goods could be released. However, GCL failed to pay the total amount due, leaving a balance of **USD 196,415** outstanding.

The Defendant insists it legitimately exercised its lien over the goods due to unpaid

charges. It further contends the alleged sale of sugar from GCL to Dubai Click was 90 a sham transaction intended to defeat DAMCO's lien. Consequently, DAMCO maintains that it lawfully refused to release the sugar to the Plaintiff until all charges were settled.

#### COUNTER-CLAIM BY THE DEFENDANT

DAMCO raised a Counter-claim jointly and severally against both Dubai Click 95 Trading Company Limited (Plaintiff/1st Counter-Defendant) and Gulf Commodities Uganda Limited (2nd Counter-Defendant) for breach of the logistics contract.

It demands recovery of alleged unpaid charges amounting to **USD 196,415**, interest at commercial rates, general damages, and costs incurred due to the breach.

The Defendant seeks the court to:

- 1. Dismiss the Plaintiff's suit with costs. - 2. Declare the sale transaction between Dubai Click and GCL a sham. - 3. Award USD 196,415 as outstanding logistics charges.

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- 4. Grant interest at commercial rates from the date the sum became due until 105 payment. - 5. Award general damages for breach of contract, and costs of the suit.

#### THE 2^ND COUNTER-DEFENDANT'S (GCL) CASE

Gulf Commodities denies liability for the Counter-Claim raised by the 110 Defendants/Counter-Claimant-DAMCO Logistics Uganda Limited. GCL contends that it fully settled its financial obligations with DAMCO and owes no money, and that DAMCO's demands are unfounded and fraudulent.

GCL disputes DAMCO's claim of outstanding dues amounting to USD 196,415, calling this amount a fabricated figure resulting from incorrect accounting by 115 DAMCO. They contest the authenticity of the impugned agreements relied upon by DAMCO, alleging that none of the agreements were signed by authorized directors of GCL (Isam Yaareb Saeed and Muthana Abdijabbar Kraidi) and that the signatures on the documents cited by DAMCO differ significantly and are

fraudulent. 120

> They deny the authority of Isam Fathelrahman Salim, whom DAMCO claims represented GCL. According to GCL, Salim was only authorized to operate GCL's Stanbic Bank account and had no broader authority to bind the company to contracts or agreements and secondly, GCL had publicly distanced itself from Salim

through notices published in media, explicitly stating he was not a director. GCL 125 alleges that DAMCO relied upon a forged power of attorney purportedly signed by a non-existent or unauthorized signatory.

That before selling sugar to Dubai Click Trading Ltd, GCL maintains DAMCO never raised any claim of unpaid dues. That DAMCO was informed and

acknowledged GCL's sale of sugar to Dubai Click Trading on 27th August 2012, 130 thereby confirming DAMCO's awareness and tacit approval of the transaction at the material time. GCL argues DAMCO is legally estopped from denying knowledge or

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legitimacy of the sale to Dubai Click since DAMCO was timely informed of the transaction and raised no objections at the relevant time.

#### **REPRESENTATION** 135

The Plaintiff was represented by Mr. Isaac Walukaga of M/s MMAKS Advocates while the Defendants was initially represented by Mr Ronald Tusingwire and later by Mr Patrick Turinawe both of M/s ENSafrica Advocates. The 2^nd Counter Defendant was represented by M/s Nyachieo Mary Maganda of Anguria, Aogon &

Co. Advocates. 140

#### **ISSUES**

The following issues were framed for determination:

- 1. Whether the Defendants is liable to the Plaintiff for Withholding the sugar in question until the order to release it was issued - 2. If Issue 1 is answered in the affirmative, whether the Defendants is liable to the 145 Plaintiff in the sums claimed in the plaint - 3. Whether the Counterclaim as presented discloses a cause of action against the $1^st$ **Counter Defendants?** - 4. Whether the $2^{nd}$ Counter -Defendants breached the Agreement/s executed with the Counter-Claimant? - 5. Whether the Counter Defendants are jointly and severally liable to pay the sum claimed by the Counter-Claimant - 6. What remedies are available to the parties

#### COURTS DETERMINATION OF THE ISSUES 155

I have perused the pleadings, the evidence and the Plaintiff's submissions on record and in resolving this matter I have taken the same together with the relevant laws applicable into consideration.

