Monday Eliab v Attorney General [2011] UGSC 12 (14 November 2011)

Key Facts

Transaction Type

Issues

• The respondent appealed that the trial judge erred in holding the plaintiff was not notified of the accident. The Court of Appeal found the appellant was notified through DW2 who telephoned him. However, the Supreme Court noted the appellant knew of the accident through his cousin on 3rd April 1998, so notification timing was not determinative of the contract termination.
• The issue concerned whether State House remained in constructive custody of the vehicle after it was involved in an accident and taken to Masaka Police Station for safe custody. The Court found that State House ceased to exercise control when Paul Kaggwa claimed and took the vehicle from the police station on 29th January 2000.
• The Court examined whether the vehicle was destroyed or merely damaged as a result of the accident. The appellant argued there was no evidence of destruction, only damage. The Court found that damage to a chattel cannot be equated with its destruction, and the respondent failed to discharge the burden of proving the vehicle was destroyed.
• The appellant argued that the Court of Appeal erred in holding that the contract of hire between the appellant and State House was discharged by frustration. The main issue was whether frustration was properly pleaded and whether there was sufficient evidence to prove that the contract was terminated by the destruction of the subject matter (the motor vehicle) without fault of either party.
• The Court addressed the evidential burden regarding proof of frustration. Section 101(1) of the Evidence Act was cited, establishing that whoever desires judgment dependent on facts they assert must prove those facts exist. The respondent failed to lead sufficient evidence to prove the contract was discharged by frustration.

Holdings

Remedies

• The Supreme Court awarded the appellant lost income of shillings 200,000/= per day from 1st April 1998 to 29th January 2000, representing the period during which State House failed to terminate the contract and return the vehicle. The total amount awarded was to be discounted by 40%.
• The appellant was granted costs of this appeal and costs in the two courts below as part of the court's final orders.
• The court ordered interest on the awarded lost income amount to be paid at the rate of 80% from the date of filing the suit until full payment is made.

Monetary Damages

Legal Principles

• The doctrine of frustration discharges a contract when the subject matter is destroyed without the fault of either party, making further performance impossible. The court held that frustration must be properly pleaded and proven by the party relying on it. Mere damage to a chattel does not equate to destruction sufficient to frustrate a contract. The court found no evidence that the vehicle was destroyed, only damaged, and thus the contract was not frustrated.
• Under Section 101(1) of the Evidence Act, the party asserting a legal right or liability dependent on facts must prove those facts exist. In contract frustration cases, the party relying on frustration to justify contract termination bears the burden of proving both that the contract was discharged by frustration and that it occurred without their fault. The respondent failed to discharge this burden as they produced no evidence showing the vehicle was destroyed.

Precedent Name

• Charles Douglas Cullen v. Persram & Hansraj
• Taylor and Another v. Caldwell and Another
• Taylor v. Caldwell
• Interfreight Forwarders (U) Ltd v. EADB
• Howard & Co. (Africa), Ltd v. Burton

Cited Statute

• Judicature (Court of Appeal) Rules
• Evidence Act

Judge Name

• Justice Kisaaakye
• Justice Katureebe
• Justice Tumwesigye
• Justice Odoki
• Justice Tsekooko

Passage Text

• I find that the respondent's argument that frustration was included in ground 3 of the appeal to this court to be extremely farfetched and devoid of merit. Therefore, with respect, it was wrong for the learned Justices of Appeal to base their decision to allow the respondent's appeal on the ground that the contract of hire was frustrated and thereby terminated when the respondent did not plead frustration as a defence in his Written Statement of Defence or even make frustration of the contract of hire a ground of appeal.
• Before this date State House had constructive custody of the vehicle even after the accident happened in accordance with its obligation as a bailee. If State House wanted to end this obligation it should have issued a notice of termination of the contract to the appellant. Therefore, the respondent is liable for the loss of income incurred by the appellant as a result of State House's failure to terminate the contract and to return the vehicle to the appellant from 1st April 1998 to 29th January 2000 when the vehicle was taken by DW3 from Masaka Police Station.
• I would, therefore, on the whole allow the appeal and set aside the judgment of the Court of Appeal and modify the orders of the learned trial judge as follows: (a) The appellant to be awarded shillings 200,000/= per day from 1st April 1998 to 29th January 2000 as his lost income. The total amount to be discounted by 40%. (b) Interest on the above amount to be paid at the rate of 80% from the date of filing the suit till payment in full.

Damages / Relief Type

• Interest awarded at 80% from the date of filing the suit till payment in full; Appellant awarded costs of this appeal and costs in the two courts below.
• Appellant awarded shillings 200,000/= per day from 1st April 1998 to 29th January 2000 as lost income, discounted by 40% (total 82,560,000/=)