Katushabe v Duhimbaze (Civil Suit 722 of 2020) [2024] UGCommC 217 (28 June 2024)

Key Facts

Transaction Type

Issues

• Whether the Defendant breached the contract for supply of peas by delivering goods that did not comply with the implied conditions under Section 14 and 15 of the Sale of Goods and Supply of Services Act, specifically failing to supply 'good quality dry peas fit for human consumption' as agreed.
• Whether the Defendant acted fraudulently in performing the contract by intentionally supplying rotten peas, concealing their poor quality, and evading responsibility despite the Plaintiff's complaints, as defined under the legal standard of 'intentional perversion of truth' from Fredrick J.K. Zaabwe V Orient Bank Ltd & 5 Ors.
• What reliefs are available to the parties following the findings of breach and fraud, including declarations, recovery of special and general damages, interest on awarded sums, and costs of the suit, as outlined in the Court's judgment and counterclaim dismissal.

Holdings

• The Court determined that the Defendant acted fraudulently by supplying rotten peas with constructive knowledge of their poor quality, evidenced by his failure to investigate or rectify the issue despite the Plaintiff's complaints. The Defendant's counterclaim of fraud against the Plaintiff was dismissed as unsubstantiated, as the Plaintiff's refusal to pay the balance was justified by the defective goods.
• The Court found that the Defendant breached the contract by delivering peas that were not good quality dry peas fit for human consumption, as confirmed by the Plaintiff's testimony and the KCCA Officer's report. The Defendant's argument that another customer (Baker Sabiiti) received satisfactory peas was not substantiated by evidence, and his failure to address the Plaintiff's complaints further supported the breach finding.

Remedies

• The Court declared that the Defendant acted fraudulently in performing the contract for the supply of peas.
• The Defendant was ordered to pay special damages of UGX 38,475,500 plus interest at 18% per annum from 3rd July 2020 until full payment.
• The Court declared that the Defendant breached the contract for the supply of peas as per the judgment.
• The Defendant's counterclaim was dismissed, and costs of the suit and counterclaim were awarded to the Plaintiff.
• The Defendant was ordered to pay general damages of UGX 20,000,000 plus interest at 13% per annum from the date of judgment until full payment.

Contract Value

Monetary Damages

Legal Principles

• The Court emphasized that fraud must be proved strictly to a higher standard than the balance of probabilities, as established in Kampala Bottlers Ltd v Damanico (U) Ltd. This was critical in evaluating the defendant's fraudulent conduct.
• The Court applied Section 101(1) and 103 of the Evidence Act, requiring the plaintiff to prove the existence of facts for legal rights or liabilities. This principle guided the evaluation of evidence in determining the breach of contract and fraud allegations.
• The Court found the defendant breached the contract by failing to deliver peas that complied with the implied conditions under Sections 14 and 15 of the Sale of Goods and Supply of Services Act (goods must match their description and be fit for purpose). This breach justified the plaintiff's right to reject the goods.
• The Court analyzed constructive and actual notice of fraud, concluding the defendant had constructive notice of the peas' poor quality based on the evidence and his evasive actions. Fraud was defined as an intentional perversion of truth under Fredrick J.K. Zaabwe V Orient Bank Ltd.
• The Court applied the principle that a buyer retains the right to reject goods if sampling at delivery fails to reveal latent defects (Section 43 of the Sale of Goods Act). This was pivotal in upholding the plaintiff's rejection of the peas despite initial sampling.

Precedent Name

• Eric Alema v Maybach Motors Ltd & 2 Ors
• Opia Moses V Chukia Lumago Roselyn & 5 Ors
• Fredrick J.K. Zaabwe V Orient Bank Ltd & 5 Ors
• Kampala Bottlers Ltd v Damanico (U) Ltd
• Stanbic Bank Uganda Ltd V Hajji Yahaya Sekalega t/s Sekalega Enterprises
• Kwizera Eddie v Attorney General
• Miller v Minister of Pensions

Key Disputed Contract Clauses

• The Court analyzed the implied condition under Section 15 of the Sale of Goods and Supply of Services Act (2017) that goods must be reasonably fit for their purpose. The Defendant, as a merchant in peas, was obligated to supply peas fit for human consumption. The evidence showed the delivered peas were unfit, leading to a finding of breach against the Defendant for failing this contractual obligation.
• The implied condition under Section 14 of the Sale of Goods and Supply of Services Act (2017) that goods sold by description must comply with that description was central to the dispute. The Plaintiff alleged the Defendant failed to deliver 'good quality dry peas' as agreed, while the Defendant claimed the peas met the description. The Court found the Defendant breached this clause by supplying peas that were predominantly rotten and unfit for consumption.

Cited Statute

• Evidence Act Cap 6
• Sale of Goods and Supply of Services Act, 2017
• Civil Procedure Act

Judge Name

Passage Text

• The Court finds that the Defendant breached the contract for supply of peas when he failed to deliver good quality dry peas fit for human consumption to the Plaintiff.
• In my view, the probing did not provide the Plaintiff with a reasonable opportunity of examining all the sacks of peas at the time of delivery.
• I, therefore, find that it is the Defendant, and not the Plaintiff, who was fraudulent in performing the contract.

Damages / Relief Type

• General damages of UGX 20,000,000 with 13% annual interest from judgment date (2024-06-28).
• Special damages of UGX 38,475,500 with 18% annual interest from 3 July 2020.
• Declaration of fraudulent performance of the contract.
• Declaration that the Defendant breached the contract for supply of peas.
• Costs of the suit and counterclaim awarded to the Plaintiff.