[2008] UGCA 29

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

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

### CIVIL APPEAL NO. 96 OF 2004

#### 1. MAVUNWA EDISON ) 2. AMITI TOM )..................................... For and on behalf of 194 others

## **VERSUS**

#### UGANDA ELECTRICITY GENERATION COMPANY LIMITED ............ RESPONDENT 20

[Appeal from the ruling of Hon. Bamwine, J dated 17/5/2004 in H. C. C. S No.353 of 2003]

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$10$

$15$

## **JUDGMENT OF TWINOMUJUNI, JA:**

- This is an appeal from the ruling of the High Court of Uganda (Bamwine, 30 J) at Kampala in which his Lordship dismissed with costs a civil suit filed by the appellants against the respondent. The facts giving rise to this suit are not in dispute. All the 194 appellants worked in various departments of Uganda Electricity Board (UEB) in various capacities until July 2001 - when in accordance with section $128(2)$ of Electricity Act of 1999, they 35 agreed to transfer their services to Uganda Electricity Generation Company Ltd (UEGCL), a successor company to UEB.

The Electricity Act, 1999 dissolved UEB and created several successor companies and UEGCI- was one of them. Section 123 and 124 of the Act provide that afler a certain date set by the Minister after the coming into fbrce of the Act, UEB rvill only continue to operate under a licence issued by the Minister for only purposes specified in the licence. Section 125 statcs:-

" 125 Successor Company.

The Ministcr shall, in accordance with thc Public Enterprises Rcform and Divestiture Act, causc to be incorporated under the Companies Act, a succcssor company or companies to assume all the duties, objectives and functions of the Uganda Electricity Board,, except those to bc exerciscd by thc authority undcr this Act, and to take over the property, rights and liabilities to which the Uganda Electricity Board is entitled or subject to."

Section 126 provides:

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"The vesting of property in Succcssor Company

- ( I ) The Ministcr may, try order published in the Gazette, appoint a transfer date and on that date, all property, rights and liabilities to which the Uganda Elcctricity Board was entitled or subject to immcdiately before that date shall bccome, by virtuc of this scction, thc property, rights and liabilitics of the successor company. 20 25 - (2)On thc transfcr date appointed under subsection (l), the Uganda Electricity Board shall cease to exist and shall be taken to be dissolvcd."

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Scclion 128 ofthat Act provides:-

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"(l) The succcssor company shall, on the transfer date, acccpt into its employment, every pcrson who, immcdiately before the transfer date, is employed by thc Uganda Electricity Board and who was given an option by thc Uganda Elcctricity Board and has optcd to scrvc as an employee of the succcssor company.

(2) A person who opts undcr subsection (l) to bc an employee of the succcssor company shall be employed by that company on terms and conditions of scrvicc not less favourable than the tcrms and conditions of service to which he or shc was entitled irnmediatcly bcfore the transfer datc."

Belbre this Act. there rvas in placc. the Public Enterprises Relbrrn and Divcstiture Act (l'}F.ltD AC'I) rvhich provided in Section 29 that: t5

> "On a date appointed by the responsible Ministcr by Statutory lnstrument, the undertaking of thc public entcrprise named in the instrument shall, by virtue of this section, vest in the successor company of that public cnterprise."

Section 3 I of the PEII. D Act provided:-

"S.31 Protection of Emrrlovees Contracts e.t.c. Notwithstanding any othe r provision of this Act:-

(a)on thc appointcd day in rclation to a public cnterprise, each employcc of the public entcrprise shall bccome an employce of its succcssor company but, for the purposcs of every enactmcnt, law, determination, contract and agrecment relating to thc employment of each such employee, thc t5

contract of employment of that cmploycc shall bc deemed to havc been unbroken and the period of service of that employee with the pu blic enterprise, and cvcry other pcriod of scrvice of that cmploycc that is recogniscd as continuous scrvicc by the public entcrprise,, shall bc dcemed to have becn a pcriotl of scrvicc with the company;

(b)the tcrms and conditions of cmploynrent of each such employee shlll, until varicd, be idcntical rvith tho terms and conditions of the employcc's employnrcnt with the public entcrprisc immediatcly bcfore the appointed tlay and be capable of variation in the same nranncr;"

