Daniel Kagame Ndahiro v Kamanzi Kaijuka (Civil Suit No. 694 of 2024) [2024] UGCommC 391 (19 September 2024)

5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO.694 OF 2024 DANIEL KAGAME NDAHIRO :::::::::::::::::::::::::::::::::::::::::: PLAINTIFF 10 VERSUS KAMANZI KAIJUKA ::::::::::::::::::::::::::::::::::::::::::::::::::::::: DEFENDANT

BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA

JUDGMENT

Introduction

15 The Plaintiff filed this suit on 6th June, 2024 seeking; a declaration that the Defendant breached the Settlement Agreement and Deed of Release, payment of UGX 329,000,000/= (Uganda Shillings Three Hundred Twenty Nine Million Only) being the outstanding debt with interest of 2% per month, payment of UGX 50,000,000/= (Uganda Shillings Fifty Million 20 Only) being the liquidated damages for breach of the Agreement with interest, general damages, interest on the general damages and costs of the suit.

Brief facts

The facts constituting the Plaintiff's claim are that on 21st February, 2023, 25 the Plaintiff and Defendant executed a Settlement Agreement and Deed of Release (the Agreement) wherein the Defendant undertook to pay the Plaintiff the outstanding sum of UGX 329,000,000/= by or on 31st

5 December, 2023 however, till to date, the Defendant has refused, failed and/or neglected to pay the outstanding sum thus breaching the Agreement hence this suit.

The summons were served on the Defendant as per the affidavit of service deponed by Mr. Ssemwezi Charles dated 2nd July, 2024 but the Defendant 10 did not file a defence as required by the law. To that an interlocutory

judgment was entered in favour of the Plaintiff on 20th August, 2024 and the matter was set down for formal proof.

Representation

The Plaintiff was represented by Learned Counsel Gilbert Turyaheebwa 15 of M/s Oculus Advocates.

The Plaintiff's Counsel submitted orally and his submissions have been considered by this Court.

Issues for Determination

- 1. Whether the Defendant breached the Agreement executed between 20 him and the Plaintiff? - 2. What remedies are available to the parties?

Issue No. 1: Whether the Defendant breached the Agreement executed between him and the Plaintiff?

Plaintiff's submissions

25 Counsel for the Plaintiff led the Plaintiff (PW1) to prove that the Defendant breached the Settlement Agreement and Deed of Release Agreement marked as PEX 1.

5 Analysis and Determination

Order 9 rule 8 of the Civil Procedure Rules SI 71-1 stipulates that:

*"Where the plaint is drawn with a claim for pecuniary damages only or for detention of goods with or without a claim for pecuniary damages, and the Defendant fails or all Defendants, if more than one,* 10 *fail to file a defence on or before the day fixed in the summons, the Plaintiff may, subject to rule 5 of this Order, enter an interlocutory judgment against the Defendant or Defendants and set down the suit for assessment by the Court of the value of the goods and damages or the damages only, as the case may be, in respect of the amount found* 15 *to be due in the course of the assessment."*

As was held in the case of *Hajji Asumani Mutekanga Vs Equator Growers (U) Ltd SCCA No.7 of 1995*, once an interlocutory judgment is entered, the issue of liability is settled and cannot be reopened at the stage of formal proof.

- 20 It is now trite that where the Court sets down a suit for formal proof after a default order has been made, the Plaintiff is under a duty to place before the Court evidence to sustain the averments in his or her plaint as was held in the case of *Kirungi and Another Vs Kabiya and Others [1987] KLR 347*. - 25 It is also a settled principle of evidence that whosever desires any Court to give judgment as to any legal right or liability must prove the existence of the facts which he asserts. (See: Sections 101, 102 and 103 of the Evidence Act, Cap. 8).

