Court name
Commercial Court of Uganda
Judgment date
8 February 2007

Peace Isingoma v MGS International U Ltd (HCT-00-CC-MA-2006/761) [2007] UGCommC 13 (08 February 2007);

Cite this case
[2007] UGCommC 13

Last Updated: 25 May 2007


 

Peace Isingoma V MGS International U Ltd -HCT-00-CC-MA-0761-2006 [2007] UGCommC-(9 February 2007)


 

THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL COURT DIVISION)

HCT-00-CC-MA-0761-2006
(ARISING FROM HCT-00-CC-0652- 2006)

Peace Isingoma ..................................................................................................................................Applicant/Plaintiff

Versus

Mgs International (U) Ltd.................................................................................................................. Respondent/Defendant

9 February 2007


BEFORE: HON. JUSTICE LAMECK N. MUKASA

RULING:
In these proceedings the business relation between the parties is that the applicant, Peace Isingoma, and her husband Patrick Mwesigwa are the owners and registered proprietors of the land situated and known as Block 220 Plot 713 at Kiwatule. They put up a filling station at the land. The respondent, MGS International Ltd. deals in petroleum products in Uganda. Mr. and Mrs Isingoma leased the Petrol Service Station and property thereat to the Respondent for a period of fifteen years effective from 8th April 2003. By an agreement dated 11th April 2003 the Respondent appointed the applicant as its licensee to operate and run the said station upon the terms and conditions stated in the said agreement.

The dealership agreement was to come into effect on 8th April 2003 and remain in force unless otherwise terminated as provided in the said agreement. On 26th October 2006 the Applicant filed Civil Suit No. 652 of 2006 wherein the Applicant alleges that on 25th October 2006 the Respondent’s officials in the company armed the guards purported to chase away the applicant’s pump attendants, took away the Applicant’s documents and cash in the sum of 5,500,000/=, switched off electricity at the station and served her with a letter purporting to terminate the dealership and demanded that the Applicant hands over the station. In the plaint, inter alia, the applicant prays for an injunction restraining the Respondent from further breach of the contract.

On the same day the Applicant filed this application by Chamber Summons under Order 41 rules 2 (I) and 9 of the Civil Procedure Rules for Orders that a temporary injunction issues to restrain the Respondent, its officials, employees or anybody acting under its instructions from further interference with the applicant’s business/dealership at Mogas Kiwatule Service Station until the disposal of the main suit or until further orders of this Court and for costs to be provided for.

The Application was supported by an affidavit dated 26th October 2006 and deponed to by the Applicant, Peace Isingoma. The Respondent in reply filed five affidavits. In rejoinder the Applicant under cover of a letter filed on 29th November 2006 sought to reply on six affidavits filed by the Applicant in Misc. Application No. 772 of 2006 also arising from this suit. Representation was Mr. Wilfred Nuwagaba and Mr Obed Mwebesa for the applicant. The Respondent was represented by Mr. Peter Nkuruziza co appearing with Mr. Stephen Musisi.

Conditions upon which court would exercise its judicial discretion and grant a temporary injunction are first that the applicant has a prima facie case with a probability of success. This condition has been relaxed to considering only whether the applicant raises prima facie triable issues in the main suit.

Secondly, that the applicant would suffer irreparable injury which an award of damages could not adequately atone, if the injunction was refused and later on he turned out to be successful in the main suit. Thirdly, if the court is in doubt in respect to the above two, that the balance of convenience is in the applicant’s favour. See J. K. Sentongo & Another Vs Shell (U) Ltd (1995) II KALR I, Robert Kavuma Vs Hotel International Ltd, SCCA No. 8 of 1990, ELT Kiyimba Kagwa Vs Haji Abdu Nasser Katende (1985) HCB 43

The prime purpose of a temporary injunction is to preserve the status quo until the questions to be investigated in the main suit are finally disposed of. See Noormohamed Janumohamed Vs Kassamali Virgi Madhan (1953) 20 EACA 8, Kayimba Kagwa Vs Katende (supra) Therefore while considering an application of this nature it is necessary to identify the status quo that is required to be preserved. Counsel for both parties addressed me at length on this issue.

The main suit and this application were filed on 26th October 2006. Under Misc. Application No 0762 of 2006 an Interim Injunction was by order of this Court issued on 27th October 2006 restraining the Respondent and those claiming under it from further interference with the subject matter until 27th November 2006 when this Application had been fixed for hearing.

