REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA HOLDEN AT KAMPALA

COMMERCIAL COURT DIVISION

HCT-00-CC-CS-0685-2006

(Formerly HCCS No. 363 0f 2001)

Yoka Rubber Industries Ltd                                           Plaintiff

Versus

The Diamond Trust Properties Ltd                                Defendant

BEFORE: MR. JUSTICE FMS EGONDA-NTENDE

JUDGMENT

1. The plaintiff was a tenant of the defendant in the premises known as Plot No. 8A/B, Kabelega Close, Luzira in Kampala. He became a tenant in 1993. He was carrying on the business of re treading tyres. Initially there was a written agreement but upon its expiry, the parties continued with an oral tenancy. In May 1999 the defendant locked up the premises and confiscated the plaintiff’s property therein claiming payment of arrears of rent.
2. The plaintiff then paid some of the arrears of rent and requested that the premises be reopened and its properties released but this was declined by the defendant and to this day the defendant continues to be in occupation of both the premises and the plaintiffs properties that were confiscated by the defendant.
3. The plaintiff claims that by reason of these actions it has suffered loss as it has been prevented from operating its business, thereby losing profits, and suffering loss and damage. The plaintiff wanted to sale its factory equipment and plant and obtained potential buyers but the defendant’s actions hindered the sale of the same. The said plant and equipment have been subjected to horrendous depreciation and deterioration due to the unlawful conduct of the defendant.
4. The plaintiff therefore claims from the defendant general and exemplary damages for detinue and trespass to the goods; an order for release of the said goods or their market value; an injunction to restrain the defendant from auctioning the goods, interest and costs of this suit.
5. The defendant opposed this claim. It stated in its defence that the defendant was entitled under the common law right of distress to shut down the factory and seize the chattels therein as a pledge until rent arrears were paid. The defendant asserted that it had a right to auction the said property in order to recover the rent arrears. The defendant denies that it hindered the plaintiff’s efforts to sale the plant. It was aware of these efforts and in fact supported the same.
6. The defendant filed a counter claim in which it states that as of May 1999 US$21,327.00 was owing. After the closure of the premises the plaintiff effected payments totalling to US$11,603.00 leaving an outstanding balance of US$9,724 as arrears of rent. The defendant stored the seized property in the premises from May 1999 to October 2004, a period of 64 months for which the defendant claims storage charges/loss of rental income at the rate of US$ 1,000.00 per month. The defendant further claims storage charges at the rate of US$500.00 per month for the period between September 2004 to date.
7. The defendant further stated that the plaintiff had incurred while in the premises an electricity bill of Shs.2,982,571.00 which remained unpaid. The defendant therefore claims the said sum from the plaintiff. In addition to the foregoing the defendant claimed interest and costs, while praying that the plaintiff’s suit be dismissed with costs.
8. In its reply to the counter claim the plaintiff opposed the counter claim, asserting that the defendant at all times refused to accept US$972 which was due and owing then but rather continued to demand a much higher sum of US$46,300.00 as at January 14^th 2001 which it used to unlawfully seize the plaintiff’s property. The plaintiff further contends that the defendant is not entitled to storage charges or loss of rental income.
9. The plaintiff avers that it is not true that the plaintiff’s goods were moved into containers but were left in the open to the mercy of the weather. In addition the claim for electricity bill is ill founded as the bill is for a period ending 21^st September 2000 long after the plaintiff had been locked out. It prayed that the counter claim be dismissed with costs.

Was the lock up of the premises and seizure/detention/holding of the plaintiff’s goods in May 1999 lawful?

