THE REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA AT KAMPALA
(Appeal from the judgment/decree of the Court of Appeal of Uganda at Kampala in Civil Appeal No. 91 of 2003 delivered by the Hon. Justice S.G Engwau, JA. Hon. Justice Amos Twinomujuni, JA and Lady Justice C.N.B. Kitumba, JA, delivered on the 16th day of December, 2009).
CIVIL APPEAL NO. 16 OF 2014
(Coram: Hon. Justice Jotham Tumwesigye, Hon. Justice A.S. Nshimye, Hon. Justice Opio-Aweri, Hon. Justice Faith Mwondha, Hon. Lady Justice Professor Lillian Tibatemwa-Ekirikubinza, JSC).
JUDGMENT OF THE COURT
This is a second appeal arising from the judgment of the Court of Appeal which upheld the decision of the High Court and dismissed the suit filed there by the appellant.
The appellant filed Civil Suit No. 808 of 2001 against the respondent in the High Court at Kampala, seeking a declaration that he is the owner of the machinery in the premises of Domus Aurea Ltd (herein after called “Domus”) at plot 123, 6th Street Industrial Area, Kampala; an unconditional order releasing the same machine to the appellant, a permanent injunction, general damages plus costs of the suit.
The appellant’s evidence was that he had an oral agreement with the respondent to set up a joint venture to run a carpentry workshop. The shareholding in the said joint venture was agreed at 51% -49% for the respondent and the appellant respectively. The said business commenced until around September 2000 when the appellant was kicked out by the respondent.
The respondent on the other hand denied the claim and setup a counterclaim stating that he was engaged by the appellant at a 10% commission to negotiate liquidation of the appellant’s 25% shares in Kava International Ltd. The respondent successfully carried out the task with the result that Kava International Ltd released or transferred to the appellant property worth shs. 216,870,000/= equivalent of his 25% shares with the company (Kava). From the agreement of the parties, the respondent’s 10% commission was equivalent to shs. 21,678,000/=. Thereafter, the appellant agreed to sell some of the machines recovered from Kava to Domus, a company owned by the respondent and his wife. The agreed price was shs. 75,920,000’= of which shs. 30,000,000/= was paid in installment as part of payment of the agreed price. Further payments were stopped when the appellant refused to formalize the documentations for the sale of the machine for purpose of the company’s records, accounts and taxation.
The respondent further stated that for a similar arrangement of 10% commission, he sold various machines on behalf of the appellant to Kapkwata Saw Mills Ltd for shs. 24,650,000/= and thus his commission was shs. 2,465,000/= making the total commission owned by the appellant shs. 24,143,000/=.
After hearing evidence from both sides and the submissions of both counsel, the trial judge dismissed the main suit with costs, allowed the counterclaim and made various orders.
The appellant was dissatisfied with the decision of the trial judge and appealed to Court of Appeal on six grounds.
- That the learned trial judge erred in law and fact when she held that there was no oral agreement to form a joint venture between the parties when there was over whelming evidence to support the fact.
- That the learned trial judge erred in law and fact when she held that the appellant sold his suit machinery to the respondent’s company M/S Domus Aurea Ltd without proof of the alleged sale.
- That the learned trial judge erred in law and fact when she failed to distinguish between two independent transactions between the parties to wits;
- One where the appellant and the respondent personally agreed to form a joint venture amongst themselves using the machinery recovery from the respondent’s company and’
- The seconds one being where the appellant entered into an agreement with the defendant’s compan6y M/S Domus Aurea Ltd whereby he imported machinery while the defendant’s company was permitted to sell to the public on behalf of the appellant upon a commission.
- The trial judge erred in law and facts when she held that the appellant promised to the respondent 10% commission upon the disposed of the appellant’s shares in Kava International Ltd based upon undated and unregistered Powers of Attorney.
- The learned trial judge erred in law and fact when she entered judgment for the defendant on the counterclaim in the sum of shs. 24,143,000/= without proof thereof.
- The learned trial judge erred in law and facts when she completely failed to evaluate the evidence the matter and consequently leading her to a wrong decision.
The respondent set up a cross-appeal on two grounds seeking to vary some of the orders of the trial judge.
- Whether or not the trial judge improperly made orders against Domus Aurea Ltd and its Directors.
- Whether the respondent was entitled to general damages and interest on the counterclaim.
The Court of Appeal dismissed the main appeal and allowed the cross-appeal with costs to the respondent, hence this appeal.
