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Gregory Gidagui Mafabi and Another v Nile Breweries Limited (Civil Appeal No. 4 of 2023)

Court of Appeal · [2026] UGCA 87 · 2026 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Civil appeal and cross-appeal from a High Court (Commercial Division) judgment on a suit and counterclaim for breach of a distributorship agreement
Decision
Appeal allowed in part and cross-appeal dismissed; general-damages award of UGX 108,264,000 upheld, goodwill award increased to UGX 1,117,687,085, and the parties ordered to reconcile accounts within 90 days to ascertain the sum due on the counterclaim, with costs to the appellants

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Holding

The Court held that the respondent breached the distributorship agreement by terminating it on roughly five weeks' notice for non-use of the Distributor Management System — a ground not listed for immediate termination — when the contract required three months' notice; the cross-appeal was dismissed. The trial court's general-damages award of UGX 108,264,000 was upheld as not manifestly low. However, the UGX 100,000,000 awarded for loss of goodwill was set aside as too low for ignoring the uncontroverted expert valuation, and substituted with UGX 1,117,687,085 based on five years' projected business continuity. On the counterclaim, the disputed outstanding debt was unproven, so the Court ordered a reconciliation of accounts within 90 days under the Registrar's supervision.

Facts

From 1999 the first appellant held exclusive distributorship rights for Nile Breweries' products in Kyengera, Kayabwe and Maddu, later operating through the second appellant company. At the respondent's request the appellants relocated their warehouse to Kayabwe, investing about UGX 2.5 billion, and took a UGX 1.32 billion beer-credit facility. The respondent introduced a Distributor Management System the appellants were to pay for and on which their staff were to be trained. In June 2018 the respondent terminated the agreement for the appellants' failure to use the system, giving roughly five weeks' notice, whereas the contract required three months' notice for grounds not warranting immediate termination. The appellants sued for breach; the respondent counterclaimed for UGX 1,075,760,038 outstanding on the credit facility. An expert accountant (PW3) valued the appellants' business, including goodwill, at over UGX 13 billion using a discounted cash flow method. The trial court found the termination unlawful, awarded the appellants UGX 108,264,000 general damages and UGX 100,000,000 for goodwill, and held the appellants owed the counterclaim sum. Both parties appealed.

Issues

  1. Whether the learned trial judge erred in holding that the respondent's termination of the distributorship agreement was unlawful (cross-appeal).
  2. Whether the general damages and compensation awarded by the trial judge were too low to compensate the appellants for the loss suffered from the unlawful termination.
  3. Whether the appellants are liable to pay the respondent UGX 1,075,760,038 claimed in the counterclaim on the beer credit facility.

Orders

  • The UGX 108,264,000 awarded by the trial court as general damages for breach of contract is upheld.
  • The award of UGX 100,000,000 as general damages for loss of goodwill is set aside and substituted with UGX 1,117,687,085 as damages for loss of goodwill.
  • The parties shall carry out a reconciliation of accounts under the direction and supervision of the Registrar, Court of Appeal, to ascertain what is actually due to the respondent on the counterclaim within 90 days of the judgment; the second appellant shall be liable to pay the amount ascertained.
  • The respondent shall bear the costs in this Court and in the court below.

