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LAW, AG. V-P.
[1] This appeal and cross-appeal arise out of a suit filed by the appellant
company against the respondent, who was at all material times a share-holder
in the appellant company, in respect of the supply to the respondent of
water, I quote from the plaint-
��by virtue of the provisions of and at the rates prescribed by the Articles
of Association of the plaintiff (that is to say, the appellant) company and
resolutions duly passed thereunder�;
[2] alternatively, at a reasonable commercial rate. The defence was,
firstly, that as the charges exceeded Shs. 10/- per 1,000 gallons, they
exceeded the maximum rate chargeable as fixed under section 16 of the Water
Boards Act and were to that extent un1awful and irrecoverable; secondly,
that to the extent that the water was supplied under the terms of an
injunction granted in another suit, no charges could be raised for the
period covered by the injunction; and thirdly, that as to the major part of
the claim purporting to be meter charges levied under an addition to the
Articles of Association, this addition was made without the agreement of the
respondent who was then a member of the appellant company.
[3] The second and third grounds of defence were rejected by the learned
trial judge, and form the substance of the cross-appeal. The first ground of
defence found favor with the learned judge, who dismissed the suit because,
in his view, I quote-
��the whole of the charges in excess of Shs. 10 �per 1,000 gallons were
unlawful and are irrecoverable in law�.
[4] I will deal first with the cross-appeal. The claim in the plaint covered
a period of 18 months. For some 10 months of that period water was supplied
in terms of an injunction obtained by the respondent in another suit, under
which the appellant was ordered to reconnect the respondent's water supply
and continue to supply him with water, until further order as to payment for
such supply. No further order was in fact made. Mr. Oder for the respondent
submitted that in these circumstances the respondent was not liable to pay
for water supplied during the 10 month period covered by the injunction, as
the water was supplied in terms of the injunction under which no order
requiring payment was ever made.
[5] I am quite unable to accept this submission. A temporary injunction
issues in order to preserve the status-quo as it existed between the parties
before its issue, and I have no doubt that the respondent is liable to pay
for water supplied while the injunction was in force at the same rates as he
would have been liable to pay had the injunction not issued.
[6] The second ground of cross-appeal is that, as the respondent had refused
to pay more than Shs. 10/- per 1,000 gallons of water supplied to him, any
implied contract which may have arisen to pay for water after such refusal
should be construed as involving the respondent in ,liability to pay at that
rate and no more. I see no merit in this ground. The respondent was never in
a position to alter unilaterally the rates at which he was contractually
bound to pay for water supplied.
[7] His liability, whether under an express or subsequent implied contract,
is to be deter�mined by whether the rates charged under the express contract
were 1awful or unlawful and the answer to that question depends on the
result of the appeal. I see no merit in the cross-appeal. I now turn to the
appeal.
[8] Many of the grounds raised in the memorandum of appeal related to the
allegedly unjustified structures passed by the learned judge as to the way
in which the appellant company was run and carried on business. As these
matters did not form the basis of the lower court's decision, Mr. Keeble for
the appellant company did not press them, beyond commenting that the trial
judge's strong views on the subject must have colored his approach to the
issues before him in a sense unfavorable to the appellant company. The main
point in this appeal is whether the learned judge was right in holding that
the charges raised by the appellant company against the respondent were
unlawful and irrecover�able in so far as they exceeded Shs. 10/- per 1,000
gallons supplied.
[9] To decide this question it is necessary to go in some detail into the
history of events relating to this appeal. The main function of the
appellant company is to supply water to dwelling houses on Busiga Hill, near
Kampala. For this purpose it instal�led a pump-house at the foot of the
hill, and pumped water up to reservoirs on the hill, from whence it was
distributed to the houses through a system of pipes. Each householder
wishing to be supplied with water was required to buy a certain number of
shares in the appellant company.
[10] Water was originally obtained from a swamp. This source of supply being
unsatisfactory, arrangements were made to obtain supplies from the Kampala
and District water Board in 1960. As the pumping- station was then just
outside the area of the water Board, the authority of the Governor in
Council was required to the arrangement, under Section 11 (a) of the
waterworks Act (Cap. 137). This authority was duly obtained, and was
published as Legal Notice No. 196/60. It authorised the Water Board to
supply water to the appellant company at the plot on which the pump house is
situated. The consent of the Minister concerned was also required under
Section 16 of the Water Boards Act (Cap. 138). This was duly obtained on 9th
September, 1960. The water Board was authorised to supply water to the
appellant company at Shs. 3/- per 1,000 gallons, and the latter were
authorised to re-sell it at a maximum of Shs. 10/�- per 1,000 gallons.
