Wakilii

Ajay Industrial Corporation Ltd Anor v Jesey Technical Services Ltd Anor (HCCS 129 of 2012)

High Court · [2014] UGCOMMC 72 · 2014 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance suit for recovery of sums owed for alleged non-payment of goods supplied; judgment in default was initially entered but set aside on application
Decision
First Defendant found liable for amounts owing under written undertaking; second Defendant not personally liable as he acted in representative capacity

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that the first Defendant breached its written undertaking to pay USD 64,338 by 21 November 2011, as evidenced by an acknowledgement of indebtedness letter and security cheque. This acknowledgement generated a fresh cause of action under the Limitation Act, independent of underlying disputes about goods supplied. The buyer accepted non-conforming goods by requesting additional matching parts rather than rejecting them. The second Defendant was not personally liable as he acted as a director/agent. Plaintiffs awarded USD 39,114 less UGX 20,000,000 deposit, plus USD 25,224 balance, USD 4,000 general damages, and interest at 14% per annum.

Outcome

First Defendant found liable for amounts owing under written undertaking; second Defendant not personally liable as he acted in representative capacity

Facts

In September 2011, the first Plaintiff supplied borehole materials to the first Defendant pursuant to orders and a revised order. One consignment valued at USD 39,114 was shipped to Mombasa in October 2011, with shipping documents delivered in November 2011. The first Defendant claimed the materials did not match specifications and requested additional matching parts in a second consignment. On 7 November 2011, the second Defendant on behalf of the first Defendant signed an undertaking to pay USD 64,338 by 21 November 2011 and issued a security cheque for UGX 166,578,940 in favour of the second Plaintiff (the first Plaintiff's agent). Original shipping documents were released based on this undertaking. The first Defendant paid UGX 20,000,000 in December 2011 but failed to pay the balance. The cheque was subsequently dishonoured when presented for payment. No second consignment was delivered. The Plaintiffs sued for the full sum.

Issues

  1. Whether there was breach of contract by the Defendants?
  2. Whether the Defendants are indebted to the Plaintiffs to the tune of Uganda shillings 166,578,980?
  3. Whether the Plaintiffs are entitled to the remedies sought?

Orders

  • The first Defendant is liable to pay the first Plaintiff USD 39,114 less Uganda shillings 20,000,000.
  • The first Defendant is liable to pay the first Plaintiff an additional USD 25,224 as the balance owing on the undertaking.
  • The first Defendant is awarded general damages of USD 4,000.
  • Interest is awarded at 14% per annum on the principal sum from the date of filing the suit until the date of judgment.
  • Additional interest is awarded at 14% per annum from the date of judgment until payment in full.
  • The suit is dismissed with costs as against the second Defendant.
  • The Plaintiff is awarded costs as against the first Defendant.

Rules and key headnotes

Acknowledgement of Debt — Fresh Cause of Action
Where a written acknowledgement of indebtedness signed by the debtor specifies a liquidated sum and a payment date, the acknowledgement generates a fresh cause of action from the date of acknowledgement under the Limitation Act section 22(4), independent of the underlying transaction. The court need not examine the original liability once a valid acknowledgement is established.
Sale of Goods — Acceptance and Rejection
Under the Sale of Goods Act section 35, a buyer is deemed to have accepted goods when, after delivery, the buyer does any act inconsistent with the seller's ownership. Where a buyer, upon discovering non-conforming goods, requests the seller to supply additional matching parts to make the initial consignment work rather than rejecting the goods, the buyer has accepted the goods and cannot later claim non-delivery as a defence to payment.
Bills of Lading — Delivery of Documents
The delivery of a bill of lading constitutes symbolic delivery of goods where the parties have agreed that payment will be made upon tender of shipping documents. Where a buyer receives original shipping documents and clears the goods, and subsequently requests rectification of defects rather than rejecting the goods, the buyer has taken delivery and accepted the goods.
Cheques — Post-Dated Security Cheques
Where parties agree that a post-dated cheque will serve as security for payment and may be presented for encashment in the event of default on the agreed payment date, the cheque evidences the debt owing and may found an action for recovery. Alleged contravention of Bank of Uganda limits on cheque values does not render the underlying debt unenforceable where the debtor voluntarily issued the cheque.
Directors — Personal Liability
A director who signs contracts and correspondence on behalf of a limited liability company in his or her representative capacity and clearly identifies the company as the contracting party cannot be held personally liable for breach of contract in the absence of grounds to lift the corporate veil such as fraud or improper conduct.

Legislation cited (21)

Cases cited (21)

  • Sanders Bros v McLean and Company (1883) 11 QBD 327
  • Sembule Investments Ltd v Uganda Baati (HCMA No. 0664 of 2009)
  • Dembe Trading Enterprises v BIDCO (U) Ltd (HCMA No. 26 of 2008)
  • Kotecha v Mohammed [2002] 1 EA 1012
  • Naris Byarugaba v Shivam MKD [1997] HCB 71
  • Abid El Hinnaway v Yacoub Fahmi Abu El Huda [1936] 1 All ER 639
  • Hadley and another versus Baxendale
  • Wakiso Cargo Transporters Company Ltd v Wakiso District Local Government Council (HCCS No. 0070 of 2004)
  • Nanam Aviation Ltd v Captain George Mike Mukula and Another (HCCS No. 309 of 2008)
  • Lukyamuzi James v Akright Projects Ltd and Another (HCCS No. T19 of 2002)
  • Lubega Matovu v Mikwano Investments Limited (HCMA No. 156 of 2012)
  • Hindley and Company v East India Produce Company (1973) 2 Lloyds Reports 515
  • Rahima Nagitta and two others versus Richard Bukenya
  • Kwei Tek Chao v British Traders and Shippers Ltd (1923) 2 KB 490
  • Jamba Soit Ali v David Salaam (HCCS No. 400 of 2005)
  • Hans Andersen Paper and Another v Crown Contractors Ltd (HCCS No. 11 of 2010)
  • Diary Development Authority v David Ngarambe (HCCS No. 10 of 2010)
  • Dharamshi v Karsan [1974] 1 EA 41
  • Thunderbolt Technical Services Ltd v Apedu Joseph and Another (HCCS No. 340 of 2009)
  • Jones v Bellegrove Properties Ltd [1949] 2 All ER 198
  • Dungate v Dungate [1965] 3 All ER 393

Full judgment

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Ajay Industrial Corporation Ltd Anor v Jesey Technical Services Ltd Anor (HCCS 129 of 2012) [2014] UGCommC 72 (11 June 2014)
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.