Wakilii

Kampala Phamaceuticals vs Gullaballi Ushalan (Civil Appeal No 49 of 1997)

Court of Appeal · [1998] UGCA 6 · 1998 Appeal Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from High Court award of damages in a suit for wrongful dismissal and breach of contract of employment
Decision
Appeal allowed; damages reduced to six months' salary (Shs.1,200,000) and six months' overseas allowance (US$12,000)

Observed later treatment

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Holding

The Court of Appeal held that where a fixed-term employment contract contains an express clause permitting termination on notice, damages for premature termination are limited to salary and allowances for the notice period, not the whole unexpired term. The trial judge erred in using a 51-month multiplier; a six-month multiplier ought to have applied. Damages for breach of an employment contract are compensatory, not punitive, and cannot include compensation for injured feelings. The employee, being highly qualified, should have mitigated her loss. The special damages award was reduced to six months' salary (Shs.1,200,000) and overseas allowance (US$12,000). The general damages of Shs.4.9m were set aside as based on wrong principle.

Outcome

Appeal allowed; damages reduced to six months' salary (Shs.1,200,000) and six months' overseas allowance (US$12,000)

Facts

In January 1991 the respondent entered a written five-year fixed-term employment contract with the appellant, effective 4 December 1991 to 3 December 1996, as Quantity Control Manager. Her emoluments were a salary of Shs.200,000 per month and an overseas allowance of US$2,000 per month, plus fringe benefits. She worked and was paid for only nine months. Her employer persuaded her to take overseas leave in early 1992, and on her return the company had changed its name from Inlex Pharmaceuticals Ltd to Kampala Pharmaceuticals Ltd. The new company neither assigned her work nor terminated her contract. She did not terminate it herself, fearing loss of benefits. She filed suit on 14 May 1993 claiming general damages and emoluments due until the end of the contract. Clause 8 of the contract allowed either party to terminate by giving six months' written notice or paying six months' salary in lieu. No notice was given by the employer.

Issues

  1. Whether damages for breach of a fixed-term employment contract terminable on notice should be assessed on the notice period or the unexpired term of the contract.
  2. Whether the respondent was obliged to mitigate her loss by seeking alternative employment.
  3. Whether the general damages awarded were excessive.

Orders

  • Appeal allowed.
  • Award made by the learned Principal Judge set aside.
  • Substituted award of Shs.1,200,000 as salary and US$12,000 overseas allowance.
  • Appellant to have the costs of the appeal and of the suit.

Rules and key headnotes

Employment & Labour — Wrongful Dismissal — Measure of Damages Where Contract Terminable on Notice
Where a fixed-term employment contract contains an express clause permitting either party to terminate on notice, damages for premature termination are limited to the salary and allowances payable for the notice period, not the entire unexpired term of the contract.
Contract Law — Fixed-Term Contracts — Termination Before Expiry
A contract for a definite period cannot be terminated before its expiry unless the parties are expressly empowered to do so by the terms of the contract; the availability of premature termination is a matter of construction of the words used.
Damages & Quantum — Breach of Employment Contract — Compensatory Nature
Damages for breach of a contract of employment are compensatory and not punitive; they cannot include compensation for the employee's injured feelings or the difficulty of finding fresh employment, and exemplary or vindictive damages are not recoverable.
Damages & Quantum — Mitigation — Duty of Employee
A dismissed employee, particularly one who is highly qualified, has a duty to mitigate her loss by seeking alternative employment, and cannot remain idle and claim compensation for the whole unexpired term of the contract.
Damages & Quantum — Special Damages — Requirement of Proof
Special damages connote damages arising from the special circumstances of the case which must be proved by competent evidence directly traceable to the failure to discharge a contractual obligation; quantifiable claims such as transport, housing and education must be specifically pleaded and proved as special damages.
Damages & Quantum — Appellate Interference With Award
An appellate court will interfere with a trial judge's assessment of damages only where it is satisfied that the judge acted on a wrong principle of law or that the amount awarded was so high or so low as to be an entirely erroneous estimate of the damage.

Cases cited (6)

  • Southern Highland Tobacco Union Limited v David McQueen (1960) EA 490
  • Latchford Premier Cinema Limited v Ennion (1931) Ch 409
  • Addis v Gramophone Co Ltd [1909] AC 488
  • Flint v Lovell [1935] 1 KB 354
  • RAMBHAI MALIJIBHAI PATEL - Civil Appeal No.20/42
  • Echen (U) Ltd v Geraldine Namubiru & Josephine Namukasa (Civil Appeal No. 29 of 1994)

Full judgment

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

Kampala Phamaceuticals vs Gullaballi Ushalan (Civil Appeal No 49 of 1997) [1998] UGCA 6 (28 April 1998)
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.