Mwesigye & 30 Ors v National Forestry Authority (Civil Suit No. 270 of 2010) [2012] UGCommC 115 (31 August 2012)

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

COMMERCIAL DIVISION

CIVIL SUIT NO. 270 OF 2010

1. M WESIGYE ALFONSE KATITI

2. ARINAITWE ASAPH ………………………………… PLAINTIFFS

3. KATAREIHA JOHN

for and on behalf of 28 others

VERSUS

NATIONAL FORESTRY AUTHORITY………………………………...…………DEFENDANT

JUDGMENT:

The plaintiffs brought this suit in 2010 seeking for a declaration that they are entitled to payments for breach of contract by nonpayment of accrued sums, special damages, general damages, interest and costs of the suit. The amount claimed and their particulars were not specified in the plaint. However, in July 2011 the plaint was amended to give particulars of the claim by indicating the amount each of the plaintiffs are entitled to all totaling Shs. 168,470,000/=. It was averred in the amended plaint that the respondent subsequently paid Shs. 145,972,000/= leaving an outstanding balance of Shs. 22,498,000/= due and owing to nine out of the original 28 claimants.

It is the plaintiffs’ case that between 2008 and 2009 the plaintiffs and 28 others on behalf of whom this suit was filed entered into contracts with the defendant to provide services such as clear slashing, initial clearing, spot hoeing, weeding and climber cutting in Rwoho Central Reserve and Bugumba Central Forest Reserve which are managed by the defendant. By June 2009, the plaintiffs had executed the work contracted to them but had not been paid.

The defendant filed a written statement of defence (WSD) in which each and every allegation in the plaint apart from the description of the parties were denied. When the plaintiff amended the plaint, the defendant filed an amended written statement of defence where it still denied every allegation in the amended plaint except the several demands made by the plaintiffs. The defendant also alleged that it paid the plaintiffs all the monies owing under the contract (which had earlier been denied) and denied the existence of a balance of Ushs. 22,498,000.

At the scheduling conference only one issue namely; whether the Plaintiffs are entitled to the remedies prayed for was framed for determination by this court.

The plaintiffs prayed for the following remedies:

1. A declaration that the Plaintiffs are entitled to payments in accordance with their contracts.

2. An order for payment of Shs. 22,498,000 in full.

3. Interest on the sum of Shs. 168,470,000 at 25% per annum from June 2009 till payment in full.

4. General damages for breach of contract.

5. Interest on general damages at court rate from date of judgment till payment in full.

6. Punitive damages.

7. Costs of the suit.

It is noteworthy at this juncture, that although the amended plaint indicated that there were nine plaintiffs whose claims were due and owing, only three of them were called for cross-examination. The claims for two others as will be elaborated on later were wholly admitted by the defendant while those of four appeared to have been abandoned and so they were not called for cross-examination although they had filed witness statements. In view of those developments, “the plaintiffs” henceforth would refer to the two claimants whose claims were wholly admitted and the three who needed to prove their claims. The defendant called only one witness to prove its case. After closure of hearing evidence, both counsel agreed to file written submissions which they did. I have considered the prayers of the plaintiffs in the order in which they were made and submitted upon.

1. A declaration that the Plaintiffs are entitled to payments in accordance with their contracts.

On this prayer, Mr. Mwesigye Alphonse Katiti, PW1 on cross-examination testified that he had executed works under two contracts with the defendant which were supervised by Mr. Yuwa Mike but he was never paid. He stated that the contract required inspection and a certificate before they were paid but this was issued by the defendant. His claim was in respect of two contracts but one was paid leaving the unpaid amount in respect of the 2^nd contract of Shs.2,310,000/= after tax.

Mr. Bimanyomwe Robert, PW2 testified that he carried out work under his contract with the defendant which was supervised by Kasimbazi and another supervisor called Micheal but he was never paid. His claim is for Shs. 3,290,000/=.

It was the evidence of Serutwe Bernard, PW3 that he did work under his contract with the defendant which Kasimbazi and Gaigana supervised and certified but he was neither given the certificate nor paid the contract sum of Shs. 3,580,00/= that is still due and owing.