On 29tr'March 2001 UEB wrotc to the appellants and sated in part

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"l acknowletlgc rcceipt of your lettcr datcd 27'h March, ²⁰⁰¹ that informed mc of your consent to transfcr your servicc to UEB Successor Companies pursuant to section 129 of the E,lectricity Act 1999,

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This is to inform you therefore that you will transfcr your scrvicc to thc Uganda Electricity Generation Company Ltd with cffect fronr Monday 02 April, 2001. You arc transferred on the same terms and conditions of scrvice stipulated in UEB Standing Instructions in forcc. Your salary will also remain unchanged."

On rhc ll'r'.lLrl1 2001 thc rcsporrdent \\'rolc to thc I'r appcllant stating in pan:-

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.. SUBJECT: CONFIRMATION OF RANK OF SHIFTMAN AND REDE,SICNATION.

At their m€eting of 23 April 2001, the Directors of the Board of thc Uganda Electricity Generation Company Limited (UEGC) Ltd. The board also adoptcd usc of the UEB Salary Structure.

I am pleased, thercfore to inform you that you are confirmed at the rank of Shiftman. You are redesigncd Shiftman with effect from 02 April, 2001. You report to the Principal Engineer, Operations. A discription of the position dutics will be given to you in duc cours€.

Your salary remains shs.451,024.17 per month on scale UECC l0 spinc point 5. You will continue to be entitled to benefits attached to scale UEGC 10.

Your other terms and conditions of service are also unchangcd."

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Atl the appeltants received sirnilar letter atfirming that their terms and conditions of service would rcrnain unchanged.

After two years the UEGCL disrnissed all the employees it had inherited from UEB and paid thern pension lor only two years covering the period they had worked with UEGCL. The employees insisted that they were entitled to f'ull pension including that one eamed when still working with UEB. The respondent resisted this claim whereupon the appellants filed HCCS No.353 of 2003 to recover their pension lorrn the respondent. l5

At the hearing of the suit. counsel lor the respondent raised a preliminary point of law and asked court to dismiss the suit for failure to disclose a cause of action. He argued that the appellants had sued a wrong party because UEB was still in existence and was the one, together with the Governr:rent of Uganda, which were liable to pay the pension. After listening to both sides, the leamed trial judge upheld the objection and dismissed the suit, hence this appeal. There is only one ground ofappeal, narnely that:-

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# "Thc learned trial judgc crred in law and in fact when he found that the respondent is/was not liable for the appellants' pension claims."

Mr John Matovu appeared for the appellants and Mr. Nicholas Echirnu reprcsented the respondent. Mr. Matovu lor the appellants submitted that the trial judge ened in law and I'act in ignoring clear provisions for the Electricity Act, 1999 and the PERD Act, which clearly made the respondent liable to pay all tenninal benef-rts eamed by the appellants as employees of [JEB. He also criticised the trial judge lbr I'ailing to take into account documentary evidence on record in which the respondent accepted and undertook to pay all tenninal beneflts accruing to the appellants. including pension eamed when they were still working with UEII. He also relied on the authoritv ol' Evidcnt vs Guildford City Association Football Club Lkl (1975) 3 ALL. ER 269, r.vhich he 15 clainrcd rvas on all lirurs rvith thc instant case l5 l0

Mr. Nicholas Echimu fbr the respondent did not agree. He submitted that the respondcnt did not at any tirne undertake to pay the pension eamed

while the appellants rverc still employees of UEB. He contended that the respondent had undertaken to pay all other terms and conditions of service as were fonnally being paid by UEB except the pension. He submitted that their pensions rvere governed by Section 129 of the Electricity Act which rnade the Governrnent of Uganda liable to pay the pensions of the UEB employees. Thc section provides:-

## .. S. I29 PENSION FUND AND FORMER EMPLOYEES

- (l)All formcr cmployccs of thc Uganda Electricity Board who at thc commenccment of this Act are recciving retirement trencfits and pcnsions from the Uganda Elcctricity Board shall continuc to be paid by govcrnmcnt on ternrs and conditions not lcss favourable than those to rvhich thev were entitlcd beforc the comnlencemcnt of this Act. - ll

