[2004] UGCA 48

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA

## **AT KAMPALA**

## CORAM:

$\mathsf{S}$

$15$

HON. LADY JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ HON. LADY JUSTICE C. N. B. KITUMBA, JA HON. LADY JUSTICE C. K. BYAMUGISHA, JA

#### CIVIL APPEAL NO.19 OF 2002

#### **BETWEEN**

EDWARD KIBALAMA:::::::::::::::::::::::::::::::: **APPELLANT**

#### **AND**

ALFASAN BELGIE CVBA::::::::::::::::::::::::::::::::::::

(An appeal from the Judgment and decree of the High Court of Uganda Sitting at Kampala (Okello J) dated the 2^nd October 2000 20 in HCCS NO.92 of 1998)

## **JUDGMENT OF BYAMUGISHA, JA**

On the 28^th January 1998, the appellant filed a suit in the High Court of Uganda against the respondent claiming a sum of US. $$15,000=$ or its equivalent in Uganda shillings; general damages for breach of contract; interest on the sums at bank rate from the date of transfer till payment in

30 full and costs of the suit.

> The facts that led to the institution of the proceedings as they can be gathered from the pleadings filed by the parties appear to be the following. In or around 1994 the appellant was introduced to the export

manager ofthe defendant, one Eddy Van Qudendijck for purposes of carrying on the business of importing drugs into Uganda. It was alleged that the agreement between them was verbal in that the plaintiff would verbally place orders with cash, which would be transferred, to the respondent's bank account in Europe. On receipt of the money, the respondent would in turn dispatch the drugs to Uganda. On l2s January 1996 the appellant claimed that after a telephone discussion with the respondent through Eddy Van Audendijck he placed an order for drugs worth US \$ 15,000: for the benefit of Cox Research Laboratories He dispatched the stated amount to the respondent's bank account and the sarne was received. The respondent failed or refused to send the drugs

hence the suit.

o

l0

In its written statement of defence and counter-claim, the respondent denied the appellant's claim. It avened that the appellant never placed any l5 appellant owed the respondent the sum ofUS \$ 34,590.90 and that the 15,000 US dollars paid by the appellant to the respondent was in order for drugs as it was claimed. Instead it was stated that at one time the settlernent of that debt. This left an outstanding balance of US \$

20 19,590.90, which the respondent counter-claimed against the appellant. ln reply to the written statement of defence and counter-claim, the appellant

because of the suit. denied the indebtedness. He contended that the counter-claim was raised

At the trial the following agreed issues were framed for court's

5 determinationnamely:

o

l. Whether there was a contract between the plaintiff and the defendant for the sale of drugs worth US \$15,000.00.

2. If there was a contract, whether it was breached.

3. The remedies to which the plaintiff is entitled.

t0 On the respondent's counter-claim two issues were framed, namely

- L Whether there was any debt owed to the defendant/counterclaimant by the plaintiff. - 2. If so, whether the payment of US \$ 15,000.00 was meant to liquidate that debt. - l5 The learned trial Judge answered the first issue in the negative. She did not find it necessary to determine the rest ofthe issues. The respondent did not adduce any evidence and the counter-claim was dismissed with costs to the appellant. Being dissatisfied with the decision, the appellant filed the instant appeal on the following grounds: - erroneous conclusion that because there was no written document,, 20 l. The learned trial Judge erred in law when she reached an

there was no legally binding contractual relationship between the pa rties.

9 2. The learned trial Judge erred in law and fact when he failed to agrpreciate the custom of tr:rde betrveen the plaintiff and the appellant and or conduct of the parties.

o

- 3 The learned trial Judge ought to have entered judgment, in favour of the appellant upon the respondent admitting receipt of US \$15,000.00 from the appellant in its rvritten st:rtement of defence ^and counter-claim. - ^I0 ,1 'Ihe learned trial Judge erred in law and fact rvhen she failed to arvard damages and interest to the appellant upon the conclusion of the appellantrs case and submission thereof. - enter judgment in favour of the appellant after he had proved his l5 case and the defendant faile'd to rebut it. 5 The learned trial Judge erred in larv and fact when she failed to - 6. The learned trial Judge failed in her discretion to direct the case to a fair conclusion thereby causing:r serious miscarriage of .iustice.

Tlre appellant's prayer was that the appeal should be allowed and the appellant be awarded the reliefs prayed for in the plaint and the lower court's decision be set aside

When the appeal carne before us, Mr Ndyomugabe, learned counsel for a the appellant, argued grounds 3 and 5 ofthe appeal together and the rest of the grounds separately.

