Incwright Limited v George Mpagi (Civil Suit No. 93 of 2017) [2025] UGCommC 142 (26 May 2025)

5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) CIVIL SUIT NO. 93 OF 2017

INCWRIGHT LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::::::::: PLAINTIFF

10 VERSUS

GEORGE MPAGI

T/A IMAGE CRUSADE ADVERTISING ::::::::::::::::::::::::::::: DEFENDANT

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

15 JUDGMENT

Introduction

On 8th February, 2017, the Plaintiff instituted this suit against the Defendant for a declaration that the Defendant breached the contract, a declaration that the Plaintiff is entitled to payment for the work done, 20 general damages, interest and costs of the suit.

Brief facts

The brief facts of the suit are that; the Defendant contracted the Plaintiff and issued a Local Purchase Order for advertising space on street poles operated by the Plaintiff in Kampala. That the Local Purchase Order was 25 to run for 3 months from August to October, 2015 and to that, the Defendant issued 2 postdated cheques, but only one cheque was encashed. That by the end of the 3 months, the Defendant had not paid the money in the agreed manner and time. That, regardless of the outstanding balance, the parties agreed that the advertising campaign 30 continues, subject to some changes relating to the advertising location

- 5 since the Defendant would clear its debt, and indeed in January, 2016, some payment was made to the Plaintiff. That on 4th February, 2016, the Plaintiff sent a statement of account showing the outstanding amount, but the Defendant failed to pay, which prompted the Plaintiff to remove all the Defendant's advertisements by 5th April, 2016. That the Defendant has - 10 refused to pay the outstanding sum for the work done by the Plaintiff, hence this suit.

In his written statement of defence and counterclaim, the Defendant/Counterclaimant denied breaching the contract and contended that he subcontracted the Plaintiff/Counter Defendant but the Plaintiff/

- 15 Counter Defendant breached the contract when; it failed to perform the contract to its completion, intentionally contacted the Counterclaimant's client to demand payment for the unfinished work to the detriment of the good relationship between the client and the Counterclaimant, frustrated the verbal communication between the parties regarding the roads covered - 20 and the street pole adverts and did partial work that was sub-standard and of poor workmanship. The Counterclaimant prayed for special and general damages for breach of contract, interest and costs of the suit.

In reply to the written statement of defence and counterclaim, the Plaintiff/Counter Defendant reiterated its averments set out in the plaint 25 and contended that the Counterclaimant continued receiving billings for the work done, which he never disputed. That the counterclaim discloses no cause of action, and that the same should be dismissed with costs.

On 27th January, 2025, the Defendant's Counsel, M/s Famm Advocates, filed a notice of withdrawal of instructions. On 28th January, 2025, when 30 the matter came up for the hearing of the Defendant's case, the Defendant was absent, and neither was he represented. At that, the Court instructed

- 5 Counsel for the Plaintiff to serve the Defendant personally, which directive was complied with as per the affidavit of service dated 18th April, 2025, on the Court record. On 22nd April, 2025, when the matter next came up for hearing, the Defendant was still not in Court and nor was he represented. To that, Learned Counsel for the Plaintiff prayed to the Court to proceed - 10 under Order 17 rule 4 of the Civil Procedure Rules, SI 71-1, which prayer was granted.

Representation

The Plaintiff was represented by Learned Counsel Ivan Wanume of M/s Naafi & Wanume Advocates.

15 The Hearing

At the hearing, the suit proceeded by way of witness statements. The Plaintiff had one witness, Mr. Michael Ssenyonjo (PW1), the Plaintiff's Director, who was duly cross-examined and re-examined. The Plaintiff also adduced documentary evidence, contained in its trial bundle.

20 The Plaintiff filed its written submissions, and the same have been considered by the Court.

Issues for Determination

1. Whether there was a contract between the Plaintiff and the Defendant?

- 2. Whether there was breach of the contract by either party? - 3. Whether the Plaintiff is entitled to payment for the work done? - 30 - 4. What remedies are available to the parties?

Issue No.1: Whether there was a contract between the Plaintiff and the Defendant?

