[2025] UGCommC 27

### 5 **THE REPUBLIC OF UGANDA**

# **IN THE HIGH COURT OF UGANDA AT KAMPALA**

#### **(COMMERCIAL DIVISION)**

#### **CIVIL SUIT NO. 0415 OF 2021**

#### **M/S FAST FORWARDING & SHIPPING CO. LTD :::::::::::::::::::: PLAINTIFF**

## 10 **VERSUS**

**M/S CHINA WU YI CO. LTD :::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT**

#### **BEFORE HON. LADY JUSTICE HARRIET GRACE MAGALA**

#### **JUDGMENT**

#### **Brief facts**

- 15 The Defendant appointed the Plaintiff as her clearing and forwarding agent to clear two consignments from Mombasa to Uganda. The Plaintiff subcontracted Multiple Solutions Ltd, which transported the consignment to Kakumiro. The Defendant had not paid the Plaintiff for the services rendered between 9th May 2019 and 15th May 2019, amounting to USD \$185,000 (United States 20 Dollars One Hundred Eighty-Five Thousand only). The Plaintiff then sued the - Defendant for breach of contract, special damages, general damages, interest, and costs of this suit.

#### **Representation**

The Plaintiff was represented by Counsel Akineza Augustine of M/s MNA 25 Advocates. Despite being served, the Defendant opted not to file a written statement of defence. The Defendant was not represented.

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# 5 **Hearing**

The Defendant never filed a Written Statement of Defence to this suit. Thus, a default judgment was entered against the Defendant by the learned Deputy Registrar, and the matter was fixed for hearing on damages and costs. However, when the matter came up for formal proof, the Court set

10 aside the default *suo moto*. This is because the default judgment was entered against the Defendant under the wrong law vis-a -vis the Plaintiff's claim against the Defendant. The Plaintiff's claim was for special damages, among others, but the learned deputy registrar entered a default judgment under **Order 9 Rule 5 and 6 of the CPR**, upon application by the Plaintiff's 15 advocates. This Rule deals with liquidated demand, yet the claim is for damages amongst others, thereby making **Order 9 Rule 5 and 6 of the Civil Procedure Rules** inapplicable.

The applicable law is **Order 9 Rule 10 of the Civil Procedure Rules**, which states that failure to file a defence makes the suit proceed as if a defence 20 has been filed, or Order 9 Rule 11(2) of the CPR, which makes the matter proceed *exparte*. In *Dembe Trading Enterprises Ltd Versus Uganda Confidential Ltd and another HCCS No. 612 of 2006***, Hon. Justice Egonda-Ntende** (as then was) observed that:

*"…If a plaintiff desires to proceed with both different categories of* 25 *claims, it would appear, it is to other rules that it must be directed. Probably Order 9 Rule 10, the general rule, may be appropriate…"*

In the circumstances, the default judgment entered by the learned deputy registrar was set aside by this court for the above stipulated reason.

Furthermore, the court was not satisfied with the service of the court papers 30 because it was the Plaintiff's claim that the defendants refused to acknowledge receipt of summons at their office located at Naguru. Therefore, court using its inherent powers under **Section 98 of the Civil Procedure Act** and **Section 37 of the Judicature Act** ordered the Plaintiff to serve the Defendant again, and fresh summons were issued. The Defendant was

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5 served on 7 July 2023 through the Court's process server, Moses Aryonget, whose affidavit of service is on record. Hence, the matter proceeded *ex parte* against the Defendant.

The Plaintiff presented only one witness, Mr. Stephen Kyalo as PW1.

# **Documentary Evidence**

- 10 a) Bills of Lading and Packing lists as marked as PEXH.1 - b) Email correspondences appointing the Plaintiff as a clearing and forwarding agent by the Defendant company marked as PEXH. 2. - c) Delivery notices to the Defendant company marked as PEXH. 3. - d) Commercial invoices to the Plaintiff dated 16/05/2019, 21/05/2019 15 and 4/06/2019 collectively marked as PEXH. 4. - e) Demand notice and invoice dated 16/12/2020 marked as PEXH. 5. - f) Demand notice from the Plaintiff's lawyers to the Defendant company dated 8/02/2021 marked as PEXH. 6.

## **Determination**

### 20 **Burden of proof**

In determining the issues, the court must be aware of the law governing the burden and standard of proof in civil matters. The general principle of law in civil cases is that the burden of proof lies with the party that alleges a fact to prove that fact. In the instant case, the burden lies on the plaintiff to prove its 25 allegations against the defendant. However, regarding the counterclaim, the burden lies on the counterclaimant to prove its allegations against the counter Defendants. I am fortified by the provisions of *sections 101, 102 and 103 of the Evidence Act***.** I equally find the decision of Stephen Mubiru J. in *Premier*

*Commodities (U) Ltd Vs. Kiir Services & Construction Co. Limited HCCS* 30 *No. 0126 of 2019* cited by the Plaintiff's counsel instructive.

