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REPUBLIC OF UGANDA
IN THE SUPREME COURT OF UGANDA AT MENGO
(CORAM: ODOKI, CJ, ODER, TSEKOOKO, MULENGA AND KANYEIHAMBA, JJ.SC.)
CIVIL APPEAL NO. 5 OF
2001
BETWEEN
SUGAR CORPORATION OF UGANDA Ltd. ::::::::::::::::::::::::
APPELLANT
AND
LAWSAM CHEMICAL (U) Ltd.
:::::::::::::::::::::::::::::::::::::::::: Respondent
[Appeal from the Judgment of the Court of Appeal at Kampala (Kato,
Mpagi-Bahigeine and Kitumba, JJ.A) dated 15th March, 2002 in Civil
Appeal No. 28 of 2001]
JUDGMENT OF TSEKOOKO. JSC:
This is a second appeal. The appeal is from the decision of the Court of
Appeal which upheld the High Court decision by Byamugisha,
J. dismissing the
appellant's suit. In the High Court, the learned trial judge also ordered the
appellant to pay to the Respondent
shs. 15,000,000/= on a counterclaim.
The facts in this appeal are simple. At the time material to this appeal, the
appellant, based in Lugazi Town, carried on the business
of sugar production and
distribution in Uganda. The production process involved the use of boilers at
some stage along the production
line. A time comes in the course of production
when the boilers have to be cleaned. The cleaning process is called descaling
and
when the cleaning is done by use of chemicals it is referred to as chemical
cleaning of the boilers. Alternatively the cleaning could
be done mechanically.
The respondent is a company dealing in the sale and distribution of a descaling
chemical code named LSR Super
Acid. Prior to the dispute giving rise to these
proceedings, the respondent supplied the appellant with the said descaling
chemical
and apparently, Diversey Lever (EA.) Ltd., the Manufacturers of the
chemical based in Nairobi, provided an expert to supervise the
descaling
exercise. That exercise was carried out successfully.
The undisputed facts as agreed upon by the parties during the scheduling conference and found by the courts below are that on 30/4/1999, the respondent offered to sell to the appellant the said descaling chemical on specified terms. This was subsequently followed by oral discussions between the two parties. On 29/6/1999, following the oral discussions, the appellant wrote exh.P.2 offering the respondent the job of descaling two of its boilers using 6000 litres of the acid at a total cost of US$22,335 (equivalent to Uganda shs.30,000,000/=). Of this amount, 50%, i.e., shs. 15,000,000/= was payable up-front on delivery of the chemical and 50% was payable within 45 days after the descaling. The respondent agreed to provide free of charge supervision of the descaling exercise by its expert while the appellant was to provide labour for the same exercise. The respondent supplied the chemical and the appellant made the advance payment of shs.l5m/=. Descaling was to take place on 4th - 5th September, 1999, during the period of the shut down of the sugar works factory at Lugazi when other repair work would be done in the factory. On 5th September, 1999, an expert from Nairobi visited Lugazi for the purpose of supervising the descaling but because the appellant was not ready, the expert did not supervise the descaling. So he returned to Nairobi.
The breakdown in the factory was corrected. The appellant felt that further
delay thereafter would cause loss and, therefore, on 7/9/1999,
the appellant
decided to carry out the descaling exercise in the absence of the expert. The
descaling was first done on one of the
appellant's two boilers by use of half of
the acid supplied by the respondent. The descaling was carried out on that
boiler from
7th up to 10th September, 1999 by John Isodo
(PW2) the Manager, Technical Control, of the appellant. According to John Isodo,
the descaling did
not occur and this is explained in his chart which was
admitted in evidence as exh.P.V. Consequently, the appellant stopped further
descaling using the acid, complained to the respondent by fax message (exh.P.4)
and decided to clean that particular boiler as well
as the second boiler by
mechanical means. The appellant asked the respondent to collect and take back
the remaining half of the chemical,
and demanded for the refund of shs. 15m/=
paid up-front on grounds that the acid for which the appellant had paid was not
suitable
for the job. For its part, the respondent refused to collect the
balance of the acid and instead demanded for payment of the balance
of the sale
price, namely, shs.l5m/=. As a result of that disagreement, the appellant
instituted a suit in the High Court against
the respondent for the refund of
shs. 15m/=, general damages for breach of contract and costs. In its amended
written statement of
defence, the respondent denied the appellant's claim and
counter-claimed for the balance of shs. 15m/=.
Three issues were framed for determination by the trial judge. The first
issue was whether the Chemical (code named LSR Super Acid)
was fit for boiler
tube descaling. The second issue was whether the appellant was entitled to
reject the chemical and claim damages
for the days lost due to the supply of
ineffective chemical. The third issue was on remedies available to the parties.