5 Plaintiff's submissions

Learned Counsel for the Plaintiff submitted that PW1 testified that the Defendant contracted the Plaintiff for the placement of adverts for one of its clients. That this was done vide a Local Purchase Order PEX 1, for an initial period of three months from August to October, 2015, at UGX 10 23,760,000/=. That it was later agreed that the Plaintiff continues the

That, as per Section 10(1) of the Contracts Act, 2010 (now Section 9(1) of Cap. 284), the facts presented point to the fact that there was a contract by virtue of PEX 1, which was executed by the parties. That the Defendant 15 never complained about the work in issue, nor did he stop the Plaintiff from continuing with the work, was always updated of the work being done

advert campaign until the month of April, 2016.

- by way of periodic statements, and that he kept on paying some money, with the last payment being made in January, 2016. Learned Counsel relied on the cases of *JK Patel Vs Spear Motors Ltd SCCA No. 04 of* - 20 *1991* and *Afro Kai Limited Vs Uganda Development Bank Ltd Civil Suit No. 31 of 2014*. That therefore, there was a written order and an oral one for the continuation of the contract as per the conduct of the parties.

Analysis and Determination

25 I have considered the pleadings of both parties, the evidence and submissions on the Court record.

It is now trite that whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he or she asserts must prove that those facts exist. (See: Sections 101, 102, 103

4 30 and 104 of the Evidence Act, Cap. 8) and the case of *John Bwiza Vs* 5 *Patrick Yowasi Kadama C. A. C. A No. 35 of 2011*). The standard of proof is on the balance of probabilities.

Section 9(1) of the Contracts Act defines a contract as an agreement made with the free consent of parties with capacity to contract, for a lawful consideration and with a lawful object, with the intention to be legally 10 bound.

In the case of *Sharif Osman Vs Haji Haruna Mulangwa SCCA No. 38 of 1995*, the Supreme Court defined a valid contract to mean one that is sufficient in form and substance so that there is no ground whatsoever for setting it aside between the vendor and purchaser. In the case of

15 *Greenboat Entertainment Ltd Vs City Council of Kampala HCCS No. 580 of 2003*, the Court held that:

*"In law, when we talk of a contract, we mean an agreement enforceable at law. For a contract to be valid and legally enforceable, there must be: capacity to contract; intention to contract; consensus ad*

20 *idem; valuable consideration; legality of purpose; and sufficient certainty of terms. If in a given transaction any of them is missing, it could as well be called something other than a contract."*

In the case of *William Kasozi Vs DFCU Bank Ltd HCCS No. 1326 of 2000*, it was stated that:

25 *"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 containing contractual terms is signed, then in the absence of fraud or misrepresentation the party signing it, is bound by its terms."*

- 5 From the above authorities, in determining the validity of a contract and whether it is lawfully enforceable, the Court ought to establish that the parties had the capacity and the intention to contract, consensus ad idem, valuable consideration, legality of purpose and sufficient certainty of terms. - 10 I am also mindful of the fact that it is not the function of the Court to make contracts between parties but rather to construe the surrounding circumstances so as to effectuate the intention of the parties. (See: *Omega Bank Plc Vs O. B. C Limited [2005] 8 NWLR (pt.928) 547* and *Fina Bank Ltd Vs Spares and Industries Ltd [2000] 1 EA 52)*. - 15 In the case at hand, PW1 testified that the Defendant initially gave the Plaintiff work to place adverts for his client BIDCO on various roads/streets in Kampala under the Presto Magic campaign as per PEX 1, a Local Purchase Order. PW1 further testified that this work was to last for 3 months from August to October, 2015. That the Plaintiff diligently 20 did the Defendant's work as ordered.

