[2012] UGCA 59

## THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## CIVIL APPEAL NO.43 OF 2010

**BETWEEN** UGANDA REVENUE AUTHORITY :::::::::::::::::::::::::::::::::::: AND WANUME DAVID KITAMIRIKE ::::::::::::::::::::::::::::::::::::

CORAM: HON. JUSTICE A. E. N. MPAGI-BAHIGEINE, DCJ HON. JUSTICE C. K. BYAMUGISHA, JA HON. JUSTICE REMMY KASULE, JA

## JUDGEMENT OF REMMY. K. KASULE, JA.

the appeal is from the judgement of the High Court at Kampala delivered by Hon. J. P. M. Tabaro on 28.09.09 in a Judicial Review application number H. C. T-00- $CV-MA-556$ of 2008.

In the stated application by way of originating summons, the respondent applied to court, to determine three questions or issues namely:-

Whether or not the decision to terminate the applicant's services with the **Example 19** *Quantity for unsatisfactory performance should be guashed.*

(b) Whether or not the applicant is entitled to general damages against the Uganda *Revenue Authority, and if so, how much should be awarded.*

*Whether the applicant is entitled to the costs of this application.*"

espondent supported his application in the High Court with two affidavits, the $\frac{1}{2}$ dated 24.11.08 and the second, in rejoinder, dated 22.12.08.

The appellant, through one Jacqueline Kobusingye Opondo, Commissioner, Internal Audit and Compliance, swore and filed an affidavit in reply asserting that the application for judicial review was incompetent as it had been prematurely filed.

Proceedings in the High Court proceeded on the basis of affidavit evidence only. The facts of the case in the court below, as could be ascertained, were that the respondent this appeal started working for the appellant in August 1999 as a Senior Revenue Officer. By 2005 he had risen to be regional Manager, Domestic Tax Department. $0\tpm$ 31.10.08 the appellant terminated in writing the respondent's services with immediate effect because his performance was unsatisfactory. Contending that the termination was based on wrong appraisal of the records and documents of his performance, the respondent moved court, by way of Judicial Review, to determine the stated questions.

Counsel for the respective parties filed written submissions and thereafter the trial indge delivered judgement. He held that the respondent had been wrongly dismissed from employment because instead of forwarding the correct score points of his job

$\mathcal{L}$

commance to the appellant's Board of Directors, the appellant's Departmental opraisal Committee had fraudulently sent lower score points that placed the espondent under the group of incompetent job performance necessitating the termination of his services. The trial judge awarded him general damages of $S$ | s.208.485,216/= as well as punitive damages of Shs.100,000,000/=.

Dissatisfied with a part of the decision of the judgement, the appellant lodged an appeal to this court on the grounds that:-

- 1. The learned trial judge erred in law in awarding the respondent compensatory damages when he had been paid two months' salary in *lieu of notice before termination.* - 2. The learned trial judge erred in law in assessing the quantum of *compensatory damages payable to the respondent.* - 3. The learned trial judge erred in fact in holding that the respondent was employed on three year (36 months) contract by the Appellant and thereby basing the award of compensatory damages to the respondent on a multiplier of 36 months.

- 4. The learned trial judge erred in law in awarding the respondent compensatory damages of UGX 208,485,216/ $=$ which was so high in *the circumstances.* - 5. The learned trial judge erred in law in awarding the respondent punitive damages of $UGX$ 100,000,000.

Appellant prayed this court to allow the appeal by setting aside the awards of the trial undge of compensatory and punitive damages and order the respondent to pay to appellant $\frac{1}{2}$ the costs of the appeal and those of the trial court.