#### Whether the defendants is liable to the plaintiff for withholding Issue 1: the sugar in question until the order to release it was issued. 160

The Plaintiff's Counsel submitted that in their Amended Plaint, the Plaintiff pleaded that on the 27^th August 2012, the 2^nd Counter-Defendants sold sugar to the Plaintiff

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and the Defendants who was storing the sugar was duly notified of this transaction. That the Defendants confirmed its charges to the 2^nd Counter-Defendants and the same were duly settled but the Defendants declined to release the sugar and only released it after the Court order. That there is no evidence to prove that the 2^nd Counter-Defendants was indebted to the Defendants at the time the Plaintiff demanded for the release of the goods. That the 2^nd Counter-Defendants was not liable to the Defendants for transport charges and prayed that this issue be answered in the affirmative.

The Defendants averred under paragraph 6.9 of their Written Statement of Defence that it could not release the sugar on account of unpaid freight charges due from the 2^nd Counter-Defendants.

The testimony of Ayman Awadallah (PW1/CDW) and DW1 Sam Sekasi who has been working with the Defendants for 7 years confirmed that the 2^nd Counter 175 Defendants sold 283.7 metric tons of sugar to the Plaintiff pursuant to PEX1 the Sale Agreement dated 27^th August 2012 at whose signing, PW1 was present. However, DW1 stated that there is no evidence that the agreement was received by the Defendants, which was corroborated by PW1's testimony. PW1 stated that after

- seeing that the documents were correct, URA granted the Plaintiff the transfer of 180 ownership of the sugar as evidenced by DEX20. DW1 testified that he is aware that the 2^nd Counter Defendants engaged the Defendants to transport sugar from Brazil to Uganda whereupon the 2^nd Counter Defendant was supposed to pay the Defendant/Counter-Claimant USD 196,415 - arising from transport ad storage charges. 185

DW1 further testified that the Defendants does not have any idea about how much it was supposed to be paid in total.

In his testimony the Defendant's witness DW1 stated that no invoices were issued to the 2^nd Counter Defendants in respect of the USD 196,415 and that he also had no idea about what the 2^nd Counter Defendants was supposed to pay in total. It is

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incredulous for one not to be certain about what is owed to them and yet still claim that the same amount was not paid fully.

PW1 testified that the Plaintiff fully paid the Defendants through Cairo Bank cheques PEX5 dated 23^rd August 2012 issued by the Plaintiff's Managing director.

PW1's testimony regarding the payment by cheques through Cairo Bank explicitly 195 stated in the cross-examination on 14th April, 2022, is corroborated by the cheques marked Pex5.

During the cross-examination on 14^th April 2022, when asked by Defendants' Counsel, PW1 clearly states that the payments to the Defendant were made by five cheques marked Pex5 issued through Cairo Bank by the Plaintiff's Managing Director, Yusuf Abdul Karim Ali. This specifically confirms that PW1 clearly

identified the cheques used to pay the Defendant as being drawn on Cairo Bank. This was confirmed by DW1 when he stated that the cheques in PEX5 were issued before the court order to release the sugar and that the sugar was ultimately released

to the Plaintiff after that court order. DW1 however testified that the Defendants 205 did not release the sugar because of payment and lack of transfer of ownership. DW1 went ahead to testify that in an email marked PEX3, where the Defendants was writing to the $2^nd$ Counter Defendants, it was confirmed that for specific invoices the outstanding on the shipping costs was USD 14,084 which the Defendants received from the 2^nd Counter Defendants. 210

DW1 testified that as of 11^th September, the outstanding figure of USD 14,084 and Ugx. 23,732,738.16 was paid but also goes on to state that by the end of September 2012, there was an outstanding on shipment charges. That after PEX3 and the invoice thereto, no further payment was made.

- Notably, under cross-examination, DW1 revealed significant inconsistencies 215 regarding the impugned payment: - 1. DW1 initially claimed that Gulf Commodities was obligated to pay USD 196,415 to DAMCO Logistics but admitted under cross-examination that no single invoice was ever issued for this sum.