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- (2)All employces of the Uganda Electricity Board who may be retrcnched as a rcsult of the implcmentation of this Act shall, on thc tlatc of rctrcnchment., be paitl in full the calcrrlated and ascertained retrenchmcnt benefits and pensions. - (3)There shall bc cstablished a Contributory Pension Fund initially fundcd by govcrnmcnt for the bcnefit of those cmployccs in thc pcrmancnt cmploymcnt of thc Uganda Electricity Board immetliately bcfore the conrmencement of this Act who arc transfcrrcd to the succcssor company. lU - (,1) All employees of thc Uganda Electricity Board who transfer thcir scrviccs to thc succcssor company undcr section 128 shall have thcir terminal bencfits and pcnsion calculated and ascertaincd and transfcrred to thc contributory pension fu nd. l5

- (5) Any cmployce who, at any time after thc transfcr of his or hcr serviccs to the succcssor company, rctires or is dismisscd or whosc scrviccs are terminated for whatever reason shall bc paid his or her calculatcd and ascertained rctircmcnt bcncfits or pension from the Contributory Pcnsion Fund, - (6)Thc calculatcd and ascertained rctiremcnt bcnefits and pcnsion cntitlcmcnt of cach employcc of the Uganda Elcctricity Board shall be recorded in a pension certificate; and whcncver that cmploycc tcrminates his or her services with thc successor cornpany, the pcnsion ccrtificate shall be conclusivc evidcnce of the employec's entitlements relating only to thc pcriod of cmployment for thc employee in the Uganda Blectricity Board." - l5

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Mr. Echimu invited the court to hold that this section and especially subsections (3) and (4) specificatly rnade provision for payment of pensions to the transferred lonner UEB employees and to order that the respondent was not liable to do so,

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This appeal arises liorr the decision of the trial judge that the appellants had sued the rvrong party and in eff'ect had no cause of action against the respondent. A carcful perusal of the provisions of the PERD Act and the Electricity Act, 1999 set out above will reveal that LJEB was dissolved and all its responsibilities. assets and liabilities rvould be the responsibility of a successor cornpany to be floated under the Cornpanies Act. This rvould take place on the date fixed and announced by the Minister rcl'erred to in the Electricity Act as the "transfer date". It is not very clear on the evidence on record whether the Minister announced a

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transl'er date ancl r.vhich date it was. However, on 29'l'March,200l UEB wrote to the appellants inforrning theln that their services would be transferrcd to LJEGCL and that they would be transferred on the same terms and conditions of sen,ices stipulated in UEB Standing lnstructions in force in line with the provisions of the Electricity Act, 1999. This rvould be rvith ef'fbct fiom 2"d April,2001. On llrr'July,200l the UEGCI, wrote to the appellants inforrning thern that the cornpany had rvith el'f'ect liom 2"d April, 2001 accepted the appellants into their company on tenns and conditions they enloyed while serving under UEB.

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This offer by UITGCL was prornptly accepted by the appellants who had continued working even before this date.

As far as the appellants were concemcd, whether the Minister set the r5 qA-Ulfel-dg-lg in rvritin-u or not, was not material. Their acceptance of the contractual terrns oftbrcd by the respondent constitlrted a contract of employlnent. Horvever, the contract rvas unique in a sense that it had the backing of the Electricity Act, 1999. the PERD Act and the Ernployment Act which provides in Section l8 thereolas follovvs:-

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## "S.18 Change of Employcr

(l)A change of employcr shall, notwithstanding anything to thc contrary in any contract, be deemcd to have taken place whencver a person other than the original cnrployer acquircs thc rvhole of greatcr part of thc property of thc undertaking and continucs substantially thc same operations."

t) To me it seems to be clear that UEGCL accepted and took over the services of the appellants with elfect from 2'd April 2001 on the terms and conditions they enjoyed under the service of UEB.

i UEB was bound by the employment laws of Uganda especially Section ^I8( I ) and (2) of the Ernployment Act Cap 219 (supra). That law provides that when an entity other than the original ernployer

