THE REPUBLIC OF UGANDA

IN THE SUPREME COURT OF UGANDA AT KAMPALA

Coram:  Nshimye; Mwangusya;  Opio Aweri; Mwondha; Tibatemwa  JJ.S.C.

CIVIL APPEAL NO. 08 OF 2013

Between

YOKA RUBBER INDUSTRIES ............................................... APPELLANT

And

DIAMOND TRUST PROPERTIES ..................................... RESPONDENT

(Appeal against  the decision of the Court of Appeal before L. E. Mukasa Kikonyogo DCJ;   Twinomujuni, SBK Kavuma JJA, dated 14th April 2010 in Civil Appeal No 51 of 2008 2015)

JUDGMENT OF MWONDHA JSC

The appellant appealed against the judgment and decision of the Court of Appeal on five grounds as follows:-

1. The learned  Justices of the Court of Appeal erred in law and fact in failing to re-evaluate and appraise all the evidence  in the trial Court and subject it to the fresh scrutiny hence came to a wrong conclusion that the distress was lawful.
2. The learned Justices of the Court of Appeal erred in law and fact in holding that the Distress for Rent (Bailiffs) Act for 1993 (Cap 76) was only enacted in order to regularise and control the procedure for appointment of Bailiffs.
3. The learned Justices of the Court of Appeal erred in law and fact in holding that DW1 was such a person with the general authority to Distress for rent hence reaching an erroneous decision that the distress was lawful.
4. The learned Justices of the Court of Court of Appeal erred in law and fact in holding that the appellants were not entitled to any damages at all from the respondents.
5. The learned Justices of the Court of Court of Appeal erred in law and fact in allowing the counter claim for the arrears of Rent in the sum of US $ 9724 and interest thereon. 

The appellant carried on the business of tyre –retreading among others and occupied the respondents premises at Plot 8 AB Kabalega Close, Luzira as a tenant as per the sublease agreement dated 1st February 1993.Upon its expiry, a periodic tenancy on exactly the same terms as under theexpiredsublease agreement was entered into save for the revised rent of US$1500.00to US$1000.00 per month commencing on 1st February 1996.In 1999 due to the appellant’s indebtedness to the respondent in rent arrears, the respondent exercised its common law right of distress as a land lord, shut down the factory and seized the chattels therein and retained them as a pledge until the appellant would settle the rent arrears.

By reason of continuous occupation of the respondent’s premises, though the factory was not in production anymore, the respondent continued charging rent as agreed at the rate of US$1000.00 per month.At all material times the respondent was aware and encouraged the appellants attempt to sell the said factory plant machinery but the said attempts failed.At the time of closure in May 1999 the appellant owed US$21,327 to the Respondent but US$11,603 was subsequently settled leaving an outstanding balance of US$9724 not including interest and storage charges.The appellant continued to occupy the leased premises from May 1999 to September 2004 following several failed promises to pay.In October 2004 the respondent moved the appellant’s goods into containers at its yard in the said premises for which it claimed to be entitled to payment of storage charges at the rate of US$500 per period from October 2004 up to the time of filing the suit.

The appellant filed the suit claiming from the respondent general and exemplary damages for detinue and trespass for the goods, an order for release of the said goods or their market value, an injunction to restrain the respondent from auctioning the goods, interest and costs of the suit.

The respondent opposed the claim and stated in his defence that it was entitled under the common law right of distress to shut down the factory and seize the chattels and hold them as a pledge until arrears were paid.The respondent company filed a counter claim to the effect that as of May 1999 US$21,327.00 was owing.The respondent stored the seized property in the premises from May 1999 to October 2004 of which period of 64 months it claimed storage charges and loss of rental income.The respondent further claimed reimbursement of Shs21,982,572 being incurred electricity bills while the appellant was in the premises.

There were four issues framed at the trial as follows:-

1. Whether the lockup of the premises and seizure of the appellants goods in May 1999 was lawful.
2. Whether the respondent was entitled to charge or lay rental charges on the appellant in respect of the premises subsequent to May 1999.  Or whether the respondent was entitled to storage, rental charges from May 1999 to September, 2004.
3. Whether the parties were under a duty to mitigate the losses occasioned.
4. What remedies were available to the parties.

The trial Court found issue No. 1 in negative and for issues 2 and 3 the Court found that because issue No 1 was resolved in negative, the respondent could not be entitled to any storage charges because it wrongly and unlawfully detained the goods.

