Court name
Commercial Court of Uganda
Judgment date
30 November 2012

Makubuya v UMEME Ltd (Miscellaneous Application-2012/614) [2012] UGCommC 154 (30 November 2012);

Cite this case
[2012] UGCommC 154

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 614 OF 2012

(ARISING FROM HCCS NO 534 OF 2012)

MAKUBUYA E. WILLIAM t/a POLLA PLAST}..................                                                                                                                           APPLICANT/PLAINTIFF

VERSUS

UMEME LIMITED}................................................                                                                                                                                             RESPONDENT/DEFENDANT

 

BEFORE HON JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicants application is brought under order 41 rules 2 and 9 of the Civil Procedure Rules and section 98 of the Civil Procedure Act. It is for orders that the power supply to the applicant/plaintiff's factory premises at Ntinda industrial area Kampala and account number 200664023 is restored, secondly for a temporary injunction to issue restraining the respondent/defendant from further disconnecting power supply to the applicant/plaintiff's premises until the final disposal of the suit and for costs of the application be provided for.

The grounds of the application are that the applicant carries on the business of manufacturing plastic related products in the Ntinda industrial area and relies heavily on the consumption of power supplied and sold by the defendant/respondent. The respondent/defendant has unlawfully billed the applicant/plaintiff for power not consumed on the factory premises and the applicant filed a suit against the respondent which has a high chance of success. Thirdly the respondent has disconnected power supply to the applicant/plaintiffs factory premises thereby causing the applicant irreparable damage and loss as the industrial process of manufacturing plastic related products once interfered with cannot be restored. Thirdly the applicant avers that it is in the interest of justice that the power supply is restored to the factory premises of the applicant as he shall suffer irreparable damage or loss which cannot be atoned for by way of an award of damages. Lastly the applicant avers that he shall suffer more if this application is not allowed and the balance of convenience is to grant him the remedies prayed for.

The application is supported by the affidavit of the applicant. The deposition is to the effect that the applicant carries on business involving manufacture of plastic related products and relies heavily on the consumption of electricity sold and supplied by the respondent on a particular account. Since the applicant bought the manufacturing machines and equipment, the respondent has unlawfully billed him for power not consumed and accused him of causing energy loss as well as installing faulty meters. Because of the unlawful billing the applicant filed a suit which has a high chance of success. The respondent has disconnected supply of power to the factory premises unless the applicant settles his full indebtedness to it. The applicant has been billed for arrears of Uganda shillings 141,992,954/= plus a connection fee of Uganda shillings 23,600/=. The applicant contends that the power remains disconnected, the industrial process of making plastic related products shall be interrupted thereby leading to irreparable loss and damage as the whole process has to be commenced afresh and any products so made have to be destroyed as they cannot be used or marketed. In the main the applicant repeats the grounds in the chamber summons.

In reply Moses G Byaruhanga the Acting Legal Services Manager of the Respondent Company made a deposition on 20 November 2012 in which he avers that the respondent carries out its duties in a lawful and professional manner. The applicant was billed in a lawful manner according to the provisions of law governing the respondent’s activities. The applicant’s electricity was disconnected due to its outstanding unpaid electricity bill arising out of a lawful billing system. The applicant owes the respondent a sum of Uganda shillings 155,157,226 and 83 cents for electricity consumed but not paid for. Secondly the applicant does not stand to suffer any damage that cannot be atoned for by an award of damages. Thirdly that the respondent shall suffer irreparable loss if the application is granted because the applicant owes the respondent Uganda shillings 155,157,226/= for electricity consumed and if the applicant is granted the remedies sought it will continue to consume electricity without paying for it.

The application came for hearing on 21 November 2012 and the applicant was represented by Counsel Abu Bakr Kawesa while the respondent was represented by Counsel Andrew Ankunda.

The applicant’s counsel submitted orally whereupon the matter was adjourned to enable negotiations between the parties. Negotiations failed and the respondent’s counsel submitted on the part of the respondent. Subsequently the court stayed a final decision on the matter until after negotiations were given a chance. The final decision was postponed by seven days. Upon failure of the parties to work out any terms for the connection of the applicant, this is the full ruling of court in the application.

