[2004] UGCA 38

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA **AT KAMPALA**

CORAM:

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HON. MR. JUSTICE G. M. OKELLO, JA HON. LADY JUSTICE C. N. B. KITUMBA, JA HON. LADY JUSTICE C. K. BYAMUGISHA, JA

## **CIVIL APPEAL NO.56/02**

#### **BETWEEN**

### INTERNATIONAL LAW INSTITUTE ...................................

#### AND

DOREEN RUGUNDU **RESPONDENT**

An appeal from the judgement and decree of the High Court of Uganda sitting at Kampala (Mwondha J) given on the 31^st December 2001 in HCCS No.310/2001]

## JUDGMENT OF BYAMUGISHA, JA

This is an appeal from the judgement and decree of the High Court wherein the respondent's claim for breach of contract was allowed. The

court awarded her the sum of shs. 10 million as damages for breach of 25 contract with interest of 10% p.a. from the date of judgement till payment in full and costs of the suit.

The facts that led to the institution of the proceedings in the court below are not in dispute. On the 25^th July 2000 the respondent sat for an 30 interview at the appellant's office premises for the post of Special Assistant to the Executive Director/Assistant Marketing Manager. After the said interview, the appellant offered the post to the respondent in a

letter dated 28th July 2000. The commencement date was 3'd January 200|. The respondent accepted the terrns and a contract of employment was executed between the parties. The respondent then spent about four days at the offices of the appellant farniliarising herself with its

- operations. On the 29th August the appellant wrote to the respondent infonning her that her services were no longer required. She tried to seek an explanation for this turn of evetrts and received no response. On the I ltl' January 2001 IWS Kateera & Kagurnire Advocates wrote to the appellant requesting thern to pay darnages and costs to the respondent for - breach of contract. On l 6'h January IWS Byenkya, Kihika &Co Advocates wrote to IWS Kateera &Kagumire on behalf of the appellant re-offering the respondent the job on the tenns that had been stipulated in the contract. The respondent rejected this. She, therefore, instituted a suit in the High Court claiming the following reliefs: IO - (l) salary for the period from January to December 2001; (2) health insurancel performance related bond; t5 - (3) general damages for disappointment, embarrassment and rnc0nvenrence; - (.t) Gencral da mages frrr breach of contract - (5) Interest at the rate of 24"1' p.a. from the date ofjudgement till payment in full. 2o - (6) Costs of the suit.

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O The appellant in rts rvritten statelrent ol'def'ence denied the avenlulents on thc plaint and contended that the respondent did not suffer any loss or darnage.

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At the trial, the following agreed issues were frarned for court's rletclrninatiorr

- L Whether there rvas a valid contract betrveen the plaintiff and the defendant. - t0 2. And if so rvho repudiated and or breached the contract - 3. Whether the defendant mitigated the breach if at all. - {. What remedies or qunntum is the plaintiff entitled to if at all?

The learned trial judge answered the first issue in the affirmative. She

l5 fbLrncl that the appellant breached the contract and gave a decree in favour of the respondent in the terrns already stated

Being dissatisfied with the outcorne, the appellant instituted the instant appeal. The memorandurn of appeal filed on its behalf contains the 20 fbllowing grounds

- l. -tht'tearnetl trial judge erretl in larv and rvhen she found that the appellant had terminated the contract of employment without noticc. - 2. 'l'hc learncd trial judge erretl in lirct rvhen she tbund th:rt the - ⁵ appellant had insisted that the respondent resign herjob as Editor of the Nlarket Place Nervspaper. - J. 'l-hc lt'arncd judge erred in larr' rr'hcn she lbuntl that the appellant had not acted in mitigation. - .1. 'l'he learned judge erred in lau rvhen she arvarded general - IO tlanragcs Ibr bre:rch of contract, rlisallpointnrent antl mental lu nguish. - 5. The learned judge in law when she awarded general damages in the sum of tlg. S/ts 10,000,000/:(ten million) rvhich rvas excessive. It was tlte appellant's prayer that: - ^I.i l. 'l'he respondent's suit be dismissed.