I have perused PEX 1, Local Purchase Order No. 0526 issued by the Defendant on 31st July, 2015, to the Plaintiff. Therein, the Defendant requested for the supply of 36 street pole advertising banners for a period of 3 months at a consideration of UGX 23,760,000/=. All this was not 25 contested during PW1's cross-examination. Also, under paragraph 4(a) of his written statement of defence and counterclaim, the Defendant averred that he subcontracted the Plaintiff to install street poles for advertising on various roads in Kampala on behalf of his clients. Therefore, there was offer, acceptance, capacity and intention to contract, *consensus ad idem* 30 and valuable consideration. The purpose for which PEX 1 was executed was legal, and the terms were also certain.

- 5 Regarding whether the contract was orally extended after the lapse of the initial 3 months, as per PEX 1, during PW1's cross-examination, the Defendant's former Counsel disputed the oral extension of the contract, contending that no contract or order was signed or issued to prove the same. - 10 Section 9(2) of the Contracts Act is to the effect that a contract may be oral or written or partly oral and partly written or may be implied from the conduct of the parties.

In the case of *Hon. Justice Anup Singh Choudry Vs Mohinder Singh Channa and Another Civil Suit No. 335 of 2014,* Hon. Justice 15 Ssekaana Musa (as he then was) quoted the case of *Greenboat Entertainment Ltd Vs City Council of Kampala (supra)*, in which the Court held that:

*"In general, oral contracts are just as valid as written ones. An oral contract is a contract, the terms of which have been agreed by spoken* 20 *communication … In my view whether a contract is oral or written, it must have the essentials of a valid contract."*

As was held above, enforcing an oral contract depends on the circumstances of each case and some of the guidelines in the establishment of such a contract are; the conduct of the parties after the 25 alleged contract was created, any prior conduct between the parties, how similar transactions are normally conducted, testimony of the parties to the contract, testimony by witnesses to the alleged agreement and each party's credibility.

PW1 averred that after the initial 3 months, he and the Defendant had a 30 meeting at his office where it was agreed that the Plaintiff should continue

- 5 running the Defendant's campaign and adverts. That after the verbal agreement, a letter, PEX 3, was issued requesting the Defendant to formalize his order, which was ignored. That the Plaintiff continued advertising the Defendant's adverts from November, 2015 to April, 2016. - According to PEX 3, a letter dated 15th February, 2016, from the Plaintiff 10 to the Defendant, received on 1st March, 2016, the Plaintiff requested the Defendant to renew his order for street pole advertising tools for the months of November, 2015 to April, 2016, since the campaign was still ongoing. This exhibit was not contested by the Defendant, nor were the services referred to therein disputed. During his cross-examination, PW1 15 stated that, much as they requested for a formal renewal of the order, the Defendant refused to issue the same.

In his written statement of defence and counterclaim, under paragraph 4 (c), the Defendant acknowledged the fact that the parties had verbal communication. I have also observed that therein, the Defendant did not 20 dispute the fact that the Plaintiff continued advertising its banners after the expiry of the initial 3 months from November, 2015 to April, 2016, he just contended that the Plaintiff was partly paid the contract price but that it never performed the contract to completion. No evidence was led to prove that the contract was partly performed, as alleged.

25 Therefore, in the absence of any evidence to the contrary, it can be concluded that after the lapse of the initial 3 months, that is from August, 2015 to October, 2015, the Plaintiff continued to provide street pole advertising tools to the Defendant from November, 2015 to April, 2016 as reflected under PEX 3. This Court is therefore convinced on the balance 30 of probabilities that the initial contract was orally extended from November, 2015 to April, 2016.

5 In the premises, I find that there was a written contract between the Plaintiff and the Defendant, from August to October, 2015, which was orally extended from November, 2015 to April, 2016 as per the testimony and evidence on the Court record.

Issue No.1 is therefore answered in the affirmative.

10 Issue No.2: Whether there was breach of the contract by either party?

Plaintiff's submissions

Learned Counsel for the Plaintiff first defined breach of contract as per the case of *Mogas (U) Ltd Vs Benzina (U) Ltd Civil Suit No. 88 of 2013*. That PW1 stated that the Defendant refused to pay the money totaling UGX 15 52,600,000/= despite several reminders via email as contained under PEX 8 and the demand notice, PEX 7.

