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THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGAND AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0276 OF 2005
KAZINGA CHANNEL OFFICE WORLD LTD ::::::::::::::
PLAINTIFF
VERSUS
ATTORNEY GENERAL ::::::::::::::::::::::::::::
DEFENDANT
BEFORE: THE HONOURABLE MR. JUSTICE YOROKAMU
BAMWINE
J U D G M E N T:
The
Plaintiff’s action against the Defendant was for the recovery of the price
of goods supplied to the servants of the Defendant,
general damages, interest
and costs. In the course of mediation, the Defendant conceded to the
Plaintiff’s claim in respect
of the contractual sum. The parties failed
to reach agreement on interest and costs. Hence this Judgment.
Briefly,
by agreement between the Government of the Republic of Uganda (represented by
the Office of the President) and the Plaintiff,
the Plaintiff was contracted to
supply computer equipment and software to the Directorate of Ethics and
Integrity. The supply was
conditioned to payment for the goods within two
months from the date of the supply. From the records, the goods were supplied
on
27/2/2004. They have not been paid for to-date. By the time the suit was
filed, the Defendant’s total indebtedness stood
at Shs.49,421,760-. By
reason of the out of Court settlement, the above sum is not in issue anymore.
The issues are:
1. Whether the Plaintiff is entitled to interest on the
principal sum.
2. Whether the Plaintiff is entitled to the costs of the
suit.
As to the first issue, the Plaintiff has prayed for interest at 30%
p.a. from the date of the breach of the contract. It is submitted
for the
Plaintiff that as a commercial enterprise, the Plaintiff has suffered a loss
foreseeable by the Defendant by being kept out
of its money, money that could
have otherwise been put to profitable and productive use in the
Plaintiff’s business and turned
over – several times. Counsel has
cited Wallersteiner –Vs- Moir [1975] QB 373 at p. 388 where Lord
Denning observed:
“In addition, in equity interest is awarded whenever a wrongdoer deprives a company of money which it needs for use in its business. It is plain that the company should be compensated for the loss thereby occasioned to it. Mere replacement of the money – years later – is by no means adequate compensation, especially in days of inflation. The company should be compensated by the award of interest.”
The learned
Judge then went on to decide whether it should be simple interest or compound
interest. He settled for compound interest,
that is, interest with yearly
rests.
In response to the above, learned counsel for the Defendant has
submitted that the prayer for interest is misconceived in that there
was no
breach of contract, but frustration, in the circumstances. Frustration was
never pleaded as a fact in this case. In its
written statement of Defence, the
Defendant chose to deny existence of a cause of action, without any
elaboration.
In my view, counsel’s argument would only hold if the
issue was on liability for the principal sum. This has been admitted
by virtue
of the consent Judgment. It would not hold in respect of interest and costs.
Interest, if it is not part of the contract
terms, is a discretionary remedy.
The general rule being that interest can only be claimed if the claim is based
on an agreement
for it in the document sued on or by statute. See: E.M.
Cornwell & Co. Ltd –Vs- Desai (1941) 6 U.L.R. 103.
The
principle of interest as a discretionary remedy was laid down by the said Lord
Denning in Harbutt’s ‘Plasticide’ Ltd –Vs- Wyne Tank
& Pump Co. Ltd [1970] 1 QB 447. He said:
“An award of interest is discretionary. It seems to me that the basis of an award of interest is that the Defendant has kept the Plaintiff out of his money; and the Defendant has had the use of it himself. So he ought to compensate the Plaintiff accordingly.”
In the
instant case, goods were supplied to the Defendant’s servants on
27/2/2004. The contract document provided for spreading
of payments, depending
on deliveries. On seeing that payments were not forth coming, the Plaintiff
filed this suit, not under summary
procedure but as an ordinary suit for breach
of contract. The Defendant then moved in to defend the suit. The principle
that emerges
from the authorities which I have cited, including Sietco
–Vs- Noble Builders (U) Ltd SCCA No. 31 of 1995 is that where a person
is entitled to a liquidated amount or specific goods and has been deprived of
them through the wrongful act
of another person, he should be awarded interest
from the date of filing the suit. Where, however, damages have to be assessed
by
the Court, the right to those damages does not arise until they are assessed.
In such event, interest is only given from the date
of Judgment.
As I
have already observed, the case has not advanced to the stage of assessing
damages.
From the records, upon the Defendant failing to pay, the
Plaintiff was informed of the attempts by the Defendant to get the World
Bank to
extend the grant period to enable payment to the Plaintiff to be processed which
attempts had been unsuccessful. The Defendant
is also on record to have made
proposals on how the Plaintiff would be paid but the Plaintiff found the
proposals unacceptable.
All this is contained in a letter dated 14th
October, 2004 from the Plaintiff’s counsel to the Permanent Secretary,
Directorate of Ethics and Integrity, annexed to the
plaint.
From this
piece of evidence, Court is satisfied that although the Defendant has kept the
Plaintiff out of its money, the Defendant
has himself not had the use of it to
warrant an order of compensation on account of that to the Plaintiff. The Court
therefore takes
the view that the withholding of the payment on the part of the
Defendant was circumstantial rather than deliberate. In these circumstances,
I
would award interest on the decretal sum at the rate of 30% per annum from the
date of filing the suit till payment in full. I
order so.
As regards
costs, the usual result is that the loser pays the winner’s costs. This
practice is also subject to the Court’s
discretion so that the winner need
not be awarded costs in all cases.
In the instant case, the
Plaintiff’s claim was for Shs.49,421,760-. By agreement of the parties,
the amount has now been decreed
to the Plaintiff. The Defendant received the
goods from the Plaintiff. The Defendant has been enjoying use thereof since
February,
2004. The Plaintiff has no doubt incurred costs in espousing its
claim against the Defendant, whether the Defendant had a reasonable
excuse for
delaying payment or not. I see no good reason or at all to deny them the costs
of the suit. The Plaintiff shall therefore
have them. The same shall attract
interest at Court rate from the date of Taxation till payment in full.
I
so order.
Yorokamu Bamwine
J U D G E
9/12/2005
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.RTF of original document