[2011] UGCommC 2008

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA. COMMERCIAL COURT DIVISION

HCT - $00 - CC - CS - 186 - 2009$

RAREMET LTD. . . . . . . . . . . . . . . . . . . . $\cdots$ Plaintiff

### **VERSUS**

SGS UGANDA LTD. ..................................

THE HON. JUSTICE GEOFFREY KIRYABWIRE **BEFORE:**

### JUDGMENT

The plaintiff RAREMET LTD filed this suit against the defendants SGS (U) LTD. a certification company for special damages of USD 543,766.19, being the market value for the raw material known as tantalite ore, which the plaintiff paid to NECA Co. Ltd as the supplier of the raw material. The plaintiff also claimed for general damages arising from negligence of the defendant, interest and costs.

The case for the plaintiff is that Neca Co. Ltd. was under the terms of a sales agreement with the plaintiff, supposed to contract the verification services of the defendant to sample weigh, tally and provide quality analysis of the mineral content. The said ore was supposed to be shipped from Uganda to Estonia. It also the case for the plaintiff that the defendant issued false certificates of sampling, weight and tally to the plaintiff which it relied upon to its detriment. The plaintiff avers that the defendant issued the said certificates, which stated $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ $\frac{1}{2}$ reliance upon those certificates, paid to NECA Co. Ltd. the supplier the sum of


USD 543,766.19 as the market value for two consignments of tantalite ore purchased by the plaintiff from NECA Co. Ltd, thereby suffering loss. The said tantalite ore was shipped out of Uganda to Estonia in two consignments. A subsequent re-sampling of the consignments by M/s Alex Stewart and Baltic Inspection Estonia LLC established that the consignments did not contain tantalite ore. Furthermore, when the drums in the first consignment were reweighed, the gross weight was stated to be 275 kg less than what was reflected in the defendant's certificate. Furthermore, the drums for the second consignment when re-weighed, established that the gross weight was stated to be 208 kgs less than what was reflected in the defendant's certificate.

The plaintiff avers that had it known that the consignments did not contain tantalite ore, it would never have paid the said sum to NECA Co. Ltd.

The defendants case however is that the defendant is a third party to the transaction between the plaintiff and NECA Co. Ltd the supplier. Furthermore, that the scope of duty owed to NECA Co. Ltd by the defendant was to sample, weigh tally and dispatch samples to M/s AH Knight Laboratory in the United Kingdom and that the duty did not extend to assaying or guaranteeing that the material contained in the consignments was tantalite ore. The defendant contended that NECA Co. Ltd, the supplier did not appoint the defendant to perform an analysis of the material and that the defendant was neither responsible for procuring the safe and untroubled journey of the goods to their place of delivery nor a guarantor or insurer of the performance of NECA Co. Ltd's obligations to the plaintiff. The defendant denied liability for any loss suffered by the plaintiff.


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Th« issues raisedfortrialwere:

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- the defendant performed its duties as per the scope of work issued by NECA Co. Ltd. - her the defendant is liable in negligence for loss occasioned to the plaintiff. - 3- What are the. remedies available;

At the trial, the plaintiffwas represented by Mr. Adriko, while the defendant was represented by Mr. Kiryowa Kiwanuka. The plaintiff called three witnesses; Mr. Robert Borodin (PW1), a director of the plaintiffs company, Mr. Jovan Latintic (PW2) the Managing Director of NECA Co. Ltd, and Mr. Christian Urston(PWs), a Geologist. The defendant called only one witness Mr. Ferdinand Bitaihirwe : : (DWi), the General Manager ofthe defendant.

#### **ISSUE 1: Whether the defendant performed its duties as per the** scope **ofwork issued** by NECA Co. **Ltd.**

Mr Jovan Latintic a representative of NECA Co. Ltd testified on behalf of the plaintiff and stated that that it was him who instructed the defendant to sample, eigh and tally and dispatch samples to M/s AH Knight Laboratory ational Ltd (herein after referred to as "AH Knight") in the United d n for lab analysis and that AH Knight received the dispatched sample bags with the present when the sampling , NECA co. Ltd, : ' used for both samples defendants seal intact. Furthermore, that he was personally " ; was done, together with other representatives from for both the consignments. He also testified that the procedure was the same, except that the locations were different.


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Mr. Latintic also testified that he received from SGS a certificate of assaying issued by AH Laboratory showing that the Ore had the expected mineral content with regard to the consignments. This is because it was SGS that sent the samples to AH Knight for analysis and all the necessary money for AH Knight was paid to SGS.

Dr. Ferdinand Bitaihirwe the General Manager of SGS also testified that he personally handled the instructions in this particular case. He testified that the defendant was instructed to sample, supervise the packing of containers, dispatch samples to AH Knight and issue certificates. Mr. Bitaihirwe testified that as to the quality of the samples given to them, SGS issued a certificate for the first sample that reproduced the quality results from AH Knight. However with respect to the second consignment SGS did not issue any certificate but merely forwarded the certificate they got from AH Knight. He however insisted that SGS did not carry out any analysis of the ore samples. He testified that SGS was only required to do the procurement and it was agreed that Neca Ltd would pay. All SGS did then was courier the samples using DHL.

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I have reviewed the evidence on this issue and the submissions of both Counsels for which I am grateful.

