[1998] UGHC 21

#### THE REPUBLIC OF UGANDA

### IN THE HIGH COURT CF UGANDA AT KAMPALA

## CIVIL SUIT NO. 95 OF 1997

UGANDA POSTS & TELECOMMUNICATIONS CORP. PLAINTIFF

# -versus-

INTERNATIONAL TELEVISION DEFENDANT To H k/ATTo BEFORE;- HON. THE PRINCIPAL JUDIE - MR. JUSTICE J. H. NTABGOBA

# RULING

Agreement for Uplink Satellite Services with the International Television Network Limited (heieinafter referred to as the first defendant). Mr. Thomas Kato, the Chairman of the first defendant, signed the Agreement on behalf cf the first defendant. I will hereinafter refer to Mr. Katto as the second defendant. According to the Agreement, the plaintiff is the National Telecommunications provider. And it can be judicially noticed that, actually it is. On 51.5.96 the Uganda Posts and Telecommunications Corporation (hereinafter referred to as the plaintiff) entered into an

According to the preainible to the Agreement, the plaintiff had express permission of the Government of the Republic of Uganda to sign a Protocol with the International Telecommunications Satellite (INTELSAT) to represent the Uganda Government in all dealings with the INTELSAT.

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It is also said, and not disputed, that the first Defendant received a licence from the Ministry of Information of the Government of Uganda to provide Television Services in Uganda, and that it is the first defendant which applied to the plaintiff in its capacity as a signatory to INTELSAT to be facilitated in providing the said Television Services using the INTELSAT Link-up under a 15 year lease.

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In consideration of the facilities given to it, the First Defendant agreed to pay to the plaintiff, for transmission to INTELSAT, annual charges amounting to US \$575,000 to be paid in two equal instalments of US \$287,500 each at the intervals specified in the Agreement.

The subject matter of this suit is as is stated in paragraph 5 of the plaint, as amended (i.e. the Amended Plaint). Paragraph $5(ix)$ of the Amended plaint, in particular reads that:-

" The plaintiff has as a result of failure and or refusal by the First defendant to pay the prescribed charges, been forced by INTELSAT as a signatory to its Protocol on behalf of the Government of Uganda, to pay US \$170,000 as at 30th November 1996, and INTELSAT is threatening to cut off Satellite Services to Uganda unless all the charges due under the Agreement hereto attached have been paid in full".

Annexture 'C' of the amended plaint is alleged to be evidence of the payments by the plaintiff to INTELSAT. Paragraph $5(x)$ of the plaint is also pertinent in so far as it avers that:-

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It is also said, and not disputed, that the first Defendant received a licence from the Ministry of Information of the Government of Uganda to provide Television Services in Uganda, and that it is the first defendant which applied to the plaintiff in its capacity as a signatory to INTELSAT to be facilitated in providing the said Television Services using the INTELSAT Link-up under a 15 year lease.

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In consideration of the facilities given to it, the First Defendant agreed to pay to the plaintiff, for transmission to INTELSAT, annual charges amounting to US \$575,000 to be paid in two equal instalments of US \$287,500 each at the intervals specified in the Agreement.

The subject matter of this suit is as is stated in paragraph 5 of the plaint, as amended (i.e. the Amended Plaint). Paragraph 5(ix) of the Amended plaint, in particular reads that:-

" The plaintiff has as a result of failure and or refusal by the First defendant to pay the prescribed charges, been forced by INTELSAT as a signatory to its Protocol on behalf of the Government of Uganda, to pay US \$170,000 as at 30th November 1996, and INTELSAT is threatening to cut off Satellite Services to Uganda unless all the charges due under the Agreement hereto attached have been paid in full".

Annexture 'C' of the amended plaint is alleged to be evidence of $\mathcal{L}$ the payments by the plaintiff to INTELSAT. Paragraph $5(x)$ of the plaint is also pertinent in so far as it avers that:-

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" On its part the plaintiff did linkup the defendants with INTELSAT whose engineers came over (to Uganda) from the United States of America, tested the first defendant's equipment at Naguru Hill in Uganda and aligned it with INTELSAT airborne Satellite Station".

