John Tiborugaba Kasangaki and Anor v Rajeev Jain and 3 Others (Civil Appeal No. 69 of 2013) [2021] UGCA 21 (7 April 2021)

Key Facts

Transaction Type

Issues

• Whether the learned trial Judge erred in law and fact when he made a finding of fraud and forgery which were not specifically pleaded and particularized by the respondents in their pleadings.
• Whether the trial Judge erred in law and fact when he extended the oral contract between the 1st appellant and the 4th respondent to include the 1st, 2nd and 3rd respondents who were strangers to the 1st appellant.
• Whether the learned trial Judge erred in law and fact when he held that the only recognized mode of payment was through the bank.
• Whether the trial Judge erred in law and fact when he made orders against the 2nd appellant based on an oral contract between the 1st appellant and 4th respondent to which it was never a party.
• Whether the learned trial Judge erred in law and fact when he found that the 4th respondent was a commission agent of the other respondents.
• Whether the learned trial Judge erred in law and fact when he failed to properly evaluate and appraise the evidence on record as a whole and thereby arrived at wrong conclusions and findings.
• Whether the learned trial Judge erred in law and fact when he held that the 1st appellant who contracted with the 4th respondent dealt with the 1st, 2nd and 3rd respondents as principals.
• Whether the learned trial Judge erred in law and fact when he ignored incontrovertible evidence that the 1st appellant paid moneys to 4th respondent as a mode of execution of the contract.
• Whether the learned trial Judge erred in law and fact when he held that there was an oral contract between the appellants and the 1st, 2nd and 3rd respondents.
• Whether the learned trial Judge erred in law and fact when he found that some figures were insertions and exonerated Vishal.
• What remedies are available?
• Whether the trial Judge erred in law and fact when having found that the 4th respondent was a commission agent of the rest, he proceeded to exclude him from them.

Holdings

• The court sustained the trial Judge's finding that the 4th respondent acted as a commission agent for R & R Bikes, not as an independent principal. Cash payments to the 4th respondent did not discharge the 1st appellant's obligations under the agreed bank payment terms.
• The court rejected the 1st appellant's argument that the trial Judge erred in making findings of fraud and forgery not explicitly pleaded. It held that the evidence of fraudulent documents justified the trial Judge's conclusions despite procedural concerns.
• The court upheld the trial Judge's reliance on expert handwriting analysis to invalidate the 1st appellant's cash payment claims. The 4th respondent's testimony about receiving altered figures was supported by the expert report, which was properly admitted into evidence.
• The court affirmed the trial Judge's correct evaluation of evidence, including the parties' agreed facts and the 4th respondent's role as an agent. It found no misdirection in the trial Judge's legal reasoning or factual conclusions.
• The court dismissed the 1st appellant's claim that the trial Judge erred in awarding damages and costs. It found no legal basis to overturn the monetary awards, as the respondents proved their case through documentary evidence and expert analysis.
• The court dismissed the appeal against the 1st, 2nd, and 3rd respondents, upholding the High Court's judgment in their favor. It found that the 1st appellant's claim of no contractual relationship with R & R Bikes was false, as evidenced by his dealings and documents. The 2nd appellant (Bullion Miners Ltd) was struck from the case due to lack of evidence linking it to the transactions.
• The court rejected the 1st appellant's argument that the learned trial Judge erred in finding an oral contract with the 1st, 2nd, and 3rd respondents. It affirmed that the 1st appellant's evidence and documents proved his dealings with R & R Bikes, not just the 4th respondent as a principal.

Remedies

• The Court dismissed the appellants' appeal against the High Court's decision, upholding the trial Judge's ruling in favor of the respondents.
• The respondents were awarded special damages of US Dollars 53,872 for the outstanding amount owed under the contract.
• The respondents were awarded general damages of Ugandan Shillings 15,000,000 for the breach of contract.
• Interest on both special and general damages was awarded at the court rate from the date of the trial Court's judgment until payment in full.
• The 1st appellant was ordered to pay 4/5 of the costs of the appeal to the 1st, 2nd, and 3rd respondents, in addition to the costs of the suit in the trial Court.