The court is cognizant of the fact that the law draws a difference between the legal burden and the evidential burden. Where a Plaintiff adduces evidence sufficient to raise a presumption that what it asserts is true, he/she is said to 35 have executed the legal burden. The evidential burden thus shifts to the

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5 Defendant to adduce evidence to rebut the Plaintiff's claims. The standard of proof is on the balance of probabilities, which means that, in so far as either party would wish the court to believe in the existence of a particular fact, the burden of proof lies on them to prove that fact. That position was re-echoed by the Court of Appeal in *CACA No. 85 of 2011 Takiya Kashwahiri & Anor Vs.*

10 *Kajungu Dennis.*

It would follow, therefore, that for the court to decide in any party's favor, it must be satisfied that the Plaintiff has furnished evidence whose level of probity is such that a reasonable man might hold that the more probable conclusion is

- 15 that for which the Plaintiff contends since the standard of proof is on the balance of probabilities/ preponderance of the evidence. Proof on the balance of probabilities is satisfied if, upon considering the evidence adduced by the Plaintiff, along with all other evidence before it, the court believes that the existence of the facts sought to be proved is so probable that a prudent man - 20 ought, under the circumstances of a particular case, to act upon the supposition that they exist. Where a reasonable man might hold that the more probable conclusion is that for which the Plaintiff contends, then the court is justified in making a finding in the Plaintiff's favour. That is the position reiterated by this court in **HCCS No. 1036/2023 Bank of Africa Limited versus** - 25 **Ssuuna Fred.** The court is, therefore, guided by the foregoing principles in resolving the issues.

# **Issues**

# *Issue 1: Whether there was breach of contract by the Defendant?*

Before the Court can establish whether there was a breach of contract, it 30 must first establish that a contract existed between the Parties. **Section 10 (1) of the Contracts Act cap. 284** defines a contract as an agreement made with the free consent of parties with the capacity to contract for a lawful consideration and with a lawful object, with the intention to be legally bound. **Section 10 (5) of the Contracts Act, cap 284**, specifies that 35 contracts above twenty-five cents must be in writing. The essence of this

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- 5 requirement was observed in *Semakula Kayinda Solomon Versus Auger Revival Ministries Ltd HCCS No. 0880 of 2020* was to avoid fraudulent enforcement of contracts that never took place. It needs to be noted that the 'writing' envisaged under **Section 10(5) of the Act** does not require a formal written contract. This requirement is satisfied by any writing that - 10 reasonably identifies the subject matter of the contract, is sufficient to indicate that a contract exists, and states with reasonable certainty the contract's material terms.

Breach of contract arises from the failure of any of the parties to perform an obligation under a contract which confers a right of action for damages on the 15 injured party.

Therefore, a valid contract between the parties must exist for a breach to occur. The **Contracts Act cap. 284** under **Section 9(1)** defines a contract as an agreement with the free consent of parties with capacity to contract, for lawful consideration and with a lawful object, with intent to be legally bound.

- 20 The Plaintiff avers under Paragraph 4(b) of the Plaint that the Defendant appointed her as her clearing and forwarding agent for the two consignments from Kenya to Kakumiro, Uganda. This is evidenced by PEXH.2, which are the email correspondences between the Plaintiff and the Defendant, where the Defendant appointed the Plaintiff as its clearing and forwarding agent. These - 25 e-mail correspondences, in my opinion, amount to a contract between the parties.

PW1 also testified under paragraphs 5 and 6 of his witness statement that the Plaintiff performed its obligations through Multiple Solutions Ltd, as can be seen from PEXH.3, but the Defendant never paid for the services rendered.

30 The court is satisfied that a contract existed between the Parties and the same was breached by the Defendant.

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# 5 *Issue 2: What remedies are available to the parties?* (a) Unpaid invoices

The Plaintiff adduced evidence of unpaid invoices from the subcontractor as PEXH.4. The testimony of PW1 confirmed these. However, the court notes that under PEXH.4, Invoice No. 189193 of USD 1,850 marked as 'TT1' was

10 removed from the record for being issued to another company, Sunday International Group Ltd. Hence, it is excluded from the amount claimed by the Plaintiff. Thus, this court finds the Defendant liable to pay the Plaintiff USD \$183,150 in unpaid invoices.

# 15 (b) General Damages

The Plaintiff prayed for general damages. According to **Halsbury's Laws of England, 4th Edition reissue Volume 12(1) paragraph 812,** general damages are defined as:

"*…those losses, usually but not exclusively nonpecuniary, which are not* 20 *capable of precise quantification in monetary terms. They are damages which will be presumed to be the natural or probable consequence of the wrong complained of; with the result that the Plaintiff is only required to assert that damage has been suffered".*

General damages are awarded due to the wrongful act complained of and 25 include damages for pain, suffering, inconvenience, and anticipated future loss. In assessing the quantum of damages, courts are mainly guided, *inter alia, by the value of the subject matter, the economic inconvenience that a party may have been put through,* and the nature and extent of the breach (**see Uganda Commercial Bank vs Kigozi [2002] 1 EA 305).**

30 Under **Section 61 of the Contracts Act cap. 284**, where there is a breach of contract, the party who suffers the breach is entitled to receive from the party who breaches the contract, compensation for any loss or damage caused to him or her. According to *Kibimba Rice Ltd Versus Umar Salim, SCCA No.*

5 *17 of 1992*, a claimant who suffers inconvenience out of actions of breach by the defendant, must be put in the position before the suffering of the damage.

