[2022] UGCommC 180

### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISIONI

### CIVIL SUIT NO. 7I3 OF 2015

## MIRAJ BAROT ::::3::;;:::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF VERSUS

### SALVATION ARMY DEFENDANT

## BEFORE: HON. LADYJUSTICE ANNA B. MUGENYI JUDGMENT

The Plaintiff brought this suit by way of ordinary plaint seeking for an order for immediate refund of UGX 453,100,000/ being money received by the Defendant in the failedpurchase of land comprised in Plot 175 Volume 3686 Folio 17, land at Bombo Road measuring approximately 0.405 hectares (hereinafter referred to as the'suit land'), refund of UGX 6,012,000/ expended in stamp duty fees, punitive damages for inconvenience, general damages, interest and costs of the suit.

The brief facts constituting the Plaintifls case are that the plaintiff and the Defendant entered into a land sale agreement on the 27h day of November 2ol2 in respect of the suit land at UGX 600,000,000/ payable in instalments. That the Plaintiff paid UGX 300,000,000/ at execution leaving a balance payable only after delivery of vacant possession of the property on or before l2s December 2012. on 23'd October 2013, by further memorandum of understanding by the parties, the Plaintiff deposited UGX 100,000,000/ and another UGX 35,000,000/ on the account of Abalema united Efforts for use to aid vacant possession to the plaintiff,

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and it was agreed that these deposits were to be deducted from the balance consideration owed by the plaintiff.

That on the 24th day of January 2014, the plaintiff compelled by the Defendant paid an additional sum of ucx 600,000/ to facilitate the eviction of Abarema Group, a squatter on the property. That in total the plaintiff has paid UGX 435'600,000/ to the Defendant, leaving a barance of UGX r64,400,000/;which the Plaintiff is unable to pay on account of failure to deliver vacant possession by the Defendant. That the Defendant has since breached the contract by failing to deliver vacant possession since r2Lh December 2012, resulting in considerable inconvenience, financiar loss and general damages. It has also deprived the Plaintiff of both an equitable and registrabre interest in the property; for which he holds the Defendant liable.

The Defendant in their Written Statement of Defence asserts that the plaintiff has no cause of action as the plaint is misconceived, incomplete, unfair and bad in law and ought to be struck off the court record with costs on a preliminary objection as ^apoint of law. The Defendant further contends that they have done all possible to honour their bargain but for the unforeseen intrusion of the 3d parties in the performance of the contract, hence they are not liabre in any way to the plaintiff. They prayed that the suit be dismissed with costs.

In reply to the written Statement of Defence, the plaintiff contends that the plaint discloses a cause of action as the Defendant owed a duty to the plaintiff to honour her obligation with regard to delivery of vacant possession of the suit property in the agreement executed by the parties; which duty the Defendant breached resulting into considerable financial loss, distress and inconvenience suffered by the Plaintiff. Further, that the Defendant has done nothing to honour the parties,

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bargain and reiterates the claim that the loss suffered by the plaintiff was occasioned by the breach of the Agreement and failure to hand over vacant possession on the part of the Defendant. The plaintiff prays for specific performance of the contract and general damages resulting from that breach.

#### REPRESENTATION

The Plaintiff was represented by M/s K. Ssebuliba & co. Advocates and the Defendant was represented by l\zls Okuku & Advocates.

#### JUDGMENT

The following issues were agreed upon in the Joint Scheduling Memorandum for determination by the court:

- l. whether there has been any breach of the purchase agreement and by whom? - 2. What remedies are available to the parties?

## Issue one: whether there has been any breach of the purchase agreement and by whom?

counsel for the Plaintiff submitted that pwl testified that it was the Defendant,s obtigation at all times to deliver vacant possession, and that the Defendant fundamentally failed to hand over the land since l2th December 2012. That pwl added that instead, he received several written pleas from the Defendant,s lawyers for additional payments to help the Defendant meet the anticipated costs for securing vacant possession from Abalema united Efforts Group. He clearly stated the various amounts paid to the Defendant, the Defendant's lawyers and some paid into High court on account of Abalema Group; and that he received paymenr receipts.

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counsel added that PWI further stated that despite fulfilling his financial obligations under the memorandum, the Defendant failed to hand over vacant possession as agreed. That even after releasing an additional UGX 400,000/- on 24th January 2014 towards aiding the Defendant's efforts to secure vacant possession, the Plaintiff was still unable to register his interest in the suit land due to interference by Abalema Group. counsel submitted that the above evidence was undisputed, even in cross examination.