The appellant
called three witnesses, all of them being its employees including
Mr. John Isodo. The respondent called one witness, Lydia Oile (DW1),
its
Managing Director.
At the conclusion of the trial the learned trial judge dismissed the suit and
gave judgment in favour of the respondent on the counter-claim.
The appellant
appealed to the Court of Appeal which dismissed the appeal and upheld the
decision of the trial judge. The appellant
has now brought this appeal and has
listed six grounds of appeal.
Counsel for the appellant, in a written submission, argued grounds 1 and 2
together, followed by grounds 3 and 4 also together and
then argued grounds 5
and 6 separately. I notice that these grounds, and indeed the arguments thereon,
were lifted wholesale, from
the memorandum of appeal, and arguments in support
thereof, filed in the Court of Appeal. Mr. Byaruhanga, assisted by Mr. Okuwa,
Counsel for the Respondent, made oral submissions.
I shall consider these grounds in the manner they were argued beginning with
grounds 1 and 2. The complaint in ground one is that
the learned Justices of
Appeal erred in law and fact in failing to properly evaluate the evidence on
record and holding that the
chemical code named LSR Super Acid was fit for its
purpose. In ground two the complaint is that the Justices erred in law and fact
by holding that the evidence of Senthil Vilan (PW1) showed that the chemical,
which was ordered, is the chemical, which was delivered.
In his written submissions, Mr. Lumweno for the appellant, contrasted the appellant's evidence given by its three witnesses: namely, Senthil Vilan (PW1), General Manager, Mr. John Isodo (PW2) the Senior Manager, Technical Control, and Patrick Dhikosoka, (PW3), General Manager, Administration, on the one hand, with the evidence given by Mrs. Lydia
Oile (DW1), the Managing Director of the respondent. Learned counsel's
contentions in a nutshell are as follows: First he contended
that although the
parties discussed and agreed that the chemical to be supplied was LSR Super
Acid, and although the respondent suggested
the concentration of the chemical,
the chemical supplied was ineffective about which the respondent was informed
immediately. Secondly
he contended that although Isodo as an expert, tested the
acidic content of the chemical and found it to be 33.18% and formed the
opinion
that the acidic content was alright, that did not mean that he tested the whole
chemical composition of the chemical and
found it to be fit for its purpose.
Counsel argued that Isodo did not test the chemical as regards its chemical
properties or its
composition. Thirdly Mr. Lumweno contended that Mrs. Oile lied
when she said that an expert witness from Nairobi stayed for five
days and not
for one day as stated by Vilan and Isodo. Learned counsel maintained that the
respondent should have called an expert
witness from the manufacturers of the
acid to give evidence that the expert came to Lugazi where he spent 5 days and
that the appellant
was not ready for descaling. Learned counsel asked us to hold
that because the respondent failed to call evidence to prove that the
chemical
delivered was fit for its purpose, the chemical supplied by the respondent was
not fit for the purpose of descaling.
For the respondent, Mr. Byaruhanga, submitted that the evidence of Velan clearly shows that the chemical, which the respondent supplied, is the same chemical, which was discussed and agreed upon between the parties, and which was ordered for by the appellant. Mr. Byaruhanga referred to the evidence of Isodo where this witness explained his expertise and counsel contended that the evidence shows that Isodo tested the chemical and found it suitable. Counsel submitted that the Court of Appeal was correct in upholding the decision of the trial judge.
In the trial court, Byamugisha, J, as she then was, quoted S.16 (a) of the Sale of Goods Act. She considered the facts of the case, the submissions of counsel for both sides and stated:
"The facts as out-lined above and the evidence given show that the chemical offered for sale by (defendant) and accepted by the plaintiff was known to both parties and the purpose for which it was required. The evidence on both sides clearly show that the plaintiff ordered a similar chemical from the manufacturer, which was delivered to the plaintiff by the defendant as its agent. The witness of the Defendant (DWl) stated that the company does not repackage the chemical and it has supplied a similar chemical to other customers who have used it successfully. There was also the evidence of PWl who negotiated the deal, which was to the effect that the chemical, which was ordered, was the Chemical, which was delivered. PW2 also testified that he carried out a test and found the acidic content to be okay. He therefore gave a go ahead for the descaling exercise to take place minus the expert. The evidence before Court does not show that there were some matters, which were left to the sellers to decide. Both parties had dealt with each before and the chemical supplied was tested and found to be fit and that is why one boiler was descaled albeit with unsatisfactory results. There is nothing to show that the defendant induced the plaintiff to purchase the chemical. Both parties in my view knew the chemical and purpose for which it was required".