The issue as I see it is quite straight forward in that it requires the Court first to establish the instructions that were given to the defendant SGS by Neca Ltd. I find exhibit D15 very instructive on the matter. It is a letter from Mr. Jovan Latincic of Neca Ltd to Dr Bitaihirwe of SGS dated 22^nd November 2007. It is a request for services from SGS by Neca Ltd and lists them as follows

1. Sampling and weighing of the consignment

- 2. Sample to be sent to AH Knight for the quality analysis - 3. Issuing certificates of sampling, tally, weighing and quality


, me f10rn ^le evidence that all the parties agree that the scope of *y* expected of SGS was to sample, weigh and tally and dispatch ¹ s to AH Knight Laboratory in the United Kingdom for lab analysis.

**SO.** at is not agieed is who takes responsibility for quality certification namely SGS 01 AH Knight? In one case SGS issued its certification based on what it saw '¹⁰¹¹¹ AH Knight; in the other consignment it merely forwards the AH Knight ^C ci tilication. In both cases however AH Knight did issue its own certificate of assay (exhibits D8 and D23) addressed to SGS. A lot of the paper work points to SGS. However a reading of Exhibit D15 (item 2) suggests that SGS was to send the sample to AH Knight for the quality analysis. I agree 'with the evidence of Dr. Bitanihiwe that this was a service outsourced to AH Knight and did not fall under the duties of SGS to cany out the analysis after all from the evidence in Court SGS could do this work itself but was not asked to do

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I find therefore that the defendant's scope of work was limited to the duty to sample, weigh, tally and dispatch the samples to AH Knight Laboratory did not include the duty to certify the quality oftantalite ore.

. s to the discrepancy of weight in the consignments as certified by SGS in and that which reached Estonia, Dr Bitanihiwe did not contest the *^C* t statec] that the drums were weighed and sealed in Uganda in the weighs Uf Latjncic before shipment. Dr. Bitanihiwe testified that the Picscnce tamuered with and in any case some of the drums drums could have ¹ reactel Estonia when they were damaged.


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It is the case for the defendant that they were not responsible for procuring the safe and untroubled journey of the goods to their place of delivery. It was also agreed by the parties that the results certified were only applicable to the time and place of inspection, that the defendant was not a guarantor or insurer of the performance of NECA Co. Ltd's obligations to the plaintiff and that NECA Ltd did not appoint the defendant to perform an analysis of the material.

I am inclined to agree with the defendants on this point. The plaintiff's in their evidence did not make out a clear case of negligence as pleaded in this respect. To my mind when the drums were sealed with tags then the defendant had discharged its obligation as to weighing.

1 find that the defendant performed its duties as per the scope of work issued by NECA Co. Ltd.

## ISSUE 2: Whether the defendant is liable in negligence for loss occasioned to the plaintiff.

The plaintiff's counsel submitted that the sample did not correspond with the bulk and therefore, the defendant failed to perform its obligations. No evidence was given to explain why the samples were different, or to even prove that the defendant flawed in its procedure. As I have said in the first issue the ingredients to warrant a claim in negligence have not been made out against the defendant in this case.

Furthermore the evidence clearly shows that the defendant neither had contractual dealings with the plaintiff, nor was the defendant privy to the contract between the plaintiff and NECA Co. Ltd the supplier. The contract by which the defendant was to sample, weigh, tally and dispatch samples to AH 6


S Laboratories in the United Kingdom was made between the defendant d the supplier NECA Co. Ltd, and thus, the plaintiff was not party to the contract.

¹ thus find that the defendant was not liable in negligence for the loss occasioned to the plaintiff.

## **1** ISSUE 3: What are the remedies available.

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Having resolved for the defendant in respect of both issue that the plaintiff is not entitled to the reliefs prayed for. Accordingly, the suit is dismissed with costs to the defendant one and two, I find

Justice Geoffrey Kiryabwire

JUDGE Dated:


08/11/07 9=35 a.m.

### !Bcnt read and signed in Court in the presence of;

- Kiwanuka for the Defendant - Mukiibi for the Plaintiff

### In. CdlUl

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- Mr. Sarah Mugenyi Ag Country Manager - Rose Emeru Court Clerk

Justi eoffrey Kiryabwire

JUDGE

Date:



### **DECREE**

THE SUIT coming up for hearing this 8^th day of November 2011, before His Lordship the Hon. Justice Geoffrey Kiryabwire in the presence of Mr. Semakula Mukiibi counsel for the Plaintiff and Mr. Kiryowa Kiwanuka counsel for the defendant.

IT is HEREBY ORDERED and DECREED that:

The suit be and is hereby dismissed with costs to the Defendants.

We approve

$\text{FAX} + 256 - 41 - 257643$ Email: advocates@kandk.co.ug

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MMAKS ADVOCATES

Counsel for the plaintiff

GIVEN under my hand and seal of this Court this....................................

FEES PAID: $600 - 5$

RECEIPT NO: $\Theta$ $\Theta$ $\Theta$ $\Theta$ $\Theta$ $\Theta$ HIGH COURT OF UGANDA COMMERCIAL DIVISION

$2.811.1201$

DEPUTY REGISTRAR THIS IS ANNEXTURE MARNEU IN THE AFFIDAVIT OF.................................... BEFORE ME ON THE.................................... DAY OF $\cdots$ KIWANUKA & KARUGIRE ADVOCATES, PLOT 5A2 ACACIA AVENUE KOLOLO, $\overbrace{\hspace{1cm}}^{\hspace{1cm}}$ COMMISSIONER FOR OATHS KAMPALA. TEL $\cdot$ +256 – 41 – 255278/345054