[2013] UGHC 269

## THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT NAKAWA CIVIL SUIT NO. 211 OF 2012

[Transfered to Nakawa Circuit from Commercial Division Civil Suit NO. 89 of 2009]

CHARLES MAC WANGE

PLAINTIFFS BRENDA GRACE OKOT

VERSUS

1. DANISH LAND OWNERS CO. LTD:

DEFENDANTS 2. BLUE OCEAN DEVELOPMENT:::::::::::::::::::::::::::::::

BEFORE: HON. LADY JUSTICE FAITH MWONDHA

IUD GMENT

**n**

## BEFORE: HON. LADY JUSTICE FAITH MWONDHA

This suit was brought before me by Counsel for the plaintiff Ms Ayena Odongo & Co. Advocates. The suit was originally filed in the commercial Division in 2009 for purposes of expeditious disposal under ADR before Hon. Justice Geofrey Kiryabwire.

According to the proceedings of 6/4/2010 before Hon. Justice Kiryabwire at 4:10 pm when the Court resumed after the earlier sitting on the same"-^x day at 9:41 am, both the plaintiff and the defendant were not in Court but Abuga for the plaintiff was present and Counsel Kalemera for the defendant was present. Counsel Abuga for the plaintiff told Court that the defendant refused to sign the consent and Counsel Kalemera for the defendant affirmed it.

**1**

2 ^G dN 23H

**^r'pl** te trial Judge returned the file to the registry because of the failed settlement and he stated that the file be before placed another Judge as he had participated a little further than is good for him to try the case.

On 18 July 2012, Counsel for the plaintiff wrote to the Deputy Registrar Commercial Division requesting that the file be transferred to Nakawa Citcuit where the subject matter i.e. the suit land comprised in Block 395 Hot 1264 Area Approx 0.080 hectares is situated at Seeking Wakiso District. On the 19/7/2012 the Deputy Registrar Commercial Division instructed the transfer of the file to Nakawa Circuit.'

The plaintiffs instituted the suit to recover the sum of shs. 98,175,431.75/= or Euros 37378 and the defendants with interest, general damages and costs of the suit.

The facts constituting the cause of action were that on 20/04/2007 the plaintiffs entered in a memorandum of sale agreement for Mailo Register Block 395 Plot 1264 at Seeking measuring approximately 0.080 hectares situated at Kabagulu Housing Estate at a consideration of shs 125,000,000/=. The sale agreement was attached and marked "A".

The ground plan for the building construction was sent to the plaintiffs ^| on 3/02/2007 by Blue Ocean Developers Ltd. Which was also a ground plan was also attached and marked Annexture "B". It was agreed that the ⁱ sum of Ugshs 125,000,000/= be paid in two equal installments of shs 62, | 5000,000/=

It was also agreed that the payment of the purchase price be transmitted ⁱ to the 2nd defendant (Blue Ocean Developers Ltd) in Denmark Nordea Bank Demnark AS Shoregade 307330 Brande Denmark IBAN NO. DK ] 30200043 75773932 swift Code NDEADKKK A/C No. 4375773932 as per

**2**

**n**

29 W

**••D'i**

the Memorandum of the sale agreement Annexture A. They pleaded that they paid on the 25/4/2007 and 21/05/07 a total of Euros 37378 on the account DK 3020004375773932 of Soren Ostrup C/o NORDEA Bank which was equivalent to Ug.shs 98,175,431.75/= more than what was provided (in the first installment) by the agreement . The copies of the transmission were attached as annexture "C"

The last installment was to be paid on completion of the building and not later than 1/06/07 as provided by the agreement in ² (jj). That the defendant failed to complete the building within the contract time and that the plaintiffs terminated the contract and on 20/1/2008 the 2nd defendant replied to the termination letter conceding to the breach of contract and accepted to refund the money so far paid. The letter was attached as annexture "F". They pleaded that they will aver that the defendants are indebted to then in the sum of Ugshs 98,175,431.75/= and that despite several reminders and or demands the defendants have refused and or neglected to pay that sum.

They prayed that Judgement be entered in their favour for Ugshs 98.175.431-75/- with interest at 30 %. General damages and interest thereon and costs of the suit.

