Wakilii

Kabaco (U) Ltd v Attorney General (HCCS 406 of 1998)

High Court · [2002] UGCOMMC 13 · 2002 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of withheld tax moneys and damages
Decision
Judgment entered for plaintiff with special and general damages, interest, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the plaintiff's claim was founded on restitution and breach of contract, not fraud, and therefore did not require particularisation of fraud under the Civil Procedure Rules. The Mbarara Training Wing of NRA/UPDF had deducted withholding tax from payments to the plaintiff but failed to remit those taxes to URA. The defendant bore the burden of proving remittance or absence of obligation and failed to discharge it. The plaintiff was entitled to recovery of the withheld tax that could be proved, general damages for inconvenience and harassment, and interest at a rate of 20% per annum.

Outcome

Judgment entered for plaintiff with special and general damages, interest, and costs

Facts

Between 22 December 1988 and 14 June 1993, the plaintiff supplied foodstuffs to the Mbarara Training Wing of NRA/UPDF. The military unit deducted 2% withholding tax from payments totalling Shs.11,442,921/-, though the plaintiff could only prove Shs.8,202,481/- at trial. The Ministry of Defence confirmed these deductions in two letters. However, URA denied receiving any of the withheld tax moneys. When URA demanded payment of tax from the plaintiff, the plaintiff was compelled to pay again, resulting in double payment. URA threatened to close the plaintiff's business. The plaintiff sued for recovery of the withheld tax, general damages, and interest. The defendant argued the plaint was defective for failing to plead and particularise fraud, but the plaintiff maintained the claim was founded on restitution and breach of contract.

Issues

  1. Whether the plaint disclosed a cause of action founded on fraud requiring particularisation under Order 6 rule 2 of the Civil Procedure Rules.
  2. Whether the plaintiff was entitled to recovery of withheld tax moneys that were not remitted to URA.
  3. Whether the plaintiff was entitled to general damages for inconvenience and harassment.
  4. What interest rate should be awarded on the decretal amount and general damages.

Orders

  • Judgment entered for the plaintiff in the amount of Shs.8,202,481/-.
  • Interest awarded on the decretal amount at 20% per annum from 21 April 1998 to the date of judgment (11 July 2002).
  • General damages awarded in the amount of Shs.4,000,000/-.
  • Interest at court rate awarded on the cumulative decretal amount and general damages from 12 July 2002 until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Civil Procedure — Pleadings — Fraud — Requirement to Particularise
A claim founded on restitution or quasi-contract for moneys had and received does not constitute a claim in fraud and therefore does not require particularisation of fraud under Order 6 rule 2 of the Civil Procedure Rules.
Civil Procedure — Striking Out Pleadings — Cause of Action
Where a plaint is founded on restitution and breach of contract rather than fraud, a preliminary objection that the plaint should be struck out for failure to particularise fraud is misconceived and must fail.
Contract Law — Restitution and Quasi-Contract — Moneys Had and Received
A claim for refund of moneys had and received lies where there was an express or implied promise to remit withheld funds to a third party, that promise was breached, and the plaintiff suffered loss by being required to pay the same amount again.
Tax Law — Withholding Tax — Duty to Remit
Where a government agency deducts withholding tax from a taxpayer but fails to remit those taxes to the revenue authority, the government bears the burden of proving either that the tax was remitted or that there was no obligation to remit, and if it fails to discharge that burden, it is directly responsible for the taxpayer's loss resulting from double payment of the tax.
Damages & Quantum — General Damages — Inconvenience and Harassment
General damages may be awarded to compensate a plaintiff for inconvenience, harassment from the revenue authority including threats of business closure, and expenses incurred in attempting to recover losses arising from non-remittance of withheld taxes.
Damages & Quantum — Interest — Rate of Interest
Interest on a decretal amount should be awarded at a rate reflecting prevailing bank rates rather than an exorbitant rate, with 20% per annum being fair where prevailing bank rates range from 19-21% per annum.

Legislation cited (2)

  • Civil Procedure Rules O.6 r.2
  • Civil Procedure Rules O.7 r.11

Cases cited (5)

  • Lubega v Barclays Bank (Civil Appeal No. 2 of 1992)
  • Kazzora v Rukuba (SCCA No. 13 of 1993)
  • Husseinali Hasmani v National Bank of India (1937) 4 EACA CA-T
  • Kampala Bottlers v Damanico (Civil Appeal No. 22 of 1992)
  • Moses v Mcferlen

Full judgment

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

Kabaco (U) Ltd v Attorney General (HCCS 406 of 1998) [2002] UGCommC 13 (10 July 2002)
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.