He further submitted that DWI acknowledged receipt of the payments, although he averred that vacant passion had been given to Harshad Barot, the plaintifls father, and that he did not have proofto show rhat. In addition, that the plaintiffs father was not a party to the suit therefore the land could not be handed over to him. pwl presented his passport to show he was out ofthe country and also that pE 15 and PE 16 show that the Defendant was aware that vacant possession had not happened. counsel added that DW3 and DW4 gave contradictory evidence regarding giving vacant possession to the plaintiff and his father.

Counsel relied on section 10 of the Contracts Act 2010 to submit that there was ^a contract between the parties, and he further relied on the definition of breach of contract in Black's Law Dictionary, Bth Edilion at page 200 to conclude that the Defendant breached their obligations under the agreement by failing to fulfil clause 2 on delivery of vacant possession, and therefore as a consequence the Plaintiff has also failed to fulfil Clause I thereof.

In reply, counsel for the Defendant submitted that the Defendant is no longer bound by the original agreement which required the delivery of vacant possession by 12th December 2012, as that agreement was varied by the Memorandum of Understanding signed by the parties on the 23'd day of November 2013. He added

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that the Plaintiff did not insist on the enforcement of the original agreement upon which this suit is premised. He cited section 67 of the contracts Act 2010 on variation of contracts, and submitted that the Plaintiff waived his right to insist on punctual performance of the contract when he entered into the memorandum of understanding, by which he made more deposits of the balance of the contractual price before being given vacant possession.

That the Plaintiff only denies not being given vacant possession but does not state who is on the land, and ought to have included the person as a party to this suit for proper determination because the Chairperson of the Abalema Group gave evidence for the Defendant that they vacated the land upon receipt oftheir balance of UGX 100,000,000/. counsel added that it is the Defendant's unchallenged evidence that upon receiving vacant possession, the plaintiff did not fence off the land and instead went away on a long holiday of 6 months leaving unknown people to enter on the land; and therefore that the Plaintiffs conduct cannot be visited on the Defendant.

counsel added that the Plaintiff took possession of the land and got the original certificate of title, and duly signed transfer forms. That the evidence suggests loss of interest in the property or inability to pay the balance by the plaintiff, because the Plaintiff claims to have paid stamp duty for transfer of title, which he would not have done for land in the possession of another person with a separate interest from the vendor's. counsel concluded that the Defendant is not in breach of the agreement and that the Defendant gave vacant possession to the plaintiff.

In submitting that the Plaintiff does not have a cause of action against the Defendant, counsel submitted that the purchaser in a contract for sale becomes the owner in equity upon execution ofthe purchase agreement and the vendor becomes

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in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase money, a charge or lien on the estate for the security of the purchase-money, and a right to retain possession of the estate until the purchase money is paid, in the absence of express act as to time of delivering possession.

In determining whether or not there was breach, I must note there is no dispute that the parties entered into a purchase agreement dated 27th November 2ol2 (pE. l) for land comprised in Leasehold Register volume 3686, Folio 17 plot 175 land at Bombo Road; wherein Article I stipulated that the balance of UGX 300,000,000/ would be paid after the Defendant delivered to the Plaintiff vacant possession on or before the l2th day ofDecember 2012. Further, the parties do not dispute entering ^a Memorandum of Understanding dated 23'd october 2013 wherein they agreed that the Plaintiff pays UGX 135,000,000/ to the Defendant to help them secure vacant possession. To date, the Plaintiff is not in possession of the land and that is where the contention is. The Plaintiff has paid a total of UGX 453,000,000/.

whereas the DWl, Dw2, Dw3 and DW4 all say in their evidence that they handed over the land to the Plaintiff, it is pwl's evidence that to date, vacant possession was not delivered to him, and that it is in breach of pE. l. He reiterated that position in both cross examination and re-examination, and he added that he did not appoint his father as his agent. The Defendant should have delivered vacant possession before or on the l2th day of December 2012 but this was not done. The Defendant avers that this term was varied by the Memorandum (pE.4), however, I do not agree with that submission because there is nothing in the memorandum that alters or modifies the requirement of delivering vacant possession, or better still, any provision that says it had already been done as the Defendant wants Court to

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believe. Instead, it only says the plaintiff had the original certificate of title and that the Defendant would sign transfer forms.