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Page 8 of 24 - 2. When asked specifically to demonstrate how the USD 196,415 was derived, 220 DW1 failed to produce any invoices or supporting documents. He admitted there were no documents available at the hearing to substantiate this claim, yet, DW1 also stated in cross-examination that there were several invoices adding up to USD 196,415 but conceded that he could not identify or present these invoices during testimony. 225 - 3. The witness acknowledged that DAMCO Logistics had received payments evidenced by cheques (Exhibits PEX5 and PEX6) but was unclear about whether these cheques satisfied the full amount of USD 196,415. - 4. However, under further questioning, he admitted that an email from Carol (Damco's representative) confirmed an outstanding amount of only USD 14,084 as of 11th September 2012, which was duly paid. This admission further contradicted his claim of a larger outstanding amount of USD 196,415.

PW1 testified that the sugar was released on 23^rd November, which was confirmed

by DW1 who stated that it was released after the court order marked PEX14 and by 235 that time, the Defendants was aware of the agreement between the Plaintiff and the 2^nd Counter Defendants.

PW1 testified that much as there is no receipt by the Defendants of the notification from the 2^nd Counter Defendants to the Defendants dated 27^th August 2012 stating

- change of ownership of sugar in DAMCO's bond from the 2^nd Counter Defendants 240 to the Plaintiff, he and Yusuf were present when the same was being delivered. According to the notification of change of ownership dated 27/8/2012 marked PEX2, the 2^nd Counter-Defendants notified the Defendants that they had sold their sugar, in the Defendant's bond, to the Plaintiff. This was corroborated by the - testimony of DW1 who contradicted himself by stating that the Defendants do not 245 have any evidence challenging receipt of PEX2 and later stated that there is no evidence that PEX2 was received by the Defendants, that because if a document is

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$\frac{1}{2}$

delivered at the Defendants, it is received and stamped and an acknowledgement of receipt given back, which was not the case here.

- This makes it clear that indeed the Defendants received the notification of change 250 of ownership dated $27/8/2012$ and were indeed aware that the sugar in question had been sold by the 2^nd Counter Defendants to the Plaintiff. This is corroborated by the fact that the outstanding payments were made to the Defendants by the Plaintiff as confirmed by DW1. - The Plaintiff established, through Pex3, Pex5, Pex6, Pex7, Pex11 and testimony 255 from PW1 that the sugar was duly purchased from Gulf Commodities (U) Ltd, and the necessary transport charges of USD 14,084 were fully settled with the Defendant. DW1's testimony was inconsistent. While he stated that the Defendant was owed USD 196,415 by Gulf Commodities arising from transport and storage charges, - under cross-examination, DW1 revealed significant inconsistencies regarding this 260 payment.

Additionally, DW1's testimony concerning the notification of the sale from Gulf Commodities to the Plaintiff further reveals inconsistencies. DW1 stated there was no evidence of receipt of the notification (Pex2), yet later conceded that there was no evidence to dispute its receipt, indicating grave inconsistency.

His inability to substantiate the claim through clear documentary evidence undermines the Defendant's entire basis for withholding the Plaintiff's sugar yet it is ostensibly the anchor of the defendants' defence.

DW1's allegation that there was still an outstanding on the shipment charges without clarity on how much was owing, characterise a frivolous and vexatious venture.

All the foregoing evidence and inconsistencies render DW1's testimony patently unreliable regarding the alleged USD 196,415 debt. His testimony is resoundingly discredited. $\mathcal{M}^{\mathcal{S}}$

To definitively determine this issue, I must answer an auxiliary question that arose from the submissions, which is whether the Defendant had a valid lien over the 275 sugar in question

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The Defendant, DAMCO Logistics Uganda Ltd, contended that it lawfully withheld the Plaintiff's sugar by exercising a lien over the consignment on account of unpaid charges allegedly owed by the 2nd Counter-Defendant. The Plaintiff challenged this assertion.

The doctrine of lien is a common law remedy that permits a person in lawful possession of goods to retain them until payment is made, of a debt or charge, relating to those goods. The lien is a passive remedy which merely permits retention, not sale, unless specifically agreed upon.

- The common law requirements for the existence of a valid lien are well established. 285 These include: - 1. Lawful possession of the goods; - 2. A debt due and owing at the time the lien is exercised; - 3. The debt must relate to the goods held; - 4. The lien must be asserted in good faith; - 5. For general liens, there must be express contractual agreement or proof of custom or trade usage.

This position was affirmed in Halsbury's Laws of England (4th Edn), Vol. 3(1) which states:

"A lien gives the creditor no right to sell the goods; it is merely a right to retain possession 295 until payment is made."