The appeal to this court was first presented in 2010 vide Civil Appeal No. 13 of 2010, but was struck out on 29/01/2013 for being incompetent.. The appellant later re-filed the Appeal vide Civil Appeal No. 16 of 2014 maintaining the same grounds of appeal as those in the Court of Appeal set out above. The above grounds basically relate to the evaluation of evidence by the Justices of the Court of Appeal.
Mr. James Muwau and Michael Kaggwa appeared for the appellant; Mr. Andrew Kahuma represented the respondent.
Submissions of counsel.
Both counsel filled written submissions and adopted them as their written arguments in this appeal.
In their written submissions counsel for the appellant argued grounds 1 and 2 separately, grounds 3 and 4 together and ground 5 and 6 separately.
Whether the learned justices erred in law and fact when they held that there was no oral agreement to form a joint venture between the parties when there was overwhelming evidence to support the fact.
The learned counsel submitted that there was overwhelming evidence adduced by the appellant that he entered into an oral agreement with the respondent to start joint venture business to utilize the machine so recovered from Kava International Ltd. There was no justification for the Justices of Appeal not believing the testimony of the appellant but chose to believe the testimony of the respondent that he bought the machine when the respondent did not adduce any written evidence of purchase or indicate the purchase price which is a fundamental requirement in law of contract and sale of goods. The learned counsel submitted that the justices of the Court of Appeal contradicted themselves in refusing to accept the testimony of the appellant that he had an oral agreement with the respondent but then went onto believe the respondent that he had bought the machine from the appellant. Learned counsel argued that if the Justices of Appeal had properly addressed their minds on to the two facts on record ie the machines were the property of the appellant and that they were at the respondent’s company premises, they would have found or at least made inferences that the above two facts support the view that there was a joint venture agreement between the two parties.
On the 1st ground of appeal, the learned counsel for the respondent submitted that there was no evidence on record to support the appellant’s contention that the parties had an oral agreement to form a joint venture and the trial judge as well as the Justice of Court of Appeal were right to find so. He submitted that the evidence on record was carefully evaluated by both courts on the matter before coming to the conclusion that there was no evidence to support the appellant’s claim that he had a joint venture agreement with the respondent.
Resolution of the ground1.
As indicated earlier, this is a second appeal where it is pertinent to state the duty of this court in that regard.
In Goustar Enterprises Ltd VS Oumo , EA 77 this court held that the second appellate court can only scrutinize the evidence on record where it was clear that it had not been subjected to adequate scrutiny by either the trial court or the first appellate court.
On the first ground, the trial court found that there was no evidence to support the appellant’s claim that he had an oral agreement with the respondent to start a joint venture. The Justices of Appeal unanimously came to the same conclusion. In the lead judgment, Justice Amos Twinomujuni stated as follows:-
“Having considered both arguments of counsel for the respondent and the appellant, I am inclined to believe counsel for the respondent on this issue that there was no oral agreement between the appellant and the respondent to enter into a joint venture. He delivered the machinery at the respondent’s premises of Domus Aurea so that the company could buy some and sell those it not need on behalf of the appellant. The company bought the machinery it its workshop from the appellant and was responsible for paying the appellant whenever he demanded for money.
The evidence on record shows that what transpired between the appellant and the respondent was an oral sale agreement for the appellant to sell some of his machinery to Domus Aurea. DW2 testified that when he insisted on sale agreement being made for the machinery sold to Domus Aurea Ltd, the appellant informed him that he had sold machinery to various clients for eight years without any formal sale agreement. It was at this point that the appellant should have corrected DW3 and informed him that the relations between him the respondent was one of a joint venture. We therefore find no merit in this ground and hold that there was no evidence of an oral contract of a joint venture between the appellant and the respondent. Ground No. 1 should therefore fail”.
I do agree with the above conclusion of the Court of Appeal. In coming to the above conclusion, the trial court and the Court of Appeal clearly evaluated and re-evaluated the whole evidence before coming to the conclusion that the appellant had no joint venture agreement with the respondent. What transpired was that, the appellant delivered his machinery at the respondent’s premises so that the company could buy some of them and sell others it did not need. Indeed the company bought some machinery and sold others to Kapkwala Saw Milks ltd.
I accordingly find no merit on this ground and it is dismissed.
The learned justice of appeal erred in law and fact when they held that the appellant sold his suit machinery to the respondent company M/S Domus Aurea Ltd without proof of the alleged sale.