10.  The facts with regard to this issue are hardly in dispute.  It is the law and its application to the facts which is ultimately in issue. The plaintiff was a tenant of the defendant initially under a written agreement styled sub lease. This expired. The plaintiff continued in occupation without signing a new agreement, on terms the parties agreed to. Rent was varied from US$1500.00 to US$1000.00 at some point. The plaintiff fell in arrears and in May 1999 the defendant threw the plaintiff out of the premises and detained its plant, machinery and other property, demanding payment of the outstanding rental before release of the same.
11. The plaintiff effected part payment in two instalments. There was an outstanding balance on arrears. The defendant declined to release the plaintiff’s properties unless the arrears were paid.
12. It is contended for the defendant that the lock up of the premises and seizure of the properties was the exercise of its common law right to distress for rent. In reply the plaintiff asserts that there was no tenancy between the parties, and therefore the defendants had no right to distress for rent. In my view clearly the plaintiff was a tenant of the defendant, that is a tenant at will, as he had no specific grant in terms of time. And as there were arrears of rent in May 1999 the defendant possessed a common law right to distress for rent.
13. Was such right exercised lawfully?  DW1, a Property Project Consultant, was in May 1999, employed by the defendant. She did not describe what her designation with the defendant was. From the letters exhibited in this case she signed the same as Property Manager. She was employed until February 2006.  She and others not named carried out the exercise of locking up the premises, leaving the plaintiff’s plant, machinery and other equipment and property in the locked up premises. She also testified, on examination by court, that in May 1999, when the defendant locked up the premises let out to the plaintiff, it was exercising its right of re-entry.
14. We need to turn first to The Distress for Rent (Bailiffs) Act. (Chapter 76, Laws of Uganda 2000 Edition). Section 2 states,

‘No person, other than a landlord in person, his or her attorney or the legal owner of a reversion, shall act as bailiff to levy any distress for rent unless he or she shall be authorised to act as bailiff by a certificate in writing under the hand of a certifying officer, and such certificate may be general or apply to a particular distress or distresses.’

15. Though the right to distress for rent is a common law right, how that distress is to be effected is regulated by the written law above. Other than a registered or certified bailiff the only persons authorised to distress for rent are firstly a landlord in person; secondly an attorney of the landlord and thirdly an owner of a reversion.
16. The person that carried out the distress in the instant case on the evidence of DW1 is DW1, a property consultant, employed by the defendant, and I suppose assisted by other people. She did so in her own words as the defendant doing so personally. The defendant is an artificial person, and not a natural person. Did the Act contemplate in providing for ‘landlord in person’ to include an artificial person? Or can artificial persons carry out distress for rent in person?
17. Section 2(uu) of the Interpretation Act, (Chapter 3), defines a person in law as ‘includes any company or association or body of persons corporate or unincorporated.’ Clearly a body corporate is a person. The defendant is a person. Can the defendant act ‘in person’?
18. I think not. To be ‘in person’ is to be physically present in person. (See the Concise Oxford Dictionary, 8^th Edition, Page 888.) The artificial person cannot appear in person, as it cannot be physically present. As a person it has no physical attributes. It is a creature of the law. It must be represented by its mind, often regarded as the directors, or be represented by attorneys, persons appointed specifically to exercise certain authority that the company may exercise. Such presence cannot be said to be ‘in person’. I suppose that is the reason why the Act provides for action by attorneys as an alternative to corporate landlords acting in person. This enables the company and of course other natural persons should they wish to have attorneys act for them in distress for rent.
19. As noted above DW1, May Virji, is the one who purported to carry out the distress for rent together with other persons not named. She was not, on the evidence before this court, the landlord or the holder of the reversion. She was not an attorney of the defendant. She and others purported to exercise the personal rights of the defendant. That is not possible. It is a physical impossibility. The defendant is an artificial person. DW1 was not authorised to distress for rent on behalf of the defendant unless she and her companions were appointed attorneys of the defendant for that purpose or otherwise instructed to act for the defendant in accordance with the law.
20. In spite of the foregoing, the defendant claimed that it had acted the way it did as pursuing distress for rent. As noted above the defendant is a limited liability company. DW1 was its employee. Her designation or office was Property Manager, or so I shall assume, and the authority of such office, in the defendant on the evidence before this court is not known. If the Landlord has to act in person, it is presumed that the landlord has applied his/her mind to the matter and acts in accordance with that which he/she has decided. If the landlord is an artificial person, and cannot act in person, then its mind, in this case the board of directors, or such other officer as the board of directors may authorise specifically or generally a person or persons that may so act in accordance with the authority granted by the company.
21. There is no evidence the defendant, through its organs that can make decisions of this kind, ever made a decision to distress for rent, and appointed DW1 to act in its behalf in that regard, either generally or specifically in this case. Or that the company had appointed and invested DW1, May Virji, with the authority, real or ostensible, as she purported to exercise.
22. I find that the purported act of distress for rent was carried out, not in accordance with the law. Persons not authorised by The Distress for Rent (Bailiffs) Act carried out the distress and this is prohibited by Section 2 of the said Act. In the result, though re-entry and termination of the tenancy, was justifiable, the detention of the plaintiff’s property amounted to trespass to goods.