The defendants filed a joint written statement of defence in which they pleaded that terms of the agreement were substantially completed. They pleaded that the 2nd defendant was not privy to the agreement and therefore making him a defendant was a misconception and that the agreement was only between the 1st defendant and the plaintiff. They further pleaded among others that the stipulation on consideration in respect to the 2nd defendant was for addressing the payment mode but

**? ⁰ W '\$13**

**3**

H

did not create any legal or contractual obligation against the 2nd defendant. They intend to raise a Preliminary Objection (P. O) to the effect that there was no cause of action against the 2nd defendant. They further pleaded that because the plaintiffs were satisfied with the progress of the Local Purchase undertook to secure their acquired rights in the property lodged a caveat among others.

The 1st defendant further pleaded that at all material times he maintained and acknowledged / understood that the contract had been terminated at the instance of the plaintiff and only offered repayment through a re-sale of the property. He attached *Austin D3* among others. That the plaintiffs terminated the contract on their own choice and they consequently agreed to be refunded their deposit payment if and when the house was resold and actual payment made by a buyer. It was pleaded that no successful sale or purchase as been made as the market price of the property was Ug.shs 120,000,000/= and it had been known by the plaintiffs that their refund was subject to re-sale of the purchased property - etc. They wherefore prayed that the plaintiff's suit be dismissed with costs.

The suit was scheduled interparty before Comt and the issues agreed on were as follows:-

- i) whether the parties in the contract / agreement fulfilled their obligations - whether the ²nd defendant was properly joined to the suit ii) - iii) whether there sale/contract. was any breach of the memorandum of

**4**

**\u+**

**H:**

z. Q MM

## iv) what remedies were available to the parties

On 2nd October 2012 the case was called after hearing the scheduling conferencing. The parties were advised to file written sworn statements of their witnesses. The plaintiff filed his sworn statement on 4th October 2012 and the defendant was meant to file on 5th October 2012 so that Cross examination ensues on 11/10/2012 at 10:00am. The cross examination of the plaintiff on his witness sworn statement was done by Counsel Kalemera for the defendant. After cross examination'a closure of the plaintiffs case counsel for the defendant informed Court that he was not able to file the 1st defendant's witness statement he prayed that Court allows him to file belatedly.

In the interest of justice I granted him leave to file though the date had passed. He was directed to file by 18/10/2012 so that cross examination is done on 2nd November 2012 at 9:00am. The preliminary objection which counsel for the defendant wanted to raise, he was advised/directed to raise it as his first thing which his final submissions on 2nd November 2012 was last adjournment at 9.00 am for cross examination of the 1st defendant. Again on 2nd November 2012 which was the last adjournment for the plaintiff's case, Counsel Kalemera for the defendant told Court that he was only able to extract the witness statement for the defendant the previous day and therefore he could not file it as directed by Court. Counsel for the plaintiff conceded to the late filing so the same was fixed for cross examination on 10th December 2012 at 9:00am.

2 7J313. **!**

The cioss examination took off on 10th December 2012 of the defendant, both parties produced one witness who filed the sworn witness statements.

Its trite law as provided in S. 101 (i) of the Evidence Act Cap 6 Laws of Uganda that;-

*whoeyer desires any Court to give judgment as to any legal right or liability dependant on the existence of facts which he asserts must 12ruye that those facts exist." When a person is bound to prove the existence of any fact, it's said that the burden of proof lies on that person"*

That is why the standard of proof in civil cases is on a balance of probabilities. Each party has to prove on a balance of probabilities that the facts he or she asserts exist to enable Court to delay which case is most probable. In civil matters the standard of proof is on a balance of probabilities as opposed to standard of beyond reasonable in criminal cases.

On the lsl issue whether the parties to the contract fulfilled their obligations, in the evidence which PW1 the 1st plaintiff who had powers of Attorney of the 2nd plaintiff *(his wife),* he stated that he had all along waited to acquire property in Uganda *(houses).* That he was directed fo the Danish Land Owners Co. Ltd and he got the mobile number of the CEO Soren Ostrup. That he contacted him and Soren the 1st defendant contacted him and explained to him how he deals with the construction of Houses in Uganda.