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- (a) acquires the whole or greater part of the property of the undertaking, and - l0 (b) continues substantially satne operative, then there is a change of ernployer and the new entity is bound by Section l8(2) of the employment Act:-

ln my opinion. UEGCL cannot, in light of the above state of affhirs, be heard to say that they only agreed to take over all other terms and conditions of service except the pensions of the appellants eamed before they were transfbrred when those pensions constituted part of the terms and conditions of service of the appellants. l5

So, is it correct to tlnd as the learned trial.iudge did, that UEB still existed in law and was the one liable to pay the pensions of the appellants'? With respect. my answer is that rvith the enactment of the Electricity Act, 1999, UEB ceased to exist. it rvas dissolved. All its responsibilities assets and liabilities passed on to UE,GCL. the respondent. UECCL became the successor company. Section 26(2) of the Electricity Act 1999 is very precise on this point:- I (.) t5

> \*126(2) ()n transfer datc appointed under subsection (l), the UEB shall ccasc to cxist and shall be taken to bc dissolved."

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Thereafter UEB could only exist in a very dillerent lbnn under a licence issued by lhe Minister on terms stipulatcd therein. It rvould no longer be a parastatal body sct up by an Act ol Parliament as was fbrrnerly the case and certainly it ceased to be the employer ofthe appellants.

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What then is the meaning of Section 129 of the Electricity Act, 1999 (supra)? Mr. Matovu argued that it did not create any Iiability on anyone to pay the pensions of the appellants or anyone else. All it did was to stipulate an administrative mechanism of how their pensions would be managed and administered. The liability to pay and transfer the pensions into the Pension Fund rernained the responsibility of the new employer, the respondent company. On the other hand, Mr. Echimu for the respondent strongly argued that this section expressly removed the payment of pensions eamed during service with UEB from the respondent and vested it into Uganda Govemment and UEB.

After a carclul perusal ol'all the provisions of the Electricity Act and PERD Act. along with the provisions of Section l8 of the Ernployment Act, I have no doubt in my rnind whatsoever that the responsibility to pay the appellants pensions earned under UEB service were transf'erred to the

succcssor colrpany. the respondent. l0

I agree with Mr. Matovu that Section 129 of the Electricity Act only sets out a mechanisrn fbr the management and adrninistration of the pension funds due to the transl-erred ernployees. the appellants. Whether that mechanism was set up or not cannot relieve the respondent. the successor employer. the contractual duty to pay the pensions. I would hold that this appeal rnust be allowed and the preliminary objection of the respondent can not be sustained. l5

Beibre I leave this case, I wish 1o make an observation on a matter of procedure arising fiorn this suit. In raising the preliminary objection, counscl lbr thc rcspondent did not state rvhether it was an application under order VI rules 28 or 29 of the Civil Procedure rules or it was made undcr order VIll Rute ll olthe sarne rules.

ln rny view. counsel should have specified under which procedure he was proceeding. Though the learned trialjudge mentioned that he rejected the plaint under order VIII Rule II (a) of the Civil Procedure Rules, yet in my opinion the plaint clearly disclosed a cause of actions. He could have handled the lnatter under Order VI rule 28 of the Civil Procedure Rules. His record clearly shows that he was considering a point of law that would substantially dispose of the whole suit. That is how the appellants seem to have understood his ruling, hence the only ground of appeal filed challenges his holding that the respondent was not liable lbr appellants

pensions, which rvas the main issue in the FICCS No.353 of 2003. In the result, allowing this appeal on the hasis of the ground of appeal. which was agreed by both parties and court. would dispose of the suit in the Fligh Court in respect of prayer (a) of the plaint in f'avour of the appellants. That prayer seeks tbr.judgnrent against the respondent lor:- I5 :0

> "(a) a declaration that they are entitled to pension, and or gratuity dues and any other retirement benefits."

I rvould order that the lile bc remitted to the trial court to dispose of prayers (b). (c). (d). (e) & (1") of the plaint.

These are in respect of': li

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"(b) an order that thcy may be paid their pcnsion and or gratuity dues and arrears since the month of termination of their services

(c) general damages for breach of contract

- (d)interest of 25% on (b) from the time of termination of services in March 2003 till payment in full and (c) and 20% interest on the aggregate sum - (e) costs of the suit

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(f) any other relief that this honourable court deems fit."