Key headnotes

Contract Law — Distributorship Agreements — Termination and Notice
Where a distributorship agreement provides that in any case not specifically provided for it may be terminated by either party giving three months' written notice, termination for a ground that is not among those listed as justifying immediate termination requires the full three months' notice, and a shorter notice period constitutes a breach of the agreement.
Damages & Quantum — Breach of Contract — Measure of Damages
The ordinary remedy for breach of contract is damages, and the innocent party is entitled to such a sum as would place him in the same financial position he would have occupied had the other party performed its side of the bargain.
Damages & Quantum — General Damages — Appellate Interference
An appellate court will not interfere with a trial court's award of general damages unless the trial court acted on wrong principles of law or the amount awarded is so high or so low as to be an entirely wrong estimate of the damages to which the party was entitled.
Evidence — Expert Evidence — Uncontroverted Reports
Where an expert report is truly uncontroverted, the court may not subject it to the same critical analysis as a contested report; it need only decide whether the report meets the minimum standards required of an expert report, though it may reject a report that is a bare ipse dixit and must give reasons for rejecting an expert opinion.
Damages & Quantum — Loss of Goodwill — Valuation
Goodwill is the benefit and advantage of the good name, reputation and connection of a business, and the assessment of damages for its loss is a financial and accounting valuation exercise that requires evidence; a court should not undertake the valuation in the absence of evidence and an unexplained award unsupported by the available expert valuation cannot stand.
Evidence — Burden of Proof — Proof of Debt
A party is bound to prove the case alleged in its pleadings; where a claimed outstanding debt rests on figures that the parties agreed to reconcile but never did, the claim is not proved, and the court may order a reconciliation of accounts to ascertain the true sum due rather than enter judgment for the unproven amount.

Legislation cited (2)

  • Judicature (Court of Appeal) Rules S.I. 13-10 r.86(1)
  • Judicature (Court of Appeal) Rules S.I. 13-10 r.30(1)

Cases cited (29)

  • National Insurance Corporation v Pelican Air Services [2004] UGCA 42
  • Sukuton Ali v Augustine Kapkwoyongo and 2 Ors [2019] UGCA 2072
  • Arim Felix Clive v Stanbic Bank (U) Limited [2015] UGCA 113
  • Majegere Sitingo v Kubeketerya James and Another [2022] UGCA 379
  • Banco Arabe Espanol v Bank of Uganda [1999] UGSC 1
  • Mbogo v Shah [1958] EA 93
  • Robinson v Harman (1848) 1 Exch 850
  • Livingstone v Rawyards Coal Co (1880) 5 App Cas 25
  • Robert Coussens v Attorney General [2000] UGSC 2
  • Heineken East Africa Import Company Limited and Anor v Maxam Limited (Civil Appeal No. E403 & E404 of 2020) (Consolidated)
  • Full Line Distributors Ltd v Crown Beverages Ltd (HCCS No. 141 of 2012)
  • Warid Telecom Uganda Ltd v Mohanlal Kakubhai Radia [2021] UGCA 232
  • African Highland Produce Ltd v Kisorio [2001] 1 EA 1
  • Seroy Airport Hotel Ltd v Uganda Breweries Ltd (HCCS No. 90 of 2014)
  • Haruna Sentongo v I & M Bank (Civil Appeal No. 1 of 2023)
  • Shosho v Waniala & 3 Others (Civil Appeal No. 224 of 2014)
  • J.K Patel v Spear Motors Limited [1999] UGSC 9
  • Uganda Commercial Bank v Kigozi [2002] 1 EA 302
  • Crown Beverages Ltd v Sendu Edward [2006] UGSC 27
  • IRC v Muller and Co's Margarine Limited [1901] AC 217
  • Surrey Animal Hospital Ltd v British Columbia (1997) 85 BCAC 297 (CA)
  • Alberta Ltd v Taylor 2020 ABQB 355
  • Premchandra Shenoi and Anor v Maximov Oleg Petrovich [2005] UGSC 15
  • Attan Moses Okia v Ariko Herbert Edmund Okworo & Others [2024] UGCA 62
  • Griffiths v TUI UK Ltd [2020] EWHC 2268 (QB)
  • Ugachick Poultry Traders Ltd v Tadjin Kara t/a ST Enterprises Ltd [1998] UGCA 11
  • Interfreight Forwarders (U) Ltd v East African Development Bank [1993] UGSC 15
  • Wood v Capital Insurance Services Limited [2017] 4 All ER 615
  • RTS Flexible Systems Ltd v Molkerei Alois Muller [2010] 2 All ER 97
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