SDV Transami (U) Ltd v Nsibambi Enterprises (Civil Appeal No. 59 of 2006) [2008] UGCA 28 (1 January 2008)

THE REPUBLIC OF UGANDA

IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

CORAM: HON. LADY JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ. HON. MR. JUSTICE S. G. ENGWAU, JA. HON. MR. JUSTICE A. TWINOMUJUNI, JA.

CIVIL APPEAL NO. 59 OF 2006

$10$

SDV TRANSAMI (U) LTD....................................

VERSUS

NSIBAMBI ENTERPRISES...................................

[Arising from the judgment of Hon. Justice Mr. F. M. S. Egonda Ntende of the High Court at Kampala dated the 29^th day of June 2006 in High Court Civil Suit No. 111 of 20051

JUDGMENT OF HON. JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ.

This is an appeal from the judgment of the High Court sitting at Kampala, in HCCS No. 111 of 2005, delivered on $29/06/2005$ . It was filed on behalf of SDV Transami (U) Ltd, the appellant. The Respondent is Nsibambi General Enterprises Ltd.

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The agreed facts of the suit were that SDV Transami (U) Ltd, the appellant made an agreement to handle the Respondent's Cargo of glass and to transport it from Mombasa to Kampala for consideration of US\$.3350. The appellant did not deliver the cargo but on 110912004, informed the respondent that the said cargo had been damaged in transit from Mombasa. The assessment report of the damage produced by a marine surveyor, known as Cunningham Lindsey showed a total loss of the cargo.

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When the appellant was asked by the respondent to compensate it, it refused to do so. The respondent, hence,, sued the appellant in HCCS No. l l l of 2006 in the Commercial Division of the High Court for breach of contract and negligence. It was contended for the respondent that the damage suffered was due to the negligence of the driver instructed to drive the vehicle carrying the cargo to Kampala. He did not fix the cargo on the truck properly which caused it to fall off.

It was also argued for the respondent that the exemption clause in the agreement to the effect that o'all cargo is transported, handled and stored at owners' risk. Full compensation insurance is the responsibility of the consignee" notwithstanding, the appellant was guilty of the fundamental breach of contract. The respondent, therefore, additionally asked Court to award it general damages, costs of the suit and interest.

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The appellant denied any liability for the damage of the respondent's cargo. It was not caused by the negligence of its agents or servants. Besides, the appellant was protected by the exclusion clause in the agreement (supra). The only advice he would have given to the respondent was to sue its Insurance Company for compensation. l0

Upon listening to the evidence of both parties, and perusing the authorities cited by counsel for the appellant and those relied on by the court the learned trial judge decided the 20 suit in favour of the respondent. He awarded it USD 8335 special damages, Ug. Shs. 8,000,000/: general damages,

half of the costs of the suit, interest on the decretal amount at court's rate from the date of judgment till payment in full.

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Aggrieved by the decision of the Commercial Court Division of the High Court, the appellant lodged an appeal to this court on 5107/2006.

The respondent also filed a cross appeal against only the order of the costs. The memorandum of appeal contains the following three grounds: l0

- 1. The learned trial judge erred in fact and law for failing to properly evaluate the evidence of DWz,, Kahindi Shikar that the accident was caused by the poor packing of the cargo by the plaintiff (respondent) - 2. The learned trial judge erred in fact and in law in holding that the appellant was liable to the respondent in negligence. - 3. The learned trial judge erred in law and fact in holding that the appellant could not rely on the 20

exemption clause in the contract of carriage between the parties to avoid responsibility.

This Court was on behalf of the respondent, prayed by its counsel for the following: -

- l. The appeal be allowed and the judgment be set aside. - 2. Court revaluates the evidence and determine it on merit. - 3. Costs of appeal be awarded to the appellant. - 4. Any further relief.

At the scheduling conferencing the parties agreed to the following two issues namely: -

- l. Whether the appellant was liable to the respondent for the damaged cargo. - 2. What remedies are available to the parties?

At the hearing of the appeal the appellant was represented by Mr. Moses Adriko whilst Mr. Nelson Nelima appeared for the respondent. 20

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Mr. Adriko based his submissions on the three grounds in the memorandum of appeal. He started with the third ground which he argued separate and then proceeded with grounds I - 2 which, he argued together. Mr. Nerima followed the same order. I will also adopt the same approach.

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On the part of the appellant, liability for the damage to the respondent's cargo was denied. The appellant or its agents or servants were not negligent nor did the appellant commit a fundamental breach of the contract. Mr. Adriko submitted that the appellant was covered by the exemption clause. He criticized the learned trialjudge for holding that the exemption clause in this case was not clear but ambiguous disregarding the fact that the respondent had accepted its terms and conditions in the contract.

