Court name
Supreme Court of Uganda
Judgment date
15 January 2004

Ahmed Ibrahim Bholm v Car and General Ltd (Civil Appeal-2002/12) [2004] UGSC 8 (15 January 2004);

Cite this case
[2004] UGSC 8








[Appeal from judgment of the Court of Appeal at Kampala (Kato,
Twinomujuni and Kitumba, JJ.A) dated 2nd May, 2002 in Civil Appeal
No.30 of 2001].

JUDGMENT OF TSEKOOKO, JSC: This is a second appeal. It is
against the decision of the Court of Appeal which overturned the judgment and
decree of the High Court
where Mukanza, J; had awarded to the appellant US $
18,700 as special damages and Uganda Shs. 30m/= as general damages, on account
of breach of a contract of employment.

The facts in this appeal can be simply stated. The respondent, Car &
General (U) Ltd, is a company incorporated in Uganda. It
belongs to a group of
companies called Car & General. There is another company in Nairobi, called
Car & General (Kenya) Ltd.
It seems to be the headquarters of the group. I
shall hereinafter refer to the latter company as the Kenya Company. On
a director of the respondent based at the Kenya Company offered the
appellant employment for two years. The offer was in a form of
a letter (Exhibit
P.1). The appellant accepted the offer apparently by signing at the end of it. A
contract of employment was thus
executed. Under the contract, he had to work on
probation for three months. There is no provision mentioning extension of the
period. The appellant travelled to Kampala to work for the respondent
in Kampala. While the appellant was working in Kampala, the
respondent paid him
a salary, provided him with a house and paid for utilities such as water,
electricity and telephone. The respondent
also provided the appellant with a car
which was in bad mechanical condition. In the course of his work, there
developed what was
described as "irreconcileable differences" between him
and a Mr. Agvan, the respondent's General Manager. The appellant continued to
perform his duties until 13th January 1994, when the respondent,
through its Executive Director, terminated his services and ordered for the
appellant to be paid
one month's salary in lieu of notice.
Consequently the
appellant instituted a suit against the respondent, in the High Court, claiming
for: -

(a) Special
(b) General damages for breach of
(c) Exemplary
(d) Costs,
(e) Interest on (a) at the rate of

In the plaint, and in his testimony,
the appellant claimed that he was offered employment on contract of two years
and he signed it.
This was originally accepted by the respondent in its defence
but in its amended written statement of defence and counterclaim, the
denied the existence of the contract. Further, the respondent counterclaimed for
Shs 1,754,200/= as the value of its property
allegedly lost or damaged by the
appellant. It also claimed for general damages.
Five issues framed for
determination by the trial judge were: -
(1). Whether there was a contract
of employment between the two parties.

(2). If there was, which was (Sic) the terms of the contract of

(3). Which of the parties was in breach of the

(4). Whether the plaintiff owes the defendant any money and
Vice versa.

(5). What general and special damages are due to
either party.

The discussion by the trial judge of the issues are
rather confusing but his conclusions are clear. At first the learned judge
to hold that the contract of employment was illegal and that the
appellant's employment was illegal under the Employment Decree,
1975. However,
later in the same judgment, the learned trial judge answered all the issues in
favour of the appellant, holding that
there was a valid contract between the
parties and that the respondent breached the contract by wrongfully dismissing
the appellant.
Consequently, the learned judge awarded the appellant US$ 18,700
as salary for the period 13/1/94 to June, 1995, that period being
the balance of
the two years contract. He also awarded the appellant shs 30m/= as general
damages to compensate him for;

"Wrongful dismissal harassment, humiliation and embarrassment and other
benefits denied to the plaintiff as per employment contract".

The judge dismissed the respondent's counter claim.

Upon appeal, the Court of Appeal held that there was no valid contract
between the parties; that the appellant had sued a wrong party
and that the
appellant was illegally employed. Accordingly, that court allowed the appeal,
set aside the judgment and orders of the
trial judge. The court did not indicate
what would happened to the counterclaim. The appellant has now appealed to this
Court on
two grounds.