Whether subsequent to May 1999 the defendant was entitled to charge or to levy rental charges on the Plaintiff in respect of the premises;                                                                          Was the defendant entitled to storage/rental charges from May 1999 to September 2004?

23. The next two issues can conveniently be taken together. The defendant has conceded on issue no.2 and has indicated that it had dropped this claim. That leaves only issue no.3. In light of my finding that the detention of the plaintiff goods did not amount to lawful distress for rent, the defendant cannot be entitled to storage charges since it wrongly and unlawfully detained the said goods. The defendant cannot be entitled to rent, given that it had actually re-entered the premises and terminated the tenancy that existed between the parties.
24. However even if I were to be wrong on my initial findings as to the lawfulness of the distress that occurred, and the distress had actually been lawful, I would still have declined to grant the defendant storage charges and or rental charges for the following reasons. After keeping the property in the premises for 5 years the defendant decided to transfer these properties to a container or containers, a much cheaper and perhaps reasonable alternative, given its claim for the cost of keeping the goods in a container or containers.
25. The defendant could have bought containers from the very beginning once for storage of the properties, and its own premises would have been available for occupation by another tenant the next day. By locking up the premises for 5 years, this was, in my view, self inflicted injury which should not be visited upon the former tenant.
26. Secondly the defendant cannot claim rent from the plaintiff for the period the plaintiff had been dispossessed of the premises by the defendant. Rent is available only when there is a tenancy between the parties and not in any other situation. See F.K. Motors (U) Ltd v Kabu Auctioneers & Court Bailiffs and Anor Court of Appeal Civil Appeal No. 92 of 2003 (unreported).

Were the parties under a duty to mitigate the losses occasioned?

What are the remedies available to the parties?

27. I can take these last two issues together. I shall begin with considering the law with regard to damages. In Eastern Radio Service and Another v R. J. Patel [1962] E.A. 818 this issue of damages for illegal distress was considered. In that case the bailiff who distrained for rent did so illegally as he did not have current certification. In considering damages Sir Trevor Gould, J.A. stated, at page 829,

‘That brings me to the question of damages. The distress in question was in my opinion illegal and the general principle concerning damages is stated in para. 730 of Mayne & McGregor on Damages (12^th Edition), thus: “The damages therefore are the same as in the ordinary tort action, and indeed the plaintiff can sue in trespass to goods, in conversion, or , generally in trespass to land. Thus the normal measure of damages is the value of the goods illegally distrained; in particular the defendant is not entitled  to deduct for the rent properly due.” The appellant is also entitled for such consequential damage as he may have suffered, but as both first and second respondents acted quite honestly and the appellant relied, as he was entitled to do, on what was little more than a technicality, there is no case for exemplary damages.’   

28. Newbold, J.A., at page 838, stated,

‘The goods, however, were undoubtedly sold,  and the case of Attack v Bramwell (18) 122 E.R. 196 makes it clear that the tenant would be entitled to recover their full value without deduction for any sum due for rent. In my view, this is a claim for special damages…..’