The respondent, in turn, also cross-appealed on two grounds:

$\mathbf{t}$

- 1. The learned trial judge erred in law when he based the calculation of compensatory damages on a presumed 3 year contract instead of basing it on the remaining 57 months which respondent was required to serve before reaching the retirement age of 55 years in accordance with Regulation 2.4.2(a) and 13.6.1(a)(1) of the Appellant's Human Resource Management Manual. - 2. Well aware that any delay to pay the said money would render the award less valuable, the learned trial Judge erred in law when he did


u:isigning any reusons when the respondent lrad prayed Jbr it. ttol uwurd interest on the sums owardeel to the Respondent without

' r'espondent prayed this court to allow the cross-appeal by varying the award of -rl8,485,l1ril= made on the basis of a presumed 3 year contract. by enhancing it, iis!-!l on .lre reuraincier period of 57 months which the respondent was required d ir-' rintil h;s retirernent at 55 years. together with interest thereon at the rate of ⁱest played f or in tl-re lower court.

irt'nearn'rg oIthe appeal, the appellant was represented by learned counsel George tlo assisted by Yahaya Alike, while Counsel Ngaruye Ruhindi represented the ondent )t

!ercncing prc,ceedings before the Registrar of this court were held on 14.02.201 l . rssues alisingt out of the appeal and cross appeal were lramed as follows:-

il'hether ot fiot the learned trial judge wos justified ,tt awarding th e 'z:;ponden; compensutory damuges when the respondenl hud been paid two trtottths' sulary in lieu of notice by the appellanl

>-6

- 2. Whether or not the learned trial judge was justified in holding that the respondent was employed on a three year (36 months) contract. - 3. *Whether the trial judge was justified to base the computation on a multiplier* of 36 months, and if not, what should have been the appropriate award. - 4. Whether the learned trial judge was justified in awarding punitive damages to the respondent. - 5. Whether the learned trial judge was justified in not awarding interest on the sums awarded. - 9. Remedies available to the parties.

For the appellant it was submitted that the respondent's employment with the defendant was governed by a term that his employment was liable to termination on being given two $(2)$ months termination notice, or payment in lieu thereof. This term was contained in the appointment letter dated 19.09.05, which had to be read together with the terms and conditions contained in the appellant's Human Resource Management Manual and the staff code of conduct that too governed the employment of the respondent. The respondent had been paid in lieu of a two months notice on $31.10.08$ . He was thus not entitled to any other damages for his dismissal.

Further, the trial judge erred and acted on a wrong principle of awarding and assessing empensatory damages for the respondent basing on a multiplier of 36 months. The judge ought to have applied the correct principle by finding that the respondent's contract was a fixed term contract and as such, the respondent was only entitled to recover damages being the equivalent of remuneration for two (2) months, the notice period stipulated in the contract.

Learned appellant's counsel relied on the cases of: Supreme Court Civil appeal No.6 of 1999: GULLABHAI USHILLINGI VS KAMPALA PHARMACEUTICALS LTD, Uganda Supreme Court Civil Appeal No.7 of 2001: AHMED IBRAHIM BHOLM VS CAR AND GENERAL LTD

and

Uganda Supreme Court Civil appeal No.12 of 2007: BANK OF UGANDA VS **BETTY TINKAMANYIRE**, and invited court to answer issues 1 and 2 of the appeal in the negative.

With respect to issue No.3, counsel criticized the trial judge for using a multiplier of 36 months on the false basis that the respondent was employed by the appellant on a three $(3)$ vear contract. The correct state of affairs was that the respondent was employed on permanent terms, according to the Human Resource Management Manual, since the respondent was staff below the level of Assistant Commissioner, and not at the level of management staff. At any rate the heads under which the trial judge calculated the compensatory damages such as monthly salary, service award, retirement benefits scheme, medical allowance and leave entitlement, apart from being special damages in nature, and which the respondent did not specifically plead, had also not become due within the two (2) months period of notice before termination.

