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Commodity Export International Ltd & Anor v Mkm Trading Company Ltd & Anor (Civil Appeal No. 84 of 2008)

Court of Appeal · [2015] UGCA 81 · 2015 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
First appeal from a High Court (Commercial Division) judgment, with a cross-appeal on interest on general damages
Decision
Appeal allowed in part: USD 10,040.50 award set aside; cross-appeal allowed granting interest on general damages; remainder of trial Judgment upheld with costs to respondents

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Holding

The Court of Appeal held that print-outs of computer-generated documents are originals constituting primary evidence under the best evidence rule, provided their authenticity is established. It upheld findings that joint venture funds were diverted to non-joint venture activities in breach of the agreement, and that general damages could properly be awarded for foreign exchange loss where special damages were not strictly proved. The court confirmed lifting of the corporate veil to hold the second appellant personally liable for fraudulent accounting, and that the 11% interest award was within the trial Judge's discretion. However, it set aside the USD 10,040.50 award for the abandoned 400 metric tons of sugar claim, allowed the cross-appeal granting interest on general damages, and awarded costs to the respondents.

Facts

MKM Trading Company and Jaheed Management Establishment (jointly MKM) entered a Joint Venture Agreement on 24 June 1999 with Commodity Export International Ltd (CEI) for trading in cereal seeds and commodities until November 1999. MKM provided all working capital and remitted USD 304,978, to be used exclusively for the venture, with profits shared equally. CEI was responsible for purchasing, selling, administration and accounting. Accountants engaged to reconcile the venture accounts produced reports indicating that CEI had applied joint venture funds to non-joint venture purposes, overstated taxes paid, under-declared profits on sugar transactions, and caused a foreign exchange loss through delayed remittances. MKM alleged fraudulent alteration of trading accounts and claimed a loss of USD 114,486.63. Karim Somani, CEI's majority shareholder and director, was joined as second defendant by lifting the corporate veil for his alleged role in falsifying accounts. The High Court entered judgment for MKM, awarding USD 74,000 plus general damages of USD 10,000 with interest. CEI and Somani appealed; MKM cross-appealed seeking interest on general damages.

Issues

  1. Whether print-outs of computer-generated documents constitute primary or secondary evidence under the best evidence rule.
  2. Whether the trial Judge properly found that joint venture funds were used for non-joint venture purposes.
  3. Whether general damages could be awarded in lieu of a failure to strictly prove special damages for foreign exchange loss.
  4. Whether the second appellant could be held personally liable by lifting the corporate veil.
  5. Whether the award of interest at 11% per annum from the date of filing was excessive.
  6. Whether interest should be awarded on the general damages (cross-appeal).

Orders

  • Grounds 1 and 2 dismissed.
  • Ground 3 allowed; the award of USD 10,040.50 on the 400 metric tons of sugar set aside.
  • Grounds 4, 5, 6, 7, 8 and 9 dismissed.
  • Cross-appeal allowed; interest of 11% per annum on the general damages awarded from the date of the trial Judgment until payment in full.
  • Appeal allowed in part and dismissed in part.
  • Respondents awarded costs in the Court of Appeal and the trial Court.

Key headnotes

Evidence — Best Evidence Rule — Computer-Generated Documents as Primary Evidence
Print-outs of computer-generated documents are originals constituting primary evidence for the purposes of the best evidence rule, provided their authenticity can be ascertained; a diskette is not a document and need not be produced.
Evidence — Authenticity of Electronic Records Created in the Ordinary Course of Business
The mere possibility that computer data can be altered is insufficient to establish untrustworthiness; where information is recorded and stored in the ordinary course of business by an accountant with no interest in the dispute, its authenticity will not be doubted absent evidence of tampering.
Contract Law — Joint Ventures — Misapplication of Funds as Breach
Where parties agree that funds advanced are to be used exclusively for the joint venture, applying those funds to non-joint venture activities constitutes a breach of the joint venture agreement.
Damages — General Damages in Lieu of Unproved Special Damages — Foreign Exchange Loss
A claimant's failure to strictly prove the specific amount of a foreign exchange loss as special damages does not bar an award of general damages where the loss arises naturally from the defendant's improper conduct and was within reasonable contemplation.
Company Law — Lifting the Corporate Veil — Director's Personal Liability for Fraud
The corporate veil may be lifted to join and hold personally liable a director or majority shareholder where the company is used as a cloak for fraud; lifting the veil at an interlocutory stage to enable the alleged fraud to be tested in evidence is proper and does not pre-determine liability.
Civil Procedure — Pleadings — Departure from Admitted Pleadings
A party is not permitted to set up a case during testimony that is inconsistent with its own pleadings; an admission in the plaint that goods were traded cannot later be denied in evidence.
Damages — Interest — Discretionary Award and Burden of Proof
An award of interest is discretionary and based on the principle that a party kept out of its money should be compensated; the party claiming interest bears the burden of adducing evidence justifying the rate, and an appellate court will not interfere unless the trial Judge misdirected himself.