The plaintiff and his wife entered into an agreement on 20/4/2007 with , Danish land owners Ltd (Vendor) signed before Bitangaro & Co.


**2 0 '''-. I;-. <8**

Advocates lawyers for the vendor and the vendor was represented by Soien Ostrup. There was one Gideon Banida (Advocate for Bitangaro & Co. Advocates who drew the contract agreement.

It was clear from the agreement that Danish Land owners Co. Ltd was the proprietor of the land comprised in Block 395 Plot 1264. The vendor being Danish Land Owners Co. Ltd represented by Soren Ostrup as CEO guaranteed to the purchasers that it was the registered proprietor and the house developed thereon together with all other developments measuring approximately 0.080" 'hectares (i.e. *as per paragraph 3 of [he said agreement).*

The lsl plaintiff stated as supported by the written agreement that the house would be built and other developments from 20/4/2007 to Is' June 2007. It was clear from the written agreement that the 1st defendant (vendor) was desirous of selling and transferring the land in issue to purchasers who were jointly and severally able and willing to purchase the same.

The agreed purchase price was Ug.shs 125,000,000/= and was to be paid to Ocean Blue Developers Ltd upon the express direction of the vendor. This was the amount for the whole purchase value.

The particulars of payment were stated expertly in paragraph ² (1) of the agreement. It was to be by telegraphic transfer to the vendors account not later than 24th April 2007 to the tune of 62,500,000/= *(shillings sixty tyvo million and five hundred thousand).* The balance was to be paid to the vendor (1st defendant) by transfer of equivalent in Danish Kroner to the vendor account as provided in paragraph 2(1) on completion of the developments referred to in paragraph 3 ( i.e. completion of the house

**7**

**ⁿ \i7**

servants quarter's and boundary wall, the vendor was to transfer to the purchaser the said land. And that then the purchasers were to take immediate possession upon completion of payment.

**1**

The first plaintiff stated that he transferred the sum US\$36,764 to the vendors' account as instructed on 25th April 2007 just the day late as its agent have been transferred by 24th April 2007.

On 21s' August 2007, he transferred Nok. 80,000 to the vendors' account as agreed and he -said he paid more than what he was supposed to pay because he was eager to have the house and he trusted the company to follow obligations. He stated further that up to the time he was making the statement the house was not complete i.e. in October 2012 and that on 19/07/2007 they terminated the agreement.

That on 20"' January 2008, Blue Ocean Developers Ltd wrote to him by email telling him that they were in the process of selling the property (i.e. *about 6 months after the termination letter)* and they will only refund the money paid after conclusion of the sale.

I observed that the letter of cancelling the sale was written to Soren Ostrup and the Blue Ocean Co. Ltd responded on email sent on 26"' March 2008 to Harila Board informing her that they have decided to sail the house because of the plaintiff's reluctance to fulfill the legally binding contract. It was apparent that it was none other but Soren Ostrup CEO Danish Land Owners Ltd who was writing as Blue Ocean Co. Ltd. He said they had gotten a potential buyer at shs. 120,000,000/= on condition that he can qualify for a mortgage.

> **8 \v&**

? 0 tffcY

**n**

**!**

It was very clear from that email which was tendered as exhibit and Marked ExH6 that Danish Land Owners Ltd and Blue Ocean Co. Ltd were owned by or administered by one person Soren Ostrup and the two Companies were one m this venture though they were different entities. The fact that Blue Ocean could write direct to the lawyer for the plaintiffs and yet the cancellation of the agreement was not addressed to Blue Ocean, and it was not a party to the agreement, shows clearly who is behind Blue Ocean Co. Ltd and Danish Land Owners Ltd. There is further evidence on record to show that the two companies are owned by the same CEO who is behind the two when the veil is lifted. There is a document dated 21st September 2007 titled;

"M/s Danish Land Owners Company Ltd. which refers to a meeting of the Board of Directors of Ms Danish Land Owners Co. Ltd held on 21/09/2007. It passed a resolution authorizing Blue Ocean Developers Ltd to take possession of all the Certificates of Title of the company's Land and sell the land to any willing purchaser. It also resolved that the Company authorize Blue Ocean Developers Ltd to supervise, transact, manage, act as caretakers and carry out construction on all company's land. It was also resolved that the company issue a power of Attorney to Blue Ocean Developers Ltd authorizing it to take possession of all certificates of title of the Company's land, to sell the land to any willing purchaser, and supervise, transact, manage, act as caretakers and carry out construction on all the company's land.

