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Last Updated: 25 May 2007
Peace Isingoma V MGS International U Ltd -HCT-00-CC-MA-0761-2006 [2007] UGCommC-(9 February 2007)
THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-MA-0761-2006
(ARISING FROM
HCT-00-CC-0652- 2006)
Peace Isingoma
Applicant/Plaintiff
Versus
Mgs International (U) Ltd
Respondent/Defendant
9 February 2007
BEFORE:
HON. JUSTICE LAMECK N. MUKASA
RULING:
In
these proceedings the business relation between the parties is that
the applicant, Peace Isingoma, and her husband Patrick Mwesigwa
are
the owners and registered proprietors of the land situated and known
as Block 220 Plot 713 at Kiwatule. They put up a filling
station at
the land. The respondent, MGS International Ltd. deals in petroleum
products in Uganda. Mr. and Mrs Isingoma leased the
Petrol Service
Station and property thereat to the Respondent for a period of
fifteen years effective from 8th April 2003. By an
agreement dated 11th April 2003 the Respondent appointed
the applicant as its licensee to operate and run the said station
upon the terms and conditions
stated in the said agreement.
The
dealership agreement was to come into effect on 8th April
2003 and remain in force unless otherwise terminated as provided in
the said agreement. On 26th October 2006 the Applicant
filed Civil Suit No. 652 of 2006 wherein the Applicant alleges that
on 25th October 2006 the Respondent’s officials in the
company armed the guards purported to chase away the applicant’s
pump attendants,
took away the Applicant’s documents and cash in
the sum of 5,500,000/=, switched off electricity at the station and
served her
with a letter purporting to terminate the dealership and
demanded that the Applicant hands over the station. In the plaint,
inter
alia, the applicant prays for an injunction restraining the
Respondent from further breach of the contract.
On the same
day the Applicant filed this application by Chamber Summons under
Order 41 rules 2 (I) and 9 of the Civil Procedure Rules
for Orders
that a temporary injunction issues to restrain the Respondent, its
officials, employees or anybody acting under its instructions
from
further interference with the applicant’s business/dealership at
Mogas Kiwatule Service Station until the disposal of the
main suit or
until further orders of this Court and for costs to be provided
for.
The Application was supported by an affidavit dated 26th
October 2006 and deponed to by the Applicant, Peace Isingoma. The
Respondent in reply filed five affidavits. In rejoinder the Applicant
under cover of a letter filed on 29th November 2006 sought
to reply on six affidavits filed by the Applicant in Misc.
Application No. 772 of 2006 also arising from this
suit.
Representation was Mr. Wilfred Nuwagaba and Mr Obed Mwebesa for the
applicant. The Respondent was represented by Mr. Peter
Nkuruziza co
appearing with Mr. Stephen Musisi.
Conditions upon which court
would exercise its judicial discretion and grant a temporary
injunction are first that the applicant has
a prima facie case with a
probability of success. This condition has been relaxed to
considering only whether the applicant raises
prima facie triable
issues in the main suit.
Secondly, that the applicant would
suffer irreparable injury which an award of damages could not
adequately atone, if the injunction
was refused and later on he
turned out to be successful in the main suit. Thirdly, if the court
is in doubt in respect to the above
two, that the balance of
convenience is in the applicant’s favour. See J. K.
Sentongo & Another Vs Shell (U) Ltd (1995) II KALR I, Robert
Kavuma Vs Hotel International Ltd, SCCA No. 8 of 1990, ELT Kiyimba
Kagwa Vs Haji Abdu Nasser Katende (1985) HCB 43
The
prime purpose of a temporary injunction is to preserve the status quo
until the questions to be investigated in the main suit
are finally
disposed of. See Noormohamed Janumohamed Vs Kassamali Virgi
Madhan (1953) 20 EACA 8, Kayimba Kagwa Vs
Katende (supra) Therefore while considering an
application of this nature it is necessary to identify the status quo
that is required to be preserved.
Counsel for both parties addressed
me at length on this issue.
The main suit and this application
were filed on 26th October 2006. Under Misc. Application
No 0762 of 2006 an Interim Injunction was by order of this Court
issued on 27th October 2006 restraining the Respondent and
those claiming under it from further interference with the subject
matter until 27th November 2006 when this Application had
been fixed for hearing.