Muluya Tony, the Acting Management Accountant of the defendant (DW) testified that the defendant entered into contracts with the plaintiffs for the purpose of maintaining Rwoho and Bugamba Forest Reserves. It was his testimony that upon execution of works, in accordance with the contract, it would be certified by the defendant’s Plantation Manager after the Forest Supervisor had reviewed works done and a certificate issued on the basis of which the claimants would be paid. It was also his evidence that the certificate of completion was an internal document of the defendant which had no provision for the claimants’ signature and they were not given copies of the same.

Contrary to the defendant’s pleadings that it paid the plaintiffs all the monies owing under the contract, Mr. Muluya in his testimony acknowledged that some monies were still due and owing to four out of the nine claimants. Mr. Byabashaija Edward’s claim of Shs. 2,210,000/= was wholly admitted by the defendant. Shs. 1,410,000/= out of the total claim of Shs. 3,290,000/= by Mr. Bimanyowe Robert was also admitted leaving a disputed balance of Shs. 1,880,000/=. Shs. 2,256,000/= out of Mr. Serutwe Bernard’s total claim of Shs. 5,875,000/= was also admitted leaving a disputed claim of Shs. 3,619,000/=. The claim of Mr. Kiwanuka Geoffrey of Shs. 1,645,000/= was wholly admitted.

The total claim admitted at the trial was Shs. 7,521,000/= out of the Shs. 22,498,000/= that was pleaded. Mr. Muluya in his evidence specifically denied the claims of three of the nine plaintiffs including Mwesigye Alfonse Katiti. He testified that those claims were false since they were not supported by any certificate of completion.

Counsel for the plaintiffs in his submission conceded that the requirement for certificate of completion is provided for under Clause 1.3 of each of the contracts of the plaintiffs. He however, argued that according to the evidence of DW this was an internal document of the defendant which it had the duty to issue and failure to do so should not be visited on the plaintiffs who were not even signatories to it. He submitted that his clients had proved their case once they testified that they did the work and were supervised by the officials of the defendant.

He further submitted that lack of certificate of completion or non performance of the contract was never pleaded by the defendant. He referred to exhibit P3 being a letter from the defendant to the 1^st plaintiff in his capacity as Chairman of Kikunda Rwoho Contractors Association. He argued that that letter shows that the plaintiffs had performed their contract but non-payment was due to the freezing of the defendant’s account.

Counsel for the plaintiffs submitted that if at all the plaintiffs had not performed the contracts as alleged, the same would have been terminated in accordance with clauses 5 and 6 of the contracts. He pointed out that this was not pleaded and no evidence was adduced to prove the termination. He therefore argued that it followed that if work was contracted and the contracts were not terminated, then on a balance of probability the work must have been done which entitles the plaintiffs to payment as per the contract. He prayed that this court finds so.

Counsel for the defendant submitted that the amount owing to the plaintiffs arises from uncertified works yet it was a condition of the contract under Clause 1.3 that the works completed required certification. He contended that this was the reason for non-payment of the plaintiffs’ claim.

I do agree with the submission of counsel for the plaintiffs that the defendant did not plead lack of certificate of completion as the reason for non-payment of the plaintiffs’ claims. I must observe that the defendant’s WSD was a general denial of the allegations in the plaint including the contracts that the evidence of DW later confirmed existed. That pleading seriously offended the provisions of Order 6 rule 8 of the CPR which requires denials to be specific on each and every allegation made by the opposite party and Order 6 rule 10 that prohibits evasive denial of allegations by the opposite party. If at all the plaintiffs had moved court to strike out that defence, I believe it would not have survived.

Be that as it may, no such application was made and the defence is on record. Can the defendant now be allowed to improve on it at this stage by relying on what was never pleaded? I do not think so. This court is bound by the Court of Appeal decision to the effect that a party will not be allowed to succeed on a case not so set up by him and be allowed at the trial to change his case or set up a case inconsistent with what he alleged in his pleading except by way of amendment of pleadings. Thus a party is precluded from departing from its pleadings. See Interfreight Forwarders (U) Ltd vs East African Development Bank Civil Appeal No. 33 of 1992. The defendant did not amend its pleadings to include non certification of works as the basis for denying the plaintiffs’ claim. It cannot therefore rely on it to justify its actions to the plaintiffs’ detriment.

