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Katatumba v Uganda Cooperative Transport Union Ltd (Civil Appeal No. 23 of 1991)

Supreme Court · [1994] UGSC 52 · 1994 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Interlocutory civil appeal from a High Court order striking out paragraphs of a plaint following a preliminary objection
Decision
Appeal allowed, struck-out pleadings restored, and suit remitted to the High Court to proceed to hearing before another judge

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Holding

The Supreme Court held that the contract was not illegal ab initio under the Exchange Control Act. Although the architect's fees were denominated in US dollars, annexure 'F' to the plaint showed that payment was to be made in Uganda shillings at the ruling rate of exchange, so there was no contemplation of evading exchange control. The annexure formed part of the pleadings and supported paragraphs 5 and 6. Striking out those paragraphs and prayer (b) was wrong. The appeal was allowed, the pleadings restored, and the suit ordered to proceed to hearing before another judge.

Facts

The appellant, an architect trading as Technoplan, was appointed in or about 1989 by the respondent to design and supervise construction of its premises, including a head office building, parking area, junior staff houses and regional workshops. He rendered architectural services, prepared and submitted a report and sketch plans, and rendered a fee note for the work then done totalling about US$55,471. The respondent allegedly failed to settle the fee and is said to have passed the report and sketch to another firm, Landplan/BIK International. The appellant sued for his fees. The estimated costs and fees in the plaint were expressed in US dollars, but annexure 'F' to the plaint provided that fees were to be paid in Uganda shillings at the ruling rate of exchange at the time of settlement. The respondent raised a preliminary objection that the dollar-denominated claims contravened the Exchange Control Act, and the High Court struck out paragraphs 5 and 6 and prayer (b) as illegal.

Issues

  1. Whether annexure 'F' to the plaint formed part of the pleadings and could be read together with paragraphs 5 and 6 of the plaint.
  2. Whether the claims in paragraphs 5 and 6 and prayer (b), being denominated in US dollars, were bad in law as contravening the Exchange Control Act.
  3. Whether the contract was illegal ab initio for infringing the Exchange Control Act, such that the suit could not be maintained.

Orders

  • Appeal allowed.
  • Order of the High Court set aside.
  • Paragraphs 5 and 6 and prayer (b) restored to the plaint.
  • Suit to proceed to hearing as speedily as possible before another judge.
  • Costs of the appeal to the appellant.
  • Costs of the preliminary objection proceedings to the plaintiff in any event.

Key headnotes

Contract Law — Illegality — Exchange Control Act — Contract not illegal ab initio
A contract is not illegal ab initio under the Exchange Control Act where payment can lawfully be made in local currency; illegality arises only if the parties contemplated performance by payment in foreign currency without the Minister's permission.
Civil Procedure — Pleadings — Annexures — Part of the pleadings
An annexure to a plaint forms part of the pleadings and must be read together with the paragraphs it supports, provided it was annexed to and served with the plaint.
Banking & Finance — Foreign currency claims — Local currency equivalent
A claim may be laid in foreign currency, the equivalent value in local currency being calculated in order to acquire the foreign currency through the open market.
Contract Law — Illegality — Maintainability of action — Foreign currency denomination
Where a claim denominated in foreign currency is in substance payable in local currency, it is not rendered unenforceable by exchange control legislation and the action may be maintained.

Legislation cited (5)

  • Exchange Control Act Cap. 158 s.1(1)
  • Exchange Control Act Cap. 158 s.3
  • Exchange Control Act Cap. 158 s.33(1)
  • Exchange Control Act Cap. 158 Fourth Schedule para.1
  • Civil Procedure Rules Order rule 7

Cases cited (5)

  • Jeraj Shariff v Chotan Fancy Stores (1950) EA 374
  • Miliangos v George Frank (Textiles) Ltd [1975] 3 All ER 801
  • Continental Agencies v Berrill & Co. Ltd (1971) E.A.
  • SCOTT BROWN (inter alia) 1982 2 QB 729
  • Moses Bulenji v Judith Mayer (High Court Civil Suit No. 10 of 1991)
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.