- In his subrnission, counsel stated that not every agreement or contract should be written. He stated that conffacts are either oral, written or partly oral or partly written. He relied on the provisions of q!!q!(!)of the Contract Act (Cap73 Laws of Uganda) which enjoins courts in Uganda to apply the Common Law of England when interpreting contracts. He - l0 ref'erred to tl.re elements that constitute a valid contract as contained in Halsbury's Laws of Englantl 4'h Edition para 203. These elements are - l there must be two or more separate and definite parties to the contract; - idem, 2. those parties must be in agreement i.e. there must be a consensus arl - ¹5 3. those parlies must intend to create legal relationship in the sense that the promises of each side are enforceable simply because they are contractual promise - 4 Consideration, or some other factor which the law considers sufficient rnust support the prornise by each party - l0 Learned counsel submitted that all the four essential elements of ^a the Sale of Goods Act that provide as follows contract existed in the instant case. He also referred us to section 4(l ) of

" Subject to the provisiotts of this Act and of any Act in thst beholf, a contract of sale may be made in writing (either with or without seal or by word of mouth or pafily in writirtg and partly by word of mouth, or nmy be impliedfrom the conduct of lhe parties".

He pointed out that the learned trial Judge erred in law to hold that since the contract was not in writing, there was no binding legal relationship. It was his contention that the learned Judge made a correct observation when he she stated that the appellant and the respondent had some t0 dealings with each other. But he criticised her for contradicting herselfby stating that it was not clear whether such dealings were meant to create a with each other in that manner. He cited the case of legal relationship binding at all. He contended that parties chose to deal

# Bhosal v International Conl t) tl tcrs (E. A)Ltd ll972l EA 55 where the

- t5 requirernents ofa trade usage or custom were judicially explained Learned counsel further contended that the appellant gave a detailed account of how he irnported drugs. He invited us to apply the provisions ofsection 4(l) (supra) and Bhogal's case to the facts of this appeal - l0 In his response to the above submissions, Mr Muganwa, learned counsel for the respondent, stated that a contract has four basic elements namely 'L of'fer and acceptance - 2 Consideration.

o

i

3. intention to create a legal relationship

4. parties. $\frac{1}{2}$

He claimed that counsel for the appellant in his submissions did not bring out the four elements. He stated that the submissions stated the nature of a contract i.e partly oral or partly in writing. But there was no evidence to

prove a binding contract. It was his contention that the conduct of the $\mathsf{S}$ parties can be used to determine the nature of the contract. He supported the finding of the trial Judge in that there was no evidence on which an inference could be made that there was a valid contract between the parties.

$10$

$15$

Generally in suits based on contract, the plaint must allege the contract and then its breach. The plaint must also state the terms of the contract as it was when the plaintiff's cause of action arose; whether the contract was express or implied; whether it was oral or written and if written the dates and the names of the parties must be stated. The appellant in pleading the contract now under dispute stated in paragraph 4 of the plaint as follows:

"The plaintiff's claim arise under and upon the following facts:-

a) In or around 1994 the plaintiff was introduced to the export manager of the defendant one Eddy Van Oudendijck for purposes of carrying on business with the defendant whereby the plaintiff would import drugs from the defendant into Uganda.

b) The plaintiff and the defendant verbally agreed that the plaintiff would always place an order with cash which would be transferred to the defendant's bank account in Europe and by telegraphic transfer before the defendant dispatched the goods to the plaintiff in

Uganda as evidenced by tronsaction vouchers hereto attached in one bundle and marked"A".

- c) In the san e yeor (1994) the plaintiffwos verily recognised and oppointed distribution agent ofthe defendont's products in Ugonda Monu"frtcturers Association Trade show at Lugogo in Uganda as evidenced by annexture"B" herewith o,tnexed i,t one bundle. - d) On I 2.0 I . 1996 t{ter a telephone discussion with the defendant through the stid Etldy Van Audendijck, the plaintiff placed an order for gootls worth 15,000/-(Fifteen tlrousand United Stutes Dolhrs) for the beneJit ofCox Research Laboratories ond os pu the terms ofthe ogreen ent the plaintiffdispatched the said money by telegraphic transfer to the defendant's bank account and the defendant acknowledged receipt thereof. The transaction voucher is hereto attoched and marked "E".

