Judgment Southern Range Nyanza LTD Vs UNRA & Another
Judgment Southern Range Nyanza LTD Vs UNRA & Another
VERSUS
VERSUS
JUDGMENT
The plaintiff filed this suit seeking for a declaration that the defendant owes the plaintiff
a sum of Uganda Shillings thirty billion four hundred seventy eight billion (UGX
30,478,000,000) arising out of a claim for injurious affection suffered by the plaintiff
In 2010 the 1st defendant planned and sought to construct a new bridge across River
Nile at Jinja Uganda. Part of the Plaintiff’s land comprised LRV 403 Folio 3 Plot No. 22-
52 and 21-51 Yusuf Lule road, Njeru Town Council was identified as the most optimal
alignment for construction of the New Nile Bridge. Through the Chief Government
Valuer, the land was assessed a valuation report generated. In accordance with the
report, the 1st defendant made an offer of UGX 8,980,810,000/= being compensation
site works – UGX 296,700,000/=, residential block – UGX 92,000,000/=, land-Plot 22-52 &
21-51 – UGX 1,186,800,000/= and Plot M-35 – UGX 25,300,000/= plus 15% Disturbance
some of its properties being injuriously affected by the construction works and it was
agreed between both parties that further consultations would be made at the design
stage to consider all effects identified in the Resettlement Action Plan and that it is at
that point that all issues raised by the plaintiff would be addressed. At the design stage
however, the plaintiff’s claims for further compensation were not considered.
At the time of filing this suit, the construction of the New Nile Bridge had since began
without the assessment of the plaintiff’s injurious claim. The construction was
completed and the 1st defendant contends that the construction works were carried out
up to the end without occasioning any damage (as earlier feared) to the plaintiff’s
factory. The plaintiff claims that the defendant breached its promise to compensate it.
The plaintiff further claims that when its certificate of title formerly pledged as security
to Bank of Baroda (plaintiff’s banker), was released to the defendant and not returned
within the agreed 90 days, it suffered business loss as it could no longer access credit
facilities. It was on that claim that the defendant joined the third party to this suit
claiming to be entitled to a contribution and/or indemnity from the Third Party for any
liability, loss, damages or costs which the plaintiff claimed from the defendant as a
Representation
The plaintiff was represented by Mr. Mugabi Enoth while the defendant was presented
by Mr. Kamya Titus and Mr Pecos Mutatina while the Third Party was represented by
Mr. Mubangizi Absolom
During Scheduling, the following facts and issues were agreed upon by the parties.
Agreed Facts
• The plaintiff is the registered proprietor of land comprised in LRV 403 Folio 3,
Plot No. 22-52 and 21-51 Yusuf Lule Road, Njeru Town Council.
• The defendants expropriated part of the suit land for the New Bridge
Construction.
• The plaintiff was paid and acknowledged receipt of compensation of Ugx
8,980,810,000/=, which comprised payments in respect of expropriation of
Administration block, Bonded Ware house, Weigh bridge, site works, Residential
Block, Parking Shade, land and a 15%Disturbance Allowance.
• The suit land certificate of title at expropriation had been pledged as security to
Bank of Baroda for a Loan by the plaintiff, that was released by the Bank to 1 st
defendant for sub-division and transfer of the expropriated portion.
Agreed Issues
1. Whether the plaintiff suffered any compensable loss over and above the
compensation of UGX 8,890,810,000/= that was payable by the defendant as a
result of the acquisition of the suit land for which the defendant is liable.
2. Whether the dispute between the defendant and Third Party should be referred
to Arbitration.
RESOLUTION OF ISSSUES
Issue 1: Whether the plaintiff suffered any compensable loss over and above the
the acquisition of the suit land for which the defendant is liable.
According to the plaintiff, the compensation received was on condition that the
defendant first address the concerns raised at the design stage something that the
defendant did not do. The plaintiff had fundamental credible concerns to the operation
of the factory, possible interruption with production in the event of disabling the
functioning of the Effluent Treatment Plant, any changes to the plaintiff’s operation
flow and resultant operational changes, inconvenient use and access of staff canteen
and Archives Section Development as well as dust and heavy vibrations expected
during the construction phase of the bridge reaching equipment located close to the
highway.