PW1 gave evidence that withholding their funds has caused setbacks in their operations since they have been denied use of the funds. The Plaintiff has been denied use of money owed to it by the Defendant since 2019 to

10 date. The unpaid invoices amount as of today amount to about Ugx. 672,063,796/=. An award of damages to the tune of Ugx. 50,000,000/= is adequate compensation for the Plaintiff for the inconvenience, suffering, and pain caused by the Defendant.

## 15 (c) Interest on the unpaid invoices and general damages.

The principles applied by this court in the award of interest are clear and set out in **Section 26 (2) of the Civil Procedure Act,** which states that:

*"Where in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be* 20 *paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the* 25 *court thinks fit".*

The above position of the law was reaffirmed in *Lwanga vs. Centenary Bank [1999] EA 175* wherein the Court of Appeal held that:

*"Section 26(2) of the Civil Procedure Act empowers the court to award three types of interest; interest adjudged on the principal sum from any period*

30 *prior to the institution of the suit, interest on the principal sum adjudged from the date of filing the suit to date of the decree, and interest on aggregate sum from the date of the decree to the date of payment in full."*

The purpose for an award of interest is *restitutio in integrum* which means 35 that the plaintiff may be restored as nearly as possible to a position he

5 would have been in had the injury not occurred. In *Riches v Westminster Bank Ltd [1947] 1 All ER 469 HL at page 472* Lord Wright explained the essence of an interest award as:

*"... payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit* 10 *he might have made if he had the use of the money, or, conversely, the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation...."*

This principle is also set out in **Tate & Lyle Food and Distribution Ltd v**

15 **Greater London Council and another [1981] 3 All ER 716** where Forbes J he held at page 722 that:

*"I do not think the modern law is that interest is awarded against the Defendant as a punitive measure for having kept the Plaintiff out of his money. I think the principle now recognized is that it is all part of the* 20 *attempt to achieve restitutio in integrum... I feel satisfied that in commercial cases the interest is intended to reflect the rate at which the Plaintiff would have had to borrow money to supply the place of that which was withheld."*

# 25 In *Mohanlal Kakubhai Radia vs Warid Telecom Ltd HCCS No. 234 of 2011* the court stated that:

*"Court should take into account the ever-rising inflation and drastic depreciation of the currency. A plaintiff is entitled to such rate of interest as would not neglect the prevailing economic value of money,* 30 *but at the same time one which would insulate him or her against any further economic vagaries and the inflation and depreciation of the currency in the event that the money awarded is not promptly paid when it falls due."*

In the instant case, the Defendants have held onto the Plaintiff's money since 35 May 2019. I find an interest rate of 9% per annum on the unpaid invoices from the date of filing the suit until payment in full appropriate. I also award

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5 interest at a rate of 18% p.a on all the damages from the date of judgment until payment in full.

(d) Costs

The generally established rule is that costs follow the suit unless the court 10 finds otherwise. In the case of **Uganda Development versus Muganga**

**Constructions [1981] HCB 35** where it was held that a successful party can only be denied costs if it is proved that, but for his or her conduct, the litigation could have been avoided and that costs follow the event only where the party succeeds in the main suit.

# 15 **Section 27(1) of the Civil Procedure Act** provides that:

*"Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of* 20 *what property and to what extent those costs are to be paid, and to give all necessary directions for the purposes aforesaid."*

There exists no reason to deny the Plaintiffs' costs of this suit. Having found in favour of the Plaintiffs, I hereby award the Plaintiffs the costs of the suit.

# 25 **Final Orders**

The Plaintiff's claim succeeds, and Judgement is hereby entered in favor of the Plaintiff in the following terms:

- (a) The Defendant pays the Plaintiff's unpaid invoices amounting to USD \$ 183,150; - 30 (b) The Plaintiff is awarded general damages to the tune of Ugx. 50,000,000/=; - (c) The Plaintiff is awarded interest at a rate of 9% per annum on the USD \$ 183,150 from the date of filing the suit until payment in full;

- 5 (d) The Plaintiff is awarded interest on the general damages at a rate of 18% p.a from the date of judgment until payment in full; and - (e) The Plaintiff is awarded the costs of the suit.

# **Dated at Arua this 12th day of March 2025.**

**Harriet Grace MAGALA Judge**

**Delivered online via ECCMIS this 12th day of March 2025.**