On the basis of the above findings, the learned trial judge dismissed the
suit and upheld the counterclaim of the respondent. With
reference to the above
findings, Mr.Lumweno has not pointed out to us where the trial judge erred. It
might be that Mrs Oile was
wrong or mistaken when she testified that the expert
from Nairobi stayed for five days before he left. But I cannot attach any
significance
on this since it does not affect the appellant's case one way or
the other. All we know is that the expert left because the appellant
was not
ready as there was a break down in the factory. Velan and Isodo admitted that
the expert arrived on the appointed date. Unfortunately
the factory had suffered
a breakdown for which neither the expert nor his employers were responsible.
There is no evidence that anybody
on behalf of the appellant was certain when
the break down would be corrected. So probably the expert was justified in going
away.
Mr. Lumweno argued that the respondent should have called an expert to come
and testify to Court that the chemical which was delivered
and partly used was
the same chemical which was ordered for and supplied. I see no merit in this
argument and I reject it.
In my opinion, in a case of this kind where parties to the dispute are not
agreed on the suitability of the chemical the suitability
of that chemical could
not be determined by the opinion of Isodo alone. One of the reasons for saying
so is that although Isodo claimed
to be an expert in sugar technology, he
admitted that he has never carried out, on his own, descaling using the acid in
question
without supervision of another expert. Moreover Mr. Isodo did not
assert that the chemical was unsuitable. According to exh. P.4
Isodo complained
about ineffectiveness of chemical cleaning. It therefore appears to me that
despite his long experience in sugar
industry, Mr. Isodo's expertise in
descaling without supervision had not been tested and found reliable. Secondly,
Mr. Isodo was
an employee of the appellant. He carried out the descaling for his
employers and as an act of desperation. It is my considered opinion
that the
evidence of Isodo, as an expert, was not good enough. I think that the
appellant, rather than the respondent as argued by
Mr. Lumweno, should have
involved an outside chemist and expert in descaling, to carry out tests on the
acid, make an appropriate
report and if necessary give evidence in court. In
that way, if this other expert confirmed the opinion of Isodo, then the latter's
evidence could be reliable. In the circumstances of this particular case, in the
absence of evidence of an external expert witness
(external to appellant's
employees), Isodo's evidence was insufficient as it could not carry credible
weight.
There is one other observation I should make. During cross-examination, Mr. Isodo testified -
"We did the descaling without a supervision (sic) from the defendant. He
was not available. The management felt that delaying the
factory for one day it
will lose 2,000 per 50 kg of sugar".
Pressure for the appellant to take the risk is indicated in exh.P.6 which is a letter dated 8th September, 1999 written to the respondent by Mr. Dhikusoka. In it, he stated:
"Since we have to keep the repair work of the factory on schedule, we are highly constrained to risk and carry out the work on our own."
Clearly the appellant was disparate. It feared incurring more losses on top of that caused by the breakdown of the factory. Therefore, the appellant took a deliberate risk when it decided to descale the boilers in the absence of the expert. In moments of crisis, decisions must be made by management of any organization. Here a decision-involving a risk, the
descaling without an expert supervisor, was made. I think that the risk was
taken at the peril of the appellant. Be it remembered
that the provision of the
expert was gratuitous. In the circumstances, as there is no satisfactory
evidence to prove that the LSR
Acid supplied and used by the appellant in its
attempt to descale the boilers was not the acid agreed upon, the respondent
cannot
be held liable. On the evidence available and on the balance of
probabilities, my view is that the chemical used must be taken to
have been fit
for the purpose for which it was ordered.
In the Court of Appeal, as I said earlier, the same ground 1 and 2 were
argued by counsel for both sides in the same way the two grounds
have been
argued before us. Mr. Lumweno's written submissions in the Court of Appeal are
virtually identical to those presented before
us.
In her lead judgment with which the other two members of the panel concurred, Mpagi-Bahigeine, J.A, considered grounds 1 and 2, which as stated earlier are identical to grounds 1 and 2 in this appeal. The learned Justice of Appeal reproduced from the trial court judgement the passage, which I reproduced earlier in this judgment, and also she referred to section 16(a) of the Sale of Goods Act. She considered the documentary evidence (Exh.Pl), (P2), (P3) and the oral evidence especially that of John Isodo, before concluding that the appellant opted to purchase the chemical because they knew it having used it thrice before. The learned Justice observed that the mere fact that the appellant proceeded to apply it without the expert's supervision indicated that they did not have to rely on the respondent's skill and judgment because they were familiar with the trademark LSR. The learned Justice concluded that the evidence showed that the chemical LSR was the one that was ordered for and was supplied. So she confirmed the findings of the trial judge that the appellants were bound.