The defendant on the other hand submitted that the plaintiff was promptly &
adequately compensated for the acquisition of its land and as such suffered no loss
attributable to the defendant’s actions. Counsel further submitted that the plaintiff’s
fear at the time it received the compensation was that if the issues raised then, remained
unattended to, its factory would be severely affected by effects of the construction
works however approximately 3 years since the New Nile Bridge project was
completed, the plaintiff is fully operational and functioning without any effects
registered.
Compulsory acquisition of private land for public use or interest is provided for under
the Constitution which also highlights the principle of adequacy of compensation. The
principle of adequacy of compensation is enshrined under Articles 26 (2) and 237 of our
Constitution. Article 26 (2) provides for the prompt payment of fair and adequate
compensation, prior to taking possession or acquisition of the property for public use
in the event of compulsory land acquisition especially in instances where the land is
In this case the plaintiff contends that it was not adequately compensated. That it was
(Modern & Executive Single Storied), Bonded Ware House, Weigh Bridge, Site Works
From the evidence on record, on the 9th July 2013, the plaintiff, the defendant and CGV
visited the suit land, to which it was thereafter agreed there were fundamental credible
concerns to the future operation of the plaintiff of possible interruption with production
in the event of disabling the functioning of the Effluent Treatment Plant (referred as the
It was agreed, the CGV would nominate 2-3 names of consultants to carry out the
injurious affection claim for the plaintiff, the defendant would coordinate the
procurement of the consultants with the objective of enabling CGV receive the
independent consultants report within 40 days (by the end of August 2013) to guide the
settlement of the plaintiff’s injurious affection claim. The CGV recommended three
consultants from whom one was to be designated by the defendant to undertake the
recommended by the CGV and no assessment was done by the defendant during the
design stage and throughout the entire project construction period which prompted the
plaintiff to file this suit. It was the plaintiff’s submission that, the compensation paid to
The plaintiff submitted that the defendant undertook to consider the concerns raised by
the Plaintiff at design stage. To-date the New Nile Bridge is completed and in use,
Paragraph 6.8 of the GCALA it is noted Severance and Injurious Affection; assessments of
the value lost due to injurious affection and severance would have to be undertaken and included
in the compensation. Severance occurs when the land acquired contributes to the value of
the land which is retained, so that when severed from it, the retained land loses value
while injurious affection is the depreciation in value of the property as a result of the
proposed construction and use of the land acquired by the acquiring authority for the
scheme and its treatment should be as provided for in the Common Law.
The plaintiff submitted that the orphaned land measuring approximately three (3) acres
across the road, severed as a result of expropriation has been rendered cumbersome to
Furthermore, it was the plaintiff’s case that it has suffered indirect loss as expounded by
Report - EXHIBIT P17. The loss as expounded in this report is non-physical entitling
The defendant submitted that whilst the parties had agreed by minutes 9th July, 2013
that the CGV would nominate 2-3 consultants to be tasked to assess the injurious
affection claim from the plaintiff that was prepared by M/S SURVESIS, the plaintiff
later changed its claim as prepared by Survesis and instead procured D. Craven
the consultants nominated by CGV and the Report referred to by the CGV. This in effect
altered that agreed terms resulting in each party relying on its own independent
plaintiff believes that the CGV should have assessed the alleged consequential loss, it
should have submitted its experts report to the CGV for his assessment which it failed
to do.
