Wakilii

Kenlloyd Logistics (U) Ltd v Kalson Agrovet Concerns Ltd (Civil Suit No. 185 of 2010)

High Court · [2017] UGCOMMC 116 · 2017 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 heard exparte under Order 9 rule 10 CPR after defendant failed to appear
Decision
Judgment entered for plaintiff with general damages, interest, and costs; defendant's counterclaim dismissed with costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that an arbitration clause does not oust court jurisdiction where no party applies to refer the matter to arbitration. The defendant breached the supply contract by failing to deposit net proceeds into the escrow account as agreed and by ordering cement outside the contract without plaintiff's consent. Special damages were not proved due to inadequate documentary evidence, but general damages were awarded for loss of profit and inconvenience caused by the breach.

Outcome

Judgment entered for plaintiff with general damages, interest, and costs; defendant's counterclaim dismissed with costs

Facts

In September 2009, the defendant contracted with BCEG (Rwanda) to supply 2000 metric tonnes of cement monthly for three years. The defendant approached the plaintiff for logistical and financial support. The parties entered a memorandum of understanding providing that net profits would be deposited in an escrow account and shared 50% to defendant, 30% to plaintiff, and 20% to Investpro Holdings Ltd. In October 2009, plaintiff ordered 2000 metric tonnes from Pakistan, paid $154,000, and delivered 1988 tonnes to BCEG, which paid $589,410. In February 2010, defendant made direct orders for cement totaling $242,032 without plaintiff's involvement, contrary to the agreement requiring orders through plaintiff's services only. Defendant requested plaintiff to top up $19,000, which plaintiff did. A supply and service agreement was executed on 25 February 2010 formalizing payment terms. BCEG paid defendant's invoices around 10 May 2010, but defendant failed to deposit proceeds in the escrow account and failed to pay plaintiff its contractual share, despite demands. Plaintiff brought suit; defendant filed defence raising arbitration clause and counterclaim, but failed to appear at hearing.

Issues

  1. Whether the matter ought to have been referred to arbitration
  2. Whether the defendant breached the contract
  3. What remedies are available to the parties

Orders

  • General damages of UGX 50,000,000 awarded to the plaintiff
  • Interest on general damages at 12% per annum from date of filing suit until payment in full
  • Costs of the suit awarded to the plaintiff
  • Defendant's counterclaim dismissed
  • Costs of the counterclaim awarded to the plaintiff

Rules and key headnotes

Arbitration — Arbitration Clause — Court Jurisdiction — Application Required
An arbitration clause in a contract does not automatically oust the jurisdiction of the court. Under section 5(1) of the Arbitration and Conciliation Act, a court may refer a matter to arbitration only where a party applies for such referral after filing of statement of defence. Where a defendant raises an arbitration clause in its defence but fails to appear at hearing and makes no application to refer the matter to arbitration, the court retains jurisdiction to hear the matter.
Breach of Contract — Definition — Failure to Fulfill Contractual Obligations
Breach of contract occurs when one or both parties fail to fulfill the obligations imposed by the terms of the contract.
Pleadings — Defence — Specific Traverse Required — Blanket Denials Insufficient
Under Order 6 rules 8 and 10 of the Civil Procedure Rules, it is not sufficient for a defendant to deny generally the grounds alleged in the statement of claim. Each party must deal specifically with each allegation of fact which he or she does not admit, except damages. A blanket denial without specific traverse does not exonerate a defendant from liability.
Documentary Evidence — Secondary Evidence — Conditions for Admission
Before secondary evidence of a document may be admitted under section 64 of the Evidence Act, proper foundation must be laid for its reception. Where a party tenders a faint, illegible copy of a document with no indication of author, title, or address, and the original is not produced for comparison, the document must be rejected for failure to fulfill the conditions specified in section 64.
Special Damages — Proof — Must Be Specifically Pleaded and Proved Exactly
Special damages and loss of profit must be specifically pleaded. They must also be proved exactly, that is, on the balance of probabilities. Where special damages are pleaded but the documentary evidence tendered is inadequate or illegible and proper foundation is not laid for secondary evidence, the claim for special damages cannot be allowed.
General Damages — Breach of Contract — Assessment — Loss of Profit and Inconvenience
Under section 61(1) of the Contract Act, where there is breach of contract, the party who suffers breach is entitled to receive compensation for any loss or damage suffered. General damages are the direct probable consequence of the act complained of, and may include loss of use, loss of profit, or physical inconvenience. The award of general damages is an exercise of judicial discretion which should be exercised judiciously taking into account the circumstances of the case.
Interest — Court's Discretion — Rate Where Not Agreed
Under section 26(2) of the Civil Procedure Act, the court has powers to award interest if not agreed upon. Where no interest rate is provided, the rate is fixed at the discretion of the trial judge. Interest on general damages may be awarded at the court rate deemed reasonable in the circumstances.

Legislation cited (12)

Cases cited (10)

  • Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation [1942] AC 154
  • NSSF & Another v ALCON International Ltd (Supreme Court Civil Appeal No. 15 of 2009)
  • Nile Bank Ltd v Thomas Katto (High Court Miscellaneous Application No. 1190 of 1999)
  • United Building Services Ltd v Yafesi Muzira t/a Quick Set Builders & Co (High Court Civil Suit No. 154 of 2005)
  • Bernard Kyomukama v ENHAS Cooperative Savings & Credit Society (Civil Suit No. 35 of 2012)
  • Hall Brothers SS Co Ltd v Yong [1938] HB 756 (CA)
  • Haji Asuman Mutekanga v Equator Growers (U) Ltd (Supreme Court Civil Appeal No. 7 of 1992)
  • Superior Construction and Engineering Ltd v Natany Engineering Ltd (High Court Civil Suit No. 24 of 1994)
  • Crescent Transportation Co Ltd v BM Technical Services Ltd (Court of Appeal Civil Appeal No. 25 of 2000)
  • James Mbabazi & Another v Matco Stores Ltd & Another (Court of Appeal Civil Reference No. 15 of 2004)

Full judgment

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

Kenlloyd Logistics (U) Ltd v Kalson Agrovet Concerns Ltd (Civil Suit No. 185 of 2010) [2017] UGCommC 116 (28 September 2017)
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.