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Punch Telecom (U) Limited v Warid Telecom (U) Limited (Civil Appeal 7 of 2023)

Supreme Court · [2025] UGSC 8 · 2025 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second appeal to the Supreme Court from a Court of Appeal decision on damages for breach of a franchise agreement
Decision
Appeal dismissed; the Court of Appeal's award of nominal damages of UGX 10,000,000 and its award of costs to the respondent upheld

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Holding

The questions were whether the Court of Appeal erred in substituting general damages with nominal damages, in setting aside interest, and in awarding costs to the respondent. By a 3-2 majority the Supreme Court dismissed the appeal. It held that the Court of Appeal properly re-evaluated the evidence: general damages of UGX 494,990,000 were exorbitant and amounted to a refund and double payment because the appellant's working capital and deposit had already been reimbursed, so nominal damages of UGX 10,000,000 sufficed. Interest, being pegged to the general damages, failed once those were set aside, and nominal damages being non-compensatory cannot attract interest. Costs follow the event as a whole, so the respondent, successful on appeal, was entitled to costs.

Facts

On 31 January 2008 the appellant and respondent executed a franchise agreement for the distribution and sale of the respondent's telecom products in Nateete and Wandegeya, with a commercial launch set for 7 February 2008. The agreement required the appellant to make available working capital (the price for stock, found to be UGX 506,000,000) before the launch. By 6 February 2008 the appellant had deposited only UGX 370,000,000 on its account. On 8 February 2008 the respondent terminated the franchise. The appellant sued for breach. The trial court found the appellant had itself breached by failing to provide the required working capital in time, but held the respondent breached by terminating without the requisite seven days' notice, and awarded general damages of UGX 494,990,000 with interest at 23% p.a. The respondent reimbursed the appellant's security deposit of UGX 20,000,000 and the deposited working capital two days after termination, and the premises were taken over by Orange Telecom. The Court of Appeal set aside the general damages as exorbitant and amounting to double payment, substituting nominal damages of UGX 10,000,000 and setting aside interest.

Issues

  1. Whether the Court of Appeal erred in setting aside the trial court's award of general damages and substituting it with nominal damages.
  2. Whether the Court of Appeal erred in setting aside the interest awarded on the general damages.
  3. Whether interest can be awarded on an award of nominal damages.
  4. Whether the Court of Appeal erred in setting aside the costs awarded to the appellant and in awarding costs to the respondent.

Orders

  • By a majority of 3-2, the appeal is dismissed in its entirety, with costs to the respondent.
  • The orders of the Court of Appeal are upheld.

Key headnotes

Damages — Nominal Damages — Function and circumstances of award
Nominal damages are awarded where a party proves the infringement of a legal right but has sustained no actual damage or fails to prove any; they serve to vindicate the right rather than to compensate for loss.
Damages — Interest — Interest on nominal damages
Interest is payable to compensate a party wrongfully deprived of the use of money; an award of nominal damages, being non-compensatory, cannot attract interest.
Damages — General Damages — Appellate interference with quantum
An appellate court will not interfere with a trial court's award of general damages unless the trial court acted upon a wrong principle of law or the amount was so high or low as to be an entirely erroneous estimate of the damages.
Damages — Double Payment — Unjust enrichment
Where a party's deposited working capital and security deposit have already been refunded, an award of general damages equivalent to that sum amounts to a refund and double payment and would unjustly enrich the claimant.
Costs — Discretion — Costs follow the event as a whole
The award of costs is discretionary and follows the event of the litigation determined as a whole, not on an issue-by-issue basis; a party who succeeds on appeal is entitled to costs.
Appeals — Second Appeal — Concurrent findings of fact
A second appellate court does not re-evaluate the evidence but determines whether the first appellate court properly applied the relevant principles, and will interfere with concurrent findings of fact only in exceptional cases, such as where there was no evidence to support the finding.

Legislation cited (3)

  • Civil Procedure Act Cap 71 s.26
  • Civil Procedure Act Cap 71 s.27
  • Judicature (Supreme Court Rules) Directions rule 30(1)

Cases cited (30)

  • Sietco v Noble Buildings (U) Ltd (Civil Appeal No. 31 of 1995)
  • Makubuya Enock William (T/A Polla Plast) v Umeme (U) Ltd (Civil Appeal No. 1 of 2019)
  • Crown Beverages Ltd v Sendu Edward (Civil Appeal No. 1 of 2005)
  • Uganda Posts v Consolate Mukadisi (Civil Appeal No. 13 of 2022)
  • Simon Tendo Kabenge v Barclays Bank Ltd & Anor (Civil Appeal No. 17 of 2015)
  • Executive Director, NEMA v Solid State Ltd (Civil Appeal No. 15 of 2015)
  • Galleria in Africa Ltd v Uganda Electricity Distribution Company Ltd (Civil Appeal No. 8 of 2017)
  • Betty Kizito v David Kizito Kanonya (Civil Appeal No. 8 of 2018)
  • Robert Cousens v Attorney General [2000] UGSC 2
  • Attorney General v A.K.P.M. Lutaya [2008] UGSC 2
  • Boutique Shazim Ltd v Norattan Bhatia & Anor [2021] UGSC 9
  • Uganda Breweries Ltd v Uganda Railways Corporation [2002] UGSC 40
  • Milly Masembe v Sugar Corporation (U) Ltd (Civil Appeal No. 1 of 2000)
  • Banco Arab Espanol v Bank of Uganda [1999] UGSC 1
  • Elizabeth Nalumansi Wamala v Jolly Kasande & Others [2017] UGSC 21
  • Francis Sembuya v Allports Services (U) Ltd [2000] UGSC 8
  • Kizza Besigye v Museveni Yoweri Kaguta & Electoral Commission (Presidential Election Petition No. 1 of 2001)
  • Iyamulemye David v Attorney General (Civil Appeal No. 4 of 2013)
  • Kabandize v Kampala Capital City Authority (Civil Appeal No. 36 of 2016)
  • Transtel Ltd & Anor v Mahi Computers & Appliances Ltd (HCCS No. 397 of 2015)
  • Ntabgoba v Editor in chief of the New vision & Anor (2004) 2 E.A 234
  • Luyimbazi Sulaiman v Stanbic Bank Uganda Ltd (Civil Appeal No. 2 of 2019)
  • Erisafani Mudumba v Wilberforce Kuluse (Civil Appeal No. 9 of 2002)
  • Lutaaya v Attorney General (Civil Appeal No. 10 of 2000)
  • Harbutt's Plasticine Ltd vs. Wyne Tank & Pump Co. Ltd [1970] 1 Ch. 447
  • Hadley v. Baxendale (1894) 9 Exch 341
  • The Mediana (1900) AC 113
  • Stroms v Hutchinson (1905) AC 515
  • British Transport Commission v Gourley (1956) AC 185
  • Livingstone v Ronoyard's Coal Co. (1880) 5 App. Cas 259
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.