Counsel for the defendant further submitted that while the plaintiff seeks for costs of
show that following the completion of construction of the New Nile Bridge, there was
need to replace, relocate and realign the said facilities. There was no technical expert or
engineer who testified on part of the plaintiff to prove the effect if any on the facilities
before, during and after construction of the bridge. The only expert report was prepared
by D. Craven Consulting (Chandi Jamwa) who did not appear in court to defend their
report. It is noteworthy that these were neither engineers nor valuers. Indeed the
defendant’s documents P.17 and Exhibit D4 being the Expert Valuers reports prepared
by Knight Frank (Judy Rugasira-MD) and UNRA Land Valuation Department Report
respectively clearly show that the plaintiff’s said facilities/properties were not affected
following the completion of the bridge and there was no need for relocation, re-
The following were the concerns raised by the plaintiff prior to the construction of the
The staff canteen and archives section that would be cut off from the main factory
According to the plaintiff, the staff canteen and archives section development would
remain situate across the bridge following the bridge alignment hence use of these
facilities would be compromised. The plaintiff would not be able to use these facilities
The defendant submitted that during trial the plaintiff’s director Mr. Richard Mubiru
confirmed that the staff canteen and archives stores are still in place and can be accessed
from the Njeru part. PW2 testified that the plaintiff had incurred additional business
related costs because of hiring more space for storage and canteen services. Through
cross examination, the PW2 testified that the canteen is still there and that some staff
live there accessing it through an alternative route. The plaintiff rented space from
picfare a sister company of the plaintiff where the canteen is now situate.
The plaintiff also contended that it had to rent archives stores in Kampala upon the
that the renting of office premises in Kampala, instead of Njeru was for the convenience
of the plaintiff and not the New Nile Bridge project. He testified that previous archives
and store are still accessible and they sit on a plot of land of about 3 acres which has
The defendant submitted that since the archives section is accessible, the plaintiff
should not be paid for the cost of hiring stores and archives in Kampala for convenience
purposes. Since PW1 testified rightly so that the archive stores and staff canteen were
not among the buildings expropriated by the Defendant and where thereby not
affected, they remained accessible and senior management still uses the canteen for its
meals, counsel invited court to find that there is no justification for this claim for
payment of alternative stores and canteen as these were purely for the convenience of
the Plaintiff.
Permanent increase in the cost of production due to expropriation of the raw material
warehouses which shall permanently affect the vertical production process flow,
hence increased cost of production on account of transport cost for raw materials.
The plaintiff seeks for costs of relocation of the raw materials ware house. The plaintiff
claimed that it might suffer a permanent increase in the cost of production due to
The defendant on the other hand submitted that the warehouses were compensated for
by the defendant with a 15% disturbance allowance, which fact is acknowledged by the
Plaintiff. Therefore, a claim for relocation of the same is superfluous, frivolous and
The plaintiff seeks for costs of relocation of the spinning unit stating that it might suffer
led or proved by the Plaintiff. On the contrary the defence Reports Exhibit P. 17 and
Exhibit D4 show that neither the spinning unit nor the rest of the plaintiff’s factory was
or is affected by vibration from the traffic on the New Nile Bridge. Both Plaintiff’s and
Defendant’s witnesses confirmed that the spinning unit was not affected by the
expropriation of part of the plaintiff’s land for construction of the New Nile Bridge. At
the time of receiving compensation, the plaintiff feared that during the construction
stage, there would be a possibility for vibrations and dust resulting in to impossibility
for the plaintiff to maintain the spinning department at its current location and
Counsel for the defendant further submitted that at the time this claim was raised it was
speculative because the construction works had not commenced and so it was
Counsel concluded that this claim was overtaken by evets hence untenable under law.
It was the defendant’s submission that from the evidence adduced, it is clear that the
spinning department was not affected by the construction of the bridge and there was
no need to relocate the same. Furthermore, increased security at the present spinning
remote and this inconvenience if any, is catered for in the 15% disturbance allowance.
Costs for relocation of the administration blocks and raw material ware houses.
PW3 Richard Mubiru during cross examination testified that the administration block
and warehouses were compensated. There is no need for this court to address this
concern.
Relocation of the Effluent Treatment Plant (ETP), without which the process house
cannot work.
PW3 testified that after construction of the bridge, the ETP was affected. He testified
that the channel that evacuates water from the effluent plant is underneath the bridge.