Legislation cited (11)

  • Evidence Act Cap 6 s.61
  • Evidence Act Cap 6 s.62
  • Evidence Act Cap 6 s.63
  • Civil Procedure Act Cap 71 s.26(2)
  • Civil Procedure Act Cap 71 s.27
  • Electronic Transactions Act 2011
  • Companies Act Cap 110
  • Judicature (Court of Appeal Rules) Directions SI 13-10 r.30(1)(a)
  • United Kingdom Civil Evidence Act 1968 s.5
  • Uniform Electronic Evidence Act 1998 (Canada) s.4(2)
  • United States Federal Rules of Evidence Rule 1001(d)

Cases cited (28)

  • Pandya v R [1957] E.A 336
  • Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
  • Omychund v. Barker 917440 1 Atk. 21, 49
  • Kajala V Nobel (1982) 75 Cr. App R 149 at 152
  • US v. Bonallo, 858 F. 2d 1427, 20 9th Cir. Ct. App. (1988)
  • Aguimatang v. California State Lottery 234 Cal. App. 3d 769, 798
  • Interfreight Forwarders v East African Development Bank (Civil Appeal No. 33 of 1992)
  • Uganda Breweries v Uganda Railway Corporation (2000) 2 EA 634
  • Stroms BruksAktieBolag v Hutchinson [1905], A.C. 515
  • Ozalid Group (Export) Ltd v African Continental Bank [1979] Vol 2 Lloyd's Rep 231
  • Isaac Naylor & Sons Ltd v New Zealand Cooperative Wool Marketing Association Ltd
  • Uganda Commercial Bank v Mattiya Wasswa (Civil Appeal No. 6 of 1982)
  • Derry v Peek [1889] 14 App Cases 337
  • Fredrick Zaabwe v Orient Bank and 5 Others (Civil Appeal No. 4 of 2006)
  • Canabolic Group of Companies Uganda v Sugar Corporation Uganda Ltd (Civil Appeal No. 151 of 1994)
  • BM Technical Services Ltd v Crested Transporters Company Ltd (Civil Appeal No. 8 of 2002)
  • Prema Chandra Chenoi and Another v Maximo Olegi Petrovik (Civil Appeal No. 9 of 2003)
  • Harbutt's Plasticide Ltd v Wayne Tank 1970 ALL ER 225
  • Mbogo & Another v Shah [1968] EA 93
  • Trans American Life Insurance Co. of Canada V Canada Life Assurance Co (1996) 28 OR 423
  • HL Bolton Co v TJ Graham and Sons [1956] 3 All ER 624
  • Gilford Motor Co Ltd v Horne [1933] Ch 935
  • DK C construction Company Ltd v Barclays Bank Ltd [2002-2004] UCLR 201
  • Nigerian Enterprise Limited v Forward Nigerian Enterprises Limited & Farore 1976 N.C.LTR 243
  • Kampala Bottlers Ltd v Dominico (U) Ltd (Civil Appeal No. 22 of 1992)
  • Attorney General v Virchand Mithalal and Sons Ltd (Civil Appeal No. 20 of 2007)
  • Gullabhai Ushillingi v Kampala Pharmaceutical Ltd (Civil Appeal No. 6 of 1999)
  • Uganda Revenue Authority v Wanume David Kitamirike (Civil Appeal No. 43 of 2010)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.