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- 2. In the alternative, the :rrvanl of tlg. S/r.s 10,000,000/: be reduced. - 3 ('osts of thc appeal be arvardetl to the appellant.

At the hearing of the appeal, Mr Oscar Kihika, learned counsel for the appellant, argued grounds I and 3 separately and the rest of the grounds together. I shall handle thern in a similar lnanner. In his submission, he l0 stated that the first ground arises liorn the.judge's finding that a notice to

the respondent should have preceded the letter written by the appellant P.3) was notice to terrninate the contract. He conceded that the contract had no provision for tertnination Hor.vever', he stated that the contract was ) fbr a flxed telrn with a probationary penod of 6 tnonths that was governed by the provisions of section 24(l) of the Etnployrnent Act. It was his contention that the appellant gave lnore than 7 days notice to the respondent since the notice was given 4 rnonths before the conr rnellcernent of the contract O terrniuating the contract. He argued that the letter of29i08l200(exhibit

- It) Ref'erring to the law, learned counsel cited the case of Ridge v Baldwin ll96-tl ,\.(l .10 fbr the legal proposition that tlre right of an ernployer to terrninate tlre contract of ernployment is absolute and can be exercised at anv time without giving any reason at all. - t5 In reply, Mr Adriko, learned counsel for the respondent, submitted that Mr Kihika's submissions were based on a fundamental error in that the farniliarisation period was a probationary period. Counsel contended and I agree with hirn that the period of farniliarisation was not part of the contract. On section 24(l) of the Employment Act, counsel claimed that an ernployer could not tenninate and give notice in the same instrument. He further contended that the letter of 28!'August 2000 was trying to rewrite the terms of the contract. Commenting on the decision of 2o

**Ridge**(supra) counsel stated that it was no longer law. He instead referred us to section 25 of the Employment Act that govern termination notices. He claimed that in a fixed term contract you could not purport to give notice. Therefore, according to counsel, the letter of termination was void.

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It is generally accepted and I agree with Mr Kihika that an employer has a right to terminate the contract of service of his/her/its employee by dismissing her or him without notice if the contract of service provides

so. Apart from this, an employer can dismiss an employee who has been $10$ guilty of a serious breach of duty that amounts in effect to a repudiation of his/her obligation under the contract. In the case of **Ridge** (supra) the court at page 64 said:

"The law regarding master and servant is not in doubt. There cannot be specific performance of a contract of service and the master can $15$ terminate the contract with the servant at any time and for any reason or none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. So the question in a pure case of master and servant does not at all depend on whether the master has heard the servant in his defence, it depends on whether the facts 20 emerging at the trial prove breach of contract".

Using the above as a guide, I shall turn to the facts of this appeal. In order for the respondent to succeed in her claim, she had to show that there was

a breach of contract. The breach was pleaded in paragraph 5 of the 25 amended plaint as follows:

"In breach of the contract by letter dated 29^th August 2000 the defendant unilaterally repudiated the contract resulting in wrongful dismissal of the plaintiff. A copy of the letter is annexed hereto and marked " $E$ ".

The letter in question stated in part as follows:

"I regret to inform you that following further reconsideration of the Institute's needs and a review of your performance during the probationary period for the above post, we will not be extending an offer of employment to you at this time."

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Mr Adriko submitted and quite rightly in my view, that the period of four days that the respondent spent at the office premises of the appellant cannot be termed the probationary period as envisaged under the contract.

- Nonetheless, the contract of employment was for a fixed period of one 15 year with a probationary period of six months. It had no clause for its termination. Under common law, if a contract of employment has no express stipulation or customary arrangement as to notice for its termination, such a contract of employment is terminable by giving a - reasonable notice. The question as to what is reasonable period of notice 20 is a question of fact, depending on all circumstances of the case and the nature of employment.