This court is very much alive to the provisions of the contracts as regards the requirement for a certificate of completion to be issued before payment is made. In fact samples of the same were even adduced in evidence. But since this was not pleaded the defendant is precluded from relying on it as it would be a departure from its pleadings. To my mind this defence appears to be an afterthought that came up as a scheme to defeat the plaintiffs’ claim and I will not allow it.

This is more so in view of exhibit P3 where the defendant appreciated “the patience and effort the plaintiffs took to complete the work assigned” and explained that what incapacitated it from paying the plaintiffs in time was the freezing of its accounts in September 2009. There was no mention of lack of certificate of completion in that letter whose authenticity was not challenged by the defendant. The defendant wrote that letter in response to the complaint made by the 1^st plaintiff as Chairman to the RDC Mbarara on non-payment for work done. The letter was copied to the defendant hence the response.

I also wish to add that as rightly pointed out by counsel for the plaintiffs, certificate of completion was an internal document of the defendant which the plaintiffs being semi-illiterate people had no way of ensuring their issuance. The plaintiffs who testified stated that copies of the certificate of completion were never given to them. Furthermore, that they were not even aware of their issuance since they were not required to sign the same. I must observe that if the requirement for certificate of completion is to serve its intended purpose of verifying work done, it would only be fair and just that both parties to the contract are made signatory to it. That requirement would compel the contractors to demand for the same as soon as work is completed. The defendant who I believe will still continue to require the services of contractors to maintain its fleets of forest reserves may wish to look into this matter so as to avoid a scenario like this one.

As to whether the plaintiffs should be entitled to payment in the absence of certificates of completion, for the reasons stated above, I find that the plaintiffs whose claims are proved as discussed below are entitled.

In arriving at the above conclusion, I have also taken note of the defendant’s insincerity in dealing with this matter from the time this suit was filed. There was total denial of all the claims including the existence of the contracts with the plaintiffs. Interestingly, as the claims and the contracts were being denied in court, payments were being quietly made to some of the plaintiffs under those very contracts leaving only a very small amount in dispute as shall be seen later. This, in my view, shows lack of trust on the part of the defendant and creates doubt on its ability to honestly handle certification of work. For that reason, even if lack of certificate of completion was pleaded, I would have still given the plaintiffs the benefit of the doubt and found that work was completed but the certificates were not issued.

2. An order for payment of Shs. 22,498,000/= in full.

The plaintiffs’ total claim for special damages in the amended plaint was a sum of Shs. 22,498,000/=. However, counsel for the plaintiffs in his submission conceded that only Shs. 12, 985,000/= had been proved in accordance with the principle that special damages must be specifically pleaded and strictly proved. See Mustapha Ramathan & Osman Kassim Ramathan v Century Bottling Co. Ltd, HCCS (Commercial Division) No. 431 of 2006; Eladam Enterprises Ltd v S.G.S (U) Ltd & others Civil Appeal No. 20 of 2002 [2004] UGCA 1.

I must point out that if you deduct a total of Shs. 7,521,000/= which was admitted from what is alleged to have been proved, the contested amount would ordinarily be Shs.5,464,000/=. But this is not the case because it was submitted for the plaintiffs particularly Mr. Serutwe Bernard that the amount of Shs.2,256,000/= admitted by the defendant is in respect of contracts that were entered into after this suit was filed. It does not relate to this claim. Following that submission which was made in reference to the documentary evidence on record, the contested amount would be Shs. 7,720,000/= whose breakdown I will consider per plaintiff as follows:

(a) Claim by Mwesigye Alfonse Katiti – PW1

In the amended plaint PW1 claims for a sum of Shs. 2,310,000/=. It was his evidence that as at the time of filing this suit he had not been paid a sum of Shs. 6,100,000/= arising from two contracts he entered into with the defendant in March 2009 and February 2009. Exhibit P1 (i) is the first contract dated 30^th March 2009 for the amount of Shs. 2,600,000/= while Exhibit P1 (ii) dated 15^th February 2009 is for the sum of Shs. 3,500,000/=.

However, PW1 further testified that upon filing the suit, the defendant paid him a sum of Shs. 3,290,000/= leaving a balance of Shs. 2,600,000/=. It was his evidence that he executed all the works contracted to him and that the same was verified by the defendant’s officers. He also testified that previous payments for the other contracts he had with the defendant had been made without certificates of completion. Counsel for the plaintiff argued that if PW1 had not worked, his contract would have been terminated. He submitted that since the contract was not terminated Mr. Mwesigye had on a balance of probability proved that he was entitled to the net balance of Shs. 2,310,000/=.