In the first ground the complaint is that the
learned Justices of Appeal erred in law and in fact in finding that there was no
contract between the appellant and the respondent. Mr. Ebert Byenkya,
counsel for the appellant, argued that there was a valid contract.
He contended
that the Court of Appeal did not study the pleadings, and or review the evidence
so as to reach its own conclusions.
He further contended that had the Court of
Appeal studied the whole defence and the counterclaim, the court should have
found that
there was implicit admission by the respondent of a valid contract
between the parties. Learned counsel submitted that the Court
of Appeal did not
appreciate that the respondent did not plead illegalities as required under
Order 6 Rule 5 of the CP Rules so as
to show that the action was not
maintainable. The illegalities being alleged were the absence of a signed
contract and absence of
an immigration permit. According to counsel, pleading
these matters was necessary for purposes of fair hearing. It was submitted
in his plaint the appellant did not plead that the entire contract was in one
document and that the learned Justice of Appeal
who wrote the lead judgment
should have found that there were other documents relating to the contract which
were in writing. Counsel
referred to a letter ref: VV/jxn/96 dated 13/1/1994,
(exhibit P.3) which was written by Vijay Gidoomal, the Executive Director, of
the respondent to the appellant terminating the employment. (The letter
specifically refers to terms of the contract). Counsel also
referred to a Car
& General (Uganda) Ltd memorandum, dated 30/10/93, by which a Mr. Karim
Agvan extended the appellant's probationary
period to December 1993 and to a
similar memorandum Ref. UGA/AKA/BHALM/7/11/1/94 dated 11/1/94 by which the same
A. K. Agvan, General
Manager, purported to again extend the probationary period
to the end of January, 1994. It was also contended, and here I agree,
that these
documents affirm the existence of a contract, contrary to the finding of the
Justices of Appeal. Referring to section
10 of the Employment Decree, 1975,
learned counsel contended that it is not correct, as asserted by the respondent,
that exhibit
P1, which was admitted in evidence without objection by the
respondent, did not reflect the true terms of the contract. He argued
that the
terms of the contract were proved. In counsel's opinion, the evidence of
Cecil Joseph (DW1), the respondent's Ag. General Manager since 1997,
indicates acceptance of the terms of the contract. Therefore, contended learned
counsel, the provisions of sections 10 and 11 of the Decree were complied with.
He also argued that: -

(a) Under Company Law (presumably S 194 of the Companies Act and on evidence
the respondent ratified the appellant's appointment.

(b) In appointing the appellant, the Kenya Company exercised ostensible
authority on behalf of the respondent. Counsel relied on Hely -
Hutchinson Vs Brayhead Ltd & another
QB.D.549. and S16 of the Employment Decree, 1975.

(c) The conduct of the respondent showed that there was the relationship of
employer and employee and for this view counsel relied
on the cases of:

(i). Mugenyi & Co. Advocates Vs Attorney
Civil Appeal

No.43 of 1995 (SC) (unreported), (ii). N. Bandali Vs Lombank
Tanganyika Ltd
(1963) EA 304.

(No specific passages were referred to by counsel but in those

cases the courts considered the application of the doctrine of


Mr. Shonubi, counsel for the respondent,
submitted that: -
(a) The Court of Appeal re-evaluated the evidence on

(b) There was no contract, but if there was any contract, it was between the
appellant and the Kenya Company which employed the appellant
to work for the
respondent. That this is confirmed by the letter of appointment (Exh.P.1)
written on the letterhead of the Kenya

(c) In paragraph 6 of its amended written statement of defence, the
respondent denied the existence of the contract.

(d) 0.6 Rule 5 does not remove
the obligation for the appellant to prove existence of contract and its
validity. The appellant had the
obligation to produce the rest of the
(e) Section 13 (1) (a) of the Decree
requires foreign contracts to be in writing and to be

(f) Exhibits P.2 and P.3, the letters extending probation and terminating
contract are unhelpful.

(g)S.113 of the Evidence Act and S .154 of Company's Act were not applicable
to this case.

Learned counsel relied on Prof. Syd Hug Vs Islamic University in Uganda
Civil Appeal No.45 of 1995 (SC); Makula International Vs H.E.
Cardinal Nsubuga
(1982) HCB 11 and Gullabhai Ushillingi Vs Kampala
Pharmaceuticals Ltd
- Civil Appeal 6 of 1999 (S.C) for the view that
Court cannot condone illegality.
In my opinion none of the above three cases
can help the respondent. On the facts the cases of Hug and
Makula are clearly distinguishable in that the illegality relied
on by the Courts in either of the two cases was obvious and clear. Indeed
Ushillingi's case, as will appear later, supports the appellant's case.
In his plaint, the appellant averred, in paragraph 2 thereof, that the
is a branch company of the multinational company called Car &
General which is incorporated and doing business in Uganda. In
4th paragraph, and contrary to Mr. Byenkya's submission on this
point, the appellant indicated that the contract was in one document;
for he
averred that on 17/5/93, he was offered employment on contract which he accepted
and signed on 18/5/93 before he reported
for duty at Kampala. In paragraph 6,
the appellant enumerated his benefits under the contract. The contract was
annexed to the plaint.
I should point out that in the original written statement
of defence filed in November, 1994, these averments were admitted explicitly
paragraph and 4 thereof However, on 24/11/95, before the defence was amended, Mr
Shonubi, counsel for the respondent, unsuccessfully
submitted in the High Court
before the trial judge that the appellant had no cause of action against the
respondent because the contract
was entered into with the Kenya Company. In his
submissions, he refers to the last page 4, of the contract where the names of
parties appeared. Counsel contended that:

"The company which has been sued is incorporated in
Uganda............... what my learned friend should have done is to sue both.
Page 4 of the contract which clearly shows the parties, the plaintiff and the
Kenya Company"