He further testified that channels of this nature once they are covered they can’t be
opened since they are susceptible to blockages which could then kill off the entire
facility. The witness also testified that they were experiencing leakages affecting the
The defendant’s second witness testified that the defendant mitigated any damage to
the factory to ensure its continued operation which wasn’t interrupted. The ETP was
protected by site hooding. Exhibit D4 appendix 1 showed that the ETP and sewerage
system were protected which enhanced and improved the plant’s capacity extending its
Counsel for the defendant submitted that during trial the defendant led evidence (see
appendix 1 of Exhibit D 4) to show that the effluent line crossing the project site was
encased in high strength concrete which eliminates any possibility of future leakage
because even if the encased asbestos pipe is worn off, the hollow section equivalent to
the external diameter of the pipe would have formed the high strength concrete that
would successfully facilitate the flow of the effluent liquid. In addition, all effluent
manholes within the site area were improved under the project cost on the request of
the plaintiff. Furthermore, there is no structural loading on the encased pine running
from the effluent treatment plant across the project area to the downstream side that
will endanger or affect the functionality of the pipe as shown in the photos and notes on
page 1 of Appendix 1 to Exhibit D4. Consequently, there was no need for the
construction of a brand new Effluent Treatment Plant because the existing one was not
affected. Counsel further submitted that the plaintiff’s insistence on the second
assessment of the issues that remained unattended to is misconceived and of no effect
the construction works having ended without the feared damage taking place.
the present factory for storm water, whose blockage at construction would mean
Counsel for the defendant submitted that the plaintiff reasoned that if infrastructure
like power and drainage channels were affected at the construction stage, it would be
difficult to avert any likely damage but adduced no evidence of damage caused to the
power lines and drainage channels during construction to warrant the compensation
claimed.
PW1 testified that there were no electricity lines in need of relocation within the right of
way.
Counsel further submitted that in any event from the evidence adduced in court, the
construction is now completed and there has not been any electricity, water or sewage
lines that were cut off or rendered nonfunctional by reason of the expropriation and
The super sensitivity to vibration and dust by hugely electronics based machinery in
The plaintiff contended that the bridge alignment being too proximate to the spinning
department that has hyper dust and vibrations sensitivity machinery, there would be a
Under Minute 2 following the meeting of 9th July 2013, it was noted by the plaintiff that
the large electronics driven machinery and equipment- spinning department located
close to the highway would obviously reach by dust and heavy vibrations expected
The defendant led evidence (see appendix 1 of Exhibit D4) during trial that best
approximately 4 meters high bordering the plaintiff’s premises and the right of way
before actual road works which effectively eliminated the impact of vibration on the
adjacent properties.
Analysis
The court shall now resolve the concerns raised by the plaintiff and claims of injurious
The plaintiff claimed that it suffered injurious affection severance. As cited by counsel
assessments of the value lost due to injurious affection and severance would have to be
Severance; occurs when the land acquired contributes to the value of the land which is
retained, so that when severed from it, the retained land loses value. For example, if a
new road is built across a field, it may no longer be possible to have access by vehicle to
part of the field, rendering it virtually useless and therefore less valuable.
result of the proposed construction and use of the land acquired by the acquiring
authority for the scheme and its treatment should be as provided for in the Common
Law. Claims arising injurious affection under Common Law may include lack of access
to homes, amnesties, means and sources of livelihood, drainage, privacy, noise and
compatibility of existing land use among others. It is the impact of the whole of the
proposed scheme that is to be considered not just the effect on the area acquired from
In the case of Abbey Homesteadys Group Ltd v Secretary of State for Transport [1982] 2
EGLR 198 The land Tribunal found that compensation for land taken must be as a
matter of law be assessed separately from compensation for severance and injurious
affection to the land retained. In the present case, it appears both assessments for the
land and possible assessment of loss where done together and the practice is more
convenient, although the plaintiff had anticipated more loss which lead to the filing of
Compensation for severance and injurious affection therefore represents the difference
between the value of the retained land ‘with or ‘without’ the project. In the case of
Melwood Units Pty Ltd v Commissioner of Roads [1979] 1 All ER 161; The Privy
council noted that it is permissible to apply the Pointe Gourde principle to the
compensation for land taken. Therefore any increase or diminution in the value of
retained land due to matters having developed in a different way because of the scheme
The valuation of compensation for the land acquired and compensation for injurious
affection for the retained land must be made on a consistent basis as noted in the case of
A claim for depreciation in the existing use value of retained land should be resisted to
the extent that such depreciation would have been an inevitable consequence of
dividing the land for the purpose of realising a price for development purposes for the
land taken. The main objective should be to ensure that- within what the law allows-
the claimant receives in total compensation no less, but more, than the claimant’s real
loss.