Paragraph 5(kl) also tells about the cause of action as follows:-

" The necessary transponders applied for and booked by the defendants were availed to the defendants by INTELSAT for an agreed period of 15 years, and the defendants have failed or refused to pay for INTELSAT Services and facilitation charges to the plaintiff—".

The plaintiff's prayers include,

- (a) Payment to INTELSAT Service charges of US 8 575»OOO and 10% handling charges; - (b) General damages, and - (c) Interest.

;s.'

The W. S. D. alleges that the Agreement between the parties was ob\ ained by misrepresentation, in so far as the first defendant, in its application, lied that it had authority to dead, with INTELSAT on behalf of the Uganda Government, "when in fact it did not have such authority" (see paragraph 4(a) of the W. S. D. as amended). The defendants also contend that the Agreement was void for a number of reasons:-

(i) that the plaintiff had no authority to sue the defendants. ^A preliminary objection is threatened on this account.

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(ii) that the agreement was not made under seal despite the provision in the Articles of Association of the defendant which provides that an agreement entered into by the defendant shall be entered under Seal.

(iii) that although the defendants had applied to the plaintiff for capacity on space segment covering Uganda, East and Central Africa (i.e. Footprints IS 702 at 359E) the plaintiff, without specifically notifying the defendants and obtaining their consent, varied the service area to Uganda only (Footprint IS 707 at 359E). On discovering the mistake, the defendant wrote a letter of protest to the plaintiff on 25th June, "1996.

There was in the W. S. D. a plea in the alternative to the above (i) to (iii) that:-

> n ⁿ the defendants shall contend that although the plaintiff agreed to uplink the defendants with INTELSAT, it has never done so, and therefore there was a total failure of consideration on the part of the plaintiff, meaning that there was no contract if it lacked consideration. The defendants also denied knowledge of the plaintiff paying any money to INTELSAT or at all. Finally, the second defendant refuted the allegations in the plaint that he acted as guarantor for the first defendant in the Agreement.

True to its word, Mr. Paulo Sebalu, learned counsel for the signed by the plaintiff with the Government. defendant, first demanded to see the authority of the Government the plaintiff to of . Uganda to^represent it in all dealings with INTELSAT. Counsel also demanded to have a look at the alleged Protocol

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This **ia what Mr.** Sebalu said:-

**n** Befor. **issues,** I want to raise a preliminary point. The plaintiff states that it is acting for the Government. In paragraph 5(H) of the plaint it says that the plaintiff signed a Protocol with the Government to represent it. —Upon reading that claim, ^I applied for a copy of the Protocol which is alleged to give the plaintiff power to deal with INTELSAT. There is an agreement between the plaintiff and Government. They never replied to any request which was written on 6th May, 1997 and filed in Court on 7th May, 1997- It was served on Counsel for the plaintiff--. It is my contention that the plaintiff has no authority to represent.the Government. I amended my W. S. D. in paragraph 4 accordingly. This is my preliminary objection that the plaintiff had no authority to sue and the suit should be dismissed with Costs".

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Government. That is not so. ^I agree with Mr. Ogalo, learned 'epresenting the Government. I dare say at this juncture that Counsel for the defendant misconstrued the plaint in so far as he indicated in his argument that ¹ ^e plaintiff was purporting to sue on behalf of the defendants to believe that the plaintiff ..was claiming to be Counsel for the plaintiff that the suit was a simple action by -the plaintiff against the defendants in breach of executory agreement. Of course the plaintiff is not unblame worthy. It is the tautology of its plaint that led Counsel for the

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**0** I understand it to say that in order to linkup the latter with INTELSAT which is the case as borne out by facts. It is not in disoute that the defendants actually as the W. S. D. alleges, contracted. At least the linkup was over Footprint IS 70? at 359E although according to the Agreement it was supposed to linkup over the entire area covering Uganda, East and Central Africa (Footprint IS. 702 at 359E). I will come back regarding this £Ot linkup with INTELSAT even though, the linkup did not cover the entire area of airwaves that had been the Government; that because it had been so empowered to deal with INTELSAT it acted by the Agreement with the first defendant, Speciality of the plaintiff. to deal with INTELSAT it had to be permitted or authorised by My understanding of the case for the olaintiff is that it claims it obtained permission from the Government to deal with » INTELSAT in the Telecommunications Services which is the failure to linkup the entire area of the agreed airwaves.