Likewise, the trial judge, in his ruling, rejecting Mr. Shonubi's objection,
referred to page 4 of the same contract where the names
of the parties appeared.
The judge delivered his ruling six months latter on 28/3/1996. Thereafter, the
respondent sought leave and
was allowed to amend its defence and on 20/9/96 it
amended and filed its amended defence, this time, denying the averments in
2 and 4 of the plaint. In that amendment the respondent rather
evasively denied the existence of a written contract. Thus in its
para 4, it
averred that "paragraph 4 and 5 of the plaint are denied in that the defendant
never contracted with the plaintiff"

The mystry surrounding page 4
doesn't seem to have aroused any body's curiosity. In his written submission,
when discussing the first
and second issues, the appellant's counsel maintained
that exhibit P.1 was a valid contract. Respondent's counsel took the contrary
view, contending that exhibit P1 was entered into with a foreign company and was
not binding.

In away the respondent was merely saying that the contract exists but the
respondent was not a party to it. A close study of those
submissions shows that
the respondents counsel made two alternative contentions before the trial judge.
This was in line with the
amended defence. In paragraphs (vii) and (VIII) of his
submissions, he accepted that Exhibit P.1 was signed in Nairobi. But in para
counsel contended that because page 4 of the same document was missing from the
record therefore, sections 13 (I) and 14 (I)
of the Decree were contravened and
so there was no valid contract.

In his evidence, as stated earlier,
the appellant testified that he was interviewed in Nairobi by the Kenya Company
and that he signed
the contract of employment before he was posted to Kampala.
The terms of employment relating to duties, salary, housing, leave, security,
medical, transport, and others are spelt out in the contract itself (exhibit P1)
and in the job profile (exhibit P.2). I find it
necessary to reproduce parts of
the contract relating to duration of the contract, work permit, commitment and
probation. It reads
as follows: -

"cc. Head Office C&G

Car & General

REF: ENG/248/VA. l7th May, 1993. Mr. Ahmed. I. Bholm P.O. Box

Dear Mr. Bholm,
Further to
your recent interview, I have pleasure in offering you the position of Financial
controller, Kampala. The date of commencement
is to be agreed. This contract
is for a term of two years.

initially in Kampala, you will be responsible for the total accounting and
finance function with Car & General (Uganda)
Limited. Should the company so
decide, you may be transferred anywhere within the Group in East Africa. You
will report to the General
Manager of Car & General (Uganda)

You will be paid a salary in
Uganda shillings equivalent to US $ 1,100 per monthly gross. This salary will be
paid in arrears at the
end of each month. The currency conversion factor will be
revised every three months and once fixed will be applicable for the whole
the succeed three months.

Work permit.
This contract is conditional upon the
company obtaining a work permit on your behalf. The initial term of contract
will be two years from the date your employment


You will be expected to devote you whole time and attention to your duties
as per laid down terms of reference and to undertake not
to become involved in
any other employment nor to take active part in politics.

Standing orders

You are required to make your self familiar with, and abide by, such
standing orders as shall from time to time be issued by the company.
You will
not without the consent of the company engage in any other business which will
be in conflict with your duties as a full
employee of the company.


Your employment is subject to the satisfactory completion of a three
months, probationary period, and your confirmation shall be only
in writing.
During this probationary period your employment may be terminated by giving one
month's notice either by the company
or yourself."

It ought to be pointed out at this stage that the contract did not either
expressly or by implication provide for extension of the
3 months probation
period. No evidence was produced by the Respondent to show that it had authority
outside the provisions of the
contract to extend the probation period. Therefore
it is legitimate to conclude that Mr. Agvan, the General Manager, in purporting
to extend the probation period, acted outside the terms of the contract.

As pointed out earlier, during submissions on the preliminary objection
raised by Mr. Shonubi for the respondent, he made reference
to the parties and
signatures which appeared at the end of exhibit P.1, the contract. So did
counsel for the appellant, as indeed
did the learned trial judge in his ruling,
overruling the objection raised by Mr. Shonubi.

In his evidence in chief, Cecil Joseph DW1 partially testified as follows:
-" I do have a record of the plaintiff's employment, I have a file. I have
looked at these records - Exhibit p.1 I do have example exhibit
P.1 is
appointment letter for Rholu. The appointment is from Car & General Ltd
Kenya, Nairobi. This contract is conditional
upon obtaining a work permit. The
appointment is only for two years......