From paragraph 3 of P8.4, it is apparent that vacant possession had not been delivered because the plaintiff was required to deliver ucx 35,000,000/ to the Defendant for use to evict the Abalema and pastor Baligasima's church. This is enough proofthat by 23'd october 2013, one year later, when pE.4 was executed, the land had not yet been vacated by the occupants. From paragraph l0 of the witness statement of DWl, he generally said that vacant possession was given to the Plaintiff together with the certificate of title but did not mention when it was done. In cross examination, DWI said they met on the land with the plaintiff and they handed over vacant possession together with the documents. He added that he even made handover documents which he had kept in office. This so called hand over document was never produced in court. I find that this evidence is contradictory to the evidence in DE. I I where it is apparent from clause 2 that the transfer forms were signed on the 23'd day of 2}r3,therefore they could not have been handed to the Plaintiff on l2s December 2012 as claimed.

It can also be seen from the last paragraph ofDE.lg that by rTth January ²⁰¹⁵ when it was written, vacant possession may not have been delivered as the lawyer stated that the Plaintiffs concems needed to be addressed urgently, and even suggested swapping the land for another one. Just like DWI stated, DW2 also confirmed that the land was handed over to the plaintiff together with the certificate of title and signed transfer forms on l2rh December 2012, after the Plaintiff had made two instalments.

I must say that the Defendant's evidence has inconsistencies that cannot be explained like DW3, one of the Abalema inmates said in his statement that they

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vacated the land upon receiving all their money in 2012, and yet when he was asked about DE.19 a court order dated 30th September 2013 directing the Defendant to deposit UGX 100,000,000/ into Court, and also directing the Abalema to vacate in 7 days, DW3 said it was a long time and he does not remember. In my opinion, irrespective of the fact that the court order refers to ^a different case, it is in respect of the land in question and the court would not make such an order if the Abalema had already vacated the land in December 2012 as claimed. This only points that they were still in occupation of the land. In the absence of any concrete evidence to prove that they vacated as directed in that order, I take it that they have never vacated.

Further, the Defendant's witnesses even contradict themselves on the issue of payment of the money to the Abalema, which was a pre-condition for them to vacate the land. whereas in cross examination DW3 confirmed that by the time they handed over the land to the Plaintiff on 12th December 2ol2 they had received all their ucx 250,000,000/, Dw4 gave contradictory evidence that by that time, they had only received ucx 150,000,000/; and that they had been informed that the Defendant was still demanding some money from the plaintiff, which is true, yet by then, the evidence shows that the plaintiff had already paid UGX 300,000,000/. DW4 added that the balance was given to them after a month.

The law on inconsistencies in evidence was discus sed, in Aziz Kalungi Kasujja v Naumi rebekanya Nakakande, scCA No. 63 of 1995 where it was held that.

"The law governing inconsistencies or a discrepancy is that grave inconsistencies if not satisfactorily explained will usually result in the rejection of the evidence of the witness. Grave inconsistency is the one that goes to the root of the case. " In light of the above, the evidence of DW3 and DW4, being the only two representatives of the Abalema Group that gave evidence in the case, is contradictory and as a result I will not consider their evidence. pE.4 itself, which both parties acknowledge to having signed, shows that by 2013 when it was executed, vacant possession had not been delivered. In addition, DWI claims that vacant possession was delivered to the Plaintifls father as the Plaintiff had travelled out of the country for his wedding while DW2 claims that both the Plaintiff and his father were present during the handover. PWI produced his passport in Court upon the request of the Defendant's Counsel and it was proved that by l2th December 2012he was still within the country therefore it cannot be said that he had gone for long, and that is why other people encroached on the land. I therefore find that the Plaintiffhas proved on a balance ofprobabilities that vacant possession was not delivered to him.

In the premises, I find that there was breach of the agreement by the Defendant to deliver vacant possession to the Plaintiff by l2th December 2Ol2 to date.

In respect of the counterclaim on breach by the Plaintiff on failure to pay the balance, PE.l was clear that the balance would be paid after the plaintiff had been given vacant possession of the land. Since that has not been done, I find no breach on the part of the Plaintiff. In fact, the Plaintiff was kind enough to accept to advance more money under the memorandum of understanding to assist the Defendant in evicting the occupants of the land. Although it was for the plaintiff ^s benefit, they were not obligated to advance more money beyond the initial uGX 300,000,000/ in the original agreement. In effect the counterclaim fails. Therefore, there was breach of the agreement by the Defendant in failing to deliver vacant possession to the Plaintiff.