^I took judicial notice of the fact that these resolutions were made on 21/09/2007. This was much after the agreement had been entered into between the Danish Land Owners and the plaintiffs. This shows apparent fraud which the defendant had calculated to cheat its customer the

**9**

IV?

**n**

7.0W ²⁰¹³

purchasers (plaintiffs). This also explains why it's the CEO Soren Ostrup, who is the player at both ends, and this explains why the letter of cancellation of the agreement was written to the defendant on 19/7/2007 and the response by email to the lawyers of the plaintiffs was sent on 25th March 2008. This showed that the defendants had not accepted the cancellation of the agreement so they had no right to decide to market off the property they had sold without the knowledge of the plaintiff. In those resolutions it's still Soren Ostrup who signed as a Director of Danish Land Owners.

The Is' plaintiff stated in lais evidence on oath that the defendant had not paid him the amount which he paid which was to the tune of 98.447.050. He prayed that Court uses its power to order that the defendant hands over the property in the state it's in without the boy's quarters.

The defendants' company representative Soren Ostrup did not deny that the moneys were received though he stated that the first installment was paid a couple of days which was not correct. There is evidence by the plaintiff that it was paid a day later i.e., instead of 24"' April 2007, it was paid on 25th April 2007 and this was not challenged in cross examination. He stated that when the agreement of sale was cancelled, it constituted a new agreement whereby the property would be sold to refund the money. That he was surprised that a caveat was lodged on the land which made it impossible for him to sell the land and that the plaintiffs occupied the house which had been completed save for the boy's quarters for'a\* considerable period.

He stated in cross examination that he permitted then to occupy it even after the cancellation of the agreement (then on what basis did he allow then to be there? wasn't this a new agreement made? He did that well

**10**

**n**

*¹* **^c ®**

aware that he reinstating it?) made the above mentioned resolution, as well or 1

He also stated to the effect that they received Shs. 84,000,000 **but** not 98,447,050 /= and that it's the plaintiffs who have escalated the situation shifting from wanting to refund to wanting the property and that they were willing to refund the money.

He drew courts attention to the fact that construction business is affected adversely by delays that are unpredictable for example shortage of construction materials. I found this irrelevant because if one decides to do business, you have to take precaution and especially for the risks. There has to be a remedy or plan 2. So that's not an excuse. The defendant company, its clear to me was aware of the shortages etc then why did he draw an agreement for a house together with its boy's quarters and a boundary wall to be completed in two months?!! This still shows that the defendant only intended to defraud the plaintiffs.

He again stated that the issue in the instant case was that the plaintiffs kept on shifting from the refund to the property itself. So what was which? Was it the scarcity of materials which made them not fulfill the contract as agreed or it was the shifting from refund to property. From Iris very evidence on his sworn statement, it was clear that by Is' June 2007, they (company) had not completed the development of the purchased land as described in the agreement even up to 19th July 2007 he had not completed it when the plaintiffs wrote a cancellation letter. jt'^s still in the company'^s CEO evidence that after the cancellation of the agreement, he approved the I⁵¹ plaintiffin laws to occupy the house. Tins wa%in corroboration of the 1st plaintiff's evidence that his in-laws went to nrcnpv it but the work was not complete. Even the 2nd plaintiff who is the

**11**

2 0 MAY 2013

**n**

**fl**

**n**

~-hhlflhe JT plaintiff came and found that the development had not l^eenconipieted

The reason the defendant gave for not completing was lack of materials and Umeme issues. He said in cross examination that he did not put it in writing but he communicated to the plaintiffs. That they came to an understanding that the defendant company was to and complete without another date given for completion. He said in cross examination that the building was completed by the time he made his sworn statement . He said that the money which was transferred on 25"' April 2007 and in May 2007 when it was completed, it came to shs. 84,917,235/-. I took notice of the fact that when the agreement was made the conversion rate was not included, so this meant that it was the prevailing conversion rate. It was not a condition/terni in the agreement that the money had to be converted in Uganda shilling when it was transferred to Denmark. It was clear that the plaintiff paid in USS and Kroner's, so it's only logical that to get the amount of money at that time in Uganda shillings a dollar. It would be the prevailing rate of a Uganda shilling to Kroner. It was the lawyers of the defendants who drafted the agreement so there is no way the plaintiffs could be faulted.