When I look at the file the work permit was made on 20th
October, 1993. There are application forms signed by the general manager
to the work permit show (Sic) that work permit was granted.
The letter is dated
18th November, 1993... The letter says/mentions that Bholu is on probation and
that they were looking for more
qualified person........ "

is a pity that at the trial, the appellant's counsel did not demand that DW1
produces the copy of the appointment letter he was
referring to containing page
4. Be that as it may, after studying the proceedings relating to the objection
by Mr. Shonubi that the
plaint disclosed no cause of action, I have no doubt in
my mind that the full contract. Exhibit P.l, had been on the court record
part of the pleadings. Otherwise both counsel and the trial judge would not have
mentioned it in submissions and the ruling. By
a strange twist of fate, the most
important portion of the document, the one bearing the execution of the
contract, disappeared in
thin air perhaps soon after the ruling of 28/3/1995.
Strangely, this disappearance appears to have emboldened or enabled the defence
to file an amended defence denying the existence and validity of the contrart
between the parties But DW1, in the above quoted evidence,
betrayed the defence
strategy. He indicates that the contract was in the possession of the defence.
He did not say that it was not
signed. Mr.Shonubi was legal Secretary of
respondent at the material time. He referred to the full contract on 24/11/1995.
In his
address to the trial judge, he admitted the signing of the contract by
both the appellant and Kenya Company in Nairobi. In these
circumstances and with
the greatest respect to the Court of Appeal, it was wrong for that court to hold
that there was no written
contract. It is my considered opinion that the
evidence on record proves existence of a written contract. To accept the
of the respondent in these proceedings that there was no written
contract would be to reduce court into a vehicle for doing injustice.
Further I
think that reference to contract and its terms, by the respondent, in the
subsequent documents by which the respondent
purported to extend the probation
period shows recognition by the respondent of a valid contract. If the
respondent was not a party
to the contract, why did the respondent rely on it to
extend probation or to terminate service?

Mr. Shunobi suggested that
the two documents were not properly proved because they were produced for
identification only. But Joseph
Cecil (DW1) did the proving, perhaps
inadvertently, when he referred to them and stated that they extended the
appellants' probation
period. He did not disown the documents. In the
circumstances, I agree with the trial judge and with Mr. Byenkya that there was
valid contract upon which both parties fulfilled their respective obligations
until the termination of services. I think that the
doctrine of estoppel
prevents the respondent from denying the existence of the contract between the
appellant and the respondent.

In his discussions, this is what the trial judge said:

"With regard to issue No.1 from the evidence on record, it has been
established that Exhibit P1 could be called a contract of employment
because of
all the terms of the said Exhibit P1 were mentioned although page 4 of this
exhibit P1 was missing. It was signed by the employer and the employee
....................................... fact that

both parties recognised its existence. No evidence was adduced by the
defence to challenge the employment management (sic) which was
allegedly signed
in Nairobi and the plaintiff took up the employment in Kampala

In this passage the judge found that the contract had been signed and was
valid. I think that the letter terminating the services
of the appellant
bolsters this finding. The letter is worded as follows: -

"our Ref: WG/jxn/94

Date. January 13th 1994.

Mr. A. Bholm

Car & General (U) Ltd.


Dear Mr. Bholm,

Due to your seemingly irreconcileable differences with your General
Manager, I regret that we have to terminate your services with Car &
General (Uganda)
Limited. In accordance with your contract of
employment and our subsequent letters extending your probation
up to
January 31, 1994, the termination of your employment takes place within the
probationary period. Consequently you are entitled
to one (1) months pay in lieu
of notice.

This is to be paid immediately following which your
services are no longer required at the branch.

Please arrange to
vacate the house by Tuesday January (l9th?) 1994. We will pay for
your transport back to Nairobi in accordance with the terms of your

We thank you for your services and wish you the best of
luck in the future.

Yours faithfully,

Signed by:

cc. Mr. V.H. Gidoomal; Mr. W. Bjones; Mr. EM. Grayson; Mr. A. K.

I have underlined four places in the letter namely: -
(a). "Termination of
services with Car & General (U) Ltd". Those words show, as rightly argued by
Mr. Benkya, that the behaviour
of the respondent towards the appellant was that
of master towards its employee.
(b). "Contract of employment and our
subsequent letters extending your probation." (c). "The terms of your
contract." (d). CAR &

All these
portions prove that the respondent adopted exhibit P.1 though it was executed in
Nairobi. The defence evidence by Joseph
Cecil shows he was recruited in the same
way as the appellant and was then sent to Kampala to be respondent's General
I agree with Mr. Byenkya that this letter is one of the letters
which signifies that the appellant was in fact employed by the respondent
two years and confirms that there was a valid contract between the

One other matter needs to be clarified. I notice from the
letter of appointment an indication that the appellant could be transferred
anywhere in East African suggesting that Kenya Company was the employer. In his
evidence in chief the appellant testified: (page

" I was interviewed in Nairobi. We were about 4 or 5 candidates. I was
interviewed by the Managing Director and (sic) considered responsible
for Uganda
group. I remember the names Milll Jones and V.J Iduman and Ben

I understand this unchallenged evidence to mean that he was recruited by
agents of the respondent. Further, judging from the fact
that the respondent is
the one who extended periods of probation, provided the appellant with essential
amenities and fulfilled all
the terms of the contract and finally terminated the
employment, instead of asking Kenya Company to recall the appellant, I am
that the Kenya Company acted as agent of the respondent and the latter
was the employer.