In pleading the breach, the appellant stated in paragraph six thereofas

follows: -

a

l0

l5

- 2o " Despite several demsnds and reminders and in breach of conlract the defenclant hos refused antVor neglected to send the gootls worth the sloted su,r, or any port therefore refund the soid sum US. D.15, 000 thereby uecessitating this court oction". - 1i The terms of the alleged contract as pleaded state the parties and the consideration. The terrns neither stated the type ofdrugs that were supposed to be delivered and the quantities nor when the breach or breaches occured. The provisions of Order 7 rule l(e) require a plaint to state the particulars constituting a cause ofaction and when it arose. It - was however submitted that there was a custoln or trade usage between the parties and the appellant relied on Bhogal's case for that assertion l0 The facts of that case were that the plaintiff was employed by the

defendant on a work permit, and towards the end of his contract the defendant asked the plaintiff to leave on its expiry. The plaintiff claimed to be entitiled to be paid compensation at the rate of one month's salary for every year of service with the plaintiff, firstly on the basis of an award

- $\mathsf{S}$ of the Industrial Court made between the employers and employees in the motor trade, and alternatively on the basis that there was a custom to pay such benefits. In dismissing the claim of a custom the High Court of Kenya relied on the case of Harilal v Standard Bank [1967]EA 512 where at page 516 Sir Charles Newbold, P. said: - "As a trade usage may be described as a particular course of dealing 10 between parties who are in a business relationship, which of course of dealing is generally known to all persons who normally enter into that relationship that they must be presumed to have intended to adopt that course of dealing and to have incoporated it into their contractual $15$ relationship unless by agreement it is expressly or impliedly excluded. Before a course of dealing can acquire the character of a trade usage it must, first, be so well known to the persons who would be affected by it that any such person when entering into a contract of a nature affected by the usage must be taken to have intended to be bound by it; secondly, be certain in the sense that the position of each of the parties affected 20 by it is capable of ascertainment and does not depend on the whim of the other party; thirdly, be reasonable, that is, that the course of dealing is such that reasonable men would adopt it in circumstances of the case; and finally, be such as is not contrary to legislation or to some fundamental principle of law".

$\cdot\quad\quad\cdot\quad$

In this same case Sir Newbold stated the standard of proof when he said:

$\mathbf{A}$ A trade usage may be proved by calling witnesses, whose evidence must be clear, convincing and consistent, that the usage exists as a fact and is well known and has been acted on generally by persons affected $bv$ it".

a Higlr Court of Kenya. However, the principles relied upon were set out in principles can be relied upon by this Court to determine the facts of this The Bhogal case is not binding on this court having been decided by the the decision of the East Africa Court of Appeal and therefore the said

5 case

ln re.jecting the appellant's clairn of a verbal contract together with the record said alleged trade usage or custom the learned trial Judge atpage 99 ofthe

l0 l5 " Even if it is grtnted that the parties elid agree thot the terms governing their relotiottship was lo renmin verbal, one would nevertheless, expect that there would be some documents or record of the transsction cottsidering thot they are supposed to have tronsacting with esch otlter for at least a year. One woukl hetve expected some proforma invoices of the drugs irtvolved in each transaction. One woukl have expected some record ofthe type ofdrug, the quantity and the cost per unit ond total cosl ofdrugs involved in each of llrc transactiorts itlolved in 1995. One woukl have expected sltipping documenls as well as clearing elocuments to be ovailoble".

2o

I entirely agree with the conclusions reached by the learned trial ludge

Mrereas it is quite acceptable for parties to enter into a verbal contract

and perforrn their obligations arising out ofthat contract in a manner they

deern fit, I do not think that when it comes to the contract now under

consideration, the courl should accept wholesale the evrd I ence as presented. The contract was allegedly entered into verbally and it was l5 conducted on telephone. There was no ltann in that. The advances that have been made in information technology has rnade it possible for many a people across the globe to conduct business with each other in the manner described by the appellant. It is, however, inconceivable that the appellant 5 prove the dealings. He attached bundles of some documents involving drugs that was sent to hirn by the respondent. Those drugs were used in the trade fair of Uganda Manufacturers Association at Lugogo. He had no docurnents to show that the respondent sent him any drugs for the money he transferred to it in 1994195. The alleged drugs could not have been t0 sent to him by telephone. He adduced documentary evidence from Uganda Cornmercial Bank to prove the transfer of rnoney to the respondent's bank account. He shoLrld have gone further to prove that when he sent the money in previous dealings the goods were also sent using the means verbally agreed upon had no docurnentary evidence of his transactions with the respondent to