Counsel admitted that there was a contract between the parties for carriage of the respondent's goods. Operative words here were "at owners risk" even if negligence was

implicated liability was still excluded by the exemption clause.

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Counsel for the respondent, in reply, opposed the appeal. On the exemption clause under ground 3 adopting the reasoning of the learned trialjudge he submitted that it was insufficient to protect the appellant from liability either for breach ofcontract or in negligence.

l0 With regard to ground I and 2 negligence was denied on the part of the respondent. The accident was not due to poor packing of the cargo but the failure by the driver of the truck to fix it on the truck properly. The respondent also raised the doctrine of Res Ipsa loquitor. Further, negligence was not pleaded in the written statement of defence. The appellant could not, hence raise it on appeal.

On the cross appeal, the counsel criticized the learned trial judge for wrongly awarding the respondent only half costs. 20 His decision was founded on a wrong principle of the law. He pointed out that costs follow the event and the

successful party would be entitled to full costs. He relied on a case cited by the case of Devran Nanji Handus Kalidas Dawda (1949) 16 EACA 35, where the Court of Appeal held that: -

"a successful defendant can only be deprived of his costs when it is shown that his conduct either prior to or during the course of the suit has led to litigation which but for his own conduct might have been averted."

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Further, in the case of Donald Campbell & Co. Ltd Vs. Pollack (1927) 4s232 Lord Atkinson had this to say: -

"It is well established that when the decision of such a matter as the right of a successful litigant to recover his costs as to is left to the discretion of the judge who tried the case, that discretion is ^a judicial discretion and if it be so its exercise must be based on facts - if, however, there be, in fact, some grounds to support the exercise by the judge of the discretion he purports to exercise, the question of sufficiency of those grounds for this

purpose is entirely a matter for the judge to decide and the Court of Appeal would not interfere with his discretion in that instance."

Counsel invited this Court to interfere with the award of half costs because the learned trial judge exercised his discretion injudiciously on a wrong principle.

To counsel, the learned trial judge did not give good reasons for his decision. He thus prayed Court to allow the cross appeal and award the respondent the full costs in both this Court and in the High Court.

With the aforesaid in mind I will now proceed to determine the three grounds on which the appeal was argued. ^I propose to adopt the same approach as both learned counsel for the parties did.

Ground 3 - Exemption clause -

I heard the submissions and arguments advanced by both counsel on the effect of the exemption clause in this maffer. First and foremost both sides admit that both the agreement 20

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between them and the SDV Transam Standard terms and conditions of trading contained the exemption clause which subsequently became contentious. I accept the submissions of Mr. Adriko that the respondent accepted the exemption clause. It is true it is clear and unambiguous in my opinion. The exemption clause must be enforced by the Courts if, they are clear, un ambitious and accepted by the parties, however, they do not amount to a fundamental breach of the contract or where negligence is implicated. In the l0 instant case there was total loss. The appellant did not deliver even an iota of the cargo, it had been entrusted with and agreed to handle and transport from Mombasa to Kampala. No evidence was adduced to show that failure to deliver was due to reasons beyond its control or negligence of the consignee. In the premises, the exemption clause not withstanding the appellant had a duty to deliver the respondent's cargo as per the contract between them unless for good reason. To permit the appellant to get away with it would, clearly, defeat the purpose for which the contract 20 was made and the result injustice. Had it been shown that the appellant or its servants were diligent and had fulfilled

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their objection, I would have accepted counsel's submission that the exemption clause absolved the appellant of any liability. There is no evidence to show that the loss was due to an act of God or beyond the control of its agents. Clearly, the appellant having committed ^a fundamental breach of the contract, was not protected by the exemption clause. Ground 3 thus fails.

Grounds I and ²

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l0 On the first ground, counsel for the appellant criticized the learned trial judge for failure to properly evaluate the evidence. Had he done so he would have accepted DW2, Kahindi Shakasi's of evidence that the accident was due to poor packing by the respondent's agent or servant.

As the evidence stands on record the appellant did not adduce the slightest evidence to prove the allegation. All that there is on record is the word of DW2. No evidence was adduced by the appellant to show that the damage to the respondent's cargo was not due to a fault on its part or

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that all what was required of it was done but still the accident occurred.

Further no attempt was made to prove negligence on the part of the respondent or his agent or servant when packing the cargo. The court was not shown how it should have been done or what was omitted. There is not a single negligent act proved on the part of the respondent or its agents or servants.