The two letters purporting to extend the appellant's probation by Mr. A.
Karim Agvan, the General Manager, were written long after
the three months
period had ended.

The letter terminating the appellant's employment was curiously forwarded to
the appellant under cover of a hand written note dated
14/1/94 from the same Mr.
A.K. Agvan, the respondent's General Manager with whom the appellant had
"irreconcilable differences".
In that note Mr. Agvan states: -

"Any discussion on the enclosed notice is to be done

Mr. Shonubi who is a Company Secretary" Clearly
Mr. Agvan did not like to see the appellant.
The inescapable inference is
that probably Agvan wrote the letter of termination and had Gidoomal to sign
In my opinion, on the balance of probabilities, the appellant established
existence of a contract.
For the foregoing reasons, ground one should

In the second ground of appeal, the complaint is that the learned Justices of
Appeal erred in law and in fact in finding that the
appellant had no valid work
permit, and that as a consequence his employment contract was

Mr. Ebert Byenkya, argued that the evidence on the record shows that the
appellant had a permit and that the respondent had indeed
obtained a special
pass for the appellant. Learned counsel relied on Halsbury's Law of
3rd Ed., Vol. 8, paragraph 22 and Cheshire and
8th Ed., Page 333, for the view that where, under a
contract, work is partly lawful and partly unlawful, and the person employed
at the time of undertaking the work, ignorant of the illegality of part of
it, even though the legality of the whole work was not
misrepresented to him, he
can recover remuneration for so much of the work as is lawful. This means the
lawful part can be severed
from the unlawful part. Counsel pointed out,
correctly in my opinion, that under section 10 (3) and S.13 (2) of the Decree,
the employer commits an offence and that this shows that both parties are
not in pari delicto. In other words, the appellant is innocent.
Mr. Shonubi for
the respondent argued that;

(a). From the beginning, the appellant, as a foreigner, should have had a
work permit as required by section 13 (1) (b) of the Immigration
Act, 1984 but got only a special pass which was not produced in
(b). A work permit was only granted in January,

There is ample evidence to show that these arguments by Mr.
Shonubi have no basis. The contract itself (exhibit P.1) provides that:

" The contract is conditional upon the company obtaining a

work permit on your behalf".

Further, the evidence of Cecil Joseph (DW1), part of which I have already
quoted, confirms that it was the responsibility of the respondent
to obtain the
work permit for the appellant. The respondent cannot, therefore, avoid
fulfilling its obligation, under the contract,
of getting the work permit for
the appellant by turning round claiming that the appellant worked illegally
because he had no permit.

After securing the appellant and most probably because of the so called
"irreconcileable deferences" between the appellant and Mr.
Agvan, the General
Manager, it seems the General Manager developed cold feet about processing
quickly the work permit for the appellant.
In my opinion, it is the respondent
who is the guilty party and I can not find any basis for holding the appellant
responsible for
the failure to get the work permit earlier than when it was got.
It is worth noting that when immigration officials visited the respondent's
offices, in October, 1993, its officials chose to conceal the appellant by
ordering him to stay in, and work from, his residence
rather than to allow him
to be seen by, or to take him to, the immigration officials for him to explain
his plight to them. However
on 24/10/1993, the General Manager obtained a pass
for the appellant. The pass expired on 19/1/94. Here the reasonable inference
be drawn is that the respondent felt guilty of failure to get the permit for the
appellant. It is the respondent who breached
the relevant law but not the
appellant because S.10 (3) of the Employment Decree, states: -

"Where a contract is required to be in writing and the failure to comply
with such requirement or agreement is due to wilful act or
omission of the
employer, he shall be guilty of an offence"

In my view,
the rules of the doctrine of contra preferentum work against the respondent in
this case. The operation of this doctrine
is to the effect that the construction
of the document least favourable to the person putting it forward should be
adopted against
him and normally this means the author of the document. It would
be contrary to common sense and even preposterous to assume that
the respondent
issued to the appellant exhibit P.1 when it was not properly

In the plaint, the appellant asserted his contractual right when he pleaded
in paragraph 6 that he was entitled to the work permit.
Therefore the subsequent
denial of this fact by the respondents in its amended defence defeats
imagination. In the Court of Appeal,
on this aspect of the case, Mr. Shonubi
does not appear to have referred to the proper law requiring a work permit. He
cited section
60 (2) (a) and (b) of the Uganda Citizenship and Immigration
Control Act, 1999. In the lead judgment, Kitumba, JA, correctly, held
that at
the material time that was not the applicable law. She also correctly stated
that the applicable laws were the Immigration
Act, 1969 and the Immigration
Control Regulations, 1969 (SI 1969 No. 165) because these were the statutory
provisions which were
in force at the time the appellant was employed. Although,
regrettably, the learned Justice of Appeal in her judgment did not cite
any of
the relevant provisions of the Act and or of the Regulations upon which she
relied to hold that:

"The respondent was supposed to have an entry permit before commencing
work. As he did not have the entry permit, he was illegally

she presumably referred to S.13 of the Immigration Act, 1969. In away the
criticism of the Court by Mr. Byenkya is borne out as it
appears that the
learned Justices of Appeal did not cite the relevant provision of the 1969 law
before holding that the appellant
violated that law. To make matters worse,
counsel for the respondent has now shifted posts by citing a different law. He
to S. 13 (1) (b) of the Immigration (Amendment) Act, 1984. Even then
actually the citation is wrong. He probably meant S.13A (2)
(b), which in any
case, does not help the respondent's case.

I have held
that it was the respondent's obligation to secure the work permit for the
appellant. There is no satisfactory explanation
of why the work permit was not
secured for the appellant early enough. Whatever the case, I think that as the
permit was obtained
eventually while the appellant was still working for the
respondent, it (permit) had retrospective operation. I can not see anything
the relevant law prohibiting this. Moreover there is evidence that the appellant
had a special pass allowing him to work. The
special pass is one of the
recognised documents because it serves the function of a work

Counsel for the respondent contended that no permit was produced in evidence.
It would seem though that this matter was not considered
material because it was
not framed as an issue for decision. It was only brought up in the course of
adducing evidence. The point
is that there was a permit and a special pass. This
was confirmed by the defence evidence given by Cecil Joseph (DW1). Therefore,
the learned Justices of Appeal erred when they held that the appellant never had
a valid work permit and that, therefore, his employment
contract was

For the foregoing reasons I think that ground 2 must succeed.
The success
of the two grounds disposes of this appeal which should be allowed. It now
remains to consider the consequences of the
success of this appeal. I begin with
the extensions of probation period.
The contract (exhibit P.1) stipulates in
part, that: -

"... .During this probationary period, your

employment may be terminated by giving one month's notice either by the
company or yourself"

Does this render the success
of the appeal a pyrrhic victory since the respondent purported to pay the
appellant salary for one month
in lieu of notice?

It appears to have been assumed by the respondent during the trial that the
appellant was, or was assumed to be, on probation at the
time the contract of
employment was terminated. I say assumed because the contract did not provide
for extension of the probation
period. If I were to assume that the appellant
was on probation he would have been entitled to only one month's notice or pay
lieu of the notice. The appellant testified that he was not paid anything
upon termination of his services. Mr Cecil Joseph (DW1)
confirms this. The
latter claims however that the respondent could not pay the appellant any
benefits because the latter was required
to pay the respondent money for its
lost property. This assertion is interesting. The appellant's evidence to the
effect that he
was literary chased out of his residence by Shonubi and askaris
remain unchallenged. Considering the manner in which the appellant
was treated
by the respondent, it is not justifiable to hold him liable for any loss of
property occasioned after he left. Had I
found that he was on probation, the
appellant would have been entitled to his pay for one month in lieu of notice.
However, the contract
did not give the respondent power to extend the period of
probation. If the respondent wanted to terminate the contract during the
three months probation period as provided in the contract, termination should
have been done before the end of September,
1993. This was not done. So when the
probation period lapsed in early September, the contract became effective and
should have lasted
its full course of two years.

The contract did not
provide for extension of probation period. On 11/1/1994, Mr. Agvan, the
respondent's General Manager, purported
to extend in writing the appellant's
probationary period, for a second time, to the end of January, 1994. Then two
days later (13/1/94)
Mr. V.Gidoomal, the Executive Director of the respondent
wrote exhibit P3 terminating the appellant's employment. Was the extension
for purposes of denying the appellant his benefits? I have no doubt that this
was the purpose.
The termination letter was copied to Agvan and was in fact
sent to the appellant under cover of a hand written note of the same Mr.
The inevitable inference appears to be that the extension on 11/1/94 was
designed for purposes of denying the appellant any
benefits under the two year

During trial, the appellant's counsel contended vigorously that probation
period was maliciously restored by the respondent and as
such the appellant was
entitled to the pay for the remainder of his contract. The judge accepted this.
That is the effect of the
judgment of the trial judge. After accepting those
contentions, he awarded the appellant US$18700 as pay for the remainder of the
contract as claimed.
There is evidence, and the trial judge in effect found,
that the appellant was mistreated. The letter of dismissal states that he
dismissed because of "irreconcileable differences" with the General Manager of
the respondent. The trial judge did not believe
this. He found as a fact that
the respondent wanted to replace the appellant with another person. In other
words the trial judge
held that the appellant was dismissed for a wrong

As a master, the respondent had a right to dismiss the
appellant. It need not have assigned any reason. Or it could assign a reason
that shows that the appellant contravened the terms of his employment. But the
moment it assigned a reason which does not appear
to be part of the appellant's
terms of employment, the dismissal was wrongful. The trial judge found that the
appellant "was harassed, embarrassed and humiliated by the General manager".
Because of that holding, the learned judge awarded the appellant Shs 30m/=.
My understanding of the findings of the judge is that
although he described the
damages as general damages (which must be due to the way the 5th
issue was framed), on the evidence and the pleadings, these are punitive or
exemplary damages which the appellant had claimed in
the plaint and he adduced
evidence to prove such damages.