The respondent’s case is that on the 25th October, 2006 it terminated the Dealership agreement with the Applicant and took over management of the station the same day. That armed with the Interim Order issued on 27th October, 2006 the Applicant unsuccessfully attempted to re-occupy the station. Mr. Musisi, Counsel for the Respondent, submitted that at the time of filing this suit and the application the respondent was the party in possession of the station. On the other hand, the Applicant’s case is that on the 25th October, 2006 she resisted the Respondents demands for a handover of the station. The following day, 26th October 2006, she filed the main suit and this Application. On 27th October 2006 she obtained in Interim Temporary Injunction which was served on the Respondent. That on 28th October 2006, the Respondent forcefully and in violation of the Interim Court Order evicted the Applicant and her staff from the station. Each party relied on several affidavits in support of its version. It is on the basis of the evidence by those affidavits that this court can adjudicate on this issue of status quo. In his submission Mr. Nuwagaba discredited the Respondent’s affidavits in reply and invited court to disregard them. He attacked the affidavits deponed to by Sowedi Kyeyune, Brian Ssali and Martin Mugisha as affidavits sworn by people in the employment or service of the Respondent and as such not independent. However, the same argument would apply in respect of the Applicant’s affidavits in rejoinder sworn by Asiimwe Leo who was the Applicants employee and Laban Akampurira who was in the Applicants service as an employee of the firm of lawyers representing the Applicant. Therefore equal weight would be put on both parties’ affidavits falling within this category.

In their respective affidavit’s Geoffrey Rugozoora, the respondents Executive Officer, and Steven Masaba, the Respondents Sales/ Marketing Manager, state that the Applicant’s Dealership agreement was terminated on 25th October 2006 and the Respondent took over the operations at the station the same day. The letter of termination dated 25th October, 2006 stated:-

" We therefore give formal notice that your dealership agreement is terminated with immediate effect under clause 16 (a) (ii) of the agreement. Please handover the station to our client upon receipt of this letter. .. "

The letter directed the Applicant to handover to the Respondent’s client. However, contrary to the instructions, the Respondent’s evidence, as can be traced from all its affidavits, is that the Respondent on 25th October 2006 directly took over the operation and management of the station. The respondent shows that from 25th October 2006 it continued to manage the station until 28th October 2006 when it is claimed that the Applicant armed with the interim order unsuccessfully attempted to reoccupy the station.

The Respondents occupation of the station from 25th to 28th October 2006 is disputed by the Applicant. The Applicant , in her affidavit in support and that dated 9th November 2006 states that she resisted the Respondents attempts to take over the station. This is corroborated by Asiimwe Leo, the Applicant’s Supervisor at the station, who in his affidavit states that the Respondent on 25th October, 2006 attempted to take over the station but that he notified the police which resisted the move. In paragraph 12 of his affidavit Stephen Masaba avers that the Respondent’s officials took over the stations in the afternoon/evening of 25th October 2006 in the presence of one Kakaire, Officer in charge Kiwature Police Post and the L.C. I Chairman. This is denied by the O.C. Kiwature Police Post, David Kakaire, and by Stanley Semakula, the L. C. I. Chairman of the area, in their respective affidavits. I find the O.Cs and Chairman’s averment in this regard more dependable since they are independent parties. I therefore find that on the balance of probabilities the applicant has proved that despite the termination letter dated 25th October 2006, she on that day continued in occupation of the station. I accordingly find that the status quo as at the time of filing the main suit and this application on 26th October 2006 the Applicant was still in occupation of the station.

Each party has adduced evidence to show that the opposite party on 28th October 2006 forcefully attempted to evict the other party from the station. The scuffle that which took place on 28th October 2006 is also talked about by Stanley Semakula, the LCI Chairman in his affidavit. Both the applicants and the Respondent’s evidence comes to one thing that on 28th October 2006 the Respondent’s group overpowered the Applicant’s group and the Respondent took over the station. The applicant in her affidavit dated 9th November 2006 contends that the Respondents occupation of the station was in violation of the Interim Court Order and avers that the Respondent has now put another dealer, an Asian, who is currently running the station. That is the status quo currently.

