Wakilii

National Social Security Fund v Alcon International Ltd (Miscellaneous Civil Application No. 940 of 2018)

High Court · [2019] UGCOMMC 15 · 2019 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to strike out plaint following Supreme Court determination on privity of contract
Decision
Plaint struck out for failure to disclose a cause of action

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the plaint disclosed no cause of action because the respondent was not a party to the construction contract, which had been entered into with a Kenyan company. The doctrine of privity of contract bars a stranger to a contract from suing on it where there was no valid assignment or novation. The transaction was also tainted with fraud as the respondent deliberately concealed its identity when taking over the construction site. The suit was dismissed with costs.

Outcome

Plaint struck out for failure to disclose a cause of action

Facts

On 21 July 1994, the applicant (NSSF) entered into a construction contract with Alcon International Limited (Kenya) to complete a multi-story office complex. The Kenyan company had been selected after a tender evaluation that rejected Alcon International Limited (Uganda) for lack of experience. Unknown to the applicant, the Ugandan company (the respondent) took over the construction site instead of the Kenyan entity. In 1998, the respondent sued for wrongful termination of contract. The matter went through arbitration, High Court, Court of Appeal, and Supreme Court. The Supreme Court determined that the respondent had no cause of action because it was not a party to the contract with the applicant and there was no valid assignment or novation. The respondent's attempt to amend the pleadings was refused. The applicant then filed this application to strike out the plaint.

Issues

  1. Whether the plaint in HCCS 1255 of 1998 disclosed a cause of action against the applicant.
  2. Whether a party that was not privy to a contract can sue for breach of that contract.
  3. Whether a suit arising from a fraudulent transaction can be sustained.

Orders

  • The plaint in HCCS 1255 of 1998 is struck out.
  • Costs awarded to the applicant.

Rules and key headnotes

Contract Law — Privity of Contract — Right to Sue on Contract
A party that was not a party to a contract cannot sue for breach of that contract in the absence of a valid assignment or novation.
Contract Law — Assignment and Novation — Requirements for Validity
For a valid assignment or novation, there must be fulfilment of the essential elements of contract including offer, acceptance, intention to create legal relations, and consent of both parties to the incoming party.
Civil Procedure — Pleadings — Cause of Action — Striking Out
Where a plaint does not disclose a cause of action and an appellate court has determined that the pleadings cannot sustain a claim, the High Court should strike out the plaint.
Tort Law — Fraud — Effect on Contract — Public Policy
A suit arising from a fraudulent transaction cannot be sustained as a matter of public policy, and a party that commits fraud to assume a contract cannot derive benefit under it.
Tort Law — Fraud — Definition and Elements
Fraud is an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with something valuable or surrender a legal right, and includes deliberate concealment that induces a party to transact business.

Cases cited (2)

  • Auto Garage & Others v Motokov [1971] EA 514
  • Halsbury's Laws of England 4th Edition Vol. 9

Full judgment

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

National Social Security Fund v Alcon International Ltd (Miscellaneous Civil Application No. 940 of 2018) [2019] UGCommC 15 (23 May 2019)
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.