I

**n**

I also observed that there was no clause in the sale agreement which provided for failure to fulfill the agreement by any party what the way forward would be.

The 1st plaintiff in cross examination affirmed that he did not pay in Danish Kroner but he paid the equivalent of Danish Kroner. That from Iris account it went as dollars but was converted into Danish Kroner and it's the Bank exchange rate which determines. Further that the 2nd payment

**12**

20 MAX ²⁰¹³

Was ma^e in Norwegian Kroner 80000 which came to a total of 98,710,498/= at the Exchange rate in Norway as at 28th April 2008 and that he did all the transactions outside Uganda and an exchange rate where got the equivalent was the same rate the Bank would use. That he was not in position to know whether it would be the same exchange rate in Uganda.

From what the 1st plaintiff said and the defendant company witnesses said, it was clear that the defendants were in breach of the contract since 'lie admitted that the company had shortage of materials and had problems with Umeme. It came out clearly that the plaintiffs performed a substantial part of the whole agreement since they had effected transfer of US \$ 36764 to the defendants Account DK Nodea Bank on the 25/4/2007 and they effected transfer of 80000 Norwegian Kroner to the same account. The defendant company failed to fulfill its obligations and it has failed to handover the property to the purchaser. The fact that after the letter for cancellation, the defendant approved occupation of the uncompleted building by the plaintiff's relatives showed reinstallment of the contract on the view that the plaintiffs had rescinded the cancellation.

2) on the 2nd issue as to whether the plaintiff properly joined the 2nd defendant as a party.

To begin with its trite law that no suit can be defeated by reason of misjoinder or non joinder of parties and the court is enjoined to deal in every suit with a matter in controversy as far as regards the rights and interests of the parties actually before it (See Order ¹ r 9 of CPR).

**II**

**j**

j

n

**13**

²⁰ W 2B13

**-Vi**

The matter in controversy was whether the contract was performed as agreed in the agreement.

From the observations concerning the two companies Danish Land Owners Ltd and Blue Ocean Developers Company Ltd, are owned by the same CEO who is the Director as well in Danish Land Owners. In cross examination he told court that Danish Land Owners Ltd were the title holders of the land they were developing, while Blue Ocean Developers Ltd were shareholders of Danish Land Owners. He did not adduce any evidence to the Memorandum and Articles of Association for Court to satisfy itself on the correctness of his statement let alone the statement being tenable at law. As far as company law is concerned, a company is different from its directors and shareholders, if that was the case this court wonders why Soren Ostrup convened a Board meeting of Directors to take over the Certificates of Land Titles belonging to Danish Land Owners Ltd and resolved to authorize Blue Ocean Developers Company Ltd to take them over, and he resolved to issue Blue Ocean Developers with Powers of Attorney of those lands. On the 21.09/2007 much after the contract had been cancelled and re-instated, but had not communicated whether he agreed with the cancellation or not, when he approved the relatives of the plaintiffs to occupy the house? The conduct of the 1st defendant clearly demonstrated that the agreement was alive.

The fact that Blue Ocean Developers Co. Ltd (Soren Ostrup) wrote to the lawyer of the plaintiffs telling then about the repayment after they had started the process to sell, the property which had been sold to the plaintiffs in pursuant to the agreement of 21st September 2007,

**14**

D MAY 28

*i*

**I**

**I**

established a cause of action against Blue Ocean Developers Ltd a company which belongs to Soren as a Director. So the 2nd defendant was properly joined.

On the 3rd issue; whether there was a breach of the memorandum of sale, having answered the 1st issue that the defendants failed to fulfill their obligation as provided therein, there was a breach on their part.