The contract now under dispute had a probationary period of six months. In the absence of any agreement to the contrary, or customary 25 arrangement giving a reasonable notice to the respondent would have terminated it. The contact was also subject to the provisions of

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theErnployrnent Act. Tlre relevant section is section 24 (l ) that provides as lb llou ^s

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# " ( I ) A conlract for a probalionary period of service may be terninoted by either party givttrg to other porty seven days' rtotice or paytnent of seven days'wages in lieu of lhe nolice."

The appellant as an ernployer had a right under the provisions ofthe above section to terminate it by giving the respondent seven days'notice or pay her seven days'wages in Iieu ofthe notice. The appellant gave the respondent a notice ofover 4 rnonths which is over and above the period stated in the section or the reasonable period under the colnmon law rule. With respect to the learned trial .1udge, I think she was wrong to find and hold that the appellant not only did repudiate the contract but that failed

- to give the requisite notice. It is not clear to me what notice the learned judge expected the appellant to give to the respondent. In rny considered opinion, the letter of 28th August 2000 constituted notice to tenninate the employment contract. t5 - ²⁰ As regards the provisions of section 26 that govern the fornr of noticc to be given, I do not think it applies to the facts ofthis appeal The lespondent had not cornrnertced rvork rvith the appellant and had no accrued riglrts. The respondent testifled that when she received the letter, she started looking for alternative ernployrnent and she got a position of

police constable in January 2001. In those circunrstances it cannot be said O that the appellant was in breach ofcontract. In order to succeed, the respondent had to show that there was sornething or a clause in the contract that her prospective ernployer ignored to entitle her to darnages. I would uphold the first ground ofappeal and find that the appellant gave

the requisite notice

The tlrird ground of appeal concerned the finding by the trial judge to the effect that the appellant failed to rnitigate the breach. In submitting on this intention to sue from the respondent's lawyers, it decided to re-offer the sarne job. This offer was ofcourse relected. He stated that the re-offering of the.job was rnitigation on the parl of the appellant. Learned counsel criticised the learned trial judge for reiecting tlre respondent's gesture of ls re-offering the job to the respondent as not rnitigation He claimed that if the respondent had accepted the re-off'er, slre would not have suffered danrage or tlre damage rvould have been less than tlre l0 million shillings that the court awarded her. It was his contention that the respondent had opporlrrnity to nritigate her darnage by re-accepting the.iob l0 ground, Mr Kihika stated that when the appellant received the notice of

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On his part Mr Adriko subrnitted that the respondent had nothing to nritigate because it suffered nothing. He contended that an ernployee who

is wrongfully dismissed has no duty to retake the job if the dismissal

resulted in personal humiliation. He refereed to the judgement of

Mulenga JSC in the case of **Gulaballi Ushillani v Kampala**

Pharmaceuticals Ltd SCCA No.6/98(unreported) where the learned

judge said: $\mathsf{S}$

> "....the contract of employment is based on confidential relationship between an employer and the employee. Where the personal confidence has ceased, as when one party has repudiated the contract, the court will not enforce the contract. It is only in exceptional cases, where the

- *court is satisfied that despite repudiation the personal confidence* $10$ between the parties remains, that the court may enforce a contract of employment by restraining an employer from wrongfully dismissing an employee: See Hill v C. A Parsons & Co. Ltd [1971] 3ALLER 1345. - In dealing with the question of the re-offer the learned judge had this to $15$ say:

" I had talked about this earlier on in this judgement but I would add that the re-offer was not done in good faith because the defendant failed to give reasons and or explanations as to the repudiation of the same. And even if I wanted to accept that that was mitigation the 20 plaintiff had already said and I accept that the defendant had breached the trust she had in the same".

