|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
Uganda: Commercial Court |
[Database Search] [Name Search] [Recent Decisions] [Noteup] [Help]
THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT
KAMPALA
(COMMERCIAL COURT DIVISION)
HCT-00-CC-CS-0358 OF
2000
TRIAD HOLDINGS LIMITED :::::::::::::::::::::
PLAINTIFF
VERSUS
1. NETWORKS EXPORTS PVT LTD ]
2. SGS UGANDA LIMITED
]
3. SOCIETE GENERAL DE ]
SURVEILENCE
S.A. LTD ] :::::::::::::::::::
DEFENDANTS
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
R U L I N G:
The Plaintiff sued the
Defendants, jointly and severally, to recover from them money lost in an
importation transaction, special damages
for breach of contract, interest and
costs of the suit. The facts of the case are rather convoluted. However, going
by the pleadings,
the Plaintiff entered into a contract with the 1st
Defendant to buy from the said 1st Defendant some rice of a stated
description. It is claimed by the Plaintiff that it contracted the
2nd and 3rd Defendants to carry out the pre-shipment
inspection of the goods which they did and they issued a clean report of
findings. When
the rice arrived in Kampala, it was declared unfit for human
consumption and destroyed. The suit is in respect of that loss.
After
the hearing had commenced, Mr. Madrama for the 3rd Defendant raised a
point of law. He argued that the plaint discloses no cause of action against
the 3rd Defendant. Mr. Kanyemibwa said the same in respect of the
2nd Defendant. Since I had just taken over the case from the
hitherto trial Judge, M.S. Arach – Amoko, J., I was of the opinion
that my
grasp of the point being raised by both counsel would be better if put in
writing. All counsel agreed.
I have now addressed my mind to the able
arguments of all counsel. It is not necessary to reproduce them verbatim as the
written
submissions form part of this record.
I will first deal with the
submission by Mr. Kabega, counsel for the Plaintiff, that the point of law is
resjudicata, the same having
been directly in issue in an earlier point of law
that was heard and disposed of by Justice Stella Arach – Amoko on 9/5/2005
and should therefore not be resurrected here.
From the records, the
3rd Defendant raised a point of law challenging the jurisdiction of
this Court to hear and determine the suit. Perusal of the Ruling
shows that the
learned Judge confined her Ruling to the sole issue of jurisdiction. She did
not comment on the issue of the alleged
lack of the cause of action and she was
never invited to do so. It is trite that in order to give effect to a plea of
res judicata,
the matter in issue must have been directly and substantially
heard and finally decided in the former suit. It simply means nothing
more than
that a person shall not be heard to say the same thing twice over in successive
litigations: LT. DAVID KABAREEBE –VS- MAJ. PROSSY NALWEYISO CACA NO.
34/2003 (unreported).
Relating the above principle to the issue now
before Court, it is very clear to me that what was handled and disposed of by my
predecessor
in the matter was the issue of jurisdiction. The instant one was
not. Therefore, res judicata does not come into play. This objection
must fail
and it fails.
As regards the point of law now before me, it is trite that
a plaint which discloses no cause of action must be rejected. To say
that a
plaint discloses a cause of action, it must show that the Plaintiff enjoyed a
right; that the right was violated; and that
the Defendant is responsible for
that violation and therefore liable. See: Auto Garage & Others
–Vs- Motokov (No. 3) [1971] EA 514.
In the instant case, it is
not disputed that the 1st Defendant offered to sell rice to the
Plaintiff. It is also not disputed that the Plaintiff accepted to buy it. This
created a
contract of sale between the Plaintiff and the said 1st
Defendant. As fate would have it, the entire consignment was declared unfit for
human consumption and destroyed. Upon the destruction,
the Plaintiff filed a
suit against the 1st Defendant, among other parties. The
1st Defendant filed no defence. Judgment in default of defence was
entered against it. It has not been set aside. This Ruling relates
to the
1st Defendant’s Co-Defendants.
The Plaintiff alleges in
the plaint, para 5 (b) thereof, that it entered into a contract with the
2nd and 3rd Defendants to inspect the goods before
shipment to ensure that they conform to the quality, quantity and packaging as
stated in the
1st Defendant’s Proforma Invoice and make price
comparisons. If any such contract was in writing, Court has not accessed it.
It is not among the Documents accompanying the plaint. It would appear that the
purported existence of the said contract is based
on the fact that the Plaintiff
filled Form ‘E’, a requirement under the Bank of Uganda Pre –
Shipment Inspection
Regulations, annexture ‘C’ to the plaint. It is
averred by the Plaintiff that by reason thereof, the 2nd and
3rd Defendants were obligated to inspect the Plaintiff’s
consignment before shipment. There is evidence of such inspection.