Additionally, in Kenya Ports Authority v. Afrotex Ltd [2005] 1 EA 289 (CAK), the Court held:

'The right of lien does not extend to property that has been lawfully sold or transferred, particularly where the lienholder has received payment of all relevant dues relating to the property."

In the instant case, it is not in dispute that the Defendant had physical possession of the sugar consignment. However, lawful possession alone is not sufficient to sustain a lien. The Defendant bore the burden to establish that:

1. A debt was owed in respect of that sugar; 305

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- 2. The debt was due and payable; - 3. The amount was certain or ascertainable; - 4. The lien was asserted in good faith.

The Defendant's case rested on the claim that it was owed USD 196,415 by the 2nd Counter-Defendant, Gulf Commodities, arising from freight, warehousing, and

310 administrative charges. However, the Defendant failed to produce any invoices, contracts, or accounting records to support this figure or a breakdown or computation showing how the amount was arrived at.

Instead, the only documented amount acknowledged as due by the Defendant was

- USD 14,084, which was fully paid prior to the Plaintiff's demand for release, as 315 confirmed by PEX3 and corroborated by both PW1 and DW1. DW1 conceded under cross-examination that: - 1. No invoices existed to support the figure of USD 196,415; - 2. He could not explain how the figure was computed;

3. The outstanding amount of USD 14,084 was paid prior to the release of the 320 sugar.

Moreover, evidence shows that on 27th August 2012, Gulf Commodities notified the Defendant of the sale of the sugar to the Plaintiff (PEX2), and the Plaintiff thereafter paid all outstanding charges. The Defendant had knowledge of the ownership change and accepted payment of the outstanding balance, yet still declined to release the sugar.

This conduct is directly inconsistent with the principles of a lawful lien. As was held in Uganda Revenue Authority v. Simba Telecom Ltd, Civil Appeal No. 2 of **2011 (CA)**, per Byamugisha, JA, as she then was, that:

'Where goods are in transit or warehoused and the bailee is aware of a lawful change of 330 ownership, any claim for charges must be confined to what is due prior to the transfer and cannot defeat the transferee's interest if payment is made."

Furthermore, a general lien, as the Defendant seems to have attempted to assert, requires express contractual authority or well-established trade usage. No such

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authority or custom was pleaded or proved by the Defendant. This would render 335 the lien invalid under the rule set out in Kenya Commercial Bank Ltd v. Kenya Planters Co-operative Union Ltd [2005] eKLR, where the Court of Appeal stated that:

> "A general lien does not arise by implication of law. It must either be founded on an express contract or arise from a well-established custom."

No such express clause or custom was shown in this case.

The Defendant's conduct in this case further revealed an intention to leverage possession of the goods to extract payment for a contested and undocumented debt. After acknowledging full payment of the only substantiated charge (USD 14,084),

and with knowledge of the sale to the Plaintiff, the Defendant unjustifiably refused 345 release of the sugar.

In Zimwe Enterprises Ltd v. Uganda Revenue Authority, HCCS No. 508 of **2011** (unreported), the Court emphasized that:

"Retaining property without legal justification amounts to conversion."

The present case is a clear example of such wrongful retention. The Defendant was 350 not a neutral stakeholder asserting a lawful right, but an actor motivated by improper commercial pressure, having no legal or evidentiary basis to assert the lien.

In light of the applicable legal principles, the credible and consistent evidence adduced by the Plaintiff, and the glaring inconsistencies and omissions in the

Defendant's case, I find that the alleged lien was not supported by a lawful or 355 ascertainable debt, the Defendant basis to assert a lien. In fact, the Defendants' conduct amounted to a wrongful assertion of a lien and unlawful interference with the Plaintiff's goods.

Accordingly, I find that no valid lien existed.

Resultantly the Defendant's refusal to release the sugar was unlawful and actionable. 360 Issue 1 is accordingly resolved in the affirmative.

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## If issue 1 is answered in the affirmative, whether the defendants Issue 2: is liable to the plaintiff in the sums claimed in the plaint.

Having answered Issue 1 in the affirmative, I now proceed to determine whether the Defendants is liable to the Plaintiff in the sums claimed in the plaint.

The Plaintiff sought recovery of special damages against the Defendants in the sum of USD 124,154, USD 68,904 being the 30% interest paid to Lngnasa Limited for refund on the purchase price that was paid to the Plaintiff only for the Defendants

370 not to release the sugar and U\$D 55,250 being damages occasioned to it on the basis that the sugar was sold at a forced sale value to beat the expiry date.

