Wakilii

Aridep Investment (U) Ltd v Pader District Local Government (Civil Suit No. 13 of 2005)

High Court · [2009] UGHC 41 · 2009 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and recovery of debt
Decision
Judgment entered for plaintiff with principal sum, general damages, interest, and costs awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that a suit is properly before court where the defendant failed to move for a stay under the Arbitration and Conciliation Act despite an arbitration clause, and proceeded to full hearing. Where a local government enters a contract to pay a supplier within 15 days of invoice and fails to pay after performance, the supplier is entitled to the contract sum plus general damages for breach. Donor funding arrangements do not absolve the contracting party of liability to pay.

Outcome

Judgment entered for plaintiff with principal sum, general damages, interest, and costs awarded

Facts

The defendant's Tender Board awarded a contract to the plaintiff in April 2003 to supply seeds and seedlings for shs. 19,875,312. A contract agreement was executed on 10 June 2003. The plaintiff supplied the seeds and seedlings as required and performed all obligations under the contract including lining and pitting. The defendant made a part payment of shs. 5,354,253 but refused to pay the balance of shs. 10,551,884, contending that the contract was donor funded and the donor had not provided the money. The defendant's Chief Administrative Officer threatened the plaintiff's representatives with imprisonment for demanding payment. The debt remained outstanding from October 2004.

Issues

  1. Whether the suit is properly before court.
  2. Whether or not there was breach of contract.
  3. Whether the parties are entitled to the reliefs prayed for.

Orders

  • Judgment entered for the plaintiff against the defendant for shs. 10,210,124/= principal sum.
  • General damages of shs. 2,000,000/= awarded for breach of contract.
  • Interest on the principal sum at 18% per annum from 10 June 2003 until payment in full.
  • Interest on general damages at 18% per annum from the date of judgment until payment in full.
  • Taxed costs of the suit awarded to the plaintiff.

Rules and key headnotes

Arbitration Clauses — Effect on Court Jurisdiction — Stay of Proceedings
An arbitration clause in a contract does not oust the jurisdiction of the High Court. Where a party wishes to invoke arbitration after a suit has been filed, the party must move court under section 5 of the Arbitration and Conciliation Act for a stay of proceedings. Where a defendant fails to apply for a stay and proceeds to full hearing, the defendant cannot later contend that the suit is wrongly before court.
Breach of Contract — Performance by One Party — Failure to Pay
Where a supplier performs all obligations under a contract to supply goods and the other party accepts the goods but fails to pay as agreed, the failure to pay constitutes a breach of contract. The fact that the contract was to be funded by a donor does not absolve the contracting party from liability to pay where the contract itself makes the contracting party liable.
General Damages — Assessment for Breach of Contract — Hadley v Baxendale Principles
General damages for breach of contract are assessed on the principle in Hadley v Baxendale: damages should be such as may fairly and reasonably be considered as arising naturally from the breach or such as may reasonably be supposed to have been in the contemplation of both parties at the time of contract as the probable result of breach. The assessment should award the injured party such a sum as will put that party in the same position as if the breach had not occurred.
General Damages — Delayed Payment — Assessment
Where a contracting party fails to pay a debt for an extended period causing the creditor to suffer financially including inability to pay employee salaries, and subjects the creditor to threats and unreasonable conduct, general damages are awarded to compensate for the breach. The quantum is assessed by reference to comparable cases and the particular circumstances of loss suffered.

Legislation cited (3)

Cases cited (5)

  • Hadley v Baxendale (1854) 9 Exch 341
  • British Transport Commission v Gourley [1956] AC 185
  • Robert Coussens v Attorney General (Civil Appeal No. 8 of 1999)
  • East African Development Bank v Ziwa Horticultural Exporters Ltd (1997-2001) UCLR 247
  • Haji Bahadur Khan v Rafiki Cotton Industries Ltd (Civil Suit No. 094 of 2002)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Aridep Investment (U) Ltd v Pader District Local Government (Civil Suit No. 13 of 2005) [2009] UGHC 41 (26 March 2009)
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.