The issue is whether Court should make an order to reverse the state of occupation to the status quo which I have held existed on 25th October 2006 whereby the Applicant was in management or maintaining the status quo as it has been from 28th October 2006 whereby the respondent or any person under it, is in management. In the event of disobedience of an injunction Order 41 rule 2 (3) of the Civil Procedure Rules provides a remedy and the Applicant has actually so applied for that remedy vide Misc. Application No 772 of 2006 which is still pending before the Registrar awaiting the disposal of this application. Further by the time this application came before me a temporary injunction was no longer a remedy available to the applicant since the status quo had already been disturbed through the applicant being forced out of the station and the operation thereof handed over to a third party. See Tonny Waswa Vs Joseph Kakooza 498 HCB 85

With regard to the first condition of a prima facie case what I should consider is whether the applicant raises prima facie triable issues in the main suit. The Applicants claim in the main suit is founded on a Dealership agreement between the applicant and the Respondent whereby the Respondent granted the Applicant the licence to operate and run the station, the subject matter of this application and suit, effective from 8th April 2003 until terminated as provided in the agreement. The applicant’s claim is that the respondent has interfered with the applicant’s business at the station and purported to terminate the dealership agreement which she contends is illegal and amounts to breach of the contract for which she prays for an injunction and damages. It is also the applicant’s contention that she and her husband are the owners of the land on which they put the station which was leased to the Respondent on the precondition that the Applicant become the dealer and thus the subsequent execution of the dealership agreement. But in its written statement of defence the Respondent contends that the lease and dealership agreements were executed on different terms and not as a precondition that the Applicant would always be the dealer. Further the Respondent’s defence is that the dealership agreement was lawfully terminated under Clause 6 (a) on the basis of continued dumping. The pleadings raise matters of breach of the dealership agreement which warrant court’s investigation. I therefore find that the applicant’s case raises serious issues to be tried in the main suit.

The next issue is whether the applicant would suffer irreparable injury which an award of damages cannot adequately atone if the injunction was not granted and later on the applicant turned out to be successful in the main suit. In his submission Mr. Nuwagaba for the applicant argued that the Applicant and her husband are the owners of the land where the Petrol Station was built. The petrol station was built by the applicant and her husband. Before the Lease Agreement of the land and developments thereon was executed between the Applicant and her husband, on the one part, and the Respondent, it was an understanding as evidenced by the Lease Offer letter, Annexture A to the Plaint that the Applicant was to be the dealer at the station. The letter dated 10th April 2003 written by the Respondent to "Mr. and Mrs Patrick Isingoma" referenced "Lease and Dealership Officer" in part states:-

"Reference is made to our...meeting in respect to leasing and franchising your Petrol Service Station and property located on Ntinda –Kiwatule Road, Plot 713 Block 220 Kiwatule, Kampala---
-----
This is also to confirm our agreement that you will be the operators of the service stations. ---- "


Counsel contends that any attack on the Dealership Agreement goes to the root of the Lease Agreement. That the applicant’s interest supercedes that of a dealer, as she has the interest of a dealer lessor and owner of the developments thereon. He therefore submitted that she could not be adequately compensated by monetary damages in the event she turned out to be the successful party in the main suit.

Breach of either the Lease Agreement or the Dealership Agreement would not have any affect to the Applicants proprietorship in the land. The applicant seeks, inter alia, to recover special and general damages. The general principal behind an award of general damages is to try and place an injured party in as good a position in money terms as she would have been had the wrong complained of not occurred. Breach of a contract entitles the injured party to damages as would be fair and reasonable. Without making any findings as to the relationship between the Lease Agreement and the Dealership Agreement, breach of either, if proved, would entitle the Applicant to damages. An award of such damages can adequately atone the injury that she would have suffered as a result of any such breach of contract.

As to the balance of convenience the applicant and her husband are the proprietors of the land on which the filling station is built and situate. The Applicant and her husband executed a lease agreement over the station in favour of the Respondent. It is the applicant’s contention that it was a precondition of the lease agreement that the Applicant was to be dealer at the station. Even if it was so provided in the Lease Agreement Clause 16 of the Dealership Agreement provides for termination of the agreement in the event of any of the acts provided therein. Among such events is the Dealer buying and/or selling petroleum products of another person, firm or company. Therefore the dealership agreement envisaged a termination thereof in the subsistence of the lease agreement. Such termination would not affect the Applicants rights as lesser in the Lease Agreement. As already held in the event of the Respondent being adjudicated in breach of any of the two agreements, the Applicants will be entitled to damages. The Respondent is a dealer in petroleum products in Uganda therefore in competition with other petroleum dealers. The provisions against dumping in the Dealership Agreement were intended to safe guard against such unfair competition. If the temporary injunction were to be granted and the Respondent turns out to be the successful party in the main suit the respondent stands to suffer more than the Applicant who is merely an operator of the station.

In conclusion I find that the Applicant has already been forced out of the station and operation thereof granted to a third party. The status quo has already been disturbed. The applicant’s injury resulting from any forceful eviction or breach of the agreement is likely to be adequatelycompensated by damages and the balance of convenience is in favour of the respondent.
In the premises this application fails, and is dismissed with costs.