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On the contrary it was the duty of the appellant's driver to fix and properly secure the respondent's cargo on the vehicle. In my view taking precaution had nothing to do with the packing. I would have been persuaded by the arguments advanced on behalf of the appellant if at least the damage to the glasses occurred without falling off the vehicle. The blame would then have been rightly put squarely at the door of respondent for poor packing. It was the responsibility of the appellant to ensure that the cargo is safely transported from Mombasa to Kampala in one piece. Again as a carrier it was the responsibility of the

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appellant's agent to check on the cargo before starting off, to confirm whether it had been poorly packed. Surprisingly, the driver of the truck confessed that he did not even know the contents ofthe cargo.

As the evidence reads on record Mr. Adriko's criticism of the learned trial judge's decision to reject DW2's evidence was not justified because it is not supported by the evidence.

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I agree that containers do not ordinarily fall off trucks if they had been properly secured. However, the only inference to draw from the kind of scenario before Court in this case is that it was poorly secured. This, hence, raises the doctrine of Res lpsa Loquito enunciated in the case of Scott vs London and St. Catherine Docks cited in Moors vs Fox & Sons (1957) I ALL ER 182. This principle is applicable "Where the thing is shown to be under the management of the defendant or his servants and the accident is such as in the ordinary course of things do not happen. If those who have the management use

proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from the want of care."

On a careful perusal and evaluation of the evidence on record and in my view the doctrine of Res Ipsg Loquitor is applicable to this case.

The learned trial judge cannot be faulted for rejecting DW2's evidence. He, thoroughly evaluated the evidence and I do not accept the submission of counsel for the appellant that he came to a wrong decision.

As can be seen from his judgment, the learned trial judge properly evaluated the evidence adduced by the parties. A good example is his analysis on the negligence and the doctrine of Res Ipsar Loquitor. He had the following to say (page 66 line 70)

"I am satisfied that the defendant has put forward no such explanation. It is not available on its pleadings. The defendant has not shown that it took reasonable

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Nor have they shown that the loss was not due to their own fault or that of its agents.

Of course it is clear that the goods were lost in the hands of Hakika Transport Services Ltd, an agent of the defendant, for purposes of transportation of the container. I am in no doubt that the defendant, on the authorities, is liable for the acts of its agents, or subbailees, See Morris V C W Martins and Sons Ltd [19651 2 All E R 725, British Road Services v Arthur V Cructchley & Co Ltd (Factory Guards Ltd Third Parties I19681 All E R 811.

The Plaintiff in this case has also pleaded res ipsa loquitor. This principle, or rather this rule of evidence is traced back to the words of Erle CJ, in Scott ^v London and St. Catherine Docks quoted in Moore v ^R Fox 7 Sons [956] 1 All E R 182 at page 188,

'The foundation of all subsequent authority is found in Scott v London Dock Co (1865) (3 H & ^C 596). The Ianguage of Erle CJ which is the basis of all that has since followed was (ibid, at p 601):

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"But where the thing is shown to be under the management of the defendant or his servants, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of explanation by the defendants, that the accident arose from want of care.t'

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l0 In this case the evidence has shown that the container in question was loaded onto a truck at KPA Mombasa. A very short distance from the point of loading the container fell off the truck. It is not in the ordinary course of things that a container securely fixed onto a truck for transportation would just fall off, if those in management of the same have exercised reasonable care. I am satisfied that this is one of the cases where the doctrine, res ipsa loquitor, is applicable, and the burden is then shifted onto the defendant to explain the 20 cause ofthe accident.

I agree with the learned trial judge that the respondent established a case of bailment and negligence against the appellant. The exemption clause though clear and unambiguous did no absolve the appellant of any liability in the circumstance in which the respondent's cargo was damaged.

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The learned trial judge came to the right conclusion when he decided the suit and passed judgment in favour of the l0 respondent.

On the cross appeal, the respondent is complaining about the quantum. Having won the suit, it was argued for the respondent that it was entitled to full costs. The decision of the learned trial judge to award half costs was erroneous and founded on a wrong principle of law. Costs follow the event and a successful litigant should not be denied costs unless for sufficient reasons which did not apply here.

²⁰ In reply counsel on behalf of the appellant, pointed out that award of costs is the discretion of the Court. Besides in this case intended to punish the respondent for its counsel's conduct failing to produce authorities to Court. The Court was prayed to dismiss the cross appeal.

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The counsel for the parties have stated the correct position of the law regarding grant of costs by the trial Court and when the appellate Court may interfere with it.

In his judgment, the learned trial judge noted that on the r0 evidence on record, the respondent's cargo was a total loss. In those circumstances he was entitled to the value of the goods. It was awarded to him together with some other reliefs.

However, when the learned trialjudge came to the award to costs, he had the following to say: -

"Before I take leave of this case I must say I am disappointed that the plaintiffs counsel made no effort at all to provide any assistance to this Court in terms of legal authorities in support of the plaintiff s case. The

case was just thrown at the Court. This is unacceptable.