It is not clear to me why the learned judge thought that the appellant

- failed to mitigate its damages. Mitigation of damages by its nature is on 25 the person who claims that legal rights have been violated. In the case of a person whose contract of employment has been repudiated, such a person cannot sit down and twiddle thumbs and claim damages from the person who has repudiated the contract. The person has to do everything - possible to minimise damages. The issue of whether the respondent failed 30

to get other employment as a result of the repudiation of the contract by the appellant did not arise because the respondent did not complain that she failed to get alternative employment. In such situation, the burden would shift to the appellant to show that other suitable employment was available. In the circumstances of this case, I do not think that the appellant had a duty to mitigate the breach as the learned judge held. Its rights had not been violated and as such it could not mitigate the breach. I would allow this ground of appeal.

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I will now consider the issue of whether the appellant insisted that the 10 respondent should resign her job with Market Place newspaper. This was pleaded in the amended plaint and denied in the written statement of defence. At the trial, the respondent stated in examination in chief that she left for the United Kingdom on 1^st September and the Market Place newspaper paid for her air ticket because she was still employed there. 15 She further stated that she had "just registered the notice" and was still getting information to get it to the Market place, and she received information that the contract had been repudiated. In cross-examination, she stated that she had set aside September for travel. She further said:

"I had to travel earlier than September because my mother was ill. It 20 was during my travel to UK that I received news of termination. I was travelling in September $I^{st}$ and I would be there till Dec. 2000 then I would begin my work in ILI in Jan.".

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It is clear fiorn the extract that the respondent had plans to travel to the a United Kingdom frorn Septernber till Decernber. Slre, therefore, had to put in her notice ofresignation with her ernployer before she left. It does not rnake sense to hold as the learned trial judge did that the appellant : insisted on her resignation wlren her contract was scheduled to begin in .lanuary 200 I . This ground would succeed

> The last ground to deal with concerns darnages that rvere awarded by the trial court. It was subnritted before us by Mr Kihika that darnages were

- l0 awarded for breach ofcontract and yet there was no breach. He claimed that the contract was tenninated within its tenns and the respondent obtained another job in January 2001 and that wlrat slre was earning as ^a subrnitted that the strrn awarded was excessive in the crrcurnstances of police constable ought to have been taken into account. He further - 15 tlr is case

Mr Adriko did not agree. He stated tlrat in awarding the damages the learned trial ludge was alive to the principles that govern the award of general darnages He stated that the exercise is one ofdiscretion and for this court to interfere, it has to be sholvn that the arnount is excessive. It

was his subnrission that the responclent rvas disntissed in hurniliating circurnstances and was ernbarrassed. He cited to us two decisions narnely unreported) 20 Bank of Lleanda v Fred Nlasaba &Others SCCA No.3/9

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and ImDressa Ing Fortunato Federici v Dr Julius Wambete&AnothL'r Oder JSC stated the principle thus O C(ICA No.28/9tl(rrnreporled). Irr the case of Bank of tlganda(supra)

" Fot tktmoges to be rnuarded they nutst hove been reasonably : foreseeable os noturall\_y orisingfrom o breoclt of conlroct."

He went on to state that the agggieved party is only entitled to recover such part ofthe loss actually resulting as was at the tinre ofthe contract reasonably lbreseeable as liable to result frorn the breach. The aggrieved

t0 party is also entitled to recover damages in respect ofpecuniary Ioss which is actually sustained by the plaintiff and which was at the tirne of making the contract reasonably fbreseeable

The Suprerne Coufi in the sarne judgernent quoted witlr approval the case

of Flittt v Loveell (1935) I KB 354 tlrat laid down tlie principle that an

- l5 appellate court would not interfere with the exercise ofdiscretion by ^a trial courl unless it is convinced that either that the judge acted upon some rvrong principle of larv, or the arnount ar.varded r'vas extremely high or so very srnall as to rnake it an erroneous estimate of the darnage to which the plaintiffis entitled. The principle of non-interference by an appellate - 20 couft in the arvard of darnages was restated by this court in the case of I mpressa(supra).