t5

It probably explains why the appellant did not plead the means by which the respondent was supposed to send the goods because no drugs were supposed to be sent. To be a good contract, there rnust be a concluded bargain, and a concluded contract settles every.thing that is necessary to be settled and leaves nothing to be settled by agreernent between the parties. The contract pleaded by the appellant with respect, did not settle everything to create a binding relatronship

ll

consistent course of dealing in which the same tenns have been regularly if not invariably incorporated in the past. He had also to show that he and the respondent knew ofthose tenns in question. In rny view, previous dealings as is being claimed in this appeal were relevant in order to prove actual knowledge and consent to those terms by both parties. If previous In order to rely on trade usage or custom, the appellant had to show a

o

l5

dealings show that a man or woman knew of and ageed to a term on say ninety- nine occasions, there would be a basis for saying that the term l0 rvas incorporated in the contract

In the rnatter now before us, although the respondent did not testify at the trial, in its written statement of defence, it acknowledged receipt of the rnoney. It was averred that the money was meant to repay a debt owed by owed the respondent some r.noney but he had repaid it. He did not adduce evidence ofthat payrnent. There was also evidence that the appellant had sent bank drafts to the respondent on behalfofsome people and that those the appellant. In his testimony, the appellant acknowledged that he had drafts were dishonoured. As the learned trial Judge rightly observed in

t0 rny view, the possibility that the appellant sent the rnoney in quesrion on behalfofother people could not be ruled out. The appellant did not prove

t2

on a balance of probability the purpose for which he sent the money in question.

In any case, the provisions of <u>section47</u> of the Evidence Act(Cap 6 Laws

of Uganda) requires that before a court forms an opinion as to usages, $\mathsf{S}$ tenets, etc, the opinion of persons having special means of knowledge is relevant. The section states as follows:

$"$ *When the court has to form an opinion as to-*

$\sigma_{\mu} = -\frac{1}{2} \Lambda$

- $10$ (a) the usage and tenets of anybody of men or family: - (b) the constitution and government of any religious or charitable foundation; or - (c) the meaning of words or terms used in particular districts or *particular classes of people,* - the opinion of persons having the means of knowledge thereon are $15$ relevant facts".

The appellant did not adduce evidence from any other source on which

the court could have made an inference of trade usage or custom that he

- was claiming. Such evidence would have come from people with 20 knowledge of trade in drugs that the appellant was supposed to import from the respondent. In my humble opinion, the judge was right to reject his evidence. - 25 The above discussion disposes of the first and second grounds of appeal, which ought to fail.

O The third ground ofappeal cornplained that the trial judge erred not have entered judgement in favour of the appellant upon admission that it received US \$ 15,000.00 It is correct, the respondent admitted receiving

the stated arnount in paragraph 5(iv) of its written staternent ofdefence and counter-clairn

Under Order ll rule 6 of the Civil Procedure Rules, judgment can be entered at any stage ofthe suit where an adrnission of facts has been rnade. Normally admissions are admissible against the maker. Such an l0 admission rnust be unequivocal in order to entitle the party to judgment without waiting for the deterrnination of any other question between the parties. In this case the respondent did not unequivocally admit receiving that the appellant sent the money because he owed it the sum of US \$ the said money and the purpose for which it was sent. Instead it avened

l5 34,590.90 and in an attempt to settle the debt, he sent the stated amount, leaving a balance of US.\$ 19,590 90. This amount was claimed in the counter-clairn that was disrnissed for want of prosecution. The trial judge cannot be faulted for not entering.ludgrnent on adnrission. This ground was not well founded and it ought to fail

l0

The rest of the grounds can be dealt with summarily. The fourth ground cornplained that the learned trial Judge erred in law when she failed to

1l

award damages and interest. Damages are normally awarded for breach of contract after proof that the terrns of the contract were breached. In view of my own findings that the appellant failed to prove his case, he was not entitled to any damages

)