It is a settled principle in law that special damages must be specifically pleaded and strictly proved. See **Uganda Telecom Ltd v Tanzanite Corporation Ltd, HCCS**

No. 17 of 2004; Kampala City Council v Nakaye [1972] EA 446; Azk Services 375 Limited v Crane Bank Limited, CS No. 334/2016.

The Plaintiff specifically pleaded and provided detailed particulars in Paragraph 5 of the Amended Plaint, supported by documentary evidence (Pex13) and the testimony from PW1.

- PW1, the Plaintiff's Sales Manager conversant with the transaction, testified that the 380 Defendant's unjustified delay in releasing the sugar led to significant financial losses, including interest payments totaling USD 68,904 to Lngnasa Ltd, following the rescission of the contract. - PW1 further convincingly testified that, due to the Defendant's delay, the Plaintiff was forced to sell 130 tons of sugar at USD 550 and 150 tons at USD 650, resulting 385 in a loss of USD $55,250$ .

While the Plaintiff's Pex13 alone did not explicitly demonstrate the direct nexus between these receipts and the refund to Lngnasa Ltd or the forced sale losses, the direct evidence from PW1, supported by his role in the transaction, sufficiently

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establishes the Plaintiff's claims. See Azk Services Limited Versus Crane Bank 390 Limited, CS No. 334/2016, where Justice Kainamura held that;

> "Special damages must be specifically pleaded and proved, but that strictly proving does not mean that proof must always be documentary evidence. Special damages can also be proved by direct evidence; for example, by evidence of a person who received or paid or testimonies of experts conversant with the matters."

PW1, convincingly testified that the Defendant's unjustified delay in releasing the sugar led to significant financial losses, including interest payments totaling USD 68,904 to Lngnasa Ltd, following the rescission of the contract.

PW1 further convincingly testified that, due to the Defendant's delay, the Plaintiff was forced to sell 130 tons of sugar at USD 550 and 150 tons at USD 650, resulting 400 in a loss of USD $55,250$ .

Accordingly, based on pleading, credible testimony, and documentary support, the Court finds that the Plaintiff has strictly proved the special damages claimed, amounting to USD $124,154$ .

Thus, Issue 2 regarding the quantum of the Defendant's liability is answered 405 affirmatively.

## Issue 3: Whether the counterclaim as presented discloses a cause of action against the $1$ ^st counter defendants.

For a Counterclaim to disclose a cause of action, like any other suit, it must establish three key elements:

- 1. the existence of a right, - 2. violation of that right, and - 3. the Counter-Defendant's liability for that violation (Auto Garage v Motokov (No.3) [1971] EA 514; Tororo Cement Co Ltd v Frokina International Ltd [2015] UGHCCD 51).

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DW1 explicitly confirmed in his testimony that there was no contractual relationship between DAMCO Logistics Uganda Ltd and Dubai Click Trading Co. Ltd. Furthermore, no specific breaches of obligations by Dubai Click Trading Co. Ltd were pleaded or substantiated with credible evidence.

From the pleadings and evidence adduced, it is clear that no contractual relationship 420 or direct obligation existed between the Defendant and the 1st Counter-Defendant /Plaintiff.

The Defendant's claim for USD 196,415 remains vague and unsubstantiated, without any invoices or supporting documentation.

Consequently, the Defendant's Counterclaim fails to establish any legal right violated 425 by the 1st Counter-Defendant.

The Counterclaim as presented does not disclose a valid cause of action against Dubai Click Trading Co. Ltd. Issue 3 is answered in the negative.

## Whether the $2^{nd}$ counter defendants breached the agreement/s Issue 4: 430 executed with the counterclaimant.

No submissions were filed on this issue. Nonetheless, I have carefully considered the pleadings, the evidence on record and witness testimonies.

DAMCO contended that GCL breached their contractual obligations by failing to 435 pay USD 196,415 for freight, forwarding, inland haulage, warehousing, and administrative charges. It relied on agreements allegedly executed by a one Salim, claiming he acted as GCL's agent.

DAMCO further argued that the sale of sugar to Dubai Click was a sham to defeat its lien, and that a notice demanding payment was sent to GCL's Managing Director

on 12th September 2012, which went unanswered.

