Wakilii

Malkara v Skyrocket Agency Co. Limited & 5 Others (Civil Suit 240 of 2023; Civil Suit 305 of 2023; Civil Suit 345 of 2023)

High Court · [2023] UGCOMMC 158 · 2023 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Three consolidated civil suits for declaration of ownership, breach of contract, and orders for release or re-export of goods held by customs
Decision
Judgment entered for the plaintiff with declaration of ownership, orders for release and re-export of goods, permanent injunction, general damages, interest and costs. The 1st defendant's suit dismissed.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the plaintiff Turkish company was the lawful owner of goods in a container held by customs, as the purported sale to the 1st defendant was void because the seller (4th defendant) had ceased to exist as a registered business eight days before the sale agreement. The court applied the nemo dat principle, finding that the 5th defendant could not pass good title when trading under a non-existent business name. The 3rd defendant breached the payment terms of the commercial invoice. The court ordered release of the goods to the plaintiff for re-export and awarded general damages of UGX 10,000,000.

Outcome

Judgment entered for the plaintiff with declaration of ownership, orders for release and re-export of goods, permanent injunction, general damages, interest and costs. The 1st defendant's suit dismissed.

Facts

The plaintiff, a Turkish company, agreed to supply 25,000kg of whey protein concentrate to the 3rd defendant for delivery to the 4th defendant in Uganda. The plaintiff issued a commercial invoice on 17 November 2022 with payment terms of 25 days after the bill of lading date (2 February 2023). The plaintiff delivered the goods and shipping documents to the 4th defendant as instructed by the 3rd defendant but was never paid. The 5th defendant received the shipping documents on behalf of the 4th defendant. On 2 March 2023, the 1st defendant purchased the consignment from the 5th defendant trading as the 4th defendant and received the original bill of lading and other documents. The container arrived in Uganda on 11 March 2023 and was held by the 6th defendant at Namanve. Evidence showed that the 4th defendant had ceased to exist as a registered business on 21 February 2023, eight days before the sale to the 1st defendant. The 1st defendant admitted conducting due diligence and discovering the 4th defendant was not registered before purchasing the goods.

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

Company Law — Foreign Companies — Capacity to Sue — Principal Officers
A foreign company incorporated outside Uganda is not required to register under the Companies Act 2012 before it can institute legal proceedings or carry out business in Uganda, and may act through its principal officer or director who has ostensible authority to instruct legal proceedings on behalf of the company.
Commercial Law — Sale of Goods — Business Names — Unregistered Business
Under the Business Names Registration Act, a person carrying out business in a name that does not consist of his or her true surname must register that business name, and contracts entered into under an unregistered business name are not enforceable.
Contract Law — Capacity to Contract — Non-Existent Entity
Where a business entity has ceased to exist prior to the execution of a sale agreement, the purported seller has no capacity to contract, rendering the sale agreement illegal and void ab initio, and neither party can acquire any rights therefrom.
Commercial Law — Sale of Goods — Nemo Dat Principle — Transfer of Title
Under the common law principle of nemo dat quod non habet and Section 29 of the Sale of Goods and Supply of Services Act 2018, a seller cannot give a better title to property than he or she possesses, and where goods are sold by a person who is not the owner and does not sell under the authority or consent of the owner, the buyer acquires no better title than the seller had.
Commercial Law — Bills of Lading — Document of Title — Good Faith Purchase
Although a bill of lading is a document of title and the general rule is that the owner of goods is the person named as consignee in the bill of lading, a purchaser does not acquire good title where the circumstances of acquisition are tainted by illegality, including where the holder of the bill of lading is a non-existent entity and the buyer was aware of this fact prior to purchase.
Contract Law — Illegality — Court's Duty
A court of law cannot sanction that which is illegal. Illegality once brought to the attention of the court overrides all questions of pleadings, including any admissions made thereon, and no court ought to enforce an illegal contract or allow itself to be made an instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal.
Commercial Law — Sale of Goods — Unpaid Seller's Lien — Loss of Lien
An unpaid seller retains a lien over goods where the circumstances under which a purported buyer acquired the bill of lading as document of title were tainted by illegality, and the documents of title were not lawfully transferred in good faith for valuable consideration.

Legislation cited (14)

Cases cited (16)

  • Yoswa Kityo v Eriya Kaddu [1982] HCB 58
  • Bugerere Coffee Growers Ltd v Sebadduka & Anor [1970] IEA 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)
  • 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)
  • All American Hardware Uganda Limited v Uganda Revenue Authority (TAT Application No. 23 of 2019)
  • 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] UGCommC 15

Full judgment

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

Malkara v Skyrocket Agency Co. Limited & 5 Others (Civil Suit 240 of 2023; Civil Suit 305 of 2023; Civil Suit 345 of 2023) [2023] UGCommC 158 (17 July 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.