lt is not disputed that the appellant terrninated the contract before it was operationalised. In rny hurnble opinion, no rights had accrued to the

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respondent as an employee of the appellant. She was, therefore, not O disnrissed fiorn ernploy'nrent

In order to get any darnages for breach she had to adduce evidence ofany darnage she suffered as a result ofthe alleged breach. At the trial she gave evidence and stated that what she rvanted fi'orn tlre appellant was the salary she would have earned if she had worked with the appellant; damages she would lrave received under the health insurance; darnages fbr enrbarlassrnent ancl anguish whiclr nrade her return to her rnother's

- l0 horne. These were the heads of damages that she clairned had not commenced her work with the appellant so the principle of restitttio in intergrunt does not apply. Norrnally darnages are intended to put the injured party in the same position she/he would have been in if The respondent was not entitled to rernuneration of salary because she - l5 there lrad been no breach. In arvardrng her l0 rnillion shillings, the learrred.ludge stated that the danrage was foreseeable when the appellant's rvihess (DW l) testified that he had a second thought when he re-offered her the job. With respect, I do not agree that by re-offering her the job, the appellant was accepting that there was a breach or that any darnage - had been occasioned by the ternrination ofthe contract. The notice that was given to the respondent satisfied tlre requirements of the law that I cited and also the comlnon law rule that govern such notices. That rneans l0

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that the termination was made with due notice and therefore not wrongful. In my humble opinion, the respondent suffered no damage that could have attracted any award of damages. At most she could have been awarded nominal damages. This ground was well founded and it would succeed.

In the result, the appeal would be allowed. The orders of the lower court allowing the respondent's claim would be set aside and substituted with orders dismissing the respondent's suit. The appellant will have the costs of the action both here and in the court below.

6. day of 1. C. 2004. Dated at Kampala this.

C. K. Byamugis **Justice of Appeal**

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### THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

# CORAM: HON MR. JUSTICE G. M. OKELLO, JA HON LADY JUSTICE C. N. B KITUMBA, JA HON. LADY JUSTICE C. K. BYAMUGHISHA. JA

#### CIVIL APPEAL NO 56 OF 2OO2

#### BETWEEN

### INTERNATIONAL LAW INSTITUTE: : : : : : : : : : : : : : : : : : : : :APPELLANT AND

DOREEN RUGUNDU: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :: :RESPONDENT

{Appeal from the judgment and orders of the High Court (Mwondha, J) siuing at Kampalq dated 3I/12/2001 in HCCS No 310 of 2001.]

#### JUDGMENT OF G. M. OKELLO. JA

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I have had tl.re chance to read in draft the judgment of Byarnugisha , JA and I entirely agree with her reasoning and conclusion. I have nothing useful to add.

As Kitumba, JA also agrees, the appeal shall stand allowed on the terms proposed by Byamugisha.

Dated at Kampala this Q6tt day of [[v^a L.zooq

. J---^^ OKELLO

JUSTI tr OF APPELA

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G:M

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

### CORAM: HON. MR. JUSTICE G. M. OKELLO, JA. HON. LADY JUSTICE C. N. B. KITUMBA. JA. HON. LADY JUSTICE C. K. BYAMUGISHA, JA.

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#### CIVIL APPEAL NO. 56 OF 2002

#### **BETWEEN**

### INTERNATIONAL LAW INSTITUTE ::::::::::::::: APPELLANT AND

DOREEN RUGUNDU :::::::::::::::::::::::::::::::::::

[Appeal from the judgment and orders of the High Court (Mwondha, J.) sitting at Kampala dated 31/12/2001 in HCCS No. 310 of 2001]

#### JUDGMENT OF C. N. B. KITUMBA, JA.

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I have read in draft the judgement of Byamugisha, JA. in draft. I concur.

Dated at Kampala this and the company of May of May of May 004.

CPES CIE<br>C. N. B. KITUN **JUSTICE OF APPEAL**