Appellant's counsel contended that at any rate, the sum of Shs.208,485,216/ $=$ awarded as compensatory damages, was so high to make it entirely erroneous, and as such this appellate court should interfere in the said award by holding that the measure of the damages awardable is limited to payment in lieu of notice at the termination of the respondent's employment contract.

i,,:ir r)i ground lour (4), the leamed trial judge is criticized tbr having awarded riitr .', da nac,es of Shs. 100,000,000/=, when in law, such damages are not ',\ ar'0able ir cases of breach of contract, except where there is some tofi committed, rlrri the alvard is not in respect of the contract breach per se, but in respect of the tort rrrrsel invited court to consider on this point, the case of Uganda Supreme Court :' i; ,,ii;peal No.3 of'1993 ESSO STANDARD (U) LTD yS SEMU AMANU OPIO.

\ irr,jilairl's t:ounsel finally invited court to allow the appeal by setting aside the ornpensatoq and punitive damages awarded at the trial. and substitute the sarne with rimages eqr"rivalent to two (2 ) months pay in lieu of notice which had already been ir, rhe alternative this court was invited to make a t-air and reasonable award of :riavarccl damages for the grounds given in {avour ol the appeal The cross appeal rgiri to be dir;missed and eacl.r parry should bear its own costs given the fact that the rpeai is due t{) errors by the trial court.

alrred couns,:l Ngaruye Ruhindi fbr the respondent submitted in opposition to the peal bLrt in lavour of the cross appeal that the respondent was never paid two iuhs salaly i,r lieu of notice before termination. The appellant deposited the money i(-:ri)on(ient':i account after he had been dismissed. Therefore the respondent's Dlo\nrent had been terminated unlawfully by the appellant's responsible officers

jo

fraudulently falsifying his job performance appraisal results with the sole purpose of getting rid of him. Respondent had as at the time of trial, not succeeded in obtaining The appellant had accepted liability to compensate the other employment. respondent. Counsel further submitted that the case law authorities relied upon by appellant were inapplicable to the respondent's unique and peculiar facts of a deliberate falsification of job performance appraisal results so as to get rid of him by the appellant. The learned trial judge considered all these factors and therefore cannot be said to have erred in his award to the respondent of the compensatory damages that he made.

Respondent's counsel also agreed that the trial judge was wrong to base the assessment on a presumed three (3) year contract. The judge ought to have found, on the evidence before him, that the respondent's contract was a permanent one up to the retirement age of 55 years, and as such, the respondent had a further working period of $$7$ months, assessed the damages on the basis of 57 months, the respondent's remaining working period before reaching the retirement age of 55 years. Therefore the award of compensatory damages to the respondent ought to be enhanced to reflect this fact.

With regard to punitive damages, respondent's counsel submitted that there was no basis for this appellate court to interfere with the trial judge's award to respondent of Shs. $100.000,000/$ = punitive damages as the award had been based upon proper principle and the amount awarded was just adequate, not too high or too low.

The appellant's conduct in terminating the respondent's employment had been vindictive, highhanded, oppressive and malicious and thus justified the award.

Respondent's counsel finally submitted that the learned trial judge erred in not awarding interest on the sums awarded to respondent without assigning any reasons yer the respondent had prayed for interest in his submissions. He prayed this court to order that interest at 24% p.a. Counsel prayed court to allow the cross-appeal.

by way of reply, appellant's counsel submitted that the trial judge ought not have awarded any compensatory damages at all since the respondent/cross-appellant had already been paid two months' salary in lieu of notice in respect of termination of his employment contract. This had been done in strict compliance with the terms of the employment contract.