Ruling

I have carefully listened to the arguments of counsel. The gist of the applicants application is that the applicant has filed a suit against the respondent seeking several remedies with regard to the stoppage of power supply to the premises where the applicant manufacturers plastic products. The applicant purchased the plastic manufacturing machines/factory from Messieurs BMK Industries. Counsel for the applicant submitted that there were some agreement between the applicant and BMK industries concerning the power previously consumed on the premises. This is to the effect that the applicant would not be liable for power previously consumed on the premises. However no such agreement was attached. The applicant alleges that the respondent cut off power on the basis of an outstanding electricity bill which is illegal in that the bill was transferred from the former proprietors and therefore the applicant is not liable to pay.

Secondly the applicant pleads hardship on the ground that it cannot make any money to pay any bills if power is disconnected. There are several other grounds the applicant dwells on but I do not need to recount them at this stage. Without much reflection, utilities such as water and electricity are essential commodities. The supplier of utilities uses the power of distress to access monies which owe on the supply. The power of distress is a self-help power employed by persons such as landlords and others such as suppliers of utilities, like telephone, electricity and water to hold a user of the services at ransom until after their bills have been paid. In such cases they determine what the amount in the bill is or ought to be. If there is a dispute as to the amount in the bill, the user of the utility goes to the establishment or Corporation which supplies the electricity or water to ascertain whether what he or she was billed was proper. In most cases the supplier will ascertain the power consumed and give the applicant conditions upon which the power may be restored. In fact there is a reconnection fee charged as can be evidenced by annexure "B" which is the order of disconnection. The disconnection order attached to the affidavit of the applicant is dated 29th of October 2012. The applicant’s plaint was filed on 8 November 2012. The right of self-help is the usual way a supplier of electricity can collect dues without recourse to the courts.

In this case the applicant who disputes the bills has come to court seeking various remedies and declarations among others that the amount billed is not due as it had been transferred from another customer of the respondent. The applicant seeks a mandatory injunction from the courts.

I have carefully listened to the respondent’s submission on the principles of law and as far as the question of status quo is concerned. It is true that the status quo is that power was disconnected and the applicant has come to court to seek the remedy of restoring power. It is quite a difficult position to settle as the respondent has a duty to collect dues and pay taxes on those dues. However the dispute that I see emerging from the application is that a part of the bill is disputed. The respondent in his reply has indicated that about 40 million is not in dispute; however no materials were given in evidence in support of the respondent's contention that certain amounts were not disputed. I have perused the plaint of the plaintiff/applicant and annexure "H" to the plaint. Paragraph 15 of the plaint avers that when the plaintiff declined to pay the highly exaggerated bills, the defendant disconnected power. In order to restore the power, the defendant forced the plaintiff into making an undertaking to pay the bills. The undertaking annexure "H" is signed by the plaintiff as managing director and is also witnessed by the respondent’s officers. In the undertaking, the plaintiff undertakes to pay Uganda shillings 86,039,076/= and the balance of Uganda shillings 51,575,374/=. The undertaking is dated 9th of May 2012. It further says that on 3 September 2012 the plaintiff shall report to Kampala Associated Advocates to negotiate the terms of payment of Uganda shillings 51,475,374/=. He goes on to say that in default of any of the instalments indicated in the undertaking, the respondent shall immediately disconnect power supply and exercise all options available to recover the debt. It is obvious from the plaint that the applicant admits some amounts which are not disclosed. The total bill demanded in the application annexure "B" in the affidavit in support is Uganda shillings 141,992,954/=. However in the plaint the plaintiff complains about60,482,777/= allegedly transferred to the plaintiff from the previous consumer, shillings 106,316,886/= assessed on the basis of faulty meters and a declaration that the plaintiff was unlawfully charged for causing energy loss and is not liable to pay the fraud charge of Uganda shillings 51,475,373/=. There is a dispute as to the exact amount which may be owing to the respondent.

The application does not indicate that the applicant is willing to pay some money. In an application this nature, where the applicant seeks to get connected, there should be an undertaking by the applicant to pay some sums of money. There is however no undertaking of any kind by the applicant. The court is unable to rely on the materials on which to assess how much the applicant is willing to pay as owing to the respondent.