The trial judge made the following orders:

1. An award of General damages of 100,000,000/= for the value of the properties held by the respondent.
2. Award of the general damages for the loss of earning of shs216,000,000/=
3. Interest at Court rate to be payable on the above sums from the date of judgment till payment in full.

The respondent was dissatisfied with the judge’s decision and orders he filed an appeal to Court of Appeal on 6 grounds.

The Court of Appeal resolved all the 6 grounds in favour of the Respondent and allowed the appeal with orders that:

1. A declaration is made that distress made by the respondent to recover arrears of rent in 1999 was lawful.
2. That the appellant pays the arrears of rent  of US$9724 with interest  from the date of default till payment in full
3. On payment the appellant should receive back all the distressed goods which are said to be in two containers at Luzira.
4. The appellant to pay the costs of the appeal and of the High Court to the respondent.

The appellant was dissatisfied with the above orders and appealed to this Court on 5 grounds as aforesaid.

• :- Mr. Butagira was Counsel for the appellant while Mr. Tumusingize and Mr. Bwogi Kalibala were Counsel for the respondent

Appellant’s submissions:-

Ground one:-

Counsel submitted among others, that the Court of Appeal as the first appellate Court had a duty to reconsider them and re-evaluate the evidence, subject it as a whole to fresh and exhaustive scrutiny.He argued that there was no evidence on record of the trial Courtto supportthe findingby the Courtof Appealthat DW1 the propertymanager was sucha person with generalauthorityto distress for rent and therefore did not needcompany resolution or specific appointment to do so.He further submitted that DW1 was not in the evidence before Court, as the Land Lord or other holder of reversion.She was not an Attorney of the defendant as the trial judge found in his judgment at page 250 of the Record of Appeal and as noted in para 19 – 21.DW1 purported to exercise the personal rights of the defendant.He contented that the defendant (respondent) is an artificial person and DW1 was not authorized to distress for rent on its behalf and there was no evidence that the defendant through its organs made a decision of this kindand appointed DW1 to distress on its behalf. He submitted that the trial Judge found that the purported distress for rent was contrary to the provisions of S.2 of the Distress for Rent (Bailiffs) Act and as such was unlawful.He argued that the only way the company which was an artificial person could distress for rent was through appointed attorney or through authorized bailiffs as per the Act.He relied on the case of Joy  Tumushabe and Another SCCA No. 7 of 1999.Where Kanyehihamba JSC stated:-

“he who chooses to distress for rent under the Act must do so strictly in accordance with the provisions and rules of that Act.”

He also relied on the case of F. K. Motors (U) Ltd v. Kabu Auctioneers and Court Bailiffs and Another C.A. No 92 of 2003 in which the Courtof Appeal held that the first respondent who carried out the distresswas neither the Landlord in person or their authorized agent, and as suchthe distress was unlawful.

Ground two:-

Counsel submitted that the learned Justices of the Court of Appeal were wrong to hold that the Distress for rent (Bailiffs) Act was only enacted in order to regularize and control the procedure of appointment of Bailiffs and doesn’t purport to change the age long common law relating to distress for rent by Landlords.He further submitted that the Act is not only procedural concerning appointment of Court Bailiffs. It provides also who should distress for rent.He contended that in that regard it is substantive and modified common law on this aspect and it is the statute laws which have to be followed.He argued that the common law of distress for rent has to be subjected to written law as per S. 14 (2) (b) of the Judicature Act.He affirmed that since the distress was not in conformity with the Act it was unlawful.He accordingly prayed that this Court upholds the trial Court’s decision on this ground.

Ground four:-

He submitted that ground 3 was covered in his submissions on ground I. So he did submit on it.He argued that ground 4 ought to be allowed as per the trial Courts decision of awarding general damages of Shs100,000,000/= and shs216,0000,000/= for the value of goods seized and loss of earnings respectively. He relied on the authorities cited by the learned trial Judge which he said correctly stated the position of the law on the issue of general damages.He argued that the trial Judge was not barred from determining the appropriate general damages despite failure by the appellant to plead and prove special damages.He relied on the case of Ahamed Ibrahim Bholm v. Car and General Ltd (2005) IULR 92 at 109.Where Tsekooko JSC said:- “its now established that an appellate Court  will not reverse  a judgment  or part of the judgment  of a Court on a question of damages, unless the appellate Court is satisfied that the judge acted on a wrong principle or that the  amount awarded was so extremely  large or very small as to make it entirely erroneous estimate of the damage.”

He submitted among others that the learned Justices never considered the amount awarded but just shrugged off the sums as exorbitant. He concluded that in the circumstances the amount awarded by the trial Court remain unchallenged.

