Commercial Law Index

A dispute arose between the appellant and the respondent regarding the amount payable for extra costs incurred during the delivery of goods by sea. The case was first heard by the high court, then the magistrates court where it was dismissed based on jurisdiction.

The court had to consider whether Ugandan courts had jurisdiction to hear the matter and whether the magistrate erred in law and fact when he dismissed the appellant’s counterclaim before hearing it.

It was held that Ugandan courts had jurisdiction to try the matter and that the magistrate erred in law and fact when he dismissed the appellant’s counterclaim without hearing it.

With reliance on the bill of lading, legislation and past cases, the court was of the view that the parties had voluntarily submitted themselves to the jurisdiction of Ugandan courts. In addition, the court stated that the Ugandan courts were readily available to adjudicate on the matter and it was convenient to bring the matter before Ugandan courts. Furthermore, the court issued that the magistrate ought to have considered the Constitution and civil procedure rules prior to dismissing the appellant’s counterclaim without hearing the merits.

The court ordered a new trial in the magistrate’s court. The appeal was allowed, and costs were awarded in favour of the appellant.

The plaintiff company brought a suit against the defendant school and its deputy headmaster for breach of contract stating that the defendants failed to pay for services rendered by the plaintiff. 

There were two issues before the court: whether there was a valid contract between the parties and whether the plaintiff carried out their services in accordance with local purchase orders 1941 and 1942.

The court held that there was a valid contract between the parties. It was also held that in rendering services, the plaintiff did not supply and install certain items in accordance with local purchase orders 1941 and 1942. 

Regarding the validity of the contract, the court found that the second defendant had apparent authority to sign the local purchase orders meaning the contract was valid and that there was no express provision in the legislation stating that non-compliance vitiates legality of contract. In addition, the court found that the first defendant accepted the goods when they were delivered to it and had to pay accordingly. 

The court’s judgement relied on a report by the Ugandan National Bureau of Standards which found that some of the items installed by the plaintiff were substandard. 

The court awarded the plaintiff Shs 216,000 for delivery of goods and Shs 84,000 for general damages. In addition, the court awarded the plaintiff interest on the above amounts until payment was made in full. 
 

This case considered the instance when the veil of incorporation can be lifted. The mind of a company where guilty intent or responsibility is being considered cannot be separated from the minds of the directors. The corporate veil ought to be lifted where there is proof of involvement of the directors in fraud. Once there has been an allegation of fraud against the company, the directors are ay virtue alleged to be involved. Accordingly, the veil of incorporation will be lifted where it is proved that the directors, acting as the mind and body of the company were involved in an act of dishonesty.

The plaintiff sued the defendant for breach of contract following its failure to pay in full – inclusive of VAT and penalties accruing from delayed payment – for construction services rendered. Two clear issues arose: whether the plaintiff was entitled to the sum claim and what remedies were available to the litigants. The contract provided for specific procedures in the event of disputes between its signatories. The plaintiff’s grievances with the project manager’s final certificate (which confirmed the amount owing by the defendant) ought to have been aired via these channels, so the defendant could be alerted thereto.

Because timeous and effective payment was based on certificates, the court found that the defendant could not be held liable for non-payment exceeding the certified amount. The court accordingly reduced the sum claim. Because the defendant had hampered the plaintiff’s commercial endeavours through its breach, it stood liable for general damages. The plaintiff provided no elucidation on the quantum thereof, and so its determination fell to the court’s discretion.

The plaintiff sought a permanent injunction against the defendant to prevent it from selling, offering for sale, or dealing in goods bearing the plaintiff’s registered trademark. 

The court considered whether the defendant infringed the plaintiff’s registered trademark and whether the defendant was a bona fide user of the trademark. The court also considered whether the defendant had locus standi (standing) to challenge the registration of the plaintiff’s trademark.

Held, the defendant did not have locus standi to challenge the plaintiff’s trademark registration. Held, although the defendant was a trader, it could not claim innocence by virtue of advertising the plaintiff’s trademarks. The court stated that points of law had to be argued and evidence adduced by the plaintiff in so far as infringement is concerned in order for final judgement to be granted. 

The court extensively examined existing trademark legislation and decided cases and concluded that the defendant did not have locus standi to challenge the plaintiff’s registration as the plaintiff enjoyed statutory protection due to registering its mark in Uganda first.    

Interim injunction granted in favour of the plaintiff until the trial. 
 

The appellant sought to overturn a taxation ruling of the Deputy Registrar, contending that the latter had erred in fact and law in coming to its decision. The order prohibited the appellant from charging its client certain fees for services rendered over and above the initial instruction costs. 

The Registrar had found that the appellant was estopped from claiming the fees due to the allegedly misleading way it had conducted itself in respect of the client regarding the anticipated bill of costs. The appellate court upheld the challenge, finding that the provisions of the Advocates Act expressly regulated the exclusion of bills of costs, thereby limiting – in terms of s 14 of the Judicature Act – the High Court’s discretion to apply principles of equitability when adjudicating disputes of this nature. 

Both legislation and case law affirmed the appellant’s right to taxation of its bill of costs against the respondent, as it had met the relevant statutory requirements.
 

The court considered an application under 0.37 rr.1 and 9 of the Civil Procedure rules (S.1,65-3) for a temporary injunction restraining the defendant from carrying out any work on the suit premises. 

The applicant was the registered proprietor of the premises, although the leases had expired on the land, the title had not been cancelled. 

The court found that granting a temporary injunction is an exercise of judicial discretion and the purpose of the granting is preserving matters in status quo until the question to be investigated can be finally disposed of. 

