THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT)

CIVIL SUIT NO. 59 OF 2003

EDWARD MAKUBUYA T/A

M. EDWARD ENGINEERING WORKS……………………………… PLAINTIFF

VERSUS

KAMPALA CITY COUNCIL

KAWEMPE DIVISION……………………………………………...... DEFENDANT

BEFORE: THE HONOURABLE MR. JUSTICE JAMES OGOOLA

JUDGMENT

The Plaintiffs claim in this suit was for recovery of Ushs.9, 526,150/= based on a contract
between himself and the Kampala City Council pursuant to which the Plaintiff repaired 32
skips (i.e. dust or refuse bins) for the City Council. The plaint avers that:

(a) between the dates of 2 1/02/2000 and 06/03/2000 the Plaintiff repaired, on the
average, two skips per day for a total of 32 skips at the cost of
Ushs.9,526,150/= (see Certificates of Works attached to the plaint and marked
as Annextures “A” to “M”, respectively);

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 (b) that on 17/03/2000, the Refuse Supervisor, one James Sempebwa, confirmed
in writing the satisfactory completion of the repair of the 32 skips (see
Memorandum marked Annexture “N” to the plaint);

(c) that on 22/03/2000, the Principal Assistant Town Clerk directed the Division
Finance Officer, Kawempe Division, to pay and indeed that officer did pay on
that date Ushs.1m/ to Plaintiffs, and another Ushs.lm& on the following day -
leaving a balance of Ushs.9,526,150/= (see Annextures “N” & “P” to the
plaint).

2. In his written submissions in this case, learned counsel for the Plaintiff stated that:

“the facts of the case as stated in the plaint are not disputed and the documents on
record are also admitted as exhibited. The defendant ‘s only contention is that there is
no valid contract.”

That indeed was the position that the learned counsel for the Defendant had already
articulated orally during the hearing of the matter on 28/11/2003, when he expressly stated
that:

“I have agreed with the Plaintiff’s counsel, Mr. Rutiba, that we await the Tender
Board’s decision next Tuesday/Wednesday. If the decision is negative, then we should
simply make submissions on only one legal issue (i.e. whether there was a valid
contract between the Parties). In this regard, I do concede all the facts averred by the
Plaintiff”. [emphasis added]

3. Given the above position amicably agreed by both parties, there is only one issue to
be addressed by the Court - namely, the validity of the contract between the parties.
The Defendant’s contention was extremely brief and direct — namely, that the alleged

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 contract between the parties for the repair of the 32 skips did not go through the
District’s Tender Board as otherwise required by the law: Sections 91 and 92 of the
Local Governments Act (now Cap 243); and, especially, Regulation 75(1) of the Local
Governments Financial and Accounting Regulations, 1998, which Regulation states
that:

“The District Tender Board or Urban Tender Board shall award all contracts for
Works, Services and Goods and shall decide on disposal of Local Governments
assets within its jurisdiction.”

4. As I understand it, the Defendant’s contention was that the suit contract never went
through the City Council’s Tender Board, the only institution that has exclusive
authority to contract for all services rendered to the City; and that as a consequence of
that failure, the suit contract was invalid and of no legal effect at all. In this regard, the
Defendant argued that it did not matter whether some officials of the Council
sanctioned the repairs, for they had no powers to do so. Moreover, the Defendant
averred that the reason for the above legal requirement concerning the tendering of
services was “to stop abuses and to safeguard public funds.” Therefore, one cannot
even plead estoppel, since that doctrine cannot be invoked to render valid a
transaction which the legislature has invalidated on grounds of public policy - see
Attorney General v Abdul Karim Winyi, S.Ct Civil Appeal No. 24 of 1992; see
also Halsbury’s Laws of England, 3rd Edition, Vol. 15 at p. 156.

5. For their part, the Plaintiffs averred that indeed their defence in this matter was the
plea of estoppel, based on the Evidence Act (Cap. 6) section 114 of which provides
that:

“When one person has, by his act or omission, intentionally caused or

permitted another person to believe a thing to be true and to act upon that
belief neither he or she nor his or her representative shall be allowed, in any
suit or proceeding between himself or herself and that person or his or her

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 representative, to deny the truth of that thing.”