Contract Value

Monetary Damages

Legal Principles

• The court applied the doctrine of privity of contract, holding that a contract cannot confer rights or obligations on a person not party to it. This principle was central to the appellants' argument that the 1st, 2nd, and 3rd respondents could not claim rights under a contract they were not privy to. The court rejected this, finding that the 1st appellant's dealings with R & R Bikes (through the 4th respondent) established a contractual relationship with the partnership.
• The court rejected the 1st appellant's claim that the 4th respondent was a principal in his own right, instead finding the 4th respondent acted as a commission agent or middleman for R & R Bikes. This determination relied on the nature of the transactions and the 1st appellant's admissions in pleadings and evidence.
• The court applied the principle of a company's separate legal personality (Salomon v. Salomon) to dismiss the claim against the 2nd appellant (Bullion Miners Ltd). The court found no basis to lift the corporate veil, as the 2nd appellant was a distinct legal entity with no direct involvement in the transactions. This principle was not explicitly listed in the schema's facet enum.
• The admissibility of expert evidence (handwriting report) was evaluated under Section 43 of the Evidence Act. The court accepted the report as admissible, noting that its acceptance by both parties dispensed with the need to prove authenticity, even though the report's author did not testify. The court also addressed the admissibility of the 4th respondent's testimony about cash payments, finding it inconsistent with documentary evidence.
• The court considered the burden of proof under Section 101 of the Evidence Act, emphasizing that the respondents, as plaintiffs, had the responsibility to establish their case. The court found the respondents' evidence (including documentary proof and expert testimony) sufficient to discharge their burden, particularly regarding the 1st appellant's failure to honor the bills of exchange.

Precedent Name

• Tororo Cement Co. Ltd vs. Frokina International Ltd
• Interfreight Forwarders vs. East African Development Bank
• Active Automobile Spares Ltd vs. Crane Bank
• Saunders vs. Anglia Building Society
• Stanbic Bank (U) Ltd vs. Uganda Crocs Ltd
• Paul K. Ssemogerere and 2 Others vs. Attorney General
• Salomon vs. Salomon & Co. Ltd
• National Social Security Fund and Another vs. Alcon International Limited
• Fredrick J.K Zaabwe vs. Orient Bank Ltd
• Makula International vs. His Eminence Cardinal Nsubuga

Key Disputed Contract Clauses

• The court determined that the 4th respondent acted as a commission agent for R&R Bikes, not as an independent principal. This was critical to establishing the partnership's liability for the 1st appellant's unpaid debts.
• The court analyzed whether the agreed mode of payment (telegraphic transfer through the bank) could be altered by cash payments to the 4th respondent. It held that the bills of exchange explicitly required bank transfers, and cash payments to a non-party (the 4th respondent) did not satisfy the contractual obligations.
• The court upheld the trial judge's finding that an oral contract was formed between the 1st appellant and R&R Bikes, evidenced by the 1st appellant's admissions and documentary proof of transactions.
• The court struck out the 2nd appellant from the case, emphasizing that it was a separate legal entity with no direct involvement in the transactions. The principle of corporate personality (Salomon v. Salomon) was applied to reject any attempt to lift the veil.

Cited Statute

• Judicature (Court of Appeal Rules) Directions S.I 13-10
• Sale of Goods Act, Cap. 82
• Evidence Act, Cap. 6
• Bills of Exchange Act, Cap. 68
• Civil Procedure Rules (CPR)

Judge Name

• Elizabeth Musoke
• Geoffrey Kiriabwire
• Irene Mulyagonja

Passage Text

• I would therefore find that the said evidence was relevant and the learned trial Judge was right in relying on it as establishing that there were some fraudulent alterations/insertions on the relevant documents D1 and D2.
• In conclusion, it is my finding that payment for the relevant goods was supposed to be effected by honouring the relevant bills of exchange drawn on the 1st appellant in favour of R & R Bikes. As this was not done, the moneys paid to the 4th respondent could not be considered as having settled the 1st appellant's outstanding obligations.
• I would therefore find that the 1st, 2nd and 3rd respondents trading in the partnership of R & R Bikes dealt with the 1st appellant. It was R & R Bikes which supplied the 5 consignments of goods consisting of bicycles and bicycle parts which the 1st appellant acknowledged having received.

Damages / Relief Type

• US$53,872 in special damages for unpaid goods
• 4/5 of appeal costs awarded to respondents
• Interest at court rate on damages from trial judgment date until payment
• Ug. Shs. 15,000,000 in general damages for breach of contract