The conditions for a grant of injunction are that there must be a prima facie (meaning on the face of it) case with a probability of success, if irreparable harm will be suffered which cannot be compensated adequately by an award for damages and if in doubt, it will be declined on a balance of convenience. 

Irreparable injury does not mean there must not be physical possibility of repairing the injury, but that the injury is substantial or material. 

The court found that if a prima facie case with a probability of success was proved, the plaintiff would be likely to suffer irreparable damages and the balance of convenience was in favour of the plaintiff as he was likely to suffer more damages than that of the defendant. 

Application granted. 
 

The court considered the conditions to grant a temporary injunction. 

The application was brought by the applicants as a means to prevent the respondent from alienating and disposing of the land mortgaged by the applicants. 

The court found that the conditions for the grant of a temporary injunction are: 1) show a prima facie (meaning on the face of it) case with a probability of success, 2) irreparable harm will be suffered without the possibility of adequate compensation for damages, and 3) a balance of convenience. 

The court held that the grant of a temporary injunction is an exercise of the courts discretion as a means to maintaining the status quo until the question to be investigated is tried on the merits, and disposed of in finality. 

The court found that the applicants hadn’t set out a prima facie case and the application lacked merits. However, as a result of procedural errors, the court found that a conditional injunction could be granted. 

Applicant Upheld.
 

Trademark – Infringing mark resembles with the plaintiff’s mark – Infringement proved

The plaintiff contested the validity of the sale and transfer of its property by the first defendant, alleging the transaction was tainted by illegality and fraud. The mortgaged property was auctioned in a public sale pursuant to the terms of the credit facility agreement concluded between the parties. 

The contract permitted that the first defendant could execute the property without application to a court if the plaintiff defaulted on payment. In accordance with this provision, the first defendant advertised and sold the plot in a public auction to the second defendant who made the purchase in good faith.

The plaintiffs challenged the first defendant’s actions on several grounds with no success before the High Court. It was argued that, because the sum advanced by the first defendant fell marginally short of the anticipated amount, it did not have to perform its obligation under the contract to pay the stipulated installments, despite having received and utilised the sum advanced by the first respondent. 

The court dismissed this argument along with further technical attacks to the alleged unlawfulness of the advertisement of the auction, the sale agreement’s adherence to statutory formalities, and the first defendant’s failure to ‘release’ the plaintiff from the mortgage following the sale of the property to the second defendant. 

The judge found in favour of the defendants, ruling that the advertisement, sale and transfer of the property had occurred lawfully and did not offend any aspects of the parties’ agreement.
 

The application was based on the fact that the applicant had been prevented by sufficient cause from filing a defence in a civil suit which according to the court had a meritorious defence that had a high chance of success.

The main issue was whether the default judgment issued by the lower court pursuant to failure to file a written statement of defence should be set aside.

The court reiterated that the burden is on the process server to indicate whether a principal officer or director or secretary of the corporation has been served or to indicate whether he or she was unable to establish who was being served. The serving officer, in this case, was simply quiet about who was served notwithstanding that there is a stamp of the applicant on the signature of the person served. Moreover, the provisions as to service support are a fundamental rule of justice which is that of fair trial. Fair trial includes due notice of the summons on the defendant or persons sought to be summoned to appear in court. 

The court held that due to the fundamental requirements of service of process on the secretary, director or other principal officer of the company, the default decree and judgment was set aside. The court held that civil procedure rules makes it necessary to identify the person served in the corporation sufficiently to fulfill the requirements for service on a corporation.

The applicant is appealing the judgment in its favour from a civil suit it instituted against the respondent. The review was brought on the ground of mistake or error apparent on the face of the record.

The civil suit sought a declaration that the respondents’ auction of the applicants’ 6990 beds of sugar was unlawful, and the court held that it was. However, the court awarded damages for the sale 736 unaccounted bags instead of 6990 unaccounted bags, which was the evidence on record and finding of the court. The sales were in breach of s 57(2) of the East African Community Customs Management Act.

The respondents filed a notice of appeal against the judgment, and contended that there was no error apparent on the face of the record. The award for 736 bags was based on evidence in which the applicant acknowledged that the respondent had accounted for 6254 bags. It was held that the applicant was entitled to file an application for review pending the appeal by the respondent.

The issue for determination was whether there was an error or mistake apparent on the face of the record.

The court held that the judgment was reviewed to the extent that it was erroneous to order special damages for 736 bags, which number was correct. The correct order was the difference between the applicant’s claim and the amount at which the sugar was auctioned; not special damages. The court substituted the amount with the sum of the difference, which was approximate 190 million Ugandan shillings.

The plaintiff brought an action for breach of contract, for the defendant to pay the balance of the money paid by the plaintiff to the defendant in terms of their contract, and for interest on the amount.

The sourt held that on the evidence the defendant failed to deliver all the sugar within the seven weeks. The defendants did not adduce any evidence to the contrary, and the plaintiff was entitled to refund of the money paid for the sugar. The issue was whether general damages ought to be awarded in addition to interest on the outstanding amount.

Section 50 of the Sale of Goods Act provided that the remedy for wrongful non-delivery was damages. The measure was the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract. General damages will usually be awarded to place the plaintiff in as close a position as possible they would have been had the injury not occurred. Where interest is awarded for deprivation of monies to be paid, then general damages will not be awarded in addition to interest. The award of interest would place the plaintiff in its original position. 

The court held that the plaintiff did not adduce evidence of what loss was suffered to warrant an award of general damages. Interest was therefore awarded in lieu of general damages.