The trouble was brought by counsel for the plaintiff, **\*** Mr. Ogalo, who kept on applying for adjournments to produce the documents requested by Mr. Sebalu, which documents were never produced after several adjournments. The matter came to a head when on 30/7/98, the date I had designated as the hearing date. on adjournment, there turned up in Court, on behalf of the plaintiff an advocate not from the firm of Advocates to which Mr. Ogalo belongs. and despite my former order that the adjournment granted 30/6/98 was to be the last

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ir. Paul Byaruhanga who came in with a notice of change of Advocates also wanted an adjournment - this time not to produce the documents required by Mr. Sebalu, but to enable him amend the plaint and also to apply for joinder of the Attorney General. It was because of these startling turns of events, and the failure of the plaintiff to produce the documents requested for, that brought about Mr., Sebalu's adjournments application to be application, not only for the $\sqrt{ }$ dismissed but also for suit to be dismissed with costs. His seriousness was exhibited from his application that, in the event the Court was inclined to grant the adjournment, then the plaintiff should be ordered to pay the Costs of the adjournment as a condition for such adjournment. I will now consider the merits and demerits (if any) of the two applications: one for dismissal of the suit and the other for adjour, ment to enable the plaintiff join the Attorney General as a Co-plaintiff. I will start with the application for the case to be dismissed:

The allegation in the amended W. S. D. (herein to be referred $\mathbf{1.}$ to simply as "the amended defence") was raised as a result of the plaintiff's averments both in the Agreement and in the plaint that the plaintiff had express permission of the Government of the Republic of Uganda and that it signed a Protocol with the INTELSAT to represent the Government in all dealings with INTELSAT. As I have already pointed out, Ir. Sebalu for the defendants challenged these averments as untrue and asked the plaintiff to produce the documentary evidence of the permission given by the Government to the plaintiff, as well as of the Protocol signed by the plaintiff with INTELSAT.

never been produced. the suit be dismissed and also an argument that the Agreement As already mentioned, despite several adjournment to enable the plaintiff to locate the documents and produce them, the same have This led to Mr. Sebalu's application that was based on a misrepresentation and was therefore null and void and could not be invoked to sue for its breach.

If my view is correct, and I think it is, that the plaintiff in its suit is not suing on behalf of anyone but on its own behalf, and that it is neither fronting for the Government of the Republic of Uganda nor for INTELSAT, then is the plaintiff nc a victim of its imprecision and verbosity in its pleadings? What I mean is that it could have very well put its case without alleging that it had, for instance, signed a Protocol with its I'lecommunications dealings, surely the Minister of Works, Housing and Communications, Hon. John M. Nasasira did, in his authorised under the law to provide Telecommunications services". In his letter to the Chief Registrar on 19th February 1998, the Minister said: two letters, leave no doubt in anyone's mind that the Dlaintiff was permitted to deal with INTELSAT in Uganda over matters within the port folio of the plaintiffaas the provider in the I Republic of Uganda, ,/ntotfiAT unless it was prepared to produce a copy of such Protocol. As for the authority to deal with INTELSAT in all

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fl This is in reference to the objections raised by the defendant regarding UPTC's authority to represent the Government of Uganda in matters relating to INTELSAT.

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" This is to confirm that Uganda Posts and Telecommunications Corporation 4s the authorised signatory to the INTELSAT Agreement in Uganda and has been attending all meetings of signatories and meets other obligations on behalf of the Country.