The respondent’s case is that on
the 25th October, 2006 it terminated the Dealership
agreement with the Applicant and took over management of the station
the same day. That
armed with the Interim Order issued on 27th
October, 2006 the Applicant unsuccessfully attempted to re-occupy the
station. Mr. Musisi, Counsel for the Respondent, submitted
that at
the time of filing this suit and the application the respondent was
the party in possession of the station. On the other
hand, the
Applicant’s case is that on the 25th October, 2006 she
resisted the Respondents demands for a handover of the station. The
following day, 26th October 2006, she filed the main suit
and this Application. On 27th October 2006 she obtained in
Interim Temporary Injunction which was served on the Respondent. That
on 28th October 2006, the Respondent forcefully and in
violation of the Interim Court Order evicted the Applicant and her
staff from the
station. Each party relied on several affidavits in
support of its version. It is on the basis of the evidence by those
affidavits
that this court can adjudicate on this issue of status
quo. In his submission Mr. Nuwagaba discredited the Respondent’s
affidavits
in reply and invited court to disregard them. He attacked
the affidavits deponed to by Sowedi Kyeyune, Brian Ssali and Martin
Mugisha
as affidavits sworn by people in the employment or service of
the Respondent and as such not independent. However, the same
argument
would apply in respect of the Applicant’s affidavits in
rejoinder sworn by Asiimwe Leo who was the Applicants employee and
Laban
Akampurira who was in the Applicants service as an employee of
the firm of lawyers representing the Applicant. Therefore equal
weight
would be put on both parties’ affidavits falling within this
category.
In their respective affidavit’s Geoffrey
Rugozoora, the respondents Executive Officer, and Steven Masaba, the
Respondents Sales/
Marketing Manager, state that the Applicant’s
Dealership agreement was terminated on 25th October 2006
and the Respondent took over the operations at the station the same
day. The letter of termination dated 25th October, 2006
stated:-
" We therefore give formal notice that your dealership agreement is terminated with immediate effect under clause 16 (a) (ii) of the agreement. Please handover the station to our client upon receipt of this letter. .. "
The letter directed the Applicant to handover to
the Respondent’s client. However, contrary to the instructions, the
Respondent’s
evidence, as can be traced from all its affidavits, is
that the Respondent on 25th October 2006 directly took
over the operation and management of the station. The respondent
shows that from 25th October 2006 it continued to manage
the station until 28th October 2006 when it is claimed
that the Applicant armed with the interim order unsuccessfully
attempted to reoccupy the station.
The Respondents occupation
of the station from 25th to 28th October 2006
is disputed by the Applicant. The Applicant , in her affidavit in
support and that dated 9th November 2006 states that she
resisted the Respondents attempts to take over the station. This is
corroborated by Asiimwe Leo, the
Applicant’s Supervisor at the
station, who in his affidavit states that the Respondent on 25th
October, 2006 attempted to take over the station but that he notified
the police which resisted the move. In paragraph 12 of his
affidavit
Stephen Masaba avers that the Respondent’s officials took over the
stations in the afternoon/evening of 25th October 2006 in
the presence of one Kakaire, Officer in charge Kiwature Police Post
and the L.C. I Chairman. This is denied by the
O.C. Kiwature Police
Post, David Kakaire, and by Stanley Semakula, the L. C. I. Chairman
of the area, in their respective affidavits.
I find the O.Cs and
Chairman’s averment in this regard more dependable since they are
independent parties. I therefore find that
on the balance of
probabilities the applicant has proved that despite the termination
letter dated 25th October 2006, she on that day continued
in occupation of the station. I accordingly find that the status quo
as at the time of filing
the main suit and this application on 26th
October 2006 the Applicant was still in occupation of the station.
Each party has adduced evidence to show that the opposite
party on 28th October 2006 forcefully attempted to evict
the other party from the station. The scuffle that which took place
on 28th October 2006 is also talked about by Stanley
Semakula, the LCI Chairman in his affidavit. Both the applicants and
the Respondent’s
evidence comes to one thing that on 28th
October 2006 the Respondent’s group overpowered the Applicant’s
group and the Respondent took over the station. The applicant
in her
affidavit dated 9th November 2006 contends that the
Respondents occupation of the station was in violation of the Interim
Court Order and avers that
the Respondent has now put another dealer,
an Asian, who is currently running the station. That is the status
quo currently.
The issue is whether Court should make an order
to reverse the state of occupation to the status quo which I have
held existed on
25th October 2006 whereby the Applicant
was in management or maintaining the status quo as it has been from
28th October 2006 whereby the respondent or any person
under it, is in management. In the event of disobedience of an
injunction Order
41 rule 2 (3) of the Civil Procedure Rules provides
a remedy and the Applicant has actually so applied for that remedy
vide Misc.
Application No 772 of 2006 which is still pending before
the Registrar awaiting the disposal of this application. Further by
the
time this application came before me a temporary injunction was
no longer a remedy available to the applicant since the status quo
had already been disturbed through the applicant being forced out of
the station and the operation thereof handed over to a third
party.