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## Issue Two: What remedies are available to the parties?

i. Refund of UGX 453,100,000/- received by the Defendant.

counsel for the Plaintiff cited the case of Dr. Dennis Rwamafa v Attorney General U992J KALR 2I and submitted that a person who suffers damage due to ^a wrongful act of the Defendant must be put back in the position he would have been in had he not suffered the wrong. That due to the fundamental breach by the Defendant, the Plaintiff suffered has been deprived of the use and benefit of UGX 453,100'000/ for over 8 years; and that it was an unjust enrichment to the Defendant who has never proposed to refund the money.

In reply, counsel for the Defendant prayed that the claim be disallowed because there was no breach and that the plaintiff did not show proof of payment of the said sums to the Defendant.

From the evidence on record, it is not disputed that the plaintiff had paid UGX 300,000,000/- by 27n November 2012 when pE. l was executed. ucx 100,000,000/- was paid in cash and received by the Defendant in a receipt dated 28'h November 2012 in pE.5. The UGX 200,000,000/- was deposited on the Defendant's bank account with Barclays bank evidenced by a pay slip marked PE.6. This is corroborated by paragraph 3 of pwl's witness statement. In pE.7, the Plaintiff paid UGX 500,000/- to a one Robert Erop upon the request of the Defendant's counsel in a letter dated 24h April 2013 and pwl mentioned it in paragraph I I of his statement. The Defendant acknowredged receipt of UGX 103,000,000/- in PE.8 a receipt dated 30ft october 2013, and another UGX 31,000'000/- in PE. 9 a receipt dated 9s November 201. AI these are mentioned in paragraph 7 of PWI's witness statement.

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Further, from PE. 15, the Plaintiff paid UGX 600,000/- to Abalema to vacate the land according to paragraph 9 of the witness statement of PW1. Therefore, going by the above, I find that the Plaintiff proved having paid the sum of UGC 435,100,000/- which was acknowledged and for which he deserves a refund. I have noted that the Plaintiff's claim was for UGX 453,100,000/- but this could have been an error as the figures 3 and 5 were interchanged. What is proved is UGX $435,100,000/.$

ii. Refund of UGX 6,012,000/ incurred in payment of stamp duty and the accompanying bank charges.

Counsel for the Plaintiff relied on the holding in the case of **Mariam Naigaga V** Orient Bank Ltd Civil Suit No. 464 of 2013 where it was held,

"A party who has done something or incurred expenses in performance of a contract prior to the frustrating event may claim compensation for such expenses."

He added that if the Defendant had been truthful about its failure to deliver vacant possession, the Plaintiff would never have paid the stamp duty and bank charges which are evidenced by PE. 12 and PE. 13 respectively.

In reply, Counsel for the Defendant said the claimed sums were not proved but also added that the land should have been vacant before the Plaintiff attempted to transfer it into his name.

I have looked at looked at PE.12 and PE.13, and I am satisfied that the Plaintiff made payment of UGX 6,000,000/ and UGX 12,000/ as stamp duty fee and bank charges respectively for the transfer of certificate of title as had been agreed under Clause 4 of PE.4, the Memorandum of Understanding dated 23^rd October 2013. Whereas the Defendant argues that the land should have first been vacant before any attempt to transfer ownership, I must agree with

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counsel for the Plaintiff that payment of stamp dut5r was made in anticipation of the Defendant honouring their promise of delivering vacant possession to the Plaintiff. In fact, the plaintiff had paid the monies requested by the Defendant to aid them in evicting the Abarema Group from the 1and. The plaintiff cannot make such a loss for a default on the part of the Defendant because had the Defendant delivered vacant possession, there wourdn,t be such a craim.