It
is averred by the Plaintiff that the two Defendants breached their respective
contracts with it and by reason of that breach caused
it to suffer loss and
damage which it holds them jointly and severally liable. The particulars of the
alleged breach by them have
been stated as:
i. failure to inspect the goods before shipment to ensure that they correspond to the description in the proforma invoice and the sample provided. This is mainly in so far as the moisture content and broken grain percentages were much higher than the agreed ones.
ii. issuing a clean Report of Findings that the goods in respect of which the said Clean Report of Findings was issued were of the right quality, merchantable and fit for human consumption whereas not.
These averments, in my view, raise two distinct issues:
1. Privity of contract.
2. Liability for the loss, whether contractual or tortious.
As regards privity of contract, as already observed above, there
appears to be no direct contractual relationship between the Plaintiff
and the 2
Defendants. The pleadings disclose existence of a contract between the
Plaintiff and the 1st Defendant for the supply of rice. The
2nd and 3rd Defendants were not party to that contract and
there is no argument that they were.
The pleadings also disclose
existence of another contract between Bank of Uganda and the 3rd
Defendant. This contract related to pre-shipment inspection of imports before
entering Uganda. Under this arrangement, no payment
would be made in or outside
Uganda by or on the authority of BOU or any licensed bank in Uganda, to the
credit of any person, in
respect of goods subject to pre – shipment
inspection, unless and until a Clean Report of Findings (CRF) was presented
together
with the relevant shipping documents to an authorized bank. The
3rd Defendant was under the Regulations appointed the inspecting
authority. The subject matter herein fell into the category of goods
for
inspection before shipment. That’s how the 3rd Defendant comes
into the picture. Payment to the 3rd Defendant was made through the
2nd Defendant. I have understood the Plaintiff’s argument to
be that by filling Form E, an Import Declaration Form and paying
the requisite
fee to the 2nd Defendant, the two Defendants became contractually
obliged to inspect the Plaintiff’s consignment before shipment. It is the
view of this Court that filling the Form and paying the requisite fee perse did
not create a contractual relationship between the
Plaintiff and the two
Defendants. This was simply a fulfillment of a statutory requirement before
payment could be made to the seller.
It was a statutory requirement of the day
before BOU or any licensed bank authorized by BOU could release money for
payment of goods
outside Uganda. Although the Regulations themselves show no
reason for their enactment, control of flow of forex outside Uganda
appears to
have been the reason behind that requirement. I’m fortified in this by
the subsequent agreement between the same
parties, that is, BOU and the
3rd Defendant dated 13/9/1989. The revised contract was, according
to its preamble, necessitated by the desire:
“to provide for
developments that have taken place since the conclusion of the Principal
Agreement and to perfect the relationship
between the parties by instituting
additional measures for import verification in Uganda (Customs Oriented
Programme) in order:
1. To maximize revenues collectable from duties and taxes on imported items.
2. To simplify import entry procedures and documentation so as to facilitate the inflow of imported goods to the Ugandan domestic economy.
3. To provide advance information of shipment to assist in arrival verification.
In my view, the mischief (the unsatisfactory state of affairs) which the Regulations were
meant to remedy must be understood in the context of those objectives as stated in the
subsequent revision of the contract between BOU and the 3rd Defendant. It was not, as counsel for the Plaintiff appears to suggest, to act as a substitute for the ordinary contractual obligations of the seller to the buyer as they are known under common law or the Law of Contract of Uganda. If the position were as counsel for the Plaintiff would invite this Court to believe, Regulation 9 would be rendered redundant. It provides:
“9. Nothing in these Regulations shall be construed as relieving any seller of his contractual obligations to the buyer of any goods liable to pre-shipment inspection.”
To that extent, Court is
of the opinion that the Plaintiff is a stranger to the contract between BOU and
the 3rd Defendant. The general principle is that a stranger to a
contract cannot sue upon that contract unless given a statutory right to
do so:
Halal Shipment Co. –Vs- Securities Bremmer [1965] EA 690; Kayanja
–Vs- New India Assurance Company Ltd [1968] EA 295.
There is
nothing in the Regulations of 1982 or the subsequent amendment of 1989 to be
construed as making the transaction herein an
exception to the above stated time
tested general principle. Accordingly, Court accepts the submission of learned
counsel for the
2nd and 3rd Defendants that there was no
contract between the Plaintiff and their clients that could give rise to a cause
of action for its breach.
Court is of further opinion that the statutory
requirement for inspection of imports before shipment could at most impose a
duty
on the 3rd Defendant the breach of which would be remedied by an
action for damages, not for breach of contract as claimed herein but in
negligence
for a breach of a statutory duty. In the absence of such a claim
grounded in negligence, the Plaintiff’s claim against the
2nd
and 3rd Defendants for breach of contract is in my view
misconceived.