[11] It is common ground that the appellant company could not carryon
without imposing some surcharge on this permitted maximum price. In 1965 an
agreed annual charge of Shs. 500/-, variously described as a gallonage or
meter charge, was paid by the residents of Busiga Hill who received water
from the appellant company, in addition to the authorised charge of Shs.
10/- per 1,000 gallons.
[12] In 1966 when the respondent became a resident on Busiga Hill and a
share-holder in the appellant company, the surcharge was shs. 600/-. This
surcharge was necessary to enable the appellant company to meet its
operating expenses. The respondent paid it. On the 3rd March, 1968, the
share-holders (including the respondent) were given notice of an
Extraordinary General Meeting of the appellant company to be held on 26th
March at which it would be pro�posed to amend the company's Articles of
Association by providing for the payment of a meter charge, the amount to be
decided in General Meeting. The Extraordinary General Meeting was duly held.
The respondent did not attend, but a quorum of members was present.
[13] The proposed resolution was duly passed, and an annual meter charge of
Shs. 1950/- per annum approved. The respondent and two other residents then
filed the suit to which reference has already been made, claiming a
declaration that the resolution had not validly been passed. The suit was
eventually unsuccessful. The respondent has always refused to pay the meter
charge of Shs. 1,950/-, and the question in this appeal is whether he is
entitled to avoid paying it on the ground upon which he now relies, that
such a meter charge is unlawful having regard to the maximum resale price of
Shs. 10/- per 1,000 gallons fixed by the Minister in 1960.
[14] The appellant company's case is, briefly, stated, that the maximum
resale price applies only to the water as delivered at the pumphouse, and
that the company is entitled to recoup its expenses of delivering the water
to the residents on Busiga Hill, and of maintaining its pumphouse,
reservoirs, tanks and pipe-lines, from those residents. The respondent's
case is that any charge in excess of the Shs. 10/- authorised by the
Minister is irrecoverable as unlawful.
[15] The respondent's case found favor with the learned judge. I find myself
quite unable to agree with this conclusion. As I see the position, the
maximum resale price of Shs.10/- per 1,000 gallons applied to the water as
delivered by the Water Board at the pump-house. Had any resident of Busiga
Hill preferred to collect his water at the pumphouse and make his own
arrangements to carry it up the hill to his house, he would have paid Shs.
10/- �per 1,000 gallons, and borne his own transport charges. I do not see
how, in these circumstances, it can be said that the charges raised by the
appellant company for' delivering the water can be said to have been
unlawful.
[16] They may have been excessive, but the consumer's remedy in that case
would be to cease making use of the appellant company's facilities, and to
make his own arrangements for transporting the water. To take a simple
example, a man might have a stand-pipe outside his house, from which he is
authorised to sell Water Board water to the public at 20 Cts. a debe. Some
of his customers ask him to carry these debes to their houses, at an agreed
charge of 10 Cts. each. Could it seriously be argued that such an
arrangement was unlawful, as involving a resale of water at a price higher
than the maximum authorised by the Minister? I do not think so.
[17] In the present case, the respondent, when he agreed to take water from
the appellant company, was fully aware that in addition to paying the
maximum authorised resale price for the water itself he would be required to
pay such surcharge, to cover pumping, storage and delivery, as should be
necessary to keep the appellant company solvent. The surcharge would
necessarily vary with the cost of providing these facilities, but it was an
implied term of the contract between the appellant company and its members
who were supplied by it with water that they would pay such surcharge as was
reasonably necessary to enable the appellant company to continue its
operations. It is unfortunate that the appellant company described this
surcharge as "meter rent".
[18] Mr. Oder for the respondent relied strongly on this description in
supporting the learned judge's finding that the surcharge was unlawful and
irrecoverable. He pointed to rule 36 of the Waterworks Rules, made under the
authority of the Waterworks Act (Cap. 137) which fixes the scale for meter
rents far lower than the "meter rent" charged by the appellant company. In
my opinion, the Waterworks Rules only apply to services operated by a Water
Authority, and have no application to a privately owned system of water
distribution such as that belonging to the appellant company. The Kampala
and District water Board�s interest, so far as Busiga Hill is concerned,
ceased when its water was delivered to the consumer, in this case the
appellant company, at its pump-house. In any event, as I have a1ready said,
the expression "meter rent" to describe the surcharge imposed by the
appellant company was a misnomer, an unfortunate choice of words. The
surcharge was in no sense a meter rent, but a charge for pumping