With those guidelines and principles in mind, court ought to determine whether the
All the witnesses called by the parties testified that the alleged orphaned land can still
be accessed by the plaintiff. PW1 testified that the staff canteen remained accessible and
senior management still uses the canteen for its meals whereas the archives are used as
residences for some of the staff. Indeed, the plaintiff witness confirmed that the archives
were transferred to Kampala for their convenience and not necessarily due to
inaccessibility.
The plaintiff’s land was therefore not rendered virtually useless as a result of the project
however PW2 testified that it was disturbance for the senior management to move a
longer route than they usually used to stating that the distance from the factory to the
canteen was now longer than it was before. PW3 also testified that the old structures
were still in place but accessing the old canteen was inconveniencing hence the plaintiff
had to rent other premises leaving the original canteen to accommodate some of its
employees. PW3 further testified that like for the canteen, accessing the old archive
stores was possible but with difficulty. When asked by court why the archive stores
were then transferred to Kampala, PW3 testified that it was because of strategic
considerations.
From this evidence the court is comfortable to conclude that the plaintiff did not suffer
injurious affection and/or severance when it came to the orphaned land. The plaintiff
made a conscious decision to move their archive stores to Kampala alive to the fact that
the old stores were still accessible and available for use. It was not a decision that was
caused by the New Nile Bridge project. The same applies to the canteen, severance and
injurious affection cannot be claimed owing to the fact that the canteen is still accessible
and available on foot and by vehicle, is in use by senior staff and accommodates other
employees of the plaintiff. The inconvenience experienced by the plaintiff with regard
to a longer route is part of the general upheaval as a result of the expropriation was
provided for in the compensation awarded as part of the 15% disturbance allowance.
There is no stated basis upon which compensation for severance and injurious affection
should be assessed. The measure of compensation should be value to the owner and not
open market value. The damage due to severance mainly arises when the land acquired
reduces the value of the land retained. The measure of compensation in respect of
severance is depreciation in the value of the claimant’s retained interest arising from
severing of land acquired from the original whole. It is not known by evidence whether
the land in issue indeed reduced in value and on the contrary it could have increased in
value due to its accessibility on the main road. Compensation for severance and
injurious affection should relate to the depreciation in the market value of the
claimant’s retained interest. See Budgen v Secretary of State for Wales [1985] 2 EGLR
The permanent increase in the cost of production due to expropriation of the raw
material warehouses which shall permanently affect the vertical production process
flow, hence increased cost of production on account of transport cost for raw materials.