Having looked at the law as I have done above, I am of the
considered opinion that even if I were to take the generous view that the
issues
raised by counsel be left to be determined on evidence, as justification to over
rule the objection, I don’t envisage
the likelihood of the Plaintiff
proving its claim against the two Defendants on the basis of its current
pleadings. This is because
as I have already observed, to say that a plaint
discloses a cause of action against the Defendant, the Plaintiff must appear as
a person aggrieved by a violation of the right and the Defendant as the person
liable: Auto Garage, supra, at p.519.
It is averred by the Plaintiff
that the two Defendants:
i. breached the pre-shipment agreement with it;
ii. the Plaintiff’s consignment arrived at Kampala when caked, rotten, full of maggots and unfit for human consumption.
iii. the Plaintiff contracted McLarens Toplis to carry out a survey exercise to assess, inter alia, the cause of damage to the rice and that they made a report, annexture ‘E’ to the plaint, blaming the Defendants for the loss.
I have seen the report. It observes, among other
things, that:
i. some water had ingressed into containers through the hard
old rubber seals;
ii. the ventilator holes on the containers were sealed by
celotape;
iii. the containers were rusted inside at the roof and at the side
panels.
The report gives the cause of damage as the excessive rain and
humid condition prevailing in the region which caused sweating inside
the
container and wet damaged the cargo.
The Plaintiff as consignee was
advised to write to the shipper and carrier and C & F Agents holding them
responsible for the damaged
cargo. It is trite that a Plaintiff is at liberty
to sue anybody he thinks he has a claim against and cannot be forced to sue
somebody.
Where he sues a wrong party, he has to shoulder the blame. In the
instant case, in as far as the 2nd and 3rd Defendants are
concerned, Court has not seen any thing in the Regulations of 1982 as amended or
in the Clean Report of Findings any
suggestion that the 3rd Defendant
as the inspecting authority was responsible for the stuffing of the goods into
the containers or anything to support the
theory that it was responsible for the
choice of the containers in which the cargo was transported. The Regulations,
No. 4 thereof,
limited the 3rd Defendant’s mandate to quality
and quantity inspection and price comparisons. Duty is cast upon the intending
importer to
make all necessary arrangements with the seller for the purposes of
handling, presentation, unpacking and repacking, sampling, shop-testing
and any
other thing required in connection with the inspection of the goods,
emphasis mine.
From the pleadings, damage to the cargo was long after the
inspection, when the goods were already in transit. In the absence of
any
agreement to the contrary, the presumption is that it was the importer’s
obligation, through its insurers or otherwise,
to ensure that the cargo was
loaded into containers suitable for the transportation of rice for such a long
distance and under the
stated weather conditions. In these circumstances,
I’m inclined to agree with the argument of counsel for the two Defendants
that the Report which the Plaintiff heavily relies on does not blame their
clients, as pleaded by the Plaintiff, for any failure
on their part to inspect
the cargo before shipment. On the contrary, the findings in the report as to
the cause of damage to the
cargo are indeed materially inconsistent with the
Plaintiff’s averment in the plaint that the two Defendants breached the
pre-shipment
contract and that they were blamed by the report for causing the
said loss. The Report blames the damage to the cargo on the poor
state of the
containers which resulted in water gaining access to the cargo coupled with poor
air circulation in the containers while
the cargo was already in transit. Court
has also not seen anything in the report to support the Plaintiff’s
averment that
the rice before it got bad did not correspond to the description
in the proforma invoice and the sample provided.
The plaint does not
allege, and it is not documented anywhere that the two Defendants were
responsible for: the poor choice of containers
and/or the loading on them; the
water gaining access to the goods; or the actions of the shipper, the carrier
and/or the C &
F Agents.
In short, the pleadings do not support the
Plaintiff’s alleged cause of action against the 2nd and
3rd Defendants for a breach of a pre-shipment contract with them.
Although the Plaintiff appears as a person aggrieved by a violation
of a right,
the pleadings do not support the averment that the two Defendants were
responsible for that violation.
In the result, Court finds merit in the
points of law raised by both learned counsel for the Defendants. They are
sustained. Under
0.7 r 11 (a) of the Civil Procedure Rules, a plaint which
discloses no cause of action must be rejected. I would accordingly reject
the
plaint herein in accordance with the said 0.7 r 11 (a) and order it struck out
with costs to the 2nd and 3rd Defendants. I make no order
as to the claim against the 1st Defendant.
It shall be
so.
Yorokamu Bamwine
J U D G E
19/08/2005
SAFLII:
|
Terms of Use
|
Feedback
URL: http://www.saflii.org/ug/cases/UGCommC/2005/41.html
.RTF of original document