In the result, I would allow this appeal setting aside the judgment of the High Court and allow the said prayer (a) of the prayers in the plaint dated 4^th January 2003 with costs to the appellants. The record should be transmitted to the trial judge to dispose of prayers (b), (c), (d), (e) and (f) of the plaint.

Dated at Kampala this . J. J. M. day of ... Angus 1:2007. $15$ un Hon. Justice A. Twinomujuni JUSTICE OF APPEAL 20

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#### THE REPUBLIC OF UGANDA

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

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

#### CIVIL APPEAL NO. 96 OF 2006

**MAVUNWA EDISON** $\mathbf{1.}$ $2.$ **AMITI TOM** ) **:::::::::::::::: APPELLANTS** For and on behalf of 194 others

#### **VERSUS**

#### **UGANDA ELECTRICITY** GENERATION COMPANY LIMITED::::::::::::::::::::::::::::::::::::

### [Appeal from the ruling of Hon. Bamwine, J. dated 17/5/2004 in H. C. C. S. No. 353 of 20031

#### **IUDGMENT OF THE HON. DEPUTY CHIEF JUSTICE L. E. M. MUKASA-KIKONYOGO**

I have had the benefit of reading in draft the judgment prepared by A. Twinomujuni J. A. and I agree with it and the orders proposed.

Since Kitumba J. A also agrees, by a unanimous decision of this Court, this appeal is allowed. The judgment of the High Court is hereby set aside with the orders proposed in Hon. Justice Twinomujuni's judgment.

Dated at Kampala this 24^th day of August 2007.

L. E. M. Mukasa-Kikonyogo HON. DEPUTY CHIEF JUSTICE

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

#### CORAM: HON. JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ. V HON. JUSTICE A. TWINOMUJUNI, JA. HON. JUSTICE C. N. B. KITUMBA, JA.

#### CIVIL APPEAL NO. 96 OF 2004

#### 1. MAVUNWA EDISON $10$ ) 2. AMITI TOM ) **....................................** For and on behalf of 194 others

#### **VERSUS**

#### **UGANDA ELECTRICITY** GENERATION COMPANY LIMITED :::::::::::::: RESPONDENT $15$

[Appeal from the ruling of Hon. Bamwine, J. dated 17/5/2004 in H. C. C. S. No.353 of 2003/

#### **JUDGEMENT OF KITUMBA, JA.** 20

I have read in draft the judgement of Twinomujuni, JA. I entirely agree with it and the orders proposed therein and have nothing more useful to add.

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Dated at Kampala this ....................................

CHES CILLA C. N. B. Kitumba JUSTICE OF APPEAL

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA AT KAMPALA CIVIL APPEAL NO.96 OF 2OO4 MAVUNWA EDISON & 195 OTHERS APPELLANTS VERSUS UGANDA ELECTRICITY GENERATION COMPANY LIMITED RESPONDENT

### RULING ON TAXATION

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The facts from which this taxation matter arises are well laid out in the lead judgement of Justice Twinomujuni, JA dated 24108107' and I need not recapitulate them in the interest of time.

l5 The most contentious bill item is that of the instruction fees. I gave parties time to reconsider their offers and counter offers. The respondent counsel offered a fee of 10m/: while the Appellant counsel insisted on a fee between 20m- 40rt/:.

)o Given the nature of the appeal, and time the counsel for these various appellants has spent to process their cause back to the High Court, ofover ³ years, all in line with the bench marks laid out in Paragraph 9(2) of the third schedule to the Court of Appeal rules I do find 30rt/;- adequate instruction fee befitting a reputable counsel for this appeal. \$impsons Motor Sales

25 (London) Ltd V Hendon Corporation, It9641 / otrE. R 833, PENNY corLKJ.l

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The rest ofthe bill has been taxed as under the scale to the Rules.

All in all this bill has been finally taxed and awarded at Shs. 30,372,500/: only.

⁵ Dated at Kampala this day of 2008. f\-

ASSISTANT REGIS

G. K. N (---.

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OURT OF APPE,AI,

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