Counsel for the defendant submitted that PW1 told court lies during cross examination when he testified that he last executed works for the defendant in 2008 and yet there were contracts executed between PW1 and the defendant during March and February 2009. Counsel prayed that PW1’s evidence be considered false.

I find that the inconsistence in PW1’s evidence is minor because during re-examination he clarified that he did the work for which he was contracted to do in 2009 as per exhibits P1 (i) and P1 (ii). I have carefully looked at exhibit P1 (i) under which this claim is made and I find that there was a provision under clause 6.6 for termination of the contract for total non-performance on the part of the contractor. Non- performance was one of the conditions for fundamental breach which would terminate the contract immediately.

If at all PW1 had not performed the contract the defendant would have notified him that the contract had terminated pursuant to clause 6.6 of the contract. There was no such notification. The only reason given for delay of payment as per exhibit P3 was freezing of the defendant’s account. In the circumstances, this court is convinced that PW1 has proved on a balance of probability that he performed work as per the contract and he was never paid the contractual sum of Shs. 2,600,000/= which comes to Shs. 2,310,000/= after tax. I find that this sum is due and owing to PW1 and the defendant is accordingly ordered to pay.

(b) Claim by Bimanyomwe Robert – PW2

According to the amended plaint PW2’s claim is Shs. 3,290,000/=. He testified that he performed works for the defendant for the above contract sum. DW testified at the hearing that only Shs. 1,410,000/= out of the entire claim was due and owing to PW2. He referred to exhibit D5 to show that this amount had been sent to PW2’s account but bounced on 24^th January 2011 due to irregularity in the account details.

I wish to point out that the contract sum under exhibit P1 (xxvii) was Shs. 800,000/= while the contract sum under exhibit P1 (xxviii) was Shs. 1,500,000/=. The total sum under the two contracts would therefore be Shs. 2,300,000/= and not Shs. 3,290,000/= as claimed.

However, in seeking to prove the claim counsel for the plaintiff relied on exhibit D5 and submitted that on the second page of that exhibit in line 8, on 24^th January 2011 under reference 5482098 a sum of Shs. 1,410,000/= appears against PW2’s name. In addition to that sum, counsel submitted that in line 35 of exhibit D5 on 30^th June 2011 under reference 713296 BWO3 a sum of Shs. 1,880,000/= appears against PW2’s name. In arriving at the sum of Shs. 3,290,000/= the two sums were added up.

The defendant already acknowledged the sum of Shs. 1,410,000/= as due to PW2 and I find that he is entitled to the same. I am not at all convinced that the entry on 30^th June 2011 was in respect of PW2’s claim. That entry was not indicated in the usual way as other entries. PW2’s name is even outside that column implying that it could have appeared there by mistake. This court cannot use it as a basis for his claim especially given that the figure there does not tally with the contract sum in exhibit P1 (xxvii). I therefore deny part of that claim and instead find that in addition to the sum of Shs. 1,410,000/= that is admitted, the sum Shs. 800,000/= is due and owing to PW2 under exhibit P1 (xxvii) and I order that a total sum of Shs. 2,210,000/= inclusive of what was admitted be paid to him.

3. Claim by Serutwe Bernard – PW3

In the amended plaint PW3 claimed Shs. 5,875,000/=. It was his evidence that he performed the works but the defendant did not pay him the sum of Shs. 4,940,000/= arising out of the contracts entered into between the two parties. The contract sum under contract number MB/04/09/40, exhibit P1 (xxiii) is Shs. 990,000/=. Under contract number MB/04/09/22, (exhibit P1 (xxiv)) the contract sum is Shs. 700,000/=. Under contract number MB/04/09/12, (exhibit P1 (xxv)) the contract sum is Shs. 1,750,000/= while the contract sum under contract number MB/04/09/12, (exhibit P1 (xxvi)) is Shs. 1,500,000/=. This comes to a total sum of Shs. 4,940,000/=. It seems that PW3 abandoned the rest of his claim as stated in the amended plaint. He testified that after filing the suit he was subsequently paid Shs. 1,410,000/= leaving a balance of Shs. 3,530,000/=. He also testified that he executed the work for which he was contracted and the same was certified by Mr. Kasimbazi and Mr. Gaigana although he got no copy of the certificate of completion of the work.