6. The Plaintiff contended that the contract was not void, but voidable (i.e. capable of
being ratified — see Halsbury’s Laws (supra), 4th Edition, para. 1044, at p. 908;
and that therefore, the Defendant had the option either to affirm or ratify the contract
or otherwise exercise its rights of rescission within a reasonable time and not take a
benefit under the contract - see Osborn’s Concise Law Dictionary (7th Edition),
page 341.

7. I have given great attention to the contentions of both counsel. I find three decisive
factors in this matter:
(i) the doctrine of estoppel;
(ii) the rule of ratification of a contract; and
(iii) the principle of unjust enrichment.

Estoppel:

8. The doctrine of Estoppel was the Defendant’s major bone of contention, For this, the
Defendant relied on two enactments:
(a) the Local Governments Act (Cap.243), and
(b) the Local Governments Financial and Accounting Regulations, 1998.
Sections 9 1(1) and 94 of the Act mandate every district and urban council to have a
tender board. The function of the tender board is stated to be to “award all contracts”
for the procurement of goods, services and works for the council. The tender board is
required to do so in conformity with the standards established by the central tender
board and to be guided by the Local Governments Financial and Accounting
Regulations. From all this, the Defendant concluded that:

“... The above law came into force to stop abuses and to safeguard public
funds. This matter did not go through the Tender Board, which has the power

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 to award contracts. It does not matter whether some officials of the council
sanctioned the repairs for they had no powers to do so and these are the
abuses the law was enacted to cure. One cannot even plead Estoppel for the
doctrine of Estoppel cannot be evoked to render valid a transaction which the
legislature has, on grounds of general public policy, enacted shall be invalid.
Supreme Court Civil Appeal No. 24 of 1992 Attorney General vs Abdu Karim
Winyi refers; and Halsbury’s Laws of England, 3rd Edition, Volume 15 at page
176.”

9. I am not satisfied that the Defendant has made out a case against the doctrine of
estoppel. In my view, the law as referred to above lays the obligation on the council
(not on innocent third parties, such as the Plaintiff in this case) to establish and utilise
a tender board. Once so established, it is not for the innocent third party (such as the
Plaintiff) to activate the tender board. Rather, it is for the council itself to trigger the
move.

10. It is evident therefore that any breach or violation of the law relating to the tendering
of the suit services could not have been perpetuated by the Plaintiff - a mere third
party. Indeed, no such breach or violation of the law was even as much as brought to
this Court’s attention. To that extent, the Defendant’s reliance on Attorney General v
Abdul Karim Winyi (supra) was misplaced. In the Winyi case, the third party was
himself guilty of a direct violation of the statute prohibiting importation/exportation
of chimpanzees from a non-prescribed place. Indeed, Winyi was even found to have
smuggled out one more chimpanzee than the number that was strictly authorised. In
these circumstances, PLATT JSC concluded that the doctrine of estoppel was indeed
applicable against Winyi. In the instant case, the third party - (Makubuya) is an
innocent party. He cannot similarly be estopped.

Ratification:

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11. The Plaintiff contended that the suit contract was not void, but voidable - and that,
therefore, the Defendant had the option to affirm or ratify that contract; or else, to
rescind or repudiate it and not take any benefit under that contract. I agree. On the
facts of this case, no other conclusion can be reached. Plaintiff repaired the 32 skips
over a period of two weeks. Eleven days after the repairs (i.e. on 17/03/2000), KCC’s
Refuse Supervisor, one James Sempebwa, confirmed in writing the satisfactory
completion of the repair of the 32 skips. Five days later on 22/03/2000, the Principal
Assistant Town Clerk directed the Division Finance Officer of Kawempe Division to
pay the Plaintiff for his repair services, On that very same day, the Finance Officer did
indeed pay the Plaintiff a sum of Ushs.lm/=. Again on the following day, the Finance
Officer released another payment of Ushs. lm/= - leaving a balance of
Ushs.9,526,150. Indeed, all these payments had also been approved by all the relevant
Division officials, including the Division Engineer and the Division Financial
Engineer - see Annextures “N” and “P” to the plaint. The latter (i.e. Finance Officer’s
letter of 17/07/2001) is totally transparent as regards the reason for the nonpayment of
the outstanding balance of Ushs.9m/. The reason was not invalidity of the contract. It
was purely due to “cash flow problems.” For greater emphasis, the letter stated that
“the debt will be settled as soon as our revenue improves.” All these actions of the
relevant officials of the Division - and senior ones at that - do in my view constitute
an explicit affirmation of the contract; and do amount to ratification of that contract.
An even more important piece of evidence of that ratification was the letter of
04/11/2003 written by the Secretary of the Kampala District Tender Board to the
Principal Assistant Town Clerk. That letter shows beyond any shadow of doubt that
the Defendants’ Tender Board had powers of ratification.