$11$

, r1i\r awa rd of interest. appellant's counsel maintained that the trial judge was Ii Ill r )t av/arding any interest because first. in the trial couft there was never ^a ^Vlcw. i'. .r l( ,r' intelest by the lespondent in his pleadings hled in court by way of Judicial i{espondent only prayed fbr interest in his written submissions to court and ,ii,t rr.[ qive reasons fbr such a pra)'er. Secondly by the very nature that the r..rncicr,r'-s cause was by way ol Judicial Review. disentitled the respondent from rrrr.r ri.r :nter( st as Order X LVI A of Civil Procedure Rules, that was the applicable \\' rt rhe rnarerial time of the respondent's cause, did not make provision for the ar.ci oi interest. So the trial judge was justified in not awarding interest to the :rr,.)r)rlefri. The cross appeal theretbre ought to be dismissed

er. inq cerefully considered tl.re record of proceedings, the submissions of respective 'nnsel and the legal authorities relied upon, I rvill proceed to resolve the issues that r.,, i. [9o11 subrnitted upon.

sues I and . of the appeal were argued together by the appellant. I will also deat ith thern together


The first issue is whether or not the learned trial judge was justified in awarding the respondent compensatory damages when the respondent had been paid two months' salary in lieu of notice by the appellant.

The second issue is whether or not the learned trial judge was justified in holding that the respondent was employed on a three year (36 months) contract.

The learned trial judge held at pages 8 and 9 of his judgement that:-

"*Mr. Ruhindi prayed for the sum of money earnable as a salary till the age of* netirement at 55 years. I think this is not available because if he had not been fraudulently terminated URA would be within the ambit of the law to give two months notice or payment in lieu of. I have already explained why the purported notice presently is not liable and only wish to reiterate that fraudulent termination is as good as wrongful dismissal. I will therefore base the award of damages based on the multiplier of 36 months, as follows:". The learned trial judge then proceeded to make awards for monthly payment, service award, 5% Retirement benefits Scheme, Medical allowance and leave entitlement.


.

.

ri r!\\,ard rrnd method of assessing the sums awarded that are the subject of the aud secortd issues.

lut ion of both issues. l iration ol some principles of the law of ernployment is necessary for

of contracts of employrnent are relevant to this case. First, is the flxed ri) contract c,t employrlent with a provision for termination by way of notice. or rlrerlr rn lier.r of notice before the expiry of the contract. Second, is a contract of lplovlneul wlrich nrakes no provision for termination prior to the expiry of the fixed

he distinctiorr between the two types is important because breach by way of unlawful lrrriuation of each type of contract of employment results in a different nreasure of

lre general principle is that an employee wrongfully dismissed is entitled to be ompensated fully for the financial loss that may be suffered as a result of the

'lf 

$\overline{\bullet}$

$\mathbf{r} \in \mathbb{R}^{n}$

$\tilde{\mathbf{v}}$

dismissal, subject to the duty of the dismissed employee to mitigate loss. $\sim$ SOUTHERN HIGHLANDS **TOBACCO** UNION LIMITED $V.$ DAVID $MCOUEEN: [1960] EA 490:$

and

: Barclays Bank of Uganda Vs Godfrey Mubiru: Civil Appeal No.1 of 1998 $(SC)$ .

When it comes to the issue of assessing the damages awardable in the event of an employment contract breach. Mulenga JSC, as he then was, stated the law distinctly in the GULLABHAI USHILLINGI VS KAMPALA PHARMACEUTICAL LTD: CAVIL APPEAL NO. 6 OF 1999 (SC)case thus:

"In deciding that issue of damages, the Court of Appeal appreciated that the employment in the instant case, was for a fixed period. The court made a distinction between a contract which makes no provision for termination prior to expiry of the fixed period, and one in which there is a provision enabling either party to terminate the employment. The learned justices stated the law to be that in the event of wrongful termination by the employer, the employee in the former contract would be entitled to recover as damages, the equivalent of remuneration for the balance of the contract period, whereas in the latter case the wronged employee would be entitled to recover as damages, the equivalent of remuneration for the period stipulated in the contract for notice. I respectfully agree that this is the correct statement of the law. I would add that it is premised on the principle of restitution in integrum. Damages are intended to restore the wronged party into the position he would have been in if there had been no breach of contract. Thus in the case of employment contract for a fixed period which is not terminable, if there is no wrongful termination, the employee would serve the full period and receive the ful remuneration for it. And in the case of the contract terminable on notice, if the termination provision is complied with, the employee would serve the stipulated notice period and receive remuneration for that period, or would be paid in lieu of the notice."