That since the Plaintiff did its part of the bargain by putting up all the advertisements on street poles in Kampala, but the Defendant refused to pay, then, there was breach of the contract by the Defendant.

20 Analysis and Determination

Section 32(1) of the Contracts Act obligates each party to a contract to perform their respective promises. In the case of *Meridiana Africa Airlines (U) Ltd Vs Avmax Spares (EA) Ltd HCCS No. 111 of 2017*, breach of a contract was defined to mean a violation of any agreed-upon 25 terms and conditions of a binding contract and this includes circumstances where an obligation that is stated in the contract is not completed on time. It is a failure, without legal excuse, to perform any promise that forms all or part of the contract, which includes failure to perform in a manner that meets the standard of the industry.

- 5 In the instant case, PW1 testified that the Defendant started defaulting on the payments due by the end of October, 2015. That despite several reminders, the Defendant refused to pay for the entire work done by the Plaintiff and that the outstanding sum is UGX 52,600,000/=. In evidence, the Plaintiff adduced PEX 7, a statement of account dated 1st April, 2016, - 10 which was not disputed by the Defendant.

According to PEX 7, from August, 2015 to March, 2016, the Defendant only fully cleared the month of January, 2016 and partly cleared the months of August, 2015 and September, 2015, leaving an outstanding balance of UGX 48,640,000/=. For April, 2016, the amount due was UGX 15 3,960,000/=.

During PW1's cross-examination, the Defendant's former Learned Counsel emphasized the fact that after some time, the poles were reduced in number. I have observed that this was considered under PEX 7 since, in March 2016, the monthly fee computed was UGX 6,820,000/= instead 20 of UGX 7,920,000/=.

According to PEX 1, the Local Purchase Order, payment was to be effected monthly, yet as per PEX 7, the Defendant had only fully cleared the month of January, 2016. As was held in the case of *Annette Tumusiime Vs Luis Gugones Aranel & Another HCCS No. 269 of 2005*, the law is that when 25 a party fails to do what he/she agreed to do or does not do it properly, he or she is said to be in breach of the contract.

In the premises, I find that the Defendant breached the contract when he failed to pay the sums that were due and outstanding to the Plaintiff.

As to whether the Plaintiff also breached the contract in issue, in his 30 Counterclaim, the Defendant/Counterclaimant averred that the

- 5 Plaintiff/Counter Defendant breached the contract when it; failed to perform the contract to completion, frustrated the verbal communication between them, intentionally contacted the Counterclaimant's client demanding payment for the unfinished work and did work that was substandard and of poor workmanship. - 10 As earlier stated, it is now trite that he who alleges must prove; however, despite being accorded a second opportunity to appear in Court, the Defendant failed to appear and prove his allegations in the counterclaim.

In summation, I find that the Defendant breached the contract when he failed to pay the sums that were due and outstanding to the Plaintiff.

15 Therefore, issue No. 2 is partly answered in the affirmative, in favour of the Plaintiff.

Issue No. 3: Whether the Plaintiff is entitled to payment for the work done? Plaintiff's submissions

Learned Counsel for the Plaintiff first relied on the principles that govern 20 the grant of damages and then submitted that the Plaintiff is entitled to UGX 52,600,000/= for the work done. That as per PEX 2, the Plaintiff did work for the Defendant by putting up adverts on street poles in Kampala from August, 2015 to mid-April, 2016, which service was not denied by the Defendant. That therefore, it would be unfair for the Defendant to 25 receive the service and then fail to make the payment.

That according to the statement of account PEX 7, the Defendant was billed UGX 66,220,000/= an amount for eight months, but the Defendant only made part payments totaling UGX 13,620,000/= leaving a balance of UGX 52,600,000/=.

5 Analysis and Determination

Having resolved issues No. 1 in the affirmative and Issue No. 2 partly in the affirmative, the Plaintiff is therefore entitled to payment for the work done.

This issue is also answered in the affirmative.

10 Issue No. 4: What remedies are available to the parties?

In its plaint, the Plaintiff sought a declaration that the Plaintiff is entitled to payment of the amounts shown in the various attachments and damages for work done and rendered to the Defendant, general damages, interest on all sums ordered to be paid from the date of Judgment till 15 payment in full.