GCL denied the breach, asserting that it had fully settled its obligations and disputing the validity of the agreements relied upon by DAMCO. It argued that the documents

RUW were not signed by its authorized directors, Isam Yaareb Saeed and Muthana Abdijabbar Kraidi, and that Salim's involvement was unauthorized.

GCL also invoked estoppel, citing DAMCO's knowledge of the sugar sale on 27th August 2012 and its failure to object at the time.

GCL contended that the alleged debt arose from incorrect accounting and a forged Power of Attorney.

Ayman Awadallah (CDW2) confirmed that Dubai Click paid USD 14,084 and that 450 DAMCO was aware of Salim's limited authority. He also identified valid signatures of GCL's directors and confirmed that DAMCO had knowledge of the sale.

Mukasa Paul (CDW3), a former GCL salesman, acknowledged the agreements between DAMCO and GCL but did not support Salim's authority, which strengthens GCL's claim of unauthorized dealings. 455

- Under Section 10(1) of the Contracts Act, 2010, to be legally binding, a valid contract requires consent, lawful consideration, capacity and intention. As explained in Bakibinga, Law of Contract in Uganda, Fountain Publishers, 2001, acts of an agent without authority render contracts voidable. - Salim lacked the requisite authority beyond operating a bank account. GCL also 460 publicly disavowed him, and DAMCO failed to prove otherwise.

Section 73 of the Contracts Act (S.61-Revised Edn.-2023) provides for compensation where a breach of a valid contract occurs. A breach requires nonperformance of a valid agreement. Additionally, in Akkermans Industries

Engineering v Attorney General [2019] UGCA 2019, the Court of Appeal 465 emphasized that a party may be estopped from asserting rights inconsistent with their earlier conduct where the other party relied to their detriment.

GCL maintained it had paid any out standings, with PW1/CDW1-Ayman confirming the USD 14,084 payment by Dubai Click. Mukasa testified that no audit

was ever conducted to substantiate DAMCO's claim, and DAMCO presented no 470 evidence of unpaid dues, in breach of Section 73 of the Contracts Act(S 61- Revised Edn. -2023).

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Furthermore, evidence shows DAMCO was notified of the sale to Dubai Click on 27th August 2012 but only raised objections on 12th September 2012. This delay

constitutes passive encouragement, and by operation of estoppel, DAMCO is barred 475 from asserting breach thereafter. This is supported by CDW2's testimony and Exhibit PEX2.

In light of the above, I find that DAMCO failed to establish that GCL breached any contractual obligations.

Accordingly, I find that the 2nd Counter-Defendant did not breach the agreement. 480

# *Whether the counter defendants are jointly and severally liable* $Issue 5:$ to pay the sum claimed by the counterclaimant.

- In Issues 1, 3, and 4, this Court found that DAMCO wrongfully withheld the 485 Plaintiff/1^st Counter-defendant's sugar, that Gulf Commodities did not breach any agreements, and that there is no valid cause of action against the Plaintiff/1^st Counter-defendants. PW1/CDW1 Ayman Awadallah confirmed payments, and additionally, inconsistencies in DAMCO's claims weakened their case. - Based on the foregoing determinations by Court, there is no basis by which the 490 Counter-Defendants can jointly and severally be held liable to pay the sum claimed by the Counter Claimant/Defendant. Issue 5 is answered in the negative.

#### *Remedies* $Issue 6:$

### $(i)$ Declaration

The Plaintiff prayed for a declaration that the Defendants' refusal to release the sugar was unlawful.

Upon consideration of the pleadings, evidence, and submissions and in view of the 500 findings in all the Issues as determined, Court finds merit in the Plaintiff's prayer. RUW

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It is accordingly declared that the "Defendants' refusal to release the sugar was unlawful."

#### $(ii)$ **GENERAL DAMAGES**

occasioned loss to the Plaintiffs.

The Plaintiff also prayed for general damages in the sum of Ugshs. $200,000,000/=$ 505 and interest at commercial rate from the date of judgement.

The Plaintiffs contended that the Defendant's actions were unjustifiable. That the Defendant greatly inconvenienced the Plaintiff. Having been aware that the sugar in question had been sold by the 2nd Counter-Defendant to the Plaintiffs, the Defendant had no justification to hold on to the sugar till the orders of Court. This

The Plaintiff further prayed that Court be pleased to award interest at commercial rate on the Damages from the date of judgment till payment in full.

General damages are awarded at the discretion of the Court and are intended to compensate for loss, inconvenience, and harm that cannot be precisely quantified.