The contract of employment entitled
the appellant to various benefits set out in para 6 of his plaint. From the
evidence, the appellant
was denied many of these privileges. He is supported by
PW2 on the issue of harassment, embarrassment and humiliation. The respondent's
evidence does not rebut this. In these circumstances, I think that, much as the
judgment of the trial judge is a little confusing,
and subject to what I say
later about the quantum of "general" damages, the conclusions of the
trial judge to award damages were justified.

Before awarding Shs
30m/=as damages, the trial judge expressed himself in these words:

"The plaintiff did indeed suffer damages for those entitlement he was not
awarded by the defendant. He suffered loss, embarrassment
when humiliated by the
defendant's resident Manager, Mr. Kassim. The court wondered why the Resident
Manager..... ...............
was not called as a witness. Also another witness
whom I feel should have been availed to the court was the Chief Accountant of
the defendant company. By so doing I am not shifting the burden of proof to the
defendant but it appears they deliberately left out
(Sic) moreover to hide
something. All the same, I am of the view that the plaintiff was able to prove
his claim ....................and
I am of the view that taking into account the
inflation in the country has some subsided (Sic) and doing the best in the
I am of the view that general damages of shs 30m/= will properly
compensate the plaintiff for wrongful dismissal

In this passage, the judge found as a fact that the respondent offered no
evidence to rebut the appellant's claims. I agree with that
conclusion. Joseph
Cecil (DW),the only witness who testified on behalf of the respondent, knew
nothing about what the appellant went
through, because he joined the
respondent's service threes years after the dismissal of the

Recently this Court decided cases involving termination of
contracts in circumstances almost similar to those in this appeal. One
of the
cases is Gulaballi Ushillini (supra). The second case is
Kenqrow Industries Ltd. Vs. C.C.Chandran. Civil Appeal No. 7 of
2001 (sc) (unreported). In Gulaballi Ushillini's case (supra) the
facts are slightly different but the principles applied there apply in this
In 1989, the respondent set up a pharmaceutical factory in Ntinda. It
recruited the appellant from India. After she had worked for
several months, the
factory was closed. She returned to India in April, 1990. She was however
persuaded to come back. She returned
and started to work in January 1991. Her
salary was shs 200,000/= plus oversees allowances of US $ 2000 p.m. In June, she
was given
a letter of appointment for 2 years. In January 1992 she went on leave
to India but returned in February and found the factory closed.
The company
provided her with accommodation and a car at Company expense. She was however
not provided with work till May 1993 when
she filed a suit against the company
for breach of contract of employment. She claimed for special damages inclusive
of salary and
general damages. The Principal Judge who tried the case awarded
her Shs 10,200,000/= as salary and US$ 10,200 by way of overseas
allowances as
special damages for a period of 4 years and 3 months. He also awarded her Shs
4,900,000/= as general damages. The company
appealed to the Court of Appeal
where arguments were basically on quantum of damages.

The Court of Appeal reduced the special damages to Shs 1, 200,000/= and US$
12,000 but confirmed the general damages. Ushillini appealed to this
Court and she substantially won the appeal. Mulenga, JSC, wrote the lead
judgment. I respectfully agree with his statement of the law and I quote him on
damages and use his own words: -

"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 restitutio in integrum. Damages
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 for a
fixed period which is not terminable, if there is no wrongful termination, the
employee would serve
the full period and receive the full 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

In the case of Kengrow Industries
I adopted this passage when I discussed the award by the trial
judge of damages to the respondent whose services had been terminated
circumstances similar to those in this appeal.

In paragraph (c) of his plaint, the appellant prayed for exemplary damages.
In the trial court parties made written submissions. The
appellant's counsel
raised the question of the mistreatment of the appellant by the respondent's
servants. Counsel then prayed for
punitive (instead of exemplary) damages to be
awarded to the appellant. Counsel never provided authorities to guide the judge
awarding either punitive or exemplary damages. On the other hand Mr.
counsel for the respondent, merely contended that the appellant was
not entitled to any damages. Consequently the judge used his discretion
to fix
Shs 30m/= as general damages which I really understand to be punitive

In this Court in the memorandum of appeal, prayer (a) asked us to allow the
appeal. In prayer (b) we were asked to set aside the judgment
and orders of the
Court of Appeal and to reinstate the award of general and special damages plus
interest granted by the High Court
to the appellant.