In *SOUTHERN HIGHLANDS, TOBACCO UNION LIMITED* (supra) the contract was for a fixed period with no provision for termination before the expiry of the fixed period. The plaintiff (respondent) on appeal was awarded damages for unlawful termination of the employment contract equivalent to remuneration for the balance of the contract period.

On the other hand, in **Barclays Bank of Uganda v. Godfrey Mubiru** (supra), the employment contract had a provision enabling each party to terminate the contract.

......it would be just and proper for the court to mark its disapproval of the plaintiffs' unconstitutional retirement by ordering that the defendant board pay to each plaintiff an amount equal to two years' salary in addition to receiving their entitlements under their contract of employment." Their Lordships of the Ghana our of Appeal had based their stated decision on the overriding consideration that:-

"A Ghanaian who has suffered a wrong expects redress and our law of wrongful dismissal should reflect it."

Okello, JSC (as he then was), also concurring in the lead judgement of Kanyeihamba, JSC. stated:-

"In the instant case, I accept Mr. Masembe-Kanyerezi's contention that for a case of this nature, a court is only limited to award of aggravated and not punitive damages. This view is supported by ESSO STANDARD (U) LTD VS SEMU AMANU OPIO, CIVIL APPEAL NO.3 OF 1993, where this court (PLATT, JSC, as he then was) stated that the principles of exemplary or punitive damages cannot be extended to breach of contract and that there is no precedent for that extension."

I find the decision reached by their Lordships as to damages awarded in the nature of aggravated damages, as well as the facts of the case in the *BANK OF UGANDA VS*


$\frac{1}{\sqrt{2}}$

tenhinated wrongly by manipulation of his performance result points, showing that he had scored poorly, when in actual fact he had scored highly, certainly high enough to remain in the service of the appellant. He was thus greatly embarrassed and greatly $\alpha$ mechanism of a well paid job. He missed the opportunity to work up to a retirement age of 55 years. No evidence was adduced that he was performing poorly prior to wrongful manipulation of his performance results. On discovering the mistake that had been done to the respondent, the appellant had not thought it fit to recall the respondent and reinstate him in his former position or some other alternative position. The evidence before court does not show that any meaningful apology was extended to the respondent by the appellant. By the time of the hearing of the case, the respondent had as yet, inspite of his trying, not succeeded to obtain alternative employment. Bearing all these aggravating factors as well as the inflation that has currently eaten into the value of the Uganda Shilling, I award the respondent aggravated damages of Shs.100,000,000/ $=$ .

$\bullet$

The respondent cross-appealed on the issue of interest. He contended that the learned trial judge erred in not awarding interest on the awards of damages he made.


$\dot{\cdot}$

$\cdot\,$

$\bullet$

$\phi$ in the applications both for leave to apply and in the application for judicial review the respondent/cross-appellant did not plead interest on the damages or costs to be awarded, in his pleadings to court. He was duty bound to do so under the then applicable Order XLVI A of the Civil Procedure (Judicial Review) Rules, 2009 and Order VI Rules 1 to 5 of the Civil Procedure Rules. The respondent's counsel only referred to interest in his submissions to court. Yet submissions are not pleadings upon which a party founds a cause of action for a claim. There was no explanation from the respondent as to why he never pleaded in his pleadings a specific prayer for interest.

