Wakilii

Bholm v Car and General Ltd (Civil Appeal No. 12 of 2002)

Supreme Court · [2004] UGSC 55 · 2004 Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from the Court of Appeal in a civil suit for breach of an employment contract.
Decision
Appeal allowed; Court of Appeal decision set aside and the High Court award restored, with the general/punitive damages reduced from Shs 30,000,000 to Shs 5,000,000.

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Holding

The Court held a valid written two-year employment contract existed, the respondent being the employer through the Kenya company acting as its agent. Having relied on the contract to extend probation and terminate service, the respondent was estopped from denying it. The employer's failure to obtain a work permit, which the contract made its obligation, did not render the employment illegal, since only the employer commits an offence under the Employment Decree. The appellant recovered salary for the unexpired contract as special damages; the Shs 30m award was punitive and reduced to Shs 5m. Appeal allowed.

Facts

In May 1993 a director of the respondent, based at the Kenya company that headed the Car & General group, offered the appellant a two-year contract as Financial Controller in Kampala. The appellant signed the contract and took up duties in Kampala, where the respondent paid his salary, housed him, met his utilities and provided a car. The contract subjected him to a three-month probationary period but contained no provision for extending it. After irreconcilable differences arose between the appellant and the respondent's General Manager, the General Manager twice purported to extend the probation in writing, beyond the contractual period. On 13 January 1994 the respondent's Executive Director terminated the appellant's services, citing the differences and the extended probation, and offered one month's salary in lieu of notice, which the appellant said he never received. The contract made obtaining a work permit the respondent's obligation; a special pass was obtained for the appellant in October 1993 and a work permit later. The appellant sued for breach of contract, and the High Court found a valid contract and awarded him salary for the balance of the contract plus general damages.

Issues

  1. Whether there was a valid contract of employment between the appellant and the respondent.
  2. Whether the respondent was a party to the contract or whether the contract was made with the Kenya company.
  3. Whether the appellant's employment was illegal for want of a valid work permit.
  4. What damages the appellant was entitled to for the wrongful termination of his fixed-term employment contract.

Orders

  • Appeal allowed with costs in the Supreme Court and in the two courts below.
  • Judgment and orders of the Court of Appeal set aside.
  • Award of US$18,700 by the trial judge, representing salary for the residue of the contract, restored, with interest at 10% per annum from the date of the High Court judgment until payment in full.
  • Award of Shs 30,000,000 general damages set aside and substituted with Shs 5,000,000 punitive damages, with interest at 8% per annum from the date of the High Court judgment until payment in full.

Key headnotes

Employment Law — Fixed-term contracts — Measure of damages for wrongful termination
Where an employer wrongfully terminates a fixed-term employment contract that contains no provision for early termination, the employee is entitled to damages equivalent to the remuneration for the unexpired balance of the contract period, on the principle of restitutio in integrum.
Employment Law — Probationary period — Extension beyond contractual term
An employer cannot extend a probationary period beyond that stipulated in the contract where the contract confers no power, express or implied, to do so; a purported extension made without such authority is ineffective and cannot deprive the employee of benefits under the contract.
Contract — Existence and proof — Estoppel
A party who relies on a contract to extend a probationary period and to terminate the other party's services is estopped from later denying the existence and validity of that contract.
Agency — Ostensible authority — Identity of the employer
Where a foreign affiliate recruits an employee on behalf of a local company which then pays the employee, provides amenities, supervises the work and terminates the employment, the affiliate acts as agent and the local company is the true employer and party to the contract.
Contract — Illegality — Work permit — Parties not in pari delicto
Where a contract makes obtaining a work permit the employer's obligation, the employer cannot rely on the absence of the permit to assert that the employment is illegal; as only the employer commits an offence under the Employment Decree 1975, the parties are not in pari delicto and the innocent employee may recover.
Damages — Exemplary/punitive damages — Distinction from compensatory damages
Where an employee has already been awarded the full salary for the unexpired contract period as special damages, a further large award for wrongful dismissal, harassment and humiliation is punitive rather than compensatory in nature and must be moderated to avoid over-compensation.
Appeal — Appellate interference with an award of damages
An appellate court will not interfere with an award of damages unless the trial court acted on a wrong principle or the amount awarded was so excessively high or so very low as to make it an entirely erroneous estimate of the damage.

Legislation cited (15)

  • Employment Decree 1975 s.10
  • Employment Decree 1975 s.10(3)
  • Employment Decree 1975 s.11
  • Employment Decree 1975 s.13(1)
  • Employment Decree 1975 s.13(2)
  • Employment Decree 1975 s.14(1)
  • Companies Act s.194
  • Companies Act s.154
  • Evidence Act s.113
  • Civil Procedure Rules Order 6 rule 5
  • Civil Procedure Act s.26(2)
  • Immigration Act 1969 s.13
  • Immigration Control Regulations 1969 (SI 1969 No. 165)
  • Immigration (Amendment) Act 1984 s.13(1)(b)
  • Uganda Citizenship and Immigration Control Act 1999 s.60(2)

Cases cited (10)

  • Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549
  • Mugenyi & Co. Advocates v Attorney General (Civil Appeal No. 43 of 1995)
  • N. daliV mbank T n kaL . (1963) EA. 304
  • Prof. Syed Huq v Islamic University in Uganda (Civil Appeal No. 45 of 1995)
  • Makula International Ltd v Cardinal Nsubuga [1982] HCB 11
  • Gullabhai Ushillingi v Kampala Pharmaceuticals Ltd (Civil Appeal No. 6 of 1999)
  • Kengrow Industries Ltd v C.C. Chandran (Civil Appeal No. 7 of 2001)
  • Obongo v Kisumu Municipal Council [1971] EA 91
  • Singh v Kumbhar (1949) 15 EACA 21
  • Henry H. Ilanga v M. Manyoka [1961] EA 705
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.