Wakilii

British American Tobacco (U) Ltd v Sedrach Mwijakubi & 4 Ors (Civil Appeal No. 50 of 2008.)

Court of Appeal · [2010] UGCA 1 · 2010 Appeal Dismissed (Interest Varied) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from High Court (Commercial Division) judgment for the plaintiffs in a representative action for breach of tobacco supply contracts
Decision
Appeal substantially dismissed; High Court decree varied to reduce interest rate from 26% to 15% per annum compounded monthly

Observed later treatment

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Holding

The Court of Appeal upheld the trial judge's findings that the respondents and the numerous tobacco farmers they represented were the appellant's contracted farmers, proved by secondary evidence under the Evidence Act where the appellant, obliged by regulation to keep records of contracted farmers, adduced no contrary evidence. The court held the burden of establishing that tobacco was grown to contractual quality lay on the appellant, which failed to grade the tobacco. However, the award of 26% interest was found excessive absent proof of the Bank of Uganda minimum commercial lending rate. The court substituted 15% per annum on daily balances compounded monthly under the Tobacco Regulations. The appeal was substantially dismissed with costs.

Outcome

Appeal substantially dismissed; High Court decree varied to reduce interest rate from 26% to 15% per annum compounded monthly

Facts

The respondents brought a representative action on behalf of numerous tobacco farmers in Masindi and Hoima Districts, claiming they were contracted by the appellant to grow tobacco for the 2004 season under written contracts, with the appellant advancing loans and providing technical supervision. The farmers were required to sell their tobacco exclusively to the appellant at predetermined prices. After initially purchasing some tobacco early in the season, the appellant announced it would not purchase any more, leaving harvested tobacco delivered to the appellant's buying sheds unbought. The respondents sued to recover the value of the delivered tobacco (less outstanding loans), plus interest and costs. The appellant denied the farmers were its contracted farmers and claimed the suit was premature pending a verification exercise. Only PW1's passbook and 214 others were produced in court; for the remaining farmers, PW1 and PW2 gave evidence of compiling lists (exhibits P2 and P3) after inspecting farmers' contract passbooks in the markets. The appellant led limited defence evidence and did not grade the tobacco or explain its rejection.

Issues

  1. Whether the respondents and the farmers they represented were the appellant's contracted farmers.
  2. Whether all the persons in the lists of farmers (annextures B and C) had the same interest in the suit.
  3. Whether the respondents' tobacco was grown in accordance with the contract and was of the quality the appellant contracted to buy.
  4. Whether the respondents were entitled to interest at the rate of 26% per annum compounded monthly.

Orders

  • Appeal dismissed with costs to the respondents in this court and the court below.
  • The decree of the High Court varied as regards the rate of interest.
  • Award of interest at 26% per annum set aside and substituted with interest at 15% per annum on daily balances compounded monthly under regulation 11(2) and (3) of the Tobacco (Control and Marketing) Regulations.

Rules and key headnotes

Evidence — Secondary Evidence — Proof of Contract Where Original Documents Not Produced
A party may prove the existence of contracts through secondary evidence under the Evidence Act where witnesses personally inspected the underlying documents, and such evidence is not hearsay where the witnesses themselves interviewed the parties and compiled the records.
Evidence — Burden of Proof — Facts Within a Party's Peculiar Knowledge and Statutory Record-Keeping Duty
Where a party is under a statutory duty to maintain records of contracted parties, its failure to adduce those records to contradict the opposing party's evidence does not shift the burden of proof; the court may draw an adverse inference from the failure to produce records within that party's peculiar knowledge.
Contract Law — Breach — Buyer's Duty to Grade and Purchase Goods Under Supply Contract
Where a supply contract vests in the buyer the responsibility for supervising production and grading the goods, the burden of establishing that the goods failed to meet contractual quality rests on the buyer, and unexplained failure to grade or purchase delivered goods constitutes breach.
Damages & Quantum — Interest — Award Requiring Proof of Statutory Reference Rate
An award of interest calculated by reference to the Bank of Uganda minimum commercial lending rate requires evidence of that rate; absent such proof, an award of 26% per annum is excessive and may be substituted with a lower rate.

Legislation cited (9)

Cases cited (1)

  • Bank of Baroda (U) Limited vs. Kamugunda [2006] E.A.11

Full judgment

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

British American Tobacco (U) Ltd v Sedrach Mwijakubi & 4 Ors (Civil Appeal No. 50 of 2008.) [2010] UGCA 1 (1 August 2010)
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.