## *Visit at Locus in ano.*

There were two dates fixed for visiting the *locus in quo* and it so happened that Her Lordship Constance Byamugisha passed on, so another date was fixed. Both the plaintiffs and the Defendants plus their lawyers did not come. There was a representative of the plaintiff.

I observed that the house had no boy's quarters and there was evidence of someone occupying it. At the time we met there with the court clerk, the gate was locked so we did not go inside to see. What was clear was that the agreement had not been executed as the boys quarters were not there. So Soren told lies to court when he stated in his cross-examination that everything was complete.

On the 4lh issue as to what remedies are available to the parties, the plaintiffs in their plaint had prayed for tire refund of the 98, 710,498/= and interest at 30%, damages and costs of the suit. They also prayed for any further or alternative relief.

From the suit file, the suit was filed in 2009 in the Commercial Division for mediation. The mediation failed for various reasons but one of them was that the plaintiffs demanded recovery of the return ticket of US\$4600.

**15**

2 0 MAY 7813

It was not disputed that the plaintiffs had fulfilled a substantial part of their side fairly on schedule and they had gone ahead to pay a front by shs. 125.000.000/- - 98.710.498/- This meant that they (plaintiffs) were remaining with only 26.290.502/- to complete the whole purchase price which was shs.125, 000,000/=.

**\*1**

Since he had paid the biggest part and the burden was on the defendants to play their part, they were justified to lodge a caveat on the property. It was ^a term- in the agreement that the vendor guaranteed to' the purchasers that it was the registered proprietor of the land and residential house developed thereon together with all developments of the land comprised in suit land as described above.

It was a breach of the highest order for the Soren Ostrup on the 21/09/2007 to resolve that Blue Ocean Developers Company Ltd take possession of all certificates of title of the company's land sell the land to any willing purchaser, it was very fraudulent of the Ms Soren Ostrup to resolve in the so called Board of Directors meeting that Blue Ocean Developers Co. Ltd , supervise, transact, manage, act as caretaker and carry out construction on all company's land, when he never disclosed anything to the plaintiffs.

It was also clear that much as the defendants were only conceding to obtaining shsh.84,000,000/= as opposed to 98 million and above, there was no prove of the assertion on a balance of probabilities. I agree with counsel for the plaintiffs submissions that S.103 of the Evidence Act Cap 6 is applicable in this regard. It provides;-

*"The burden of proof as to any particular fact lies on that person who wishes the Court to believe its existence unless it's provided by*

**¹⁶** '<3 0

*any law that the proof of that fact shall lie on any particular person."*

hi this case the plaintiffs had proved on a balance of probabilities that they transferred 98million plus for purchase of the property and the developments thereon.

In light of the fact that plaintiffs had paid a substantial stun of money i.e. shs.98, 175,431.75 or out of shs. 84 million which was not processed by the defendant, shs.l25,000,000/= and the developments had not been completed at least by the time this case was heard, I will grant the alternative relief prayed for in the plaint considering the circumstances of tills case.

- (i) He had prayed during his evidence in chief in his sworn statement that the Court orders the 1st defendant to hand over the property comprised in Mailo Register Block 395 Plot 1264 at Seeking measuring Approx. 0.080 hectares. That prayer is hereby granted and ordered so. This has to be done in ³ weeks to effect the transfer, direct the commissioner Land Registration to register the plaintiffs jointly as the owners of the property. - (ii) It is further ordered that the resolutions of Danish Land Owners Ltd Board Directors made on the 21st September 2007 signed by Soren Ostrup and are rendered *null and void for* fraud. - (iii) Plaintiffs awarded general damages to the tune of shs 50,000,000/= for the breach of the contract and inconveniences suffered by the plaintiffs.

**17**

? 0 MAX

V2-7

(iv) Interest of 20% p.a from the time of Judgment to payment in full.

(v)The Commissioner Land Registration is directed to register the plaintiffs jointly as proprietors. The defendants directed to sign the transfer forms immediately and not later than 7 days for the date from this Judgment

**(vi)** Costs of the suit

Judgment is entered in favour of the plaintiffs in the above terms. So be it done.

Right of Appeal explained

FAITH MWONDHA HON. LADY JUSTICE 30/04/20lg

2 0 may


*1*