Ground five:-

Counsel just repeated what the trial judge said in the judgment which he submitted as earlier reproduced in this judgment.

He prayed that the appeal be allowed set aside the decision of the Court of Appeal and restore that of the trial Court with costs of this Court and the Courts below.

Respondent’s submissions:-

In reply Counsel for the respondent submitted on ground 1, 2, and 3 together.He agreed with the submissions of Counsel for the appellant on the duty of the appellate Court.He relied on the case of Masembe v. Sugar Corporation and Another (202) 2 EA 434 where it was stated:-

“what the court said in Kifamunte (supra) does perhaps best represent the view of the Courton a matter.After discussing the duty of the 1st appellate Court to revaluate and reconsiderevidence from a trial Courtthis Court said (it does not seen to use that except in the clearest of cases, we are requiredto re-evaluateevidencelike a first appellate Court.On 2nd appeal it is sufficientto decide whether the 1st appellate Court in approaching its task applied or failed to apply such principles see Pandya v. R [1957]  EA 366; Kairu vs Uganda [1978] HCB 123.”

Counsel for the respondent asserted that the Court of Appeal reconsidered the evidence, evaluated and subjected it to fresh scrutiny among others.

He argued that the Court of Appeal raised a number of questions at page 58 line 19 of the Record of Appeal before reaching its decision to depart from the trial Judges finding.

The questions considered were:-

(a) can a corporate person act in “person”

(b) if it can , who is authorized to act for it so that the act is regarded as that of thecompany itself?

(c) does DW1 May Virji fall in that category?

Counsel further submitted that the questions were analysed and the Court of Appeal referred to the definition of (person) and in person contained in S. 2 of the Interpretation Act (Cap 3) and the Blacks Law Dictionary.

Learned Counsel submitted that it was after the above analysis that the Court of Appeal confirmed that in law a person whether natural or artificial has certain rights and an artificial person can indeed do anything in person,through agents, or legal representatives like any other person.The Court of Appeal also confirmed that the right to distress for rent was a summary common law remedy by which a person is entitled without legal process to take into his possession the personal chattels of another person, to be held so as to compel the performance of a duty.He relied on the Halsbury’s Laws of England Vol. 13 para. 201, 202, 206, 207, 208, 311 333 and 334.

He contended that the Court of Appeal found that the distress for Rent (Bailiffs) Act Cap 76 did not change the common law right of a landlord to distress for rent.He further asserted that the purpose of the Act was in the head note as An Act relating to the appointment of bailiffs for purposes of distressing for rent. He argued that the Court noted that the Act did not intend to make any distinction in the well known statutory and company law principles between natural persons and legal persons.

If a corporation happens to be a landlord it enjoys the same powers and obligations as those conferred by the common law on any landlord among others.

He submitted further that the Court of Appeal observed at pages 61 line 12 to page 62 line 6 of the Record of Appeal, that in the instant case, DW1 testified that she had been at all material times, the appellants property manager with the responsibility to manage the properties of the appellant including collection of rent.Before she distressed for rent she consulted the company lawyers who assured her that the company had powers to distress for rent and such a matter fell within the powers generally assigned to her portfolio.She then went ahead and distressed for rent.In the above holding the Court of Appeal continued and said that the trial judge rightly observed that, the Board of Directors, a such other officers as the Board of Directors may authorize, specifically or generally a person or persons that may so act in accordance with the authority granted by the company to distress for rent. The Court of Appeal found that DW1 was such a person with general authority to do or perform such duties in her department and she did not need a company resolution or specific appointment in order to do what she did.I would hold that the appellant had powers to distress for rent.It could like any other legal personality exercise it. “in person” and DW1 was the right person through whom the company could exercise the powers to distress.

Counsel submitted that in addition to reconsidering, evaluation and subjecting it to fresh exhaustive scrutiny, it gave reasons for departure from the trial judge finding in respect of DW1’s authority to collect rent.

He further argued that the authorities cited by the appellant did not aid them as they are distinguishable from the facts of the instant case. The authorities of Joy Tumushabe & Another.F.K. Motors (U) Ltd (Supra). Both these cases were in respect of appointing a bailiff without a Certificate/ Licence to distress for rent.In F.K. Motors (U) Ltd the 2nd respondent instructed the 1st respondent to distress much as the 2nd respondent had a right as a land lord.The instructions fell squarely under the Distress for Rent (Bailiffs) Act which requires possession of certificate/licence.So was the case in the case of Joy Tumushabe & another.He submitted that grounds 1, 2 and 3 must fail.