The raw material warehouses were expropriated and compensated for as confirmed by
PW2. The consequences of their relocation were catered for under the 15% disturbance
allowance hence the plaintiff cannot credibly raise this is a concern to seek more
Costs of relocation of the Spinning Department; the plaintiff’s witnesses did not lead
evidence to show that the plaintiff suffered was or is affected by vibration from the
traffic on the New Nile Bridge. It was therefore unreasonable for the plaintiff to relocate
the spinning department with no evidence of suffering dust or vibrations from the New
The effect of compulsory acquisition may be to increase substantially the costs of using
the retained land. The cost of working on the land will however be reflected in its open
market value. It is therefore not the increased cost of using the land retained that can be
claimed but the depreciation in the open market value of that land following the
acquisition compensation for the liability of a claimant for the increased costs of
Enhanced security at the present spinning department. There was no evidence from the
plaintiff’s witnesses to prove that the plaintiff has to pay above and beyond for
enhanced security as a result of expropriation. The court can therefore not make an
Relocation of the Effluent Treatment Plant (ETP), without which the process house
cannot work. PW3 when asked by defence counsel whether the ETP suffered any
testified that the plaintiff was experiencing leakages but did not reliably inform this
court whether the leakages were attributed to the construction of the bridge. The court
Relocation of other critical infrastructure like power, drainage channels underneath the
present factory for storm water, whose blockage at construction would mean flooding
of the entire place. The plaintiff did not lead any evidence to prove that there was
Bridge. With no evidence the court cannot reliably believe that there was any relocation
spinning department. There was no evidence by the plaintiff to show that the hugely
electronics based machinery closely situate to the bridge was affected by vibration and
dust from the bridge. The defendant led evidence Exhibit D4 during trial that best
approximately 4 meters high bordering the plaintiff’s premises and the right of way
before actual road works which effectively eliminated the impact of vibration on the
On that note, I find all the concerns raised by the plaintiff incredible. However the
defendant acted improperly and besides their agreement with the plaintiff, had they
honored their promise to assess these concerns before construction of the bridge these
concerns would have been ruled out earlier and the plaintiff’s fears laid to rest.
However, it was also a blessing in disguise since the court was able to assess the entire
project after its completion rather than making assumptions of the anticipated losses
In addition to the above, the plaintiff contends that they suffered loss as a result of the
defendant and 3rd party staying in possession of their certificate of title longer than the
agreed 90 days.
The Suit Land Certificate of title at expropriation had been pledged as security to Bank
of Baroda for a loan by the plaintiff that was released by the Bank to 1st Defendant for
sub-division and transfer of the expropriated portion. The Defendant returned the
residue Certificate of Title to Bank of Baroda on 11th May 2015. Counsel for the plaintiff
submitted that the defendant ought to have returned the Title to the Bank on 31st
September 2010 however the defendant contended that this period was extended. PW3
testified that the plaintiff took on best endeavours to seek for the return of the
which was pledged to Baroda so the possibility of extension was not there because this
Counsel further submitted that because of the delay in return of the Title the Bank could
not enhance the Plaintiff’s borrowing limits, this curtailed growth. PW3 noted the
Plaintiff’s turnover increased on return of the title to 62.3 Billion in 2015, 74.6 Billion in
2016, 83.8 Billion in 2017, 88.7 Billion in 2018 and 108 Billion at end of 2019 from 56
Billion at end of 2014; which is a demonstration that the plaintiff had capacity to have
Bank of Baroda enhance access to working capital so as to cause business growth. This
explains clearly why the plaintiff’s turn-over that was UGX 41. 2 Billion in 2010 only
grew to UGX 62.3 Billion by end of 2015 in five years yet in the subsequent 4 years from
2015, turn-over grew to UGX 108 Billion. Clearly, the less than optimal business
The defendant on the other hand submitted although the parties had initially agreed to
ensure subdivision and return of the residue title is completed within 90days, there
were circumstances beyond the control of the defendant that necessitated the further
extension of time to complete the exercise and return of title. The parties having agreed
to waive the time, the same ceased to be of essence especially given the fact that the
registered on the title while it was still in the custody of the land office.
Counsel further submitted that save for the allegations made by the Plaintiff that it
suffered such losses, no scintilla of evidence was produced in court of any credit
applications made by the plaintiff and rejected on grounds of non-availability of its title
whereas the defendant led evidence to show that even with the absence of the said title
from the plaintiff’s custody, it enabled the plaintiff to have all its facilities registered on
evident that all mortgages executed between the plaintiff and its bankers during the
period when the title was with the defendant’s agent COWI (June, 2010 – May, 2015),
the said mortgages were effectually registered on the title. This fact was not denied by
the plaintiff, in fact during cross examination both Sanjeev Sapkota Sharma-the
plaintiff’s Finance Manager and Mr. Richard Mubiru-one of the plaintiff’s directors
confirmed to court that the plaintiff obtained credit facilities from Bank of Baroda, its
banker between 2011 and 2015 (the period when the title was with the defendant’s
agents).