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¹¹ The second defendant approached both Government and INTELSAT and was advised to route his application through UPTC which he did and their application was granted and services provided by Intelsat. As such it is very surprising if the defendants are denying the authority of UPTC in processing their application".

if only to emphasise that Government has confirmed, though not but in the Minister's official communication to Court, INTE. SAT. on the Government's behalf; that the plaintiff is the one trhat actually granted the defendants' permission to operate Television Services in Uganda and that having been so authorised by the plaintiff and are operating under such authority, they should be estopped from denying it and challenge the authority, so to say, biting the hand that fed them? Do I need to quote the above words from the same Minister' letter addressed to the Attorney General on 28th July, 1998, on Oath, I that the plaintiff is authorised by Government to deal with

One may be tempted to argue that the Minister's letters were delivering the information not on Oath, but that is a matter besides the issue. That is a matter for probative evidence and should the defendants wish to verify the veracity "of the Minister's information, he could be called on Oath at the trial of the substantive issues of the case.

pleadings of the imprecision and verbosity I have alluded to. As matters stand, I think that the plaintiffs should be the doubt and be given the benfit of allowed to present it. Who knows? May be the intended amendment is to disabuse the

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There are some other grounds relied on by Mr. Sebalu, learned Counsel for the defendants for his request that the suit be terminated. Seal, in accordance with the provision of the Articles of Association which required Contracts, agreements e.t.c. of the defendants to be entered into under the Company's Seal. In the first place, as Mr. Ogalo, pointed out in response, one would have expected learned Counsel to have produced that portion of'the defendants' articles of association which requires that Contracts of the defendant should be done under its Seal. He did not produce it; he did not say it exists when he was on Oath. He said it from the Bar and it is up to But believing a well respected and honest Senior member of the Bar. ^I think the major consideration is whether the Agreement entered into He says that if the Agreement was not ⁱ based on misrepresentation by that fact, the plaintiff was not empowered to sign a valid agreement unless it was done under between the parties in this case was necessarily a nullity by the reason that it was not made under Seal. ⁱ Court to believe him or not to be believe him. him or not is not that important seeing that Counsel is

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Prior was as had been enunciated in the case of Mayor of Ludlow -vs- Charlton, 6, M & W 815 that:- The law on this has been long established since the decisions of the English Courts starting with the case of Nicholson -vs- Bradfield Union, L. R. 1. Q. B. 620 and Wells -vs- Mayor of Kingston - on - Hull, L. R. 10Cp.402. to the decisions in those cases the tight common law rule

> " The Seal is the only authentic evidence of what the corporation has done or agreed to^^The resolution of a meeting however numerously attended is, afterall, not the act of the whole body. Every member knows he is bound by what is done under the common Seal and by nothing else. It is a great mistake, therefore, to speak of the necessity for a seal as a relic of ignorant times. It is no such thing. Either a seal, or some substitute for seal, which by law shall be taken as conclusively evidencing the sense of the whole body Corporate, is a necessity inherent in the very nature of a corporation".

The two subsequent cases I have cited above introduced a number of exceptions to the Mayor of Ludlow -vs- Charlton (Supra). matters of trifling importance, or daily necessary occurrence", such as "the supply of Coals to a work house, the hire of an inferior servant" e.t.c. And where a Minucipal Corporation of the above two authorities) that agreements for the admission of ships could be made by simple contracts without a seal. owned a graving dock in constant use, it was held (in one The exceptions included such things as "

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was allowed to enter, through its agents, manner. had its roots in the 1908 English Act, under the Act is allowed to enter into contracts, through agents, in writing or by payor, in cases where such contracts could be entered into by private persons in like manner (see 8. 54(a) and (b) of the Companies Act, Cap. 85 of the Laws of Uganda 1964). In some other cases legislations have freed corporations from the necessity of contracting under Seal, and have provided different forms in which their common must, of necessity admit transactions through agency, cases of contracts by Companies without employing a seal have far out numbered those which contract under seal. There was a conflict in judicial decisions some time as to the liability of a corporation in cases where no contracts were made under seal but where goods had been supplied, or, as in the instant case, work done for the purpose for which the corporation or Company exists. This point was finally settled in Lawford -vs-Billericay R. D. C. ^9057^ K. B. 772 in which a Committee of a Rural District Council employed an engineer, already engaged by the Corporation for certain purposes, to do a number of As a result of the passage in England, in '1908 of the Companies (consolidation) Act, S. 76 (re-enacting a similar provision in earlier Act) a Company incorporated under the Companies Acts, into contracts in writing or by parol, in cases where such contracts could be entered into by private persons in like By S. 54 of our Companies Act which appears to have a Company incorporated consent may be expressed. Indeed, with S. 54 of the Companies Act in place, and so as to ease modern trade and Commerce, which

acts in reference to work for which he had not been engaged.