- 5 The Black's Law Dictionary, 9th Edition defines a contract to mean an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. Section 9(1) of the Contracts Act, Cap. 284 also defines a contract as an agreement made with the free consent of parties with capacity to contract, for a lawful 10 consideration and with a lawful object, with the intention to be legally bound. On the other hand, breach of a contract is where one or both parties fail to fulfil the obligations imposed by the terms of the contract. (See: *Nakawa Trading Co. Ltd Vs Coffee Marketing Board Civil Suit No.137 of 1991*). - 15 While relying on Section 91 of the Evidence Act, Hon. Lady Justice C. K. Byamugisha (as she then was) in the case of *William Kasozi Vs DFCU Bank Ltd HCCS No.1326 of 2000*, stated that:

*"Once a contract is valid, it creates reciprocal rights and obligations between the parties to it. I think it is the law that when a document* 20 *containing contractual terms is signed, then in absence of fraud or misrepresentation the party signing it, is bound by its terms."*

I am also mindful of the fact that it is not the function of the Court to make contracts between the parties but rather to construe the surrounding circumstances to effectuate the intention of the parties as was held in the

25 case of *Omega Bank PLC Ltd Vs O. B. C Limited [2005] 8 NWLR (pt. 928) 547*.

In the instant case, PW1 testified that in 2019, he disbursed UGX 800,000,000/= to the Defendant to help him acquire five land sites as well as process their titles however, the Defendant only worked on and 30 delivered one land title hence PW1 engaged his lawyers. That upon

- 5 negotiation, the Defendant paid PW1 UGX 30,000,000/= and then agreed to reimburse the remaining money and to that PEX 1 was executed on 21st February, 2023 wherein the Defendant was supposed to repay UGX 329,000,000/= by 31st December, 2023 but that till to date, he has not paid any of the money as he promised as per PEX 1. - 10 I have perused PEX 1 and indeed the Plaintiff and the Defendant entered into a duly signed Settlement Agreement and Deed of Release, PEX 1, on 21st February, 2023 wherein the Defendant acknowledged that the Plaintiff had contracted him to obtain lease deeds, process leasehold titles for different pieces of land and was given UGX 359,000,000/= for the services. - 15 Also therein, the Plaintiff acknowledged receipt of UGX 30,000,000/= from the Defendant and the Defendant agreed to pay the remaining UGX 329,000,000/= to PW1 on or by 31st December, 2023. However as stated by PW1, the Defendant did not pay as promised under the Agreement.

Therefore, in light of PEX 1 and the testimony of PW1, the Defendant 20 breached the agreement.

Issue No. 1 is answered in the affirmative.

Issue No. 2: What remedies are available to the parties?

According to the plaint, the Plaintiff seeks; a declaration that the Defendant breached the Settlement Agreement and Deed of Release, 25 payment of UGX 329,000,000/= (Uganda Shillings Three Hundred Twenty Nine Million Only) being the outstanding debt with interest of 2% per month, payment of UGX 50,000,000/= (Uganda Shillings Fifty Million Only) being the liquidated damages for breach of the Agreement with interest, general damages, interest on the general damages and costs of

30 the suit.

5 a) Liquidated damages

As stated above, it is not the function of the Court to make contracts between the parties but rather to construe the surrounding circumstances to effectuate the intention of the parties. Also, as was held in the case of *William Kasozi Vs DFCU Bank Ltd (supra)* when a document containing 10 contractual terms is signed, then in the absence of fraud or misrepresentation; the party signing it is bound by its terms.

In the matter at hand, clause 1.3 of PEX 1 stipulates that:

*"The parties agree that time of performance of the Consultant's obligations is of the essence in this Agreement and if the Consultant fails* 15 *to pay any of the instalments on the due date, the Client shall have the*

*right to terminate this Agreement and levy liquidated damages of UGX 50,000,000 (Uganda Shillings Fifty Million Only) in addition to the Client's right to pursue other legal remedies." [Emphasis mine*]

Having held in Issue No. 1 above that the Defendant breached the contract 20 when he failed to pay the Plaintiff as promised under PEX 1 and in the absence of fraud or misrepresentation; then the Plaintiff is entitled to the liquidated damages amounting to UGX 50,000,000/= as sought.

b) General damages

Counsel for the Plaintiff submitted that it is the principle of law that while 25 assessing general damages, the Court should be guided by the value of the subject matter, the economic inconvenience the Plaintiff may have gone through and the nature and the extent of the injury suffered. In conclusion, Counsel prayed to Court to award the Plaintiff general damages amounting to UGX 45,000,000/=.

