Wakilii

Surgipharm Uganda Limited v Batabane (Civil Appeal 11 of 2020)

Supreme Court · [2023] UGSC 73 · 2023 Appeal Dismissed (Interest Reduced) ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision in an employment contract dispute
Decision
Appeal dismissed save for partial success on the interest ground; Court of Appeal damages awards upheld with interest reduced to 6%

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Cited — treatment unverified cited in 1 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Supreme Court held that where a prospective employer repudiates an employment contract before it commences, the probationary-notice provisions of the Employment Act do not apply; the would-be employee may instead sue for general damages for breach of contract. The award of UGX 25,000,000 general and UGX 89,900,000 special damages (for earnings forfeited by resigning his former job at the appellant's inducement) was upheld, distinguishing Doreen Rugundu. However, the 14% interest rate set by the Court of Appeal lacked evidential basis and reasoning; it was reduced to 6% under section 26(3) of the Civil Procedure Act. The appeal failed save for partial success on the interest ground.

Facts

On 15 February 2008 the respondent signed an employment contract with the appellant company, with employment to commence on 25 March 2008 after a six-month probationary period. The contract permitted termination on one week's notice or pay in lieu. The appellant alleged it was orally agreed the respondent would make familiarization visits before commencement, but no schedule was fixed. The respondent travelled to his home village to prepare for the new job, having resigned from his former employer, ZK Advertising. On 23 and 25 February 2008 the appellant emailed the respondent and cancelled the job offer, citing his failure to attend for familiarization. The respondent learned of the cancellation on visiting the office in March 2008. He sued for damages for repudiation of the employment contract, claiming lost earnings from the former employment he had given up to take the offer. The High Court held the contract frustrated, but the Court of Appeal found wrongful repudiation and awarded special and general damages with interest.

Issues

  1. Whether the repudiation of the respondent's contract of employment prior to its commencement was wrongful.
  2. Whether the Court of Appeal erred in awarding the respondent UGX 25,000,000 in general damages.
  3. Whether the Court of Appeal erred in awarding the respondent UGX 89,900,000 in special damages for loss of earnings from his former employment.
  4. Whether the Court of Appeal erred in awarding interest at 14% per annum on the damages.

Orders

  • The appeal fails save for partial success of ground 4.
  • UGX 25,000,000 awarded to the respondent as general damages, attracting interest of 6% from 7th June 2019 (the date the Court of Appeal granted the award) until payment in full.
  • UGX 89,900,000 awarded to the respondent as special damages, attracting interest of 6% from 30th May 2008 (the date the suit was instituted in the High Court) until payment in full.
  • Costs of the appeal and the costs in the courts below awarded to the respondent.

Key headnotes

Contract Law — Repudiation — Anticipatory Breach Before Commencement of Performance
Repudiation occurs where a party intimates by words or conduct an intention not to honour obligations falling due in the future; it may arise before any breach or before performance is due (anticipatory breach), and where a prospective employer cancels an employment contract before it commences it has repudiated that contract.
Employment & Labour — Probationary Contracts — Inapplicability of Notice Provisions Before Commencement
Section 67(4) of the Employment Act 2006 governing termination of a probationary contract does not apply where employment has not yet commenced, since the events have not brought the contract within the ambit of a probationary contract.
Contract Law — Remedies — Damages as the General Remedy for Wrongful Repudiation
Where a would-be employer wrongfully repudiates a contract of employment before commencement, the prospective employee is entitled to pursue an action for compensation by way of general damages for breach of contract, even though no employment rights have accrued under the contract.
Damages & Quantum — General Damages — Assessment by Reference to Value of the Contract
In assessing general damages for a repudiated contract the court is guided by the value of the contract at the time of performance and the economic inconvenience to which the party may have been put; an appellate court will not interfere unless the trial court applied a wrong principle or the award is so high or low as to be an entirely erroneous estimate.
Damages & Quantum — Special Damages — Loss of Earnings Forfeited by Induced Resignation
A claimant who resigns from gainful employment in reliance on a job offer that is later wrongfully repudiated may recover, as special damages specifically pleaded and proved, the earnings lost from the former employment, subject to a duty to mitigate; such a claim is distinguishable from a claim for what would have been earned under the repudiated contract.
Damages & Quantum — Interest — Discretion Under Section 26 of the Civil Procedure Act and the Default 6% Rate
The award of interest is a matter of judicial discretion that must be exercised judiciously by giving reasons and assessing supporting evidence; where a court fixes a rate without evidence or reasons, the statutory default of 6% per year under section 26(3) of the Civil Procedure Act applies. Interest on special damages runs from the date of filing the suit, while interest on general damages runs from the date of the judgment awarding them.

Legislation cited (4)

  • Employment Act 2006 s.67(4)
  • Employment Act 2006 s.24(1)
  • Civil Procedure Act Cap 71 s.26(2)
  • Civil Procedure Act Cap 71 s.26(3)

Cases cited (18)

  • Doreen Rugundu v International Law Institute (Civil Appeal No. 8 of 2005)
  • Hilda Musinguzi v Stanbic Bank (U) Ltd (Civil Appeal No. 5 of 2016)
  • Betty Tinkamanyire v Bank of Uganda (Civil Appeal No. 12 of 2007)
  • Barclays Bank of Uganda v Godfrey Mubiru (Civil Appeal No. 1 of 1998)
  • [1970] 2 QB 163
  • [1976] WLR 638
  • (1974) 1 ICR 501
  • [1905] AC 515
  • Betty Kizito v David Kizito & 7 Others (Civil Appeal No. 8 of 2018)
  • Kibimba Rice Ltd v Umar Salim (Civil Appeal No. 17 of 1992)
  • Robert Coussens v Attorney General (Civil Appeal No. 8 of 1999)
  • Crown Beverages Ltd v Sendi Edward (Civil Appeal No. 1 of 2005)
  • Haji Asuman Mutekanga v Equator Growers (U) Ltd (Civil Appeal No. 7 of 1995)
  • Uganda Revenue Authority v Stephen Mabosi (Civil Appeal No. 26 of 1995)
  • SIETCO v Noble Builders (U) Ltd (Civil Appeal No. 31 of 1995)
  • Premchandra Shenoi & Anor v Maximov (Civil Appeal No. 31 of 2003)
  • [1970] EA 469
  • [1967] EA 724
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