The plaintiff also contended that that it was charged interest of 3% following its excess
drawing beyond sanctioned limits of UGX 2.5 Billion and USD 3.75 Million. The
plaintiff relied on Exhibit P 11- a letter from Bank of Baroda wherein it was stated that
due to the plaintiff’s failure to prevail over the defendant to return its title, constrained
the bank’s capabilities to continue enhancing the plaintiff’s credit due to breach of
lending terms which thereby triggered penalties. Counsel for the defendant submitted
that the document ought to be studied cautiously owing to the fact that the letter was
written to the defendant by Bank of Baroda upon request from the plaintiff to provide
the defendant with information in respect of financing terms, particularly; regarding the
delay by the defendant to return the certificate of title. Counsel wondered why in the
first place this information (on penalties levied against the plaintiff as a result of non-
Counsel for the defendant further submitted apart from the said letter, there is nothing
that was adduced in court showing the exact interest that was levied. The plaintiff
neither produced original sanction letters from the bank addressed to it detailing the
percentages and amounts that were to be levied for its alleged breaches of lending
terms, nor was there evidence of the bank accounts from which the alleged drawings
over the permitted limits were made and bank statements showing that interest levied
The plaintiff also alleged to have missed a business opportunity to supply textiles to
South Sudan attributed to the defendant’s failure to return the title within the agreed 90
days. The defence counsel submitted that exhibit PE.19 (Annexture 10 reading contract
award from South Sudan; letter dated 8th December, 2014) presented showed a different
company (Ms. Southern Nytil Garments Ltd) from the plaintiff that was addressed. The
exhibit was not signed by the issuing authority. It fell short of a contract between the
that plaintiff was at all times able to register credit facilities with on the title during the
period is issue. Therefore the claim that it missed a business opportunity on account of
It has been clear from the evidence adduced before this court, the title not being in
physical possession of the plaintiff’s bankers did not stop the plaintiff from acquiring
credit facilities from the bank. This was confirmed by all three of the plaintiff’s
witnesses. The court concurs with counsel for the plaintiff that the title was returned out
of the time agreed by the parties however the plaintiff did not prove to this court what
loss was suffered as a result of this delay. Counsel’s submission that because of the
delay in return of the Title the Bank could not enhance the plaintiff’s borrowing limits,
this curtailed growth is not tenable since there was no evidence led by the plaintiff
showing that they were ever denied credit facilities by the bank as a result of not having
physical possession of the title. All evidence on the encumbrance page of the title shows
that the plaintiff continued to access credit facilities as usual despite the title being in
the possession of the defendant and/or third party. Secondly, the third party witness
also testified that the leases expired and they had to make applications for renewal.
The plaintiff contention that it was charged interest of 3% following its excess drawing
beyond sanctioned limits of UGX 2.5 Billion and USD 3.75 Million was also not reliably
proved before this court. The plaintiff relied on Exhibit P 11- a letter from Bank of
Baroda wherein it was stated that due to the plaintiff’s failure to prevail over the
defendant to return its title, constrained the bank’s capabilities to continue enhancing
the plaintiff’s credit due to breach of lending terms which thereby triggered penalties.
However evidence showed that even before the title was submitted to the defendant
there was still a clause saying 5% additional interest will be charged. PW2 in his cross
examination while explaining the bank’s sanctions and penalties testified that whether
the bank’s client has the title or not, it is standard of norms that the bank will penalize
this money. PW2 testified that these are standard norms of the bank whenever they
Furthermore PW2 did not reliably inform this court if the plaintiff had drawn beyond
The plaintiff also alleged to have missed a business opportunity to supply textiles to
South Sudan attributed to the defendant’s failure to return the title within the agreed 90
days. PW3 stated there was award for the contract but rather an invitation to quote for
the business. The plaintiff failed to prove correlation between the absence of the title
Therefore everything considered, I do not find that the plaintiff suffered any
compensable loss over and above the compensation that was paid by the defendant that
Issue 2: Whether the dispute between the defendant and third party should be
referred to arbitration.