IO

o

However, I would like to observe that there is a growing tendency among members of the High Court bench who fail or omit to assess damages they would have awarded the plaintiff, had the action succeeded. I shall refer to some authorities to illustrate why there is need for this practice to

be observed. The flrst case is Selle v Associated Motor Boat Co. [9681 EA 123. The courl counselled tlrat it rs desirable and advisable for a .judge offirst instance to decide all issues raised in the case so that further expenses and delay rnay be avoided in the event of the appellate court having to adopt a course of remitting the file to the High Court for l5 assessment of damages. The file was remitted to the High Court to do the needful. The second case is Mute v Elikana ll975lEA 20I where the Cou( of Appeal for East Africa(as it then was) had occasion to comment on the need to assess damages even thoughjudgment is given in favour of the defendant. At page 202 Lavt Ag. P said

" where the judgment is, witlt respect less satisfactory, is itt the almost complete ktck of speciJicJittdittgs ort the allegations of negligertce pleorletl on both sieles, and the judge's failure to ntoke Jindings os to lamages to which the appellant woultl have been entitled had he been 20

t5

# s ccessfit l. This shoultl always be done in a suit for damages, even thoush iudsment is siven for the defendant....."(ernphasis added)

The file was rernitted to the High Court to assess darnages due to the

plaintiff

ln

o

In a recent decision of the Suprerne Court in the case of A. K. P. M.

Lutaya v Attorney General Civil Appeal No.l0/02(unreported) Tsekooko JSC who wrote the lead judgernent with which other members of the court agreed, had occasion to comment on failure by the trial court to assess darrages. At page l9 ofthejudgment he said:

" It is o well esloblished judiciol proctice that in this type of cases, a trial court should ittdicote what it would have awarded as damages if the plaintiff had estoblished his ckim: See National Enterprises Corporation&2 others Vs Nile Bank Ltd, Civil Appeol No.17 of

ts 1994(unreported). The Supreme Court remitted the record to the trial judge to assess damages. The observations made in those cases were of course orbiter. But the practice rnust be observed by the lower courts

In the instant appeal, the appellant failed to prove his claim and therefore ²⁰ the trial Judge did not err in not awarding hirn any darnages although she should have assessed them. Failure by the trialjudge to enterjudgment in favour of the appellant in my view did not occasion any miscarriage of justice notwithstanding failure by the respondent to adduce any evidence

)

All in all, the appellant failed to prove his case and his appeal to this court ought to fail. I would uphold the judgement and orders of the High Court. The appeal would accordingly, be dismissed with costs to the respondent.

Dated at Kampala this.....day of.................................... $\mathsf{S}$

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

#### THE REPUBLIC OF UGANDA

#### IN THE COURT OF APPEAL AT KAMPALA

## CORAM: HON. JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ HON. JUSTICE C. N. B. KITUMBA, JA HON. JUSTICE C. K. BYAMUGISHA, JA

### CIVIL APPEAL NO.19 OF 2002

## EDWARD KIBALAMA ::::::::::::::::::::::::::::::::::

### VERSUS

### ALFASAN BELGIE CVBA::::::::::::::::::::::::::::::::::::

(Appeal from a decision/Judgement/Degree/Order of the High Court of Uganda at Kampala (Lady Justice C. A. Okello) Dated the 2^nd day of October, 2000 in Civil suit No.92 of 1998)

#### JUDGEMENT OF L. E. M. MUKASA-KIKONYOGO, DCJ

I had the benefit of reading the judgement in draft prepared by Hon. Justice Byamugisha, J. A and I agree that the appeal must fail. I have nothing useful to add. Since Hon. Justice Kitumba, JA holds a similar view this appeal is dismissed with costs to the respondent.<br>Dated at Kampala..................................

L. E. M. Mukasa-Kikonyogo Hon. Deputy Chief Justice

### THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

#### HON. LADY JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ. CORAM: HON, LADY JUSTICE C. N. B. KITUMBA, JA. HON. LADY JUSTICE C. K. BYAMUGISHA, JA.

### CIVIL APPEAL NO. 19 OF 2991

#### EDWARD KIBALAMA ..................................

#### **VERSUS**

ALFASAN BELGIE CVBA :::::::::::::::::::::::::::::::::::: [An appeal from the judgment and decree of the High Court sitting at Kampala (Okello, J.) dated 2/10/2000 in HCCS No. 92 of 1998]

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

I have had the benefit of reading in draft the judgment of Byamugisha, I agree with it. The appellant did not adduce enough evidence to $JA.$ prove that there was a contract between him and the respondent that was based on custom of trade or conduct of trade between both parties.

I would, therefore, dismiss the appeal with costs to the respondent.

Dated at Kampala this 2 day of June 2004.

CALA Crember C. N. B. Kitumba **JUSTICE OF APPEAL**