On ground four, Counsel submitted that it was apparent from the judgment of the trial Court at page 322 line 36 to page 324 line 20 of the Record of Appeal that the appellant never pleaded special damages and did not prove them.He contended that the appellant was neither able to show the value of the goods to which it would be entitled nor was any loss of income proved.He argued that there was no inventory or valuation so no value was tendered.He submitted that this ground should fail too.

On ground five, Counsel submitted that the Court of Appeal rightly observed that the basis on which the claim was rejected was because of the wrong conclusion made by the trial judge that the distress was unlawful whereas the distress was lawful.He further submitted that the claim for US$9724 in rental arrears with interest should succeed.The amount due was admitted by the Managing Director of the appellant at pages 321 line 26 -27 of the Record of Appeal. Therefore the above sum plus interest were rightly due to the respondent.He prayed that ground 5 fails and the appeal be dismissed with costs of this Court and the Court below.

Consideration of the appeal

This is a second appeal arising out of the decision of the Court of Appeal.

I had the opportunity to read the record of proceedings and judgments of both the trial Court and the Court of Appeal. I also considered the submissions of both Counsel.The trial Court while determining the matter relied on Section 2 of the Distress for rent (Court Bailiffs) Act 1933 (Cap 76) which provides “No person other than a land lord in person his or her attorney or legal owner of reversion shall act as a bailiff by a certificate in writing under the hand of a certifying officer and that certificate may be general or apply to a particular distress or distresses.

Ground 1, 2 and 3 were submitted on together, and it was clear that the Court of Appeal properly and fully discharged its duty as required of the first appellate Court.The focus of the trial judge was on DW1 who he said was an employee of the Respondent and her designation or office was of a property manager … and as far as the evidence was concerned, she was not known as landlord agent or legal owner of reversion.

This could not be sustained because the word person includes any company or association or body of persons corporate or incorporate.And as will be discussed later in this judgment, a land lord who is not a natural person can distress for rent through an employee who acts as an agent of the land lord.

The evidence of DW1 was recorded by the trial Judge on the 8th January 2008.He recorded what DW1 said in her testimony at pages 182 – 221 of the record of appeal.Her evidence during cross examination was not challenged in the material particular that she was not an employee of the respondent company in position of property manager.What the trial Judge held was that the authority of her office in the respondent company was not known, did not arise in my view.It was as a result of evaluation and re appraising of the evidence as a whole that the Court of Appeal came up with the three questions which culminated in one question.Whether a legal person cannot in law distress for rent and if so whether the distress carried outlay by DW1 was unlawful?

If the question is answered in affirmation then automatically the distress would be unlawful if it’s answered in the negative then it becomes automatic that the distress was carried out lawfully.But the first limb can only be answered in affirmative or negative after discussing and or exploring the law applicable and the facts or evidence adduced by both parties.

It is trite law as laid down in the Interpretation Act that a person includes any company or association or body of persons corporate or incorporate (Section 2 Cap 3).By that definition alone I am of the view that in law a person whether natural or artificial/legal, has rights and obligations as those of any natural person and can indeed do anything “in person” or through agents or legal representatives a natural person can do.

As stated earlier the evidence of DW1 being an employee of the respondent in the capacity of Property Manager was not disputed or shaken in cross examination.There was no evidence to the contrary.DW1 stated clearly her role in the respondent company and what she did and what she knew.This was recorded by the trial Judge.Her evidence was strongly corroborated by DW2 according to the Record of Appeal.

The purpose of the Distress of Rent (Bailiffs) Act was clearly provided in the long little of the same as

“An Act relating to the appointment of bailiffs for purposes of distressing for rent.”

As the Court of Appeal pointed outin its judgmentat page 60 of the Record of Appeal the Act is very shortwith only five sections arranged as follows:-

1. Interpretation
2. Appointment of bailiffs under certificate of certifying officer
3. Power of cancellation etc. of certificate
4. Penalty for acting without certificate
5. Power to make rules

I agree with the Court of Appeal finding and reasoning that the Distress for Rent (Bailiffs) Act was not intended to make any distinction in our well known Statutory and Company Law principles between natural person and legal persons.It was never intended to contradict the provisions of the Interpretation Act which define person to include any company or association or body of persons corporate or unincorporate.

Distress for Rent is a common law remedy.According to Halsbury’sLaw of England 4th Edn. Volume 13 para201 and 202 Distress connotes a summary remedy by which a person is entitled without  legal process  to take into  his possession the personal chattels of another to behold as to compel the performance of a duty or the satisfaction of a debt or demand.