Counsel for the appellant submitted that the appellant had never sold the suit property to the respondent. The appellant denied ever selling the machinery to the respondent. The appellant instructed the respondent by power of attorney to recover the machinery from Kava International as part of his 25% share holding in that company. Learned counsel argued that the justices of Appeal erred in law in accepting unsigned exhibits, unsigned sale agreement as evidence of sale. He contended that the respondent came into possession of the machines because the appellant had authorized him to recover them from Kava International Ltd and that the machinery had never been sold to the respondent and there was no evidence of sale on court record. He concluded that the Justices of Appeal had ignored the fact that the respondent was trying to use his advantage of adverse possession of the machinery to claim that they were sold to him and yet he had obtained the same as an agent of the appellant. Counsel accordingly prayed this court to uphold this ground.
On the 2nd ground, learned counsel for the respondent submitted that the appellant failed to prove that he delivered the machines in issue to the premises of the Domus for the purpose of running a joint venture. He contended that the uncontradicted evidence of DW1, DW2 and DW3 showed that the machines were sold to Domus. A part from the above evidence of the three witnesses exhibit P1-P4 also showed that the machines were sold to Domus. These were the sale agreements plus price lists of the machine sent to the lawyers to formalize the documentations. He concluded that there was overwhelming evidence on record that the appellant sold the suit machinery to Domus as found by the High Court and the Court of Appeal. He invited this court to find so and dismiss this ground of appeal.
The above ground is a kin to the 1st ground. The trial court and the Court of Appeal relied on the evidence of DW1, DW2 and DW3 to establish that the appellant sold his machinery to the respondent’s company M/S Domus Aurea Ltd. The two courts further relied on exhibits P1-P4 to show that the machines were sold to Domus. These were draft sale agreements plus price lists of the machines sent to the lawyers to formalize the documentations.
In their conclusion on the issue the Court of Appeal held as follows:-
“A part from the evidence of the three defence witnesses, there was exhibit P1-P4 showing that the machines were sold to the company. These were draft sale agreements and price lists of the machines sent to the lawyers to formalize the documentations. The appellant admitted that he prepared these documents and gave them to DW2 to translate from Italian to English. He admitted that they were draft sale agreements, the machines listed therein were the same machines in issue and that he was indicated therein as the vendor and Domus Aurea Ltd as the buyer. The respondent admitted that Domus Aurea Ltd bought the machines, made part of payment and the same company is ready to pay the balance as soon as formal documents were executed to regularize the sale……………….
We would agree with the learned trial justices in holding that the appellant sold the suit machinery to the respondent’s company”.
I am in full agreement with the findings of the Court of Appeal on this issue. The court after analyzing properly the evidence came to the conclusion the evidence on record, including exhibit O1-P4 all show that the appellant had sold the machines to the company and that those exhibits were draft in sale agreements of those machines and their prices list. The documents were prepared but the appellant as a vendor and the Domus as buyer.
I accordingly find no merit in this ground and it is accordingly dismissed.
Ground 3 and 4.
- The learned justices of Appeal erred in law and fact when they failed to distinguish between two independent transactions between the parties.
- The learned justices erred in law and fact when they held that the appellant promised to the respondent 10% commission upon the disposal of the appellants’ shares in Kava International Ltd.
The learned counsel for the appellant contended inter alia that the evidence on record indicates that there were two independent transactions between the appellant and the respondent and not one and the same. The 1st transaction was where the appellant instructed the respondent to recover his machinery from M/S Kava International Ltd, by a power of attorney. That power of attorney was signed by the appellant and the respondent where no mention of a commission was made. The 2nd transaction was the formation of a joint venture involving an oral undertaking to utilize the said machinery by both parties to their mutual benefit.
Learned counsel contended very strongly that there was no evidence on record to show that the appellant sold some of the machines to Domus Aurea Co. Ltd. He concluded that since the power of attorney did not provide for a commission of 10%, parol evidence should not be admitted to vary it. He relied on the case of HAJJI SULIMAN LULE VS SAMU NALUMANSI NALONGO AND ANOTHER HCCS 558 of 1989, where it was held thus:-
“when words in a document are clear or plain, parol evidence is not admissible to vary it but where they are unclear, then the machinery can be ascertained by calling evidence”
On the 3rd and 4th grounds, the respondent’s counsel contended that there was no distinction between the two contracts. He submitted that the appellant instructed the respondent to carry out negotiations with Kava and sell some machines to Kapkwala for a 10% commission. Then the appellant sold some of his machines to Domus which made part payment and remained with a balance which was to be paid after formalization of the transaction. Counsel submitted that this ground of appeal was unfounded and even if court was to find merit in it, the result would remain unchanged.