The fundamental legal principles guiding the assessment of general damages include foreseeability, causation, and the requirement to restore the aggrieved party to the position they would have been in had the wrongful act not occurred.

As established in Stanbic Bank Uganda Limited vs Haji Yahaya Sekalega T/a Sekalega Enterprises (Civil Suit No. 185 of 2009), the quantum of general 520 damages is at the discretion of the Court, exercised judicially with reference to the circumstances of the case. The Court must consider factors such as the nature and gravity of the wrong, the duration of harm suffered, and the broader context of justice and equity.

The Defendant, despite being aware of the sale and after confirming receipt of USD 525 14,084, the only amount indicated as due, proceeded to retain the goods on unjustified grounds, citing a purported lien arising from unsubstantiated claims of a USD 196,415 debt. These claims were neither backed by invoices nor supported by clear, credible, or contemporaneous evidence. DW1's testimony on this issue was

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riddled with inconsistencies and cast significant doubt on the Defendant's good 530 faith.

Having found that the Defendant wrongfully withheld the Plaintiff's sugar despite having been notified of the sale and after the Plaintiff had cleared all the relevant dues, I am satisfied that the Plaintiff suffered not only pecuniary loss but also severe

- inconvenience and disruption to its commercial operations. The Plaintiff was 535 engaged in a legitimate and time-sensitive business transaction involving the reexport of sugar to a third party, LNGNASA Ltd. The unlawful withholding by the Defendant directly led to the collapse of that transaction. - This Court takes the view that the Defendant's actions were not only wrongful but amounted to a deliberate obstruction of the Plaintiff's commercial rights. The effect 540 of such conduct, particularly in international trade and logistics, can be deeply detrimental to commercial reputation, relationships with third parties, and the ability to engage in future transactions. The Plaintiff was exposed to reputational damage, loss of trust with its business partner, and operational instability. - In determining the appropriate quantum of damages, I have guided myself by 545 principles of reasonableness and fairness, and consideration of the gravity of the harm caused, the degree of inconvenience, and the impact of the Defendant's conduct on the Plaintiff's business. - In light of the above, and upon careful consideration of the submissions of the Plaintiffs' Counsel, the conduct of the Defendant, and the extent of inconvenience 550 suffered by the Plaintiff, including possible reputational harm and business disruption, I find that, whereas Ugx 200,000,000/= claimed by the Plaintiffs is excessive, an award of Uganda Shillings Twenty Million (UGX 20,000,000/ $=$ ) is just, fair, and reasonable in the circumstances of this case and I so grant it.

#### *Interest* $(ii)$

Interest shall accrue on the general damages at the rate of 18% per annum from the date of judgment until payment in full.

Ruw

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#### $(iii)$ *Special damages* 560

It is a settled position in law that special damages must not only be specifically pleaded but also strictly proved. See: Kampala City Council v Nakaye [1972] EA 446, Haji Asuman Mutekanga v Equator Growers (U) Ltd, SCCA No. 7 of 1995, and Gapco (U) Ltd v A. S. Transporters (U) Ltd, CACA No. 18 of 2004.

These cases underscore that while documentary evidence is preferred, oral testimony 565 from a competent witness may also suffice in proving special damages, provided it is credible and unchallenged.

In the instant case, the Plaintiff claimed special damages totaling USD 124,154, broken down as follows:

- 570 - 1. USD 68,904 being interest refunded to LNGNASA Ltd after the failure to deliver sugar as contracted. - 2. USD 55,250 being losses incurred from a forced sale of the sugar at reduced prices due to expiry concerns.

These damages were specifically pleaded at paragraph 5 of the Amended Plaint and were supported by both documentary evidence and the oral testimony of PW1, the 575 Plaintiff's Sales Manager who was directly involved in the transaction. PW1 provided a detailed account of the failed onward sale of the sugar to LNGNASA Ltd and the resultant refund, including the agreed interest penalty, as well as the circumstances surrounding the forced resale of the sugar to mitigate further loss.

- Although the Defendant sought to challenge the overall liability by alleging the 580 existence of unpaid charges (USD 196,415), this allegation was not substantiated by any documentary proof, such as invoices or ledgers. On the contrary, the Plaintiff presented cheques and correspondence confirming that all legitimate charges (USD 14,084) had been paid prior to the demand for release of the sugar. - The testimony of DW1, the Defendant's witness, further undermined the 585 Defendant's case, as he admitted under cross-examination that he could not identify or present any documents supporting the alleged outstanding amount. He also RWW

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conceded that DAMCO had acknowledged receipt of the USD 14,084 and had released the sugar only after a court order.

