Wakilii

Malkara Birlik Sut ve Sut Mamulleri A.S v Skyrocket Agency Co. Ltd and Others (Civil Suits No. 240 of 2023; Civil Suits No. 305 of 2023; Civil Suits No. 345 of 2023)

High Court · [2023] UGCommC Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated civil suits for declaration of ownership, breach of contract, and orders for release or re-export of goods
Decision
Plaintiff's ownership declared; goods ordered released to plaintiff for re-export after payment of taxes; 1st defendant's competing claim dismissed; permanent injunction granted restraining 2nd defendant from releasing goods to any party other than plaintiff

Observed later treatment

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Holding

The High Court held that a Sale Agreement for goods covered by a Bill of Lading was void ab initio where the purported seller, though named as consignee on the Bill of Lading, was a non-existent entity whose business registration had ceased eight days before the contract. The buyer, having conducted due diligence and discovered the seller's non-existence prior to purchase, could not acquire good title under the nemo dat principle. The court found the original supplier remained the rightful owner and retained its lien as an unpaid seller, as the Bill of Lading was not lawfully transferred in good faith.

Outcome

Plaintiff's ownership declared; goods ordered released to plaintiff for re-export after payment of taxes; 1st defendant's competing claim dismissed; permanent injunction granted restraining 2nd defendant from releasing goods to any party other than plaintiff

Facts

A Turkish supplier (plaintiff) agreed to supply 25,000kg of Whey protein concentrate to Admirals Trading LLC (3rd defendant) for delivery to Adim Foods and Fruits Supplies (4th defendant) in Uganda. Payment was due 25 days after the Bill of Lading date (2 February 2023). The plaintiff released the Bill of Lading and shipping documents to the 4th defendant as instructed by the 3rd defendant but was never paid. On 21 February 2023, the 4th defendant's business registration was cancelled. On 2 March 2023, Skyrocket Agency Co. Ltd (1st defendant) purchased the goods from Dumba Hadadi (5th defendant) trading as the 4th defendant, paying USD 50,000 and receiving the original Bill of Lading. The 1st defendant had conducted due diligence before purchase and discovered the 4th defendant was not registered. The goods arrived in Uganda on 11 March 2023 and were held by Good Brothers International Ltd (6th defendant) in a bonded warehouse. The plaintiff obtained an interim court order preventing release of the goods. Three consolidated suits followed, with the plaintiff seeking to recover the goods and payment, and the 1st defendant seeking clearance to take possession.

Issues

  1. Whether the suit filed by the Plaintiff is competent before this Honorable Court?
  2. Who is the lawful owner of the goods in container No. MRU 369933 and whether the plaintiff holds a lien over the goods?
  3. Whether the 3rd, 4th and 5th defendants are liable for breach of contract?
  4. What remedies are available for the parties?

Orders

  • A declaration is made that the suit goods in container No. MRSU 369933 are the property of the plaintiff.
  • A declaration that the 3rd defendant breached the contract with the plaintiff under the Commercial Invoice.
  • The 2nd and 6th Defendants are ordered to release the suit goods to the plaintiff and/or facilitate their re-export by the Plaintiff after payment of the requisite taxes.
  • A permanent injunction is issued restraining the 2nd Defendant from releasing the suit goods in container No. MRSU 369933 to the 1st Defendant or any other person party claiming an interest in the goods save for the plaintiff.
  • General damages of UGX 10,000,000 are awarded to the plaintiff.
  • Interest is awarded on the general damages until payment in full.
  • Costs of the suit to the plaintiff.
  • The claim by Sky Rocket Agency Co Ltd under HCCS No. 305 of 2023 is dismissed.