12. In this regard, the case of Janfred Properties Ltd v Ente Nazional per II Turismo
[1989] 2 All ER 444, is extremely instructive. First, the case established that in
considering voidable contracts,

“... the correct question to ask is whether the [Defendant] had power to ratify
or affirm the ... agreement or to enter into afresh contract on the same terms.”

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Secondly, the Court in that case held that:

“…even no contract, whether voidable or otherwise, had been effectively entered

into..., the subsequent acts of the defendant’s president in authorising payment of the
deposit and offering to complete the purchase by installments constituted under
Italian law the ratification of the July agreement or the entry into a fresh contract on
the same terms..”

Third, the Court in addressing the specific significance of the payment of the contract
amount, pronounced itself in no unmistakable terms as follows:

“It is difficult to conceive of an act more clearly calculated to ratify or affirm a

previously unauthorised contract for the purpose of land... than purchase by deferred
installments ... it is difficult to conceive of a more vivid act of ratification or
affirmation...”

In my view, all the above principles of the Janfred case are on all fours with the acts of the
Kawempe Division officials who certified the Plaintiff’s work as satisfactory, approved
payment for that work, and proceeded to make actual part payment for that work, with an
express written undertaking to settle the remainder of the debt as soon as the Defendant’s
revenues improve. In the words of the Janfred case, it is difficult to conceive of an act that
would be clearly calculated to ratify or affirm the suit contract than the above acts of the
Division officials in making current and future contract payments to the Plaintiff.

Unjust Enrichment:

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13. A final consideration in this matter is the principle of unjust enrichment or quasi-
contract. It is trite law that faced with a voidable contract, a Defendant has the choice
of either affirming or ratifying that contract, or otherwise exercising his rights of
rescission within a reasonable time and not take a benefit under the contract - see
Osborn’s Concise Dictionary (supra) at page 341. In the instant case, the Defendant
took a benefit - namely, the repair of the 32 skips that was done by the Plaintiff. The
Defendant’s officials repeatedly and consistently issued certificates of completion of
the works (see Annextures “A” through “L” - (i.e. 12 certificates in all).

14. The final certificates, Annextures “N” and “P” categorically acknowledge the value of
the repair work of these 32 skips as amounting to over 11million/=. Of this amount,
Ushs, 2m/= was paid to the Plaintiff, leaving a balance of some Ushs, 9m/=. The
taking of that benefit under the contract was inconsistent with any rescission of the
underlying contract. That taking of a benefit cannot co-exist with rescission of the
same contract. On the contrary, the taking of a benefit is a clear manifestation of the
ratification of the contract. For the Defendant to succeed, he must prove that he has
received no part of what he was promised under the challenged contract - see Corpe v
Overton (1833) 10 Bing 252 - quoted in CHESHIRE, FIFOOT & FURMSTON’S
Law of Contract (13th Edition, Butterworths 1996) at p. 449.
In the instant case, far from proving that he had not received any benefit at all under
the challenged contract, the Defendant conceded to the Plaintiff’s services as well as
the monetary value of those services. The Defendant cannot in equity and in good
conscience be allowed to keep the benefit under that contract but rescind the contract.

15. In light of the foregoing, judgment is hereby entered for the Plaintiff:

(a) in the amount of the outstanding balance of Ushs.9, 526,150=;

(b) in the amount of Ushs.3, 000,000/= as general damages for breach of contract and
inconvenience;

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(c) interest on the amounts in (a) and (b) above:
(i) at the rate of 15% p.a. from 17/03/2000 to today’s date of judgment;
(ii) at the Court rate from 02/03/2004 until payment in full; and

(d) the costs of this suit.

Ordered accordingly.

James Ogoola
JUDGE
01/03/2004

DELIVERED IN OPEN COURT, BEFORE:

Rutiba, Esq - Counsel for the Plaintiff
Mutyaba, Esq - Counsel for the Defendant
J.M. Egetu - Court Clerk