The involvement of the third party in this case is only limited to indemnification of the
From my determination of issue 1, the court has found the plaintiff’s claim devoid of
any merit therefore the defendant is not liable in any way to the plaintiff. It would be
redundant for the court to delve further into the determination of this issue however
regardless of that it is worthy to note that had the defendant been found liable to the
plaintiff, the question of indemnity between the defendant and the third party would
Although judicial power is an essential prerogative of any country, the parties may if
they express the wish to do so, give jurisdiction to arbitrators to settle their disputes.
However, a country retains the power to prohibit settlement of certain types of disputes
The contract between the defendant and third party clearly stipulated that disputes
arising would be referred to arbitration. Despite this court being clothed with inherent
unlimited original jurisdiction under Article 139, it has also pronounced itself several
times that when it comes to arbitration this court it has limited jurisdiction in arbitration
matters as per section 5 of the Arbitration and Conciliation Act. It provides as follows:
(1) A judge or magistrate before whom proceedings are being brought in a matter which is the
subject of an arbitration agreement shall, if a party so applies after the filing of a statement of
defence and both parties having been given a hearing, refer the matter back to the arbitration
(a) that the arbitration agreement is null and void, inoperative or incapable of being performed;
or
(b) that there is not in fact any dispute between the parties with regard to the matters agreed to
be referred to arbitration.
(2) Notwithstanding that an application has been brought under subsection (1) and the matter is
pending before the court, arbitral proceedings may be commenced or continued and an arbitral
The arbitration clause in the contract is very clear about referring any dispute between
the defendant and 3rd party to arbitration which both parties validly entered into and
refer disputes to a neutral third party to make a binding decision. Therefore the
consensual nature and the principle of freedom to contract give the right to arbitrate
public policy.
The court in British American Tobacco Uganda Limited vs Lira Tobacco Stores M.A
No. 924 of 2013 extensively discussed the jurisdiction of this court when it comes to
arbitration matters. Justice Christopher Madrama Izama held; “Before taking leave of this
issue, the Respondents Counsel referred to section 14 of the Judicature Act which provides for
the unlimited original jurisdiction of the High Court. However under section 14 (2) (a) of the
Judicature Act, the jurisdiction of the High Court shall be exercised in conformity with the
written law. Particularly under section 14 (2) (b) of the Judicature Act provides that subject to
any written law, the High Court may apply any established and current custom or usage. In
other words, any customs or usage is subject to the written law. The court therefore has no
jurisdiction or discretionary powers to try any customs or usages which are in conflict or not in
Where a valid arbitration agreement exists between the parties to a dispute, they will be
discouraged by the courts from commencing any court action until the terms of
arbitration agreement are satisfied. The provisions of the Arbitration and Conciliation
Act are quite instructive on this matter and the net effect of those provisions is that once
the parties have agreed to settle their disputes by arbitration and one party, attempts to
side-step this procedure by commencing legal proceedings, such proceedings will not
be allowed to proceed until the arbitral process has been completed. The law makes it
obligatory for the judicial authority not only to make an order for staying the
proceedings on an application from the party, but also refer the parties to arbitration.
agreement and it may seem that this was due to the suit filed against it and they were
forced to have the third party explain the delay in processing the land title for the
plaintiff. It was out of fear of being condemned for actions of the third party and the
In the premise therefore, the defendant was wrong to take out third party proceedings
against the Third Party and any proceedings against it ought to have been determined
Since it was determined that the plaintiff’s claims were devoid of merit, there are no
defendant is ordered to pay costs to Third party for erroneously dragging them to court
I so order.
Obiter dictum
There is need for clarity and precision in the law of compensation in order to help ensure both
that a land owner obtains fully the compensation the law intended and that the land owner is not
paid twice for what is essentially the same loss.
The court has a duty to balance between doing justice to individuals and equitably preserving
tax payers’ funds for greater priorities and this is the most pervasive considerations. In pursuit
of that balance it is inevitable that the distinctions will be drawn in order to avoid any arbitrary
awards or inconsistent awards which may be influenced through corrupt tendencies.
SSEKAANA MUSA
JUDGE
19th/04/2021