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The Committee had no power to bind the Corporation by entering into Contracts, but their minutes were approved, and their acts thereby affirmed and adopted by the Council. The Court held that the work done was work for the doing of which the Corporation was created and that having taken the benefit of the work they could not refuse to pay for it. It is perhaps to be noted that breach of an executory contract of employment made with an engineer, not under seal, would clearly have given no right of action to the engineer or to $\angle$ Corporation. I draw great solace from that decision in deciding in the instant case that the defendants having contracted with the plaint if, though not under seal as stipulated by the defendants' articles of association, and the defendants having used t & INTELSAT facilities as agreed in the Agreement and continuing to use such facilities even unto this day, they (the defendants) should not be allowed to refuse to pay the charge: stipulated under the Agreement by hiding behind the lack of a seal. $\parallel$ There is, of course, the argument that the $\cancel{\ast}$ Agreement involved the use of the facilities over a large area ( $F\cup$ otprint IS. 702 at 359E) but that only the facilities over Ugenda (Footprint IS 707 at 359E) was availed. That may be a valid argument but certainly not for the dismissal of the suit before it goes on trial. Again, I think, that will be a matter for evidence at the trial and could reduce the amount of fee or charges in quantum meruit.

by the first defendant is clearly a simple matter. are that the Agreement was signed on behalf of the first therefore, in the reality of business, to sign through its Chairman. The Chairman was not signing a guarantee deed but was signing the agreement in the common course of business transaction. He has to be a party as is necessitated by law but he cannot personally be liable for the liability of his Company which is a corporation sole. All in all, the suit ⁱ Mr. S^balu. should be allowed, despite my order of \$0.06.98 that it was then the final adjournment. defendant by the second defendant - Trie first defendant not being ^a human person could not sign the agreement^ it had cannot be dismissed on the oreliminary points raised by The other issue was as to whether an adjournment Finally, the issue of whether or not the second defendant was acting as a guarantor for the performance of the contract The facts

as he 0n< obvious reason is that he had just been engaged by the plaintiff and he had had no time to study the case. The second reason is that he wishes to amend the plaint. It is now settled that ⁱ amendment should be annexed to the application for the amendment. I think that should be understood as ^a good rule of convenience. Mr. Byaruhanga addressed me on sufficient cause said why another adjournment was necessary. But it should be noted that Mr. Byaruhanga, learned counsel foi the plaintiff was not applying to amend. where an amendment is to be made, a version of such intended

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to enable him study the case put in the amendment, if after studying the necessary to amend. He was applying for adjournment of his client and, if found necessary, to amend the plaint. My understanding is that he will put in his application to amend when he has been given an adjournment to enable him case he finds it

I have considered the application to adjourn and because he had no time between bis engagement and the hearing fixed for the 50th of July 1998, to study the case, I think it is only just to grant him an adjournment which ^I do hereby grant. In any case, this was one of such applications which could not be decided extempor because of the extensive submissions. Because I had of necessity to adjourn to consider the submissions for and against the application, the adjournment be corn', a must. In view of that, I take it that Counsel Byaruhanga has had, in the interim, time to study his client's case. I therefore give him an adjournment of only 8 days. Hearing is adjourned to 15th August, 1998. The application to amend will thereafter be considered on merit. Mr. Byaruhanga conceded costs to be paid by his client and I order that the plaintiff pays the costs of the adjournment in any event.

J. H. NTABGOBA PRINCIPAL JUDGE 04/08/98

Mr. Paul Byaruhanga for plaintiff/applicant Mr. Paul Sebalu for the defendant/respondent Ms. Jolly Kauma, Court Clerk

All present in chambers.

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J. H. NTABGOBA PRINCIPAL JUDGE $4/8/98$

Mr. Sebalu:- I apply for permission to appeal. I would apply for time to make submissions if Mr. Byaruhanga is not opposed.

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Mr. Byaruhanga:-

Court

We have no objection to him coming to present his reasons by adjournment.

Hearing is adjourned to 13/8/98.

J. H. NTABGOBA PRINCIPAL JUDGE