In the premises, it is not onry equitable but also just and fair that the plaintiff be refunded the UGX 6,000,000/ and UGX '2,OOO/paid for stamp dury and bank charges respectively. This claim succeeds.

iii. Punitive damages for inconvenience suffered by the plaintiff.

counsel for the Plaintiff cited the case of Fredrick Zaabwe v orient Bank & ^S others [200[ HCB vol29 to support this claim and he submitted that punitive damages are awarded to punish the Defendant and deter him from repeating the wrongful act. He added that in this case the Defendant sold land which they knew was infested and they extracted more money from the praintiff to secure vacant possession which was not done. That the refusal by the Defendant to refund the money for a period of8 years has aggravated the injury and inconvenience suffered by the Plaintiff, who is a known commercial developer. counser prayed for UGX 100,000,000/ in punitive damages.

In reply, counsel for the Defendant submitted that punitive damages are awarded where there has been oppressive, arbitrary or unconstitutional action by servants of govemment and since the plaintiff has not led any evidence to show that the Defendant is a government institution, the claim must fail. He cited the cases of Rookes v Barnard tr964l Ail ER 4r0 and KCC v Nakaye (1972) EA 4a6 in suppoft.

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^Ihave looked at the submissions and authorities by both counsel and I find as follows. The law on punitive damages or exemplary damages is that it is in respect of a sum of money of a penal nature in addition to the compensatory damages given for pecuniary loss and mental suffering. As counsel submitted, its main purpose is to deter and avoid repetition of the offending acts. It is important to note that they may be awarded without proof of actual loss suffered by the plaintiff as long as aggravating circumstances exist.

According to the case of Kanji Naran pater v. Noor Esso and another llg6sl I EA 484, there are two circumstances under which exemplary damages are awarded and these include: cases in which the wrong complained of was an oppressive, arbitrary or unconstitutional action by a servant of the government, or cases in which the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation made to the defendant. This case does not fall in the first category as the Defendant is not a servant of the goverrrment. Similarly, the plaintiff has not proved aggravating factors to show that the Defendant's conduct was calculated to self-enrichment. Therefore, this claim for punitive damages is rejected.

## iv. General damages

counsel for the Plaintiff cited several authorities to support this claim and he submitted that the purpose for the award of general damages is to put the innocent party in the position in which he would have been had the contractual obligations been performed. He added that the plaintifls claim is based on investment loss on appreciated value of the asset purchased in November 2012. That the value of the property was UGX 600,000,000/ and the current market value being UGX 2,000'000,000/, and also that the Defendant benefitted from the use of the money

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paid by the Plaintiff, they will still retain the appreciation in the value of the land even if they refund the amount they received. He relied on the valuation report (PE.l6) of the property and prayed that court grants the plaintiff the UGX 2,000,000,000/ being the current market value ofthe property.

In reply, Counsel for the Defendant briefly submitted that the plaintiff is not entitled to general damages as the Defendant is not in breach of the agreement.

General damages are the direct, natural or probable consequence of the act complained of therefore they are awarded as a form of compensation to put the party in the same position as he would have been if he had not suffered the loss or injury. (See storms v Hutchinson t19391 I KB z4g at 7s6 and British rransport Commission v. Gourley [1956t AC. lBS, lgn.

In this case, the Plaintiffhas been deprived ofthe use and benefit ofthe land for the past 10 years as a result of the Defendant's conduct of failing to deliver vacant possession to the Plaintiff or at the very least refunding the plaintifls money as it has become impossible for them to fulfil their obligation under the agreement. The Plaintiffshould therefore be placed in a position that they would have been at, had they had use of the land. In the premises, I find it appropriate and proper to award general damages of UGX 100,000,000/ to the plaintiff for the damage and inconvenience suffered.

Interest on refunds in (i) and (ii) at the rate of z3o/o per annum from the 27s November 2012 until payment in full.

counsel submitted that court must take into account the ever rising inflation and drastic depreciation of the Ugandan currency in determining a just and reasonable

rate of interest. That since the purchase was a commerciar transaction, ^a commercial rate is applicable.

In response, counsel for the Defendant submitted that there is no justifiable reason for the 23%o rate which is above the court rate of 6%o; and also that the plaintiff ^s claim was not proved therefore he is not entitled to interest.

^Ihave considered submissions and authorities relied on by counsel, as well as the circumstances of this case, and I find it just to award interest on the refund of the purchase price and refund on stamp duty at court rate from the date of this judgment until payment in full.

vi. Costs of the suit.

As it is that costs follow the event, it is only fair that the successful party is awarded costs. Therefore, the plaintiff is awarded costs of this suit.

HON LADYJUSTICE ANNA B. MUGENYI DArED....... ...1g.1 YL