- It is therefore the finding of this court that the losses suffered by the Plaintiff were 590 a direct and foreseeable consequence of the Defendant's wrongful and unlawful refusal to release the sugar despite having received payment of its legitimate charges. The Plaintiff's inability to fulfil its onward contractual obligations and the forced disposal of perishable goods due to delay were a proximate result of the Defendant's - 595 actions.

The Plaintiff, having proved both the existence and quantification of these losses through credible testimony and supporting documentation, is entitled to be restored to the financial position it would have been in had the Defendant not unlawfully withheld the sugar.

Accordingly, Court awards the Plaintiff special damages of USD 124,154. 600 Interest on the said special damages shall accrue at the rate of 8% per annum from the date of release of the sugar (23rd November 2012) until payment in full.

### Exemplary damages $(iv)$

Exemplary damages are awarded in cases where the Defendant's conduct is oppressive, arbitrary, or unconstitutional. The landmark case of **Rookes v. Barnard** (supra) established three key instances where exemplary damages may be granted:

- 1. Where there has been oppressive, arbitrary, or unconstitutional action by the servants of the government. - 2. Where the Defendant's conduct was calculated to generate profit exceeding the compensation payable to the Plaintiff. - 3. Where a law expressly authorizes the award of exemplary damages.

Exemplary damages are appropriate in cases where the Defendant's conduct demonstrates a wanton and willful disregard for the plaintiff's rights or the law. 615

RWW

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In the present case, the Defendant, DAMCO Logistics Uganda Ltd, is a private logistics service provider, and its conduct, though not undertaken by a public official, falls squarely within the second category. The evidence shows that DAMCO knowingly and unjustifiably withheld the Plaintiff's sugar, despite:

- 620 - a) Receiving full payment of the verified outstanding dues (USD 14,084), - b) Being expressly notified of the sale transaction between Gulf Commodities and Dubai Click Trading Ltd, - c) Having no credible or contemporaneous records to support its inflated claim of USD 196,415, - 625

d) Proceeding to assert an unsubstantiated lien over the goods, causing unjustifiable disruption to a lawful commercial transaction.

This conduct was calculated and sustained, despite internal acknowledgments that the Plaintiff had complied with all obligations. The Defendant's actions forced the Plaintiff into prolonged litigation, caused loss of a major business deal, and led to financial loss and reputational damage.

- The Court finds that the Defendant's conduct was willfully indifferent to the rights of the Plaintiff and intended to leverage control of the goods to extract illegitimate financial advantage—thereby falling within the second limb of the Rookes v. Barnard [1964] AC 1129 test. - This wanton disregard for the Plaintiff's rights justifies the award of exemplary 635 damages to: - a) Punish the Defendant for its oppressive and unjustified assertion of a false lien, - b) Send a strong signal to commercial actors, especially in the logistics and warehousing industry, that unethical conduct designed to exploit vulnerable counterparties will not be tolerated, - c) Uphold public confidence in the judicial protection of legitimate commercial transactions.

RWW

However, in exercising its discretion under the principles of fairness and proportionality, the Court is mindful that the Plaintiff has already been awarded Special damages totaling USD 124,154, and General damages of UGX 20,000,000 for loss, inconvenience, and disruption.

These awards substantially compensate the Plaintiff for the tangible and intangible harm suffered. Therefore, to avoid unjust enrichment and to calibrate the punitive element appropriately, the amount of exemplary damages must be moderate and symbolic rather than excessive.

Accordingly, the Court finds that an award of UGX 5,000,000 (Five Million Shillings) as exemplary damages is just, proportionate, and sufficient to reflect the egregious nature of the Defendant's conduct without resulting in duplicative or punitive overcompensation.

# 655

#### $(v)$ **Costs**

Costs follow the event; the plaintiffs are accordingly awarded the costs of the suit.

### 660

# **COUNTER-CLAIM**

The Defendants/Counter-claimant's suit is accordingly dismissed against the 1^st and $2^nd$ Defendants.

I make no order as to the costs of the Counter claim.

Delivered at Kampala this 4^th of April 2025. 665

Richard Wejuli Wabwire **JUDGE**

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