Section 60(1) of the Contracts Act empowers this Court to award compensation for any loss or damage caused to a party due to another person's breach of the contract.

i) General damages

20 In the case of *Kabandize John Baptist and 21 Others Vs Kampala Capital City Authority C. A. C. A No. 36 of 2016* Court held that:

*"The general rule regarding the measure of general damages is that, the award is such a sum of money that will put the party who has been injured or who has suffered as adjudged by Court in the same* 25 *position as he or she would have been had he or she not sustained the wrong for which he or she is getting the compensation."*

It is also trite that general damages are awarded at the discretion of Court and are compensatory in nature. (See: *Takiya Kashwahiri & Anor Vs Kajungu Denis C. A. C. A No. 85 of 2011*. The Plaintiff should, however

5 lead evidence as to what damage he or she suffered at the instance of the Defendant. As was held in the case of *Uganda Commercial Bank Vs Deo Kigozi [2002] 1 EA 305*; while assessing the quantum of damages, Courts are mainly guided by the value of the subject matter, the economic inconvenience that a party might have been put through and the nature 10 and extent of the breach or injury suffered.

In the case at hand, Learned Counsel for the Plaintiff submitted that the Plaintiff should be awarded general damages of UGX 50,000,000/= for loss of business, time spent in Court, stress over recovery and diminished investment funds in the Plaintiff's business for over 10 years now.

- 15 I have considered the financial inconvenience suffered by the Plaintiff as well as the time spent in Court considering that an ex parte Judgment had been delivered by Court on 24th January, 2022, and the Court set aside the same on 6th July 2023, on the Defendant's motion vide *Misc. Application No. 077 of 2023*. However, the Defendant later failed to 20 enter appearance at the time of hearing his case. In the premises, the Plaintiff is hereby awarded general damages of UGX 8,000,000/= (Uganda Shillings Eight Million Only). - ii) Interest

Section 26(2) of the Civil Procedure Act, Cap. 282, is to the effect that 25 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 of 2000*, the guiding principle is that interest is awarded at the discretion of the Court, but the Court should exercise the discretion judiciously, taking into account all the circumstances of the case.

- 5 Learned Counsel for the Plaintiff prayed for interest at the rate of 30% per annum on the decretal sum and general damages from the time of default until payment in full. In my view, interest at the rate of 30% is harsh, unreasonable, and no convincing justification has been provided for the same. I, therefore, decline to award that rate of interest. - 10 Accordingly, I award interest on the decretal sum at the rate of 20% per annum from the date of filing the suit until payment in full, which in my view is reasonable given the fact that this was a commercial transaction.

I further award interest at the rate of 6% per annum on the general damages from the date of Judgment until payment in full.

15 iii) Costs of the suit

Section 27(2) of the Civil Procedure Act, provides that 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:

20 *"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."*

Accordingly, since there are no reasons to deprive the Plaintiff of the same, 25 the Plaintiff is entitled to the costs of the suit.

Conclusion

In the final result, the following orders are hereby issued:

1. The Defendant shall pay the Plaintiff a total sum of UGX 52,600,000/= (Uganda Shillings Fifty-Two Million Six Hundred

- 5 Thousand Only), being the money for the work done by the Plaintiff under the contract with the Defendant. - 2. The Defendant shall pay the Plaintiff general damages amounting to UGX 8,000,000/= (Uganda Shillings Eight Million Only). - 10 - 3. Interest is awarded on the sum in (1) above at the rate of 20% per annum from the date of filing the suit until payment in full. - 15 4. Interest is awarded on the sum in (2) above at the rate of 6% per annum from the date of Judgment until payment in full. - 5. Costs of this suit are awarded to the Plaintiff. - 20 - 6. The counterclaim is hereby dismissed with costs.

I so order.

Dated, signed and delivered electronically via ECCMIS this 26th day of May, 2025.

Patience T. E. Rubagumya JUDGE 3026/05/2025