Having reviewed all the evidence on the issues raised by the appellant
concerning grounds 1 and 2, I am not persuaded by the arguments
of Mr. Lumeweno
that the two Courts below erred in the conclusions they reached.
In the result grounds 1 and 2 must fail. These two grounds are the substratum of this appeal and conclusion on these grounds therefore in effect disposes of this appeal. The rest of the grounds are in reality different aspects of the issues raised by these two grounds. I shall discuss ground 3 briefly. The complaint in ground 3(a) is that the learned Justices of Appeal erred in law and fact by failing to hold that the burden of proving that the chemical code named SLR Super Acid was fit for the purpose was upon the respond and that the respondent had failed to discharge it. And in paragraph 3(b) the alternative complaint is that the Justices erred in law and fact by holding that the appellant had not discharged its burden of proving the Chemical Code named LRS was not for its purpose. I think that what appears as two complaints in this ground are different sides of the same coin. And be it noted that paragraph (a) was a substantive ground 3 in the memorandum of appeal in the Court below and the appellants' written submissions there, are word for word the same as those repeated before us. Mr. Lumweno relied on S.105 of the Evidence Act to support his contentions. That section states -
"In any civil proceedings when any fact is especially within the knowledge of any person the burden of proving the fact is upon him."
Mr. Lumweno relied on this provision for the view that as it is the
respondent who knew the secret contents of LSR Super Acid, and,
therefore, it
bore the burden, which it failed to discharge, of proving that the chemical was
fit for the descaling. And that the
respondent should have adduced evidence from
Diversey, the manufacturer of the chemical to disapprove the appellant's
testimony which
was given by PW1, PW2 and PW3 that the chemical was unfit for
the purpose for which it was ordered.
Again in a round about way, Mr. Lumweno advanced substantially similar arguments under the alternative paragraph (b) of ground 3. Mr. Byaruhanga in response combined grounds 3 and 4 together. He referred to sections 102 and 105 of the Evidence Act and contended that the burden of proof was on the appellant. He argued that the provision of an expert by the respondent was not a material condition of the contract and with this I agree. Mr. Byaruhanga further argued that the appellant should have proved that the chemical was not fit. He further contended, and here I also agree, that when the appellant opted to deal directly with the manufacturers, the appellant took a risk. The documentary evidence (exh. PV) and the evidence of (PW2) and (DW1) shows that the appellant indicated the type of the chemical it wanted for descaling its boilers. According to DW1 the appellant gave the chemical specifications to technical people. The technical people gave the chemical according to the specification". During cross-examination, DW1 stated, regarding the coming of the expert, that:
"I talked to Mr.Velani on phone. I told him. that I had contacted the office where the expert was coming from and he too said that he was in touch with them."
It is clear that the appellant did not depend on the judgment and skill of the respondent. The appellant depended on its own judgment and skill. I would like to assume that the test carried out by John Isodo was to establish whether the chemical was in conformity with the specifications given to the respondent. John Isodo must have been satisfied with the
specifications before the appellant decided to do the descaling on its own
without supervision by an outside expert. Indeed, according
to Mr. Isodo, when
the descaling process was going on, the chemical exhibitted its characteristics.
What failed was proper descaling
for which the appellant failed to pin
responsibility on the respondent. In these circumstances, I cannot see how the
provisions of
Section 102 and 105 of the Evidence Act can be
construed so as to place responsibility on the respondent. In my opinion, the
respondent bore no burden to prove anything.
The learned trial judge and the
Justices of Appeal were correct in their conclusions. Accordingly both grounds 3
and 4 must fail.
As I said earlier my conclusions on grounds 1 and 2 dispose of this appeal.
This has been confirmed by further conclusions on grounds
3 and 4.
I would dismiss this appeal. I would uphold the decisions of the courts below. I would award the respondent its costs here and in the courts below.
JUDGMENT OF ODOKI, CJ.:
I have had the benefit of reading in draft the judgment of Tsekooko JSC, and
I agree with it and the orders he has proposed.
As the other members of the Court also agree with the judgement and orders proposed by Tsekooko JSC, this appeal is dismissed with costs here and in the courts below.
JUDGMENT OF ODER, JSC.
I have had the advantage of reading in draft the judgment prepared by
Tsekooko, JSC. I agree with him that the appeal should be dismissed.
I also agree with the orders proposed by him.
JUDGMENT OF KANYEIHAMBA J.S.C.
I have had the benefit of reading in draft the judgment of my brother
Tsekooko, JSC. I agree with him that the appeal should be dismissed.
I also agree with the order he has proposed.
Dated at Mengo this 20th Day of December 2002.
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