29. In Benedicto Musisi v Attorney General HCCS No. 622 of 1989, (unreported) my brother, Berko, J., (as he then was), stated,

‘When goods have been taken permanently from one, the judgment is usually for the return of the chattel detained or their value, together with damages for its detention. The measure of damages is usually the market value of the goods plus the consequential loss. The value of the goods is assessed as at the date of judgment or verdit. The principle is clearly stated in the case of Rasenthal v Alderton & Sons Ltd [1946] K.B. 374 as follows: “In an action of detinue, the value of the goods to be paid by the defendant to the plaintiff in the event of the defendant failing to return the goods to the plaintiff must be assessed as at the date of the verdict or judgment in his favour and not at the date the defendant refused to return the goods, and the same principle applies whether the defendant has converted the goods by selling them or has refused to return them for some other reason.”

30. The consequential loss to the detention of the goods, additional to the value of the goods may be the loss of earnings that a plaintiff suffers as a result of detention of its income bearing property. As noted above such claim would ordinarily be a claim for special damages. But in event it is claimed and not proved, it can be met with an award for general damages. As was noted by Platt., J.S.C, in Kibimba Rice Co Ltd v Umar Salim Supreme Court Civil Appeal No. 7 of 1988, (unreported),

‘It is not true to say that daily income can never be proved. Accounts of receipts against outgoings can be proved to arrive at a net figure. If no accounts were kept, then a claim in general damages should be considered.’

31. A similar principle was expressed in Uganda Commercial Bank v Matiya Wasswa Court of Appeal (Supreme Court) Civil Appeal No. 6 of 1982 (unreported) by Nyamuchoncho, J.A.,  in the following words,

‘I hold that the respondent is entitled to an award of general damages as a consequence of the detention of his bus since he cannot prove his actual loss of earnings.’

