[2023] UGHC 335

### \ **THE REPUBLIC OF UGANDA**

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

## **CIVIL SUIT NO. 35 OF 2018**

## **KYOTERA TAX OPERATORS CO. OPERATIVE UNION ……...….. APPLICANT**

### **VERSUS**

## **1. ATTORNEY GENERAL**

## **2. RAKAI DISTRICT LOCAL GOVERNMENT**

**3. KYOTERA TOWN COUNCIL …………………..……………….. DEFENDANTS**

#### **JUDGMENT**

*Hon. Lady Justice Victoria N. N. Katamba*

#### **BACKGROUND**

The Plaintiff instituted this suit against the Respondents for recovery of UGX. 41,929,500/= which it had paid to the 3rd Defendant prior to the presidential directive that led to the cancellation of daily collections of a given taxation. The President had identified this collection as an oppressive form of over taxation against taxi drivers and made a decision to have it scrapped.

The Plaintiffs stated that the president's directive amounted to breach of their contract with the 3rd Defendant local governmental entity and thus contend that it's a breach of contract for which the 1 st Defendant should be directed by this court to compensate it in damages and costs of the suit.

The defendants denied the Plaintiff's claims. The 3rd Defendant has since made a refund of the UGX. 41,929,500/= that the Plaintiff had deposited with it under the contract authorizing it to make the collections on its behalf. A consent Judgment was entered by the parties in respect to the above sum of money and all that was left for adjudication of this court is damages and costs.

Representation

The Plaintiff was represented by **M/s Fred Kalule & Co. Advocates**.

The Respondent was on the other hand represented by **M/s Attorney General's Chambers**.


#### **ISSUES:**

- **1. Whether there was breach of contract by the defendants and if so,** - **2. Whether the plaintiff is entitled to damages for breach of contract?** - **3. Whether costs should be awarded in the circumstances?**

## **PLAINTIFF'S SUBMISSIONS**

### **Issue1:**

The Plaintiff submits that under *S. 33(1) of the Contracts Act, parties have a duty to perform their respective promises unless the performance is dispensed with or excused under this Act or any other law. The Plaintiff referred this court to the authority of Cargo World Logistics Ltd vs. Royale Group Africa Ltd HCCS No. 157/2013 Commercial division*

The Plaintiff contends that since the breach of contract emanated from a presidential direction, the 2 nd and 3rd defendants may be excused but the 1st defendant being the legal mind of government, misadvised the president and should be held liable for the breach.

In conclusion, the Plaintiff maintains that the abolishment of the revenue collection was a breach of contract.

## **Issue 2:**

The Plaintiff argues that it suffered inconvenience as a result of the breach. It referred this court to the authority of *Kampala District Land Board & Anor vs. Venansio Babweyana Civil Appeal No. 02 of 2007 in which it was held that the point of award of damages by a trial court is that damages are the direct probable consequences of the act complained of with such consequences being enumerated to include loss of use, loss of profit, physical inconvenience, mental distress, pain and suffering.*

The Plaintiff went on to state that it had a plan to improve its commercial standards owing to the contract but all this was swatted by the 1st defendant's abolishment of the revenue collection. The Plaintiff also submits that it had hired workers, hired cars and yet all this fell through and that for these reasons, it should be awarded damages.


#### **Issue 3**:

The Plaintiff conceded that under S. 27, the award of costs is a discretion of court and prayed that this court be pleased to award it with costs.

## **DEFENDANTS SUBMISSIONS**

## **ISSUE 1:**

The defendants submit that Under S.10 of the Contracts Act, a contract is defined to be;

'*an agreement made with a 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'*.

The Defendants referred this court to the case of *Ronald Kasibante vs. Shell Uganda Ltd HCCS No.542 of 2006*, in which breach of contract was defined as;

'*the breaking of the obligation which a contract imposes which confers a right of action for damages on the injured party*."

Basing on the above prepositions the defendants argue that they didn't breach the contract with the Plaintiff. The contract was discharged by operation of the law.

That the phrase "**by operation of law**" is a legal term that indicates that a right or liability has been created for a party, irrespective of the intent of that party, because it is dictated by existing legal principles.

That the contract is said to be discharged by operation of law **when the parties' contractual duties are terminated due to the involvement of the law** and this may release the parties from their obligations.

The defendants further submit that a contract which was valid at the beginning may became invalidated by law and will be dismissed as a result. The contract becomes void due to supervening impossibility owing to the change in the existing laws.