In the exercise of the courts discretion, it is a relevant factor to consider what owes so that the court will be able to establish whether the applicant is serious about its commitments to keep on paying electricity consumed on his premises. It is my humble opinion that the discretion of the court is very limited since it is mainly the respondent to concede that the applicant pays in instalments. Since the respondent has to supply electricity to the premises and is demanding for arrears it would be difficult for the court to impose on the respondent conditions upon which power is to be restored to the applicant. It would have been better for the applicant to negotiate for better terms for restoration of power.

For the moment, the plaintiff has disclosed in its plaint that it has triable issues as to whether it can be charged for electricity it has not consumed. Secondly, whether the amounts in the bills are due? As far as the principles are concerned, all the plaintiffs needs to show is that it has an arguable case which merits judicial consideration as held in the case ofAmerican Cyanamid company versus Ethicon Ltd [1975] 1 All ER at page 504. Secondly, the plaintiff would otherwise suffer irreparable loss that cannot be adequately atoned for by an award of damages. If the court is in doubt, the application will be decided on the balance of convenience.

The principles upon which courts exercise discretion to grant temporary or mandatory injunctions are summarised in the case of Kiyimba Kaggwa versus Katende [1985] HCB at page 23 where the High Court held that the granting of a temporary injunction is an exercise of judicial discretion and the purpose of granting it is to preserve the status quo until the question to be investigated in the suit can be finally disposed of. Secondly the conditions for the grant of a temporary injunction are that the applicant must show a prima facie case with a probability of success; secondly that the injunction would normally be refused unless the applicant might otherwise suffer irreparable injury which would not be adequately compensated for by an award of damages. Thirdly if the court is in doubt, it will decide the application on the balance of convenience. In that case the learned judge referred the case of American Cyanamid company versus Ethicon Ltd [1975] 1 All ER at page 504 for the proposition that the plaintiff need not show that it has the prima facie case with a high probability of success. All that the plaintiff needed to show was that it had an arguable case which merits judicial consideration. However in the above case, Lord Diplock also held that where the rights of the parties are to be decided on contested facts, the courts decide whether to grant the remedy on the balance of convenience. The balance of convenience may require an undertaking of one of the parties to compensate the other party against whom the order is being made in case of injury. The origin of the rule is explained by Lord Diplock at page 509:

“It was to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved that the practice arose of granting him relief by way of interlocutory injunction; but since the middle of the 19th century this has been made subject to his undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it should be held at the trial that the plaintiff had not been entitled to restrain the defendant from doing what he was threatening to do. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where ‘the balance of convenience lies.”  (Emphasis added)

The considerations for assessing the balance of convenience require an undertaking from the applicant in damages in case the uncertainty was resolved in the respondents favour. I have appreciated the applicant’s case that it cannot operate and make money to pay bills without the supply of electricity. In other words the applicant wants supply of electricity on credit so that he can pay the bills of the respondent. The applicant would have been better of seeking to negotiate the terms of the connection than seeking an interlocutory order of this court. This is because the status quo is that the electricity was disconnected in October 2012. The disconnection notice is annexure "B" and is dated 29th of October 2012. The applicant filed the application on 8 November 2012. The status quo is that electricity supply has been disconnected. The applicant seeks a mandatory order or injunction against the respondent. Counsels did not address the court on the considerations for the grant of mandatory injunctions. The applicant’s application was brought under order 41 rules 2 of the CPR. Rule 2 deals with injunctions to restrain breach of contract or other injury. However, the rules specifically deal with restraining the defendant from committing a breach of contract or other injury of any kind whether compensation is claimed in the suit or not. It deals with restraint of the defendant. It is not explicit about a mandatory order which may upset the status quo by the time of the filing of the application. According to Philip Pettit on Equity and the Law of Trusts 4th edition page 401, there is no distinction in principle between granting a prohibitory and a mandatory injunction. Every injunction must be granted with care and caution. Courts will not hesitate to grant a mandatory injunction in appropriate cases where there is breach of covenant. He likened a mandatory injunction to an order for specific performance. Maintenance of the status quo deals with prohibitory orders of restraint. However a mandatory injunction necessarily changes the status quo because it is a positive order such as an order for specific performance. The East African Court of Appeal considered a mandatory injunction in the case of the Despina Pontikos [1975] 1 EA 38 (HCK). The High Court granted a mandatory injunction and among other factors took into account the fact that the respondent had no defence to a claim for release of the goods. Sir Dermot Sheridan held at page 48:

“I am informed that the value of the cargo is £251,000 and is going up. It is obviously in everyone’s interest that it should be released as soon as possible. There can be no defence to this claim and the defendant does not claim that there is save that it objects to the vessel being under arrest – an exercise by the plaintiffs of their legal rights. ... this interlocutory relief can be granted even if it is in substance for the whole relief claimed in the action. Woodford v. Smith, [1970] 1 All E.R. 1091 is to the same effect.”

On appeal to the Court of Appeal, the judgment of the High Court was upheld and Spry VP gives some of the principles for grant of mandatory injunctions. Courts “will not order mandatory injunctions that involve personal services”. Secondly on whether a mandatory injunction ought to be issued with which the defendants may be incapable of complying, as a general rule the court should not. In deciding whether to grant an equitable relief, a court is entitled to take into account the conduct of the parties.

The applicants counsel never addressed the court on the principles to be applied for the grant of mandatory injunctions. Was there a breach of covenant and if so what? The applicant seeks both a mandatory injunction which is a positive order to restore power on the premises of the factory and a prohibition order restraining the respondent from further disconnecting in any future time power supply to the premises.

 The applicant alleges that the respondent is charging it with a Bill which is not due. Among the attachments in the plaint, the applicant has written a letter to Parliament complaining about the conduct of the respondent. Subsequently the applicant filed this application in the High Court. I was not advised on the provisions of the Electricity Act 1999 chapter 145 on supply of electricity. A quick perusal of the Act and section 79 thereof gives the consumer of electricity a right to be supplied by the licensee of the Authority. Moreover the licensee may seek to recover outstanding dues by civil action. The terms of contract between the supplier of electricity and the consumer is also regulated by section 77 of the Electricity Act 1999, Cap 145. Where the licensee refuses to supply a consumer with electricity, under section 79 (3), such a person may complain to the authority and the authority shall take such action against the licensee as it deems necessary in accordance with the Act. The authority is created by section 4 of the Act and its functions as spelt out by section 10 thereof. It is responsible for standards such as set by meters and the conduct of the business of electricity generation, transmission and distribution or sale of electricity. I note that electricity is an essential commodity for industry.

Should the court grant any mandatory injunction, it will be assuming some of the functions of the Authority spelt out under section 79 (3) and section 10 (s) of the Electricity Act 1999 to regulate the supply of electricity i.e. to industry. The authority is defined as the Electricity Regulatory Authority established by section 4 of the Act. All the allegations of the applicant in the application fall under the regulatory authority described above.

In the premises in order to use the expertise and mandate of the regulatory authority, it is more convenient for the applicant to lodge its complaint to the regulatory authority namely the Electricity Regulatory Authority established by section 4 of the Act. The balance of convenience is in favour of refusing the application and permitting the applicant to lodge its complaint with the appropriate authority. Secondly in the case of suffering damages, the applicant can seek to be compensated by an award of damages. At this stage the court will not interfere with the right of distress of the respondent as it would set an unpredictable precedent in the management of power supply affecting supply of electricity and management thereof. The final result is that the balance of convenience is in favour of refusing the application. Consequently the applicant’s application for a mandatory injunction to connect power to its premises and as well as a negative injunction to restrain the respondent from future disconnection of power is dismissed with costs to abide the outcome of the main suit.

Ruling delivered in open court this 30th day of November 2012

Christopher Madrama Izama

JUDGE

Ruling delivered in the presence of:

Kawesa Abu Bakar for the applicant

Applicant in court

Andrew Ankunda Counsel for respondent

Christopher Madrama Izama

JUDGE

30 November 2012