$\bullet$

$\overline{a}$

The failure to plead interest in the pleadings enforces, in my view, the unconventional way, which must be discouraged, of parties like the respondent/cross-appellant bringing causes to court through Judicial view, which causes, by their very nature, are most suitable to be commenced and prosecuted in court as ordinary suits commencing with lodgment of the plaint with detailed particulars of claim as prescribed by Order VII of the Civil Procedure Rules. The respondent/cross-appellant's claim, in my judgement, fell under this category. He should have originated his claim by an ordinary plaint setting out in detail the particulars of the claim, the damages being claimed in their various categories as well as interest and when such interest was supposed to have accrued. He was also under a duty to support his claim for interest with some evidence. He did $101.$

instead he chose to come to court through Judicial review, which is a process, and should as much as possible be restricted to that process, whereby the High Court exercises its supervisory jurisdiction over proceedings and decisions of the inferior eburts, tribunals and other bodies or persons carrying out judicial, quasi-judicial functions or who are charged with the performance of public acts and duties. Judicial review has its core purpose of issuing orders within the area of administrative law and not otherwise. See: Court of Appeal Civil Application No.18 of 2006: PIUS VIWAGABA VS. LAW DEVELOPMENT CENTRE. It follows therefore, in my independent that litigants ought not substitute Judicial Review for ordinary lodgement and prosecution of civil suits.

While section 26(2) of the Civil Procedure Act, gives court discretion to award interest adjudged on the principal sum from any period prior to the institution of the shit, or from the date of filing suit to date of the decree, or on the aggregate sum alliudged from date of decree to date of payment in full, the burden is on the party

stailing interest to plead and adduce some evidence entitling that party to interest. In Court of Appeal of Uganda Civil Appeal No.30 of Charles Lwanga Vs Centenary Ruval Development Bank, 1999, this court dealt with the issue whether interest was payable on the principal sum admitted for the period prior to the institution of the suit and if so at what rate. After satisfying itself that the appellant had specifically pleaded for interest at the commercial rate of 40% and after considering the evidence adduced, court awarded the appellant interest at the reduced rate of 20% being the current bank interest rate.

$\bullet$

$\mathbf{r}$

By way of contrast, in this appeal, the respondent/cross-appellant did not plead any claim for interest and did not adduce any evidence in that regard. He therefore provided no basis for the trial court to exercise its discretion one way or the other on the issue of interest.

accordingly find that the respondent by pursuing his claim through Judicial review whereby he did not make any pleading as to his claim for interest and by failure to adduce evidence as to his entitlement to interest, has no justification to fault the trial judge for having not awarded him interest. I so resolve the issue of interest on the dross-appeal.


In conclusion the appeal only partly succeeds in that this court has found that the learned trial judge erred in awarding to respondent compensatory damages and assessing the same using a multiplier of 36 months, all totaling to Shs.208,485,216/ $=$ and also punitive damages of Shs.100,000,000/ $=$ . The sums so awarded are adcordingly set aside. Instead the court awards a sum of Shs. 100,000,000/ $=$ aggravated damages given the circumstances of termination of the contract of employment of the respondent by the appellant.

The cross-appeal fails and no interest is awarded on the aggravated damages, the espondent/cross appellant having not pleaded for the same, let alone adduced evidence on the issue.

Since the respondent/cross appellant has been awarded, on appeal, aggravated damages of Shs.100,000,000/=, thus being in a way successful in that regard, he is awarded $\frac{1}{3}$ of the costs of the appeal and those in the court below.

Dated this ......20^th .....day of ...**March.....2012.**

.


Remmy. K. Kasule ruSTICE OF APPEAL

## DGMENT OF A. E. N. MPAGI-BAHIGEINE, DCJ

I ve read in draft the judgment of my brother Kasule JA.

oncur and have nothing useful to add. Since Byamugisha, JA also agrees, the eal partly succeeds with the orders as stipulated in the lead judgment. I a

D at Kampala this ......20th .....day of .,. Mareh.....2012.

## E. ll. Mpagi-Bahigeine, puty Chief Justice

{l

'l

## MENT OF BYAMUGISHA, JA

ad the benefit of reading the lead judgment prepared by Kasule JA which has just delivered. I b

with the orders he has proposed in partly allowing the appeal. I have nothing eful to add. I

t) d at Kampala this ......201h .....day of ... March.....2012.

K. Byamugisha stice o1'Appeal C J

h\