This being a revenue collection contract where the Plaintiff would collect and then remit the funds to the 3rd Defendant, the only sum they were entitled to was that that had already been paid in advance of which the 3rd Defendant agreed to pay back as per the consent agreement dated 15th November 2022.

In conclusion, the defendants submitted that the policy guidelines of 2017 that were enacted were to bring back sanity and for the good and smooth running of taxi parks in the whole country and not only Kyotera Town Council. For the above reasons, the defendants did not breach the contract and thus no damages should be paid to the Plaintiffs.

## **ISSUE 2:**

## **General Damages**

The defendants submitted that general damages are awarded at the discretion of court. General damages are what the law presumes to be the direct, natural or probable consequences that will have resulted from the defendant's breach of contract or other act giving rise to the Plaintiff's claim. The Defendants referred this court to the decision in *Waiglobe (U) Limited – Vs- Sai Beverages Limited – HCCS No. 0016 of 2017.*

The defendants submitted that whereas the compensatory principle is the norm in awarding damages as cited above, they are not liable for any loss (if any) occasioned or suffered by the Plaintiff herein.

## **Costs**

The Defendants submitted that they are not liable for any **costs** and as such it would be an injustice if she is condemned to pay costs of this suit.

The defendants argued that the instant case is not fit for the award of costs to the Plaintiff since it failed in its claim against the Defendant and as such it is not entitled to any costs. The award of the same would defeat the legal rationale for the award of costs. That there is no good reason given for the award. *The Defendants referred this court to the decision in Rwanyindo Aurelia & Anor Versus School Outfitters (U) Ltd CACA No. 53 of 1999.*

In conclusion the Defendants re-affirmed their position that the Plaintiffs are not entitled to any of the reliefs sought and prayed that the suit be dismissed with costs to them.

## **DETERMINATION BY COURT**.

I have carefully considered the pleadings, the evidence, submissions and the circumstances under which the H. E the President of Uganda's made the directive that affected Plaintiff's contract and below are my findings on the claims of breach of contract.

## **Issue 1**: **Whether there was breach of contract by the defendants and if so?**

I find that H. E the President of Uganda acted in good faith when he recognized that a particular group of working citizens were being oppressed by a local governmental department through over taxation. It is against that background that he made the above directive stopping the impugned taxation regime altogether.

H. E the President of Uganda, upon his election, took an oath to uphold the Constitution of Uganda. I find it necessary to re- state here the oaths taken by the president for avoidance of doubt as to the president's mandate.

## **Oath of President/Vice President.**

*'I,…. , swear in the name of the Almighty God/solemnly affirm that I shall faithfully exercise the functions of the President/Vice President of Uganda and shall uphold, preserve, protect and defend the Constitution and observe the laws of Uganda and that I shall promote the welfare of the people of Uganda. (So help me God.)*

## **Oath of Allegiance.**

The oath of allegiance states: *'I….., swear in the name of the Almighty God/solemnly affirm that I will be faithful and bear true allegiance to the Republic of Uganda and that I will preserve, protect and defend the Constitution. (So help me God.)*


The President therefore, has a statutory duty/authority by virtue of his holding of office to make any such necessary interventions in good faith to protect people's property from being unlawfully deprived from them without prior adequate compensation as required in Article 26 of the Constitution of Uganda.

*Article 26 of the Constitution creates the right to own property by individuals and citizens shall not be deprived of this property except within the exceptions created therein*.

Accordingly, the President acted well within his mandate of upholding the Constitution in making the directive and the Plaintiff's contract which was based on an illegality was simply frustrated by the President's decision to enforce the right to own property which had hitherto been infringed.

In as much as the President takes it upon himself to execute his duty of upholding the Constitution, he should be given support/approval so that he has motivation to do even better.

The collections from which the contract sought to be enforced were oppressive and illegal as clearly demonstrated. The aforesaid over taxation regime is a classical example of deprivation of citizens of their property (in this case money) that is barred by Article 26 of the Constitution. It is now trite; courts cannot not sanction/enforce illegalities *See Makula International Ltd Vs Cardinal Nsubuga 1982 HCB 11.*

If anything, the Plaintiff should be embarrassed to be associated with the now scrapped illegal taxation regime that occasioned oppression of citizens, amongst whom it operates.

Issue 1 is answered in the negative. Resolution of this issue also determines the 2nd and 3rd issues.

In conclusion, the Plaintiff's suit is hereby dismissed with no order as to costs.

I so order.

Orders;

- 1. The suit is hereby dismissed. - 2. There is no order as to costs made.

Dated and delivered electronically this 1st day of April, 2023



# **HON. LADY JUSTICE VICTORIA NAKINTU NKWANGA KATAMBA**