32. In that case the appellant had seized the respondent’s bus and detained it unlawfully. It was noted on appeal that the respondent had failed to prove the loss of earnings that he had suffered. The trial court awarded him general damages for loss of earnings and on appeal the court decided that the respondent could rightly be compensated by an award of general damages in respect of lost earnings though he had failed to prove specifically the loss of earnings.
33. The defendant had a counter claim for the balance of the rental due as at May 1999. PW1, the managing director of the plaintiff, admitted that this sum of US$9,722.00 as due and owing. The defendant would have succeeded on this claim, but in light of authorities above, the defendant is not entitled to recover this from any sums the plaintiff may recover for the illegal distress. In light of my findings on issues 1, 2 and 3 the defendant’s counterclaim for storage/rental fails. So does the claim for the electricity bill for lack of evidence.
34. The plaintiff’s claim for trespass to his goods has succeeded. What is left to consider is the damages payable. The plaintiff claimed that the property be returned or its value. In the evidence before this court PW1 testified to the effect that his property has suffered from being left exposed in the open out side the rented premises where it was moved. I take it that he now desires to have the value of the property rather than the property itself. In addition he claimed general and exemplary damages for detinue and trespass, interest on the decretal amount, and costs of the suit.
35. No case has been made out for exemplary damages.
36. The plaintiff’s evidence with the regard to the value of the property seized or even with regard to actual inventory of the property seized is somewhat problematic. There is no valuation report of property seized. I do not recall any inventory of the property seized tendered into evidence. Nevertheless the defendant did admit to have seized the plaintiff’s property which was on the premises, and detained the same up to this day, save for some vehicles its claims that some other people collected claiming the same as belonging to them. It is not in question though that the defendant seized the plaintiff’s plant, machinery and or equipment for tyre re treading.
37. At the time of the seizure, the plaintiffs business was, to use the managing director’s words, ‘limping’ having been suffocated by the closure of some banks in which it had been banking money. It is not clear if it would have continued limping, or it would have been rejuvenated, had not the defendant intervened as it did. It is reasonable to assume that the sunny side of the business was only around the corner. The plaintiff was not able to show by clear proof what its earnings were by the time the factory was closed.
38. It was the plaintiff’s claim that it attempted to sell the factory and would have succeeded to do so, had it not been because of the obstruction of the defendant. The evidence elicited from PW1, especially on cross examination, and the evidence of the defendant’s witness no.1, May Virji, leave it in no doubt that this was not the case. It is true that there were several attempts to sell the plant. For reasons that are not clear, other than that the intended buyers backed out, the plant or factory remained unsold.
39. There are several letters on record from the plaintiff to the defendant calling for the defendant’s forbearance in the matter, which appears to have been granted. These letters are at variance with the suggestion that the defendant refused prospective buyers access to the factory. On the contrary they assured the defendant that the plaintiff would get in touch as soon as it finalised with a buyer. Exhibits D4, D5, D7, D9, D10, D11, D12, D13, D14, D15, D16 and D17 refer. The plaintiff’s managing director admitted writing these letters and receiving the letters that came from the prospective buyers.
40. Different prospective buyers gave different quotes for the price of the plant. The highest offer was US$700,000.00 by a buyer from Burundi. This buyer failed to raise foreign exchange from the Central Bank of his country. Another offer was for US$140,000.00. Another offer was for Uganda Shillings 140,000,000.00. Though an agreement was made the prospective buyer did not tender the purchase price.
41. In my view the plaintiff has failed to prove the value of the goods to which it would be entitled. It is not possible to infer this from the values provided by prospective buyers, given that those prospective buyers actually failed to pay the agreed prices. At the same time, the prices vary so widely, as not to be able to guide one on the actual value of the plant and machinery in question. That is not, however, fatal to recovery. It is still possible to compensate the plaintiff by way of an award of general damages to cover the value of the goods and any other loss that the plaintiff suffered.
42. I have taken into account the fact that the plaintiff when he tried to sell the property it actually failed. Even the lowest price he had been offered the buyer did not come forward to pay. It must have been difficult to find a buyer for the property. I take into account that the circumstances in which the sale was attempted could have dampened the market and enthusiasm of prospective buyers. The property was in the hands of a person, other the seller, who was claiming a lien over it. This possibility may have been responsible for forcing away buyers.
43. There may have been other factors that made the sale of the property rather difficult but those factors have not been explored at all in the evidence before me. I shall not attempt to speculate. Doing the best I can in the circumstances, I am satisfied that an award of general damages of Shs.100,000,000.00 for value of the properties held by the plaintiff, would in the circumstances of this case be sufficient recompense for the value of the properties to the plaintiff.
44. The plaintiff is also entitled to consequential loss, and in this case loss of earnings. This was a profit making business. As I have noted above the business was limping at the time of the seizure. Two reasons were advanced for this. One was that some banks had been closed with the plaintiff’s money, leaving the plaintiff with little or no working capital. Secondly one of its customers was government, and government had delayed in meeting its outstanding obligations to the plaintiff.
45. As I noted above, it is reasonable to assume that the sunny side of the business may have just been around the corner though due account must be taken of imponderables for and against the business. No actual loss of income was proved. The seizure has lasted to date of this judgment, and that means the loss of earnings must be for the period from May 1999 to May 2008, a period of 9 years. Doing the best I can in the circumstances of this case, I shall award a lump sum figure for general damages for loss of earnings for 9 years in the sum of Shs.216,000,000.00. Interest at court rate shall be payable on the above sums from the date of the judgment till payment in full.
46. The question of mitigation of the plaintiff’s loss does not arise.
47.  The defendant shall pay costs of this suit.
48. Before I take leave of this matter, I must express my regret at the delay this case has suffered in the justice system. It is an old case filed in 2001. Delay imposes undue costs on both the successful party and the unsuccessful party that would have been avoided with a speedy trial. Delay locks up the economic potential of the resources of the parties, inflicting harm not only on the parties but to the social and economic fabric of the country.
49. It is my hope and earnest desire that not only will efforts be made by those responsible (from managers of the system, resource providers, parties, counsel, and individual judicial officers) that will ensure that cases of this nature become a thing of the past in our system, but perhaps too, the parties and their legal advisors as well need to take the opportunities afforded by mediation that are now on offer at this court. I was informed from the bar that counsel had put proposals to their clients which could have settled this matter, but the clients declined the advice, which I suppose they were entitled too. I wish to commend counsel for having embraced mediation though it turned out to be unsuccessful in this particular case.

Dated, signed and delivered this 30^th day of May 2008

FMS Egonda-Ntende

Judge