See Tonny Waswa Vs Joseph Kakooza 498 HCB 85
With
regard to the first condition of a prima facie case what I should
consider is whether the applicant raises prima facie triable
issues
in the main suit. The Applicants claim in the main suit is founded on
a Dealership agreement between the applicant and the
Respondent
whereby the Respondent granted the Applicant the licence to operate
and run the station, the subject matter of this application
and suit,
effective from 8th April 2003 until terminated as provided
in the agreement. The applicant’s claim is that the respondent has
interfered with the
applicant’s business at the station and
purported to terminate the dealership agreement which she contends is
illegal and amounts
to breach of the contract for which she prays for
an injunction and damages. It is also the applicant’s contention
that she and
her husband are the owners of the land on which they put
the station which was leased to the Respondent on the precondition
that
the Applicant become the dealer and thus the subsequent
execution of the dealership agreement. But in its written statement
of defence
the Respondent contends that the lease and dealership
agreements were executed on different terms and not as a precondition
that
the Applicant would always be the dealer. Further the
Respondent’s defence is that the dealership agreement was lawfully
terminated
under Clause 6 (a) on the basis of continued dumping. The
pleadings raise matters of breach of the dealership agreement which
warrant
court’s investigation. I therefore find that the
applicant’s case raises serious issues to be tried in the main
suit.
The next issue is whether the applicant would suffer
irreparable injury which an award of damages cannot adequately atone
if the injunction
was not granted and later on the applicant turned
out to be successful in the main suit. In his submission Mr. Nuwagaba
for the applicant
argued that the Applicant and her husband are the
owners of the land where the Petrol Station was built. The petrol
station was built
by the applicant and her husband. Before the Lease
Agreement of the land and developments thereon was executed between
the Applicant
and her husband, on the one part, and the Respondent,
it was an understanding as evidenced by the Lease Offer letter,
Annexture A
to the Plaint that the Applicant was to be the dealer at
the station. The letter dated 10th April 2003 written by
the Respondent to "Mr. and Mrs Patrick Isingoma" referenced
"Lease and Dealership Officer"
in part states:-
"Reference is made to our...meeting in respect to leasing and franchising your Petrol Service Station and property located on Ntinda –Kiwatule Road, Plot 713 Block 220 Kiwatule, Kampala---
-----
This is also to confirm our agreement that you will be the operators of the service stations. ---- "
Counsel contends that any attack on the
Dealership Agreement goes to the root of the Lease Agreement. That
the applicant’s interest
supercedes that of a dealer, as she has
the interest of a dealer lessor and owner of the developments
thereon. He therefore submitted
that she could not be adequately
compensated by monetary damages in the event she turned out to be the
successful party in the main
suit.
Breach of either the Lease
Agreement or the Dealership Agreement would not have any affect to
the Applicants proprietorship in the
land. The applicant seeks, inter
alia, to recover special and general damages. The general principal
behind an award of general damages
is to try and place an injured
party in as good a position in money terms as she would have been had
the wrong complained of not
occurred. Breach of a contract entitles
the injured party to damages as would be fair and reasonable. Without
making any findings
as to the relationship between the Lease
Agreement and the Dealership Agreement, breach of either, if proved,
would entitle the Applicant
to damages. An award of such damages can
adequately atone the injury that she would have suffered as a result
of any such breach
of contract.
As to the balance of
convenience the applicant and her husband are the proprietors of the
land on which the filling station is built
and situate. The Applicant
and her husband executed a lease agreement over the station in favour
of the Respondent. It is the applicant’s
contention that it was a
precondition of the lease agreement that the Applicant was to be
dealer at the station. Even if it was so
provided in the Lease
Agreement Clause 16 of the Dealership Agreement provides for
termination of the agreement in the event of any
of the acts provided
therein. Among such events is the Dealer buying and/or selling
petroleum products of another person, firm or
company. Therefore the
dealership agreement envisaged a termination thereof in the
subsistence of the lease agreement. Such termination
would not affect
the Applicants rights as lesser in the Lease Agreement. As already
held in the event of the Respondent being adjudicated
in breach of
any of the two agreements, the Applicants will be entitled to
damages. The Respondent is a dealer in petroleum products
in Uganda
therefore in competition with other petroleum dealers. The provisions
against dumping in the Dealership Agreement were
intended to safe
guard against such unfair competition. If the temporary injunction
were to be granted and the Respondent turns out
to be the successful
party in the main suit the respondent stands to suffer more than the
Applicant who is merely an operator of
the station.
In
conclusion I find that the Applicant has already been forced out of
the station and operation thereof granted to a third party.
The
status quo has already been disturbed. The applicant’s injury
resulting from any forceful eviction or breach of the agreement
is
likely to be adequatelycompensated by damages and the balance of
convenience is in favour of the respondent.
In the premises this
application fails, and is dismissed with costs.
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