During the hearing of the appeal before us, Mr. Byenkya concentrated his
attack on the findings of the Court of Appeal where damages
were not canvassed.
So he asked us to "do what is proper" He however asked us to restore the
judgment of the trial judge. Mr. Shonubi submitted on issues raised by Mr.
Byenkya regarding the
legality of the contract and the dismissal of the
appellant. He did not say anything about the damages, although as pointed out
in the memorandum there was a prayer for this Court to restore the
judgment of the High Court.
It is my considered opinion that since the trial
judge had awarded US$18700 as special damages representing loss of salary for
balance of the contract of employment which the appellant would have served,
the judge erred when he included in the award of Shs 30m/= an
element of damages for wrongful dismissal.

As I said earlier, in the plaint the appellant prayed for exemplary damages
but the learned trial judge described them as general
damages. It is now
recognised that courts in East Africa can award punitive and or exemplary
damages in torts and contracts. This
is clear from the decision of Obonqo
Vs Kisumu Municipal Council
(1971) EA 91, a decision of the E. A
Court of Appeal. Spray, V.P., in his lead judgment, at page 96B, stated: -

"It might also be argued that aggravated damages would have been more
appropriate than exemplary. The distinction is not always easy
to see and is to
some extent an unreal one. It is well established that when damages are at large
and a court is making a general
award, it may take into account factors such as
malice or arrogance on the part of the defendant and this is regarded as
the injury suffered by the plaintiff, as, for example, by causing him
humiliation or distress. Damages enhanced on account of such
aggravation are
regarded as still being essentially compensatory in nature. On the other hand,
exemplary damages are completely outside
the field of compensation and, although
the benefit of them goes to the person who was wronged, their object is entirely
In the present case, it is not clear how far damages at large were
contemplated either in the consent judgment or in the proceedings
that followed.
Certainly the judge made no general award, possibly because he considered that
the consent judgment precluded it.
Aggravated damages were, therefore,
inappropriate. On the other hand, I am satisfied that the intention was that the
damages should
be punitive and that the judge was entitled in law to award
exemplary damages".

On damages it is now
established that an appellate court will not reverse a judgment, or part of
judgement, of a court below on a
question of damages unless the appellate court
is satisfied that the judge acted on a wrong principle or that the amount
was so extremely large or so very small as to make it an entirely
erroneous estimate of the damage: See Singh Vs Kumbhai(1948) 15
EACA 21, Henry. H. Ilanga Vs M. Manyoka (1961) EA705 and
Obonqo's case (supra) at page 96.

I have held that the trial judge erred by including an element of damages for
wrongful dismissal in the award of 30m/=. He acted on
a wrong principle. I have
pointed out that the trial judge was not guided by any authorities in that
award. In my opinion since the
appellant had been awarded US$ 18700 as salary
for the residue of the contract which was terminated, punitive damages of Shs
would be inappropriate and too high. Considering that the appellant was
subjected to high handed mistreatment, and bearing in mind
the award of US
$18700, I think that Shs 5m/= would be adequate.

There was no
complaint about interest awarded at 45% p.a. Counsel for the appellant did not
given reasons for claiming such high rate
of interest. No explanation was given
by the trial judge for such a high rate of interest. However under S.26 (2) CP
Act, rate of
interest is awarded on discretionary basis unless it is agreed to
by the parties.
I think that in these proceedings the award of interest on
the decretal amount at the rate of 45% was uncalled for and is too high.
On the
facts, it is patently unjust. I would award interest at 10% p.a. on $ 18700 from
17/3/1999 till payment in full. I would award
interest of 8% on Shs 5m/= from
the date of judgment till payment in full.

In conclusion, I would
allow the appeal with costs here and in the two courts below. I would set aside
the judgment and orders of
the Court of Appeal. I would restore the award by the
trial judge of $ 18700 representing salary for the residue of the contract.
would award interest thereon at the rate of 10% p.a. from date of judgment of
High Court till payment in full. Instead of Shs 30m/=
awarded as damages by the
trial judge, I would award the appellant

Shs 5m/= as punitive damages with interest thereon at the rate of 8% p.a.
from date of judgment of the High Court till payment in


I have had the advantage of reading in draft the judgment of my learned
brother, Hon. Justice Tsekooko, JSC. I agree with him that
the appeal should
partially succeed. I also agree with the orders proposed by him.

I have nothing useful to add.


I have had the benefit of reading in draft the judgment of my learned
brother, Tsekooko, J.S.C, and I agree with him that this appeal
ought to be
allowed with costs in this court and in the courts below. I also agree with the
orders he has proposed.


I have had the benefit of reading in draft the judgment of my brother
Tsekooko, JSC. I agree with him that the appeal should be allowed.
I also agree
with the orders he has proposed.


I have had the advantage of reading in draft the judgment of my learned
brother Tsekooko JSC, and I agree with him that the appeal
should be allowed. I
agree with the orders he has proposed.

As the other members of the Court also agree, this appeal is allowed with
orders as proposed by Tsekooko JSC

Dated at Mengo this 16th of January