For that reason I shall award the plaintiff half of the costs of the suit."

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The principles governing award of costs by the trial Court and interference by the appellate Court are well settled. They have also been reiterated in a number of authorities some of which are reproduced below.

It is not disputed that S. 27(2) of the Civil Procedure Act 10 gives the Court wide discretion as to costs of a suit. It reads as follows: -

SS. ²⁷(2) The fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of the powers in subsection (1); but the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order."

).0 See also Devrans Nanji Vs Handag Kalida Davda (1949) 16 EACA 35 (supra)

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Further in his judgment in the case of Lord Atkson in Donold Campten and Co. Ltd vs Pollock (1927) AC 722 at page 81 he held that: -

"It is well established that when the decision of such a matter as the right of a successful litigant to recover his costs is left to the discretion of the Judge who tried the case, that discretion is ^a judicial discretion, and if it be so its exercise must be based on facts....if, however, there be, in fact, some grounds to support the exercise by the Judge of the discretion he purports to exercise, the question of the sufficiency of hose grounds for this purpose is entirely a matter for the Judge to decide, and the Court of Appeal would not interfere with his discretion in that instance."

Thus, where a trial court has exercised its discretion on costs, an appellate court should not interfere unless the discretion has been exercised injudiciously or on wrong principles. Where it gives no reason for its decision the appellate court will interfere if it is satisfied that the order

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is wrong. It will also interfere where reasons are given but reasons do not constitute "good reason" within the meaning of the rule.

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In the instant case the learned trial judge having allowed the respondent's claim declined to award it full costs. As can be seen from the aforementioned authorities costs follow the event unless for good reason. With respect, I do not find it fair to visit the mistake of the counsel on an innocent client. The authority for this statement can be found in the case of ESSAJI AND ORS V SOLANKI [1968] EALR 218, where it was held by the court that: -

"(iv) the applicant's counsel's error in failing to realize that the order he was filing was not the correct order was not necessarily a bar to his obtaining an extension of time."

Disagreeing with my learned brother, the trial judge, there is no ground to justifr depriving the respondent, who was ^a successful parff, costs. In the result I would allow the cross appeal. The order of the High Court awarding the

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respondent half costs is hereby set aside and substituted with one awarding it full costs.

As both Engwau, JA and Twinomujuni, JA agree, by unanimous decision of this Court the appeal is dismissed but the cross appeal allowed with full costs both in this Court and High Court.

Dated at Kampala this $16^{h}$ day of $16^{h}$ ....................................

L. E. M. Mukasa-Kikonyogo DEPUTY CHIEF JUSTICE.

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$10$

o THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL IN UGANDA AT KAM LA

CORAM: HON. L. E. M. MUKASA-KIKONYOGO, DCJ HON. JUSTICE S,G. ENGWAU, JA t0 HON. JUSTICE A. TWINOMUJUNI, JA

CIVIL APPEAL NO. 59 OF 2OO8

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BETWEEN

SDV TRANSAMI (U) LTD APPELLANT

l0 AND NSIMBAMBI ENTERPRISES RESPONDENT

[Appeal from the judgment of the High Court at Kampala (Egonda Ntende, J) dated 29th June 2006 in H. C. C. S. No. 111 of 20051

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JUDGMENT OF TWINOMUJUNI, JA

I have had the benefit of reading the judgment, in draft, of My Lord the Hon Deputy Chief Justice.

I agree with it and the orders proposed by her and I have nothing useful to add

Dated at Kampala this ... . ...[.9 f.- 2008 i5 -7 ^I day of

/tkl .+0 tice of al

THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL IN UGANDA AT KAMPALA

GORAM: HON. JUSTICE L. E. M. MUKASA-KIKONYOGO, DCJ HON. JUSTICE S. G. ENGWAU, JA HON. JUSTICE A. TWINOMUJUNI, JA

CIVIL APPEAL NO. 59 OF 2006

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10 BETWEEN

SDV TRANSAMI (U) LTD APPELLANT

AND

NSITVBAIVBI ENTERPRICES RESPONDENT

[Appeat from the judgment of the High Court at Kampala (Engonda Ntentle, J) datetl 29't' '15 June 2006 in H. C. C. S. NO. I I I OF ²⁰⁰⁵¹

JUDGMENT OF ENGWAU JA.

I have had the benefit of reading in draft the judgment prepared by my 20 learned Deputy Chief Justice, L. E. M. Mukasa-Kikonyogo, DCJ.

I agree with her that this appeal be dismissed and the cross-appeal be allowed. I also agree with the orders proposed by her.

Dated at Kampala this []- ^N .day of k? .2008.

S. G. Ehgwau, 30 Justice of Appeal.