Para 202.,

the right of the land lord to destrain for arrears or rent arises at common law and need not be expressly reserved.It enables the landlord secure the payment of rent by seizing of goods and chattels found upon the premises in respect of which the rent or obligations are due.

When the remedy was exercised the chattels remained only as a pledge in the hand of the party making the distress and could not be sold.This continues to be the law with regard to chattels taken by wayof distress where the mode of dealing with distress has not been altered by an Act of Parliament; over such chattels, the distrainer has no other power than to retain them till satisfaction is made.

As I had said earlier the law currently is the Distress of Rent (Bailiffs) Act 1933 Cap 76 (supra) DW1 was an employee or officer as Property Manager and therefore officer of the respondent /Landlord.It is apparent to me thatshe could not be an employee or officer in the Respondent Company without the authority in whatever form of the respondent or Board of Directors or whoever was giventhe authority to appoint her as such.Her appointment letter to the job or the Respondent’s memorandum and Articles of Association were not in issue.I find no basis on record for the trial Judge to have stated as here under:-

“if the Landlord is an artificial person and cannotact “in person then its mind in this casethe Board of Directorsor suchother officersas the Board of Directorsmay authorizespecificallyor generally a personor persons that may so act in accordance with theauthoritygrantedby the company.There is no evidence the defendantthrough its organs that can make decisionsof this kind ever made a decisionto distress for rentand appointedDW1 to act on its behalf in that regard either generally or specifically in this case.On that the company had appointed and invested DW1 May Virji with the authority, real or ostensible as she purported to exercise.”

It was for that reason that the trial Court found that the distress for rent was carried out not in accordance with the law which was not correct in my view.

I agree with the authority cited by the Court of Appeal in its judgment.Gowers Principles of Company Law 6th Edn. page 232.The learned author wrote:-

“The Courts have recognized that where managerial powers have been delegated by the Board to other officers, those officers also may be treated as organs [of the company], rather than agents or servants of the servants of the company so that their acts can be regarded as those of the company itself and not merely as acts of the officers which its is liable vicariously.”

It is not only right and logical but just, to conclude that DW1 having beenthe Property Manager of the respondent the function of her portfolio having been not questioned and or discredited such matters like distress for rent were within her powers generally or specifically assigned to her under her portfolio by the respondent.

I agree with the decision of the Court of Appeal that DW1 was the right person through whom the company would exercise the power of distress in her position as an employee.

Her act was lawful and so grounds 1, 2, and 3 would fail.

Counsel for the appellant submitted on ground four that this Court upholds the award by the trial Court.He relied on the case of Ahamed Ibrahim Bholm (supra) and argued that failure to quantify or prove special damages should not be confused with the issue of general damages. Much as I would agree that the trial Judge awarded general damages which need not be proved like special damages, considering the facts of the instant case, which were not in dispute, the case cited would be considered in favour of the respondent not the appellant. This is to say that this court had to reverse the judgment as the amount awarded was extremely high.In the instant appeal the appellant was a tenant and spent a very long time on the premises of the respondent and failed continuously to pay rent despite the promises to pay.Arrears accumulated and the respondent kept the chattels on his premises even after seizure.I do not accept therefore that the Ahamed Ibrahim Bholm’s case was applicable to the appellant’s case.The blame of the Court of Appeal that it just shrugged off the issue of damages and never considered the amount, has no justification in my view.This is because the wrong finding the trial judge made was so fundamental, it went to the root of the case.So whether the award was exorbitant or not it was immaterial and would not defeat the position in law given the fact of the case. The appellant could not be entitled to any damages at all. The case ought to have been dismissed. This ground would fail. 

On ground 5 it was apparent from the Record of Appeal that the Managing Director of the appellant admitted that there were arrears to the tune of US$9724 which was due and owing.The trial Court on a wrong principle or basis denied the respondent recovery of the same.He said “the defendant would have succeeded on this claim but in light of the 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 defendants counterclaim for storage/rental fails.

I am unable to accept the above reasoning by the trial Court.I have at length stated why I agreed with the Court of Appeal findings particularly that reasoning was based on wrong finding by the trial Court, that the distress was unlawful where as not.Ground No. 5 would fail.

In the result this appeal would fail.I would uphold the Court of Appeal decision and orders. The appeal is dismissed with costs here and in the Courts below to the Respondent.

Dated at Kampala this........ ................... day of................ 2017

…………………………………………………………………………...

Hon. Lady Justice Faith Mwondha

JUSTICE OF THE SUPREME COURT