Rules and key headnotes

Civil Procedure — Locus Standi — Capacity of Foreign Company to Sue — Principal Officer Authority
A foreign company incorporated outside Uganda may institute legal proceedings in Uganda without first registering under the Companies Act 2012. A principal officer or director of a company has ostensible authority under Order 29 rule 1 of the Civil Procedure Rules to instruct legal proceedings on behalf of the company without a specific board resolution where that officer holds a position of sufficient seniority and has direct knowledge of the facts giving rise to the claim.
Contract Law — Capacity to Contract — Unregistered Business Names — Void Contracts
A contract entered into by a party purporting to trade under an unregistered business name is illegal and void ab initio where Section 2(1)(b) of the Business Names Registration Act requires registration. Neither party to such a contract can acquire any enforceable rights therefrom.
Contract Law — Capacity to Contract — Non-Existent Legal Entity — Nemo Dat Principle
Under the nemo dat quod non habet principle and Section 29 of the Sale of Goods and Supply of Services Act 2018, a purported seller who is a non-existent legal entity has no capacity to contract and cannot pass good title to a buyer. A buyer who conducts due diligence and discovers the seller's non-existence prior to purchase cannot claim to have acquired the goods in good faith or acquired a better title than the seller possessed.
Commercial Law — Bills of Lading — Document of Title — Transfer of Title
A Bill of Lading is a document of title under Section 1(1)(b) of the Sale of Goods and Supply of Services Act 2018 and represents the goods in international trade. However, possession of a Bill of Lading does not confer good title where the Bill was not lawfully transferred or where the transferor lacked capacity to contract. The holder of a Bill of Lading who purports to sell goods in the name of a non-existent consignee cannot pass title, notwithstanding possession of the original shipping documents.
Commercial Law — Unpaid Seller's Lien — Retention Rights — Loss of Lien
An unpaid seller loses the right of lien under Section 54(2)(b) of the Sale of Goods and Supply of Services Act 2018 when goods are delivered to a carrier for transmission to the buyer without reserving the right of disposal. However, where a document of title has not been lawfully transferred within the meaning of Section 58(2) because the transferee did not acquire it in good faith for valuable consideration, the seller's right of lien is not defeated.
Contract Law — Illegality — Court's Duty — Makula Principle
A court cannot sanction or enforce an illegal contract. Illegality, once brought to the attention of the court, overrides all questions of pleadings including any admissions made. No court ought to enforce obligations alleged to arise out of a contract or transaction which is illegal if the illegality is duly brought to the notice of the court.
Contract Law — Breach of Contract — Payment Terms — Proof of Non-Payment
A breach of contract occurs when one or both parties fail to fulfil the obligations imposed by the terms of the contract. Where payment terms stipulate a specific deadline and the buyer fails to make payment by that deadline despite receiving the goods and shipping documents, the buyer is in breach of contract.

Legislation cited (13)

Cases cited (16)

  • Yoswa Kityo v Eriya Kaddu [1982] HCB 58
  • Bugerere Coffee Growers Ltd v Sebadduka & Anor [1970] EA 147
  • Makerere Properties Ltd v Mansukhlal Ranji Karia (High Court Civil Suit No. 32 of 1994)
  • Rubaga Building Company Ltd v Gopal Devsi Vekaria & Virbhai Nanji Bechar Kerai (High Court Civil Suit No. 534 of 2014)
  • Friecca Pharmacy Limited v Anthony Natif (Miscellaneous Application No. 497 of 2019 arising from High Court Civil Suit No. 50 of 2019)
  • Krone Uganda Limited v Kerilee Investments Limited (Civil Miscellaneous Application No. 306 of 2019) [2021] UGCommC 16
  • Chicken Tonight Limited v Kikomeko Aminah T/a Agro-Tech Enterprises Ltd (Miscellaneous Application No. 408 of 2023 arising from High Court Civil Suit No. 1070 of 2023)
  • All American Hardware Uganda Limited v Uganda Revenue Authority (TAT Application No. 23 of 2019 and Miscellaneous Application No. 39 of 2020)
  • Rass T, Smyth & Co. Limited v T.D Bailey, Sons & Co. [1940] 3 All ER 60
  • Rahima Nagita & 2 Others v Richard Bukenya & 3 Others (High Court Civil Suit No. 389 of 2010)
  • P&O Nedloyd Uganda Ltd v Tesco International Ltd (Court of Appeal Civil Appeal No. 86 of 2004)
  • Copy Lines Ltd v Rapid Shipping and Freight Uganda Ltd and Another (High Court Civil Suit No. 314 of 2007)
  • Biddell Bros Ltd v E. Clemens Horst & Co Ltd [1911] 1 KB 934
  • Makula International Ltd v Cardinal Nsubuga (Civil Appeal No. 4 of 1981)
  • Karim Moding v Sulaiman Kabega (High Court Civil Appeal No. 35 of 2015)
  • United Building Services Ltd v Yafesi Muzira T/A Quickest Builders and Co. [2006] UGComm 15

Full judgment

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

Malkara Birlik Sut ve Sut Mamulleri A.S v Skyrocket Agency Co. Ltd and Others (Civil Suits No. 240 of 2023; Civil Suits No. 305 of 2023; Civil Suits No. 345 of 2023) [2023] UGCommC
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.