5 I agree with the submissions of Counsel for the Plaintiff in respect of the principle governing the assessment of general damages. As was held by the Court of Appeal in the case of *Takiya Kashwahiri & Another Vs Kajungu Denis CACA No.85 of 2011*, general damages should be compensatory in nature in that they should restore some satisfaction, as 10 far as money can do it, to the injured Plaintiff.

It is also trite that general damages are awarded at the discretion of Court and are not meant to enrich the Plaintiff. In the instant case, PW1 testified that given that the Defendant is a childhood and family friend; he has suffered mental anguish due to the complications of dealing with family,

15 loss of trust and betrayal. The Plaintiff further testified that given that he runs a micro finance business, being deprived of his money for over nine months from 31st December, 2023 has brought great loss to his business.

In light of the authorities above and given the fact that the Plaintiff suffered mental anguish and was inconvenienced by being deprived of his money

- 20 for over nine months, I accordingly award the Plaintiff UGX 10,000,000/= (Uganda Shillings Ten Million Only) as general damages which I believe will be sufficient to atone for the loss and inconvenience occasioned to the Plaintiff by the Defendant. - c) Interest - 25 The Plaintiff prayed for interest on the decretal sum, the liquidated damages and the general damages.

7 Section 26(2) of the Civil Procedure Act, Cap. 282 is to the effect that the Court has the discretion to award interest. As was held in the case of *Milly Masembe Vs Sugar Corporation (U) Ltd and Another SCCA No. 1* 30 *of 2000,* the guiding principle is that interest is awarded at the discretion

- 5 of the Court but the Court should exercise the discretion judiciously taking into account all the circumstances of the case. - i) Interest on the decretal sum

The Plaintiff prayed for interest at the rate of 2% per month on the decretal sum. In my opinion, this claimed interest rate is harsh and I have also 10 noted that it was not agreed upon by the parties.

In the premises, this Court awards interest at the rate of 12% per annum on the decretal sum from the date of filing this suit until payment in full.

ii) Interest on the liquidated damages

According to clause 1.3 of PEX 1, the parties agreed on the liquidated 15 damages but not accrual of interest on the same. Therefore, in light of the holding in the case of *Omega Bank PLC Ltd Vs O. B. C Limited (supra)* wherein it was held that it is not the duty of the Court to make contracts between the parties but rather to construe the surrounding circumstances to effectuate the intention of the parties, this Court declines to award 20 interest on the liquidated damages.

iii) Interest on the general damages

The Plaintiff prayed for interest to be awarded on the general damages from either the date of filing the suit or the date of judgment until payment in full.

25 In light of Section 26(2) of the Civil Procedure Act, I accordingly award interest at the rate of 6% per annum on the general damages from the date of judgment until payment in full.

5 d) Costs of the suit

As provided under Section 27(2) of the Civil Procedure Act, the costs of any action shall follow the event unless otherwise provided. Further, in the case of *Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35,* Hon. Justice Manyindo (as he then was) held that:

10 *"A successful party can only be denied costs if it is proved, that but for his or her conduct, the action would not have been brought. The costs will follow the event where the party succeeds in the main purpose of the suit."*

In the circumstances, since there is no reason to deprive the Plaintiff of 15 the same, he is hereby awarded the costs of the suit.

In the circumstances, the following orders are issued:

- 1. It is hereby declared that the Defendant breached the Settlement Agreement and Deed of Release. - 2. The Defendant shall pay to the Plaintiff UGX 329,000,000/= (Uganda - 20 Shillings Three Hundred Twenty Nine Million Only) being the outstanding debt owed by the Defendant arising from the Settlement Agreement and Deed of Release. - 3. The Defendant shall pay to the Plaintiff liquidated damages amounting to UGX 50,000,000/= (Uganda shillings Fifty Million 25 Only). - 4. The Defendant shall pay to the Plaintiff general damages amounting to UGX 10,000,000/= (Uganda Shillings Ten Million Only). - 5. Interest is awarded on the sum in (2) above at the rate of 12% per annum from the date of filing this suit until payment in full.

- 5 6. Interest is awarded on the sum in (4) above at the rate of 6% per annum from the date of judgment until payment in full. - 7. Costs of the suit are awarded to the Plaintiff.

I so order.

Dated, signed and delivered electronically via ECCMIS this 19th day of

10 September, 2024.

Patience T. E. Rubagumya JUDGE 1519/09/2024