In other words, the appellant would remain entitled to the balance of his purchase price for the machines from Domus and the respondent would remain entitled to his commissions from the appellant. The learned counsel submitted that the power of attorney which the appellant was relying on was not registered and had no legal effect and that non of the findings of the courts below hinged on it. Counsel concluded that there was overwhelming evidence on record showing that the appellant promised to pay the respondent the said commission and so the courts below were right to come to that conclusion. He prayed that these two grounds of appeal be dismissed too.
Grounds 3 and 4
On the above grounds, the Court of Appeal found as follows:-
“Having considered the evidence and arguments of both counsels, we agree with the findings of the learned Judge on this issue. We hold that the appellant owes money to the respondent in commissions for negotiations with Kava International to the tune of 21,678,000/= being the 10% commission he promised the respondent. The appellant by his own admission owes the respondent money for sale of the machinery to Kapkwata. The respondent testified that he had sold the machines for 24,656,000/= thereby earning shs. 2,465,000/= unpaid commission of 10%. Therefore the total amount owing by the appellant to the respondent in commission is 24,143,000/=”.
I am unable to fault the Court of Appeal on the above issue. I have already observed that the appellant instructed the respondent to carry out negotiations with Kava and sale some of his machines to Kapkwata for 10% commission. It was established by the trial court and the Court of Appeal that both commissions had not been paid. For the above reasons, I find no merit in the two grounds.
Ground 5 and 6
That the learned justices of appeal erred in law and fact when they upheld the respondent’s counterclaim of ugshs. 24,143,000/=.
The learned counsel contended that from the record of appeal there was no single document on which the Justices of Appeal relied on to uphold the award of ug shs. 24,656,000/= as payment by the appellant as commission for work done at the rate of 10%..
Counsel submitted that the recovery of the machinery worth ugshs. 216,870,000/=by the respondent on instructions of the appellant could not have entitled the respondent to a commission of shs. 21,678,000/= without an express agreement to that effect.
There was no provision in the power of attorney to that effect. In conclusion, learned counsel submitted that the justices of Appeal erred in law and fact in upholding such an award that was not backed by any documentary evidence to that effect when the said transaction was undertaken with a power of attorney.
That it was an error in law to import a clause on a commission in the power of attorney which clause did not exist. He prayed that this court should uphold this ground.
The learned counsel submitted that the learned justices of Appeal failed to evaluate the following evidence:-
- Failing to recognize the appellant as the owner of the machinery, the suit properly and the one who had authorized the respondent by way of a power of attorney to recover his 25% shareholding in Kava International Ltd and that the respondent was an agent of the appellant
- The Justices of Appeal failed to re-evaluate the evidence on record that the appellant wanted to enter and indeed entered into joint venture with the respondent.
- The Justices of Appeal failed to re-evaluate the evidence that the respondent was in possession of the appellant’s machinery by virtue of the fact that he was by a power of attorney authorized by the appellant to recover them from Kava International Ltd, and that the appellant has never sold the machinery to him.
- The justices of Appeal failed to re-evaluate the evidence of the draft sale agreement which in law are inconsequential in commercial transactions when they are not signed by the parties and not witnessed.
The learned counsel contended that in failing to re-evaluate the evidence on record to the extent and manner highlighted above, the Justices of Appeal reached a wrong decision. He prayed court to uphold the above ground.
The learned counsel for the respondent submitted that the learned Justice of Appeal critically re-evaluated the whole evidence on record and came to the conclusion that the trial judge was right in her ruling that the appellant owned the respondent shs. 24,143,000/= in commissions. The above sum was calculated based on the evidence on record.
In a brief rejoinder, counsel for the appellant reiterated their submissions on all the grounds of appeal and also reiterated the prayers of the appellant that the appeal be allowed and the orders sought be granted.
My conclusion in grounds 3 and 4 also disposes of grounds 5 and 6.
In conclusion, I find that all the grounds of appeal have no merit. As a second appellate court, I cannot depart from the concurrent findings of fact by the lower courts on all the grounds of appeal unless special circumstances justify it. In the instant case, there are no special circumstances to justify it; see Mpunga and sons Transports Ltd VS The Attorney General  1 EA 212. I accordingly find no merit in this appeal. The appeal is dismissed with costs to the respondent here and in the court below.
Dated at Kampala this 24th day of August 2017.
HON. JUSTICE OPIO-AWERI,
JUSTICE OF THE SUPREME COURT.