Wakilii

Kyotera Tax Operators Cooperative Union v Attorney General & 2 Others (Civil Suit 35 of 2018)

High Court · [2023] UGHC 335 · 2023 Judgment for Defendant AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract and damages following presidential directive cancelling revenue collection arrangement
Decision
Suit dismissed — plaintiff's claim for damages for breach of contract rejected on grounds that contract was based on illegal taxation regime and presidential directive was lawful exercise of constitutional duty

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the presidential directive cancelling the daily tax collection regime did not constitute breach of contract by the defendants. The President acted within his constitutional mandate under Article 26 to protect citizens from unlawful deprivation of property. The revenue collection arrangement was based on an oppressive and illegal taxation regime that violated constitutional property rights. Courts cannot enforce contracts founded on illegality. The plaintiff's suit was dismissed with no order as to costs.

Outcome

Suit dismissed — plaintiff's claim for damages for breach of contract rejected on grounds that contract was based on illegal taxation regime and presidential directive was lawful exercise of constitutional duty

Facts

The plaintiff, a cooperative union of taxi operators, entered into a contract with Kyotera Town Council (3rd defendant) to collect daily taxes from taxi drivers. The plaintiff paid UGX 41,929,500 to the 3rd defendant under this arrangement. The President of Uganda subsequently issued a directive cancelling daily tax collections, identifying them as oppressive over-taxation of taxi drivers. The plaintiff sued the Attorney General, Rakai District Local Government, and Kyotera Town Council for breach of contract and damages. The 3rd defendant refunded the UGX 41,929,500 under a consent judgment, leaving only the claims for damages and costs for adjudication.

Issues

  1. Whether there was breach of contract by the defendants.
  2. Whether the plaintiff is entitled to damages for breach of contract.
  3. Whether costs should be awarded in the circumstances.

Orders

  • The suit is hereby dismissed.
  • There is no order as to costs made.

Rules and key headnotes

Contract Law — Discharge of Contract — Frustration by Operation of Law — Presidential Directive
A contract may be discharged by operation of law when parties' contractual duties are terminated due to the involvement of law, releasing parties from their obligations. Where a contract becomes void due to supervening impossibility owing to change in existing laws or policy directives, there is no breach of contract.
Constitutional Law — Presidential Powers — Duty to Uphold Constitution — Article 26 Property Rights
The President has statutory duty and authority by virtue of holding office to make necessary interventions in good faith to protect people's property from being unlawfully deprived without prior adequate compensation as required under Article 26 of the Constitution. A presidential directive issued to enforce constitutional property rights and prevent oppressive taxation is a lawful exercise of constitutional mandate.
Contract Law — Illegality — Contracts Based on Illegal Acts — Unenforceability
Courts cannot sanction or enforce contracts based on illegalities. Where a revenue collection contract is founded on an oppressive and illegal taxation regime that violates constitutional property rights under Article 26, the contract cannot be enforced and no damages flow from its termination.
Constitutional Law — Property Rights — Article 26 — Protection Against Unlawful Deprivation
Article 26 of the Constitution creates the right to own property and citizens shall not be deprived of property except within the exceptions created therein. An oppressive taxation regime that deprives citizens of their money without lawful basis constitutes unlawful deprivation of property barred by Article 26.

Legislation cited (4)

Cases cited (6)

  • Cargo World Logistics Ltd v Royale Group Africa Ltd (High Court Commercial Suit No. 157 of 2013)
  • Kampala District Land Board & Anor v Venansio Babweyana (Civil Appeal No. 02 of 2007)
  • Ronald Kasibante v Shell Uganda Ltd (High Court Civil Suit No. 542 of 2006)
  • Waiglobe (U) Limited v Sai Beverages Limited (High Court Civil Suit No. 16 of 2017)
  • Rwanyindo Aurelia & Anor v School Outfitters (U) Ltd (Civil Appeal No. 53 of 1999)
  • Makula International Ltd v Cardinal Nsubuga [1982] HCB 11

Full judgment

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

Kyotera Tax Operators Cooperative Union v Attorney General & 2 Others (Civil Suit 35 of 2018) [2023] UGHC 335 (1 April 2023)
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.