It was the evidence of DW that the defendant acknowledged the sum of Ushs. 2,256,000/= as due to PW3. The sum of Ushs 2,256,000 subtracted from Ushs 3,530,000/= leaves a balance of Ushs. 1,274,000. DW1 also testified that exhibits D6 and D8 were duly approved payment vouchers. I have looked at exhibits D6 and D8 and as submitted by counsel for the plaintiffs, I find that they relate to different contracts, namely MB/10/010/18 and MB/10/010/06. Those are not the contracts in issue and for that matter what is admitted does not extinguish the defendant’s liability in this case.

In the premises, I find that PW3 has proved on a balance of probability that he did work for which he was partly paid leaving an amount of Shs. 3,530,000/= due and owing to him. I accordingly order the defendant to pay that amount to him.

(d) Claim by Byabashaija Edward-P4

In the amended plaint, it was stated that the special damages due to Byabashaija Edward was a sum of Shs. 2,400,000/=. Since this amount is admitted by the defendant, I order that the defendant pays it to the claimant less tax.

(e) Kiwanuka Geoffrey-P5

According to the amended plaint Kiwanuka Geoffrey’s claim is Shs. 1,645,000/=. Since this amount is admitted by the defendant, I order that the defendant pays it to the claimant.

The above evaluation of evidence shows that while Shs. 22,498,000/= was pleaded only Shs. 11,905,000/= was proved to the satisfaction of this court including the amount that was admitted.

3) Interest on the sum of Ushs 168,470,000 at 25% per annum from June 2009 till payment in full.

The amended plaint filed in this case was for a claim of Shs. 22,498,000/=. The claim for interest is based on a figure of Shs. 168,470,000/= which is alleged to have been due and owing as at the time this suit was filed. I however, do not see any mention of that figure in the original plaint that was amended. In the premises, it is my considered opinion that that amount which was never pleaded cannot be the basis for an award of interest. While it is true that that amount is mentioned in the amended plaint and the bulk of it said to have been paid by the defendant, no documents showing dates of payments were tendered in evidence. It therefore remains a mere allegation that that was the amount due and owing as at the time this suit was filed. For that reason I decline to consider the issue of interest based on that figure. I will instead award interest on the amount that was pleaded and proved.

Section 26(2) of the Civil Procedure Act Cap. 71 empowers this court to award interest for any period prior to the institution of the suit. Award of interest is discretionary. The basis of an award of interest is that the defendant has kept the plaintiff out of his money and the defendant has had the use of it himself. So he ought to compensate the plaintiff accordingly as per Lord Denning in Harbutt’s “Plasticine” Ltd v Wayne Tank and Pump Co. Ltd (1970) 1 QB 447. The Supreme Court has upheld this principle in the case of Sietco v Noble Builders (U) Ltd Civil Appeal No. 31 of 1995.

In the instant case, there are a number of contracts involved. They had different commencement and finishing dates. Although exhibit P2 indicates that works were completed by June 2009, some contracts that form the basis of these claims like that of Mr. Serutwe were signed as late as September 2009. I will therefore look at the individual claims that have been proved and award interests.

1. Mr. Mwesigye Alfonse Katiti

According to clause 9 of the contract for Mr. Mwesigye that was not paid for work was to be completed by 31^st June 2009. I find that payment was due upon completion of the work. The defendant denied PW1 use of his money from that date. However, giving the defendant a grace period of two months which could have been used for processing payment, I would award interest on the Shs. 2,310,000/= due to him at the rate of 18% per annum from September 2009 until payment in full and it is accordingly awarded.

2. Bimanyomwe Robert – PW2

According to the contract of Mr. Bimanyowe signed on 1^st July 2009, the duration was up to 31^st October 2009. The contract sum was Shs. 800,000/=. However, giving the defendant a grace period of two months which could have been used for processing payment, I would award interest of 18% per annum on that amount from January 2010 until payment in full and it is accordingly awarded.

The second contract of 3^rd January 2012 was ending on 31^st March 2010. The amount was Shs. 1,500,000/=. Giving the defendant the grace period of two months which could have been used for processing payment, I would award interest at the rate of 18% from June 2010 until payment in full and it is accordingly awarded.

3. Serutwe Bernard – PW3

It was not stated under which contracts Mr. Serutwe’s claims remained unpaid. But going by the date of the last contract and taking into account the grace period for processing payments, I would ward interest on the sum of Shs. 3,530,000/= due to him from December 2009 until payment in full and it is accordingly awarded.

(d) Byabashaija Edward

The particular contract under which this claim is made was not stated as there are several of them but I note that the last one was to be completed in June 2009. In the circumstances, I award interest on the sum of Shs. 2,400,000/= less tax at 18% per annum from September 2009 until payment in full.

(e) Kiwanuka Geoffrey

I was not able to locate Mr. Kiwanuka’s contract that formed the basis of his claim. However, from his witness statement he did the work between 2008 and 2009. His claim was admitted. In the circumstances, I will use the common period of June 2009 as the completion date and award interest on the Shs. 1,645,000/= due to him at 18% per annum from August 2009 until payment in full.

(4) General damages for breach of contract

General damages are as such as the law would presume to be the natural or probable consequence of the act complained of on account of the fact that they are its immediate, direct and proximate result. Per Lord Macnaghten in Stroms v Hutchinson [1905] A.C 515.

The plaintiffs adduced evidence to show that they suffered inconvenience arising from the defendant’s failure to pay them. PW1 testified that upon the defendant’s failure to pay, he mobilized the rest of the plaintiffs to petition the Resident District Commissioner to assist them recover the money. It was also his evidence that a letter was written to the defendants demanding for payment, various meetings were convened with a view to obtaining their payment without success. Evidence was also adduced that most of the plaintiffs had borrowed money in order to perform the contracts with the defendant but the failure to obtain their payment resulted into some of them selling off their properties to meet their loan obligations. Others had to flee their homes for fear of being arrested while some were arrested and imprisoned on account of the debts.

During cross examination DW1 acknowledged meeting some of the plaintiffs who were following up the issue of bounced payments with regard to their claims. This corroborates the plaintiff’s version of the story. I do not agree with the submission of counsel for the defendant that the plaintiffs were paid. This is because some payments were advanced after the filing of this suit while other payments due were later on admitted by the defendant during the hearing of the matter.

I find that the plaintiffs suffered inconvenience due to the direct actions of the defendant. It is common for government institutions to enter into contracts and fail to honour their obligations thereby causing untold suffering to the innocent party. This practice must be discouraged. I therefore find the sum of Shs. 15,000,000/= adequate to atone for the hardships and inconveniences the plaintiffs were subjected to and I accordingly award it as general damages.

(5) Interest on General damages at court rate from date of judgment till payment in full

The award of Interest on general damages is a matter of discretion of the court as was observed by Okello J (as he then was) . in the case of Superior Construction and Engineering Ltd vs. Notay Engineering Industries (Ltd) High Court Civil Suit No 702 of 1989. In exercise of that discretion, I award the plaintiffs interest on the general damages at a rate of 8% per annum from the date of judgment till payment in full.

6. Punitive damages

Counsel for the plaintiff conceded that punitive damages were not particularized in the plaint and consequently abandoned the remedy. Therefore the prayer for punitive damages is denied.

6. Costs of the suit.

I find the prayer for costs justifiable because costs must follow the event. Since the plaintiffs are the successful party, I will award costs of this suit to them.

In the result, judgment is entered for the above five successful plaintiffs against the defendant in the following terms:-

1. It is declared that the plaintiffs whose claims were outstanding as indicated above are entitled to payments as proved.

2. It is ordered that the plaintiffs whose respective claims have been proved as above be paid by the defendant.

3. Interest of 18% p.a is awarded to the respective plaintiffs as particularized above.

4. Shs. 15,000,000 is awarded as general damages.

5. Interest on the general damages is awarded at a rate of 8% per annum from the date of judgment till payment in full

6. Costs are awarded to the said plaintiffs.

I so order.

Dated this 31^st day of August 2012

Hellen Obura

JUDGE

Delivered in chambers at 4.00 pm in the presence of Mr. John Kabandize for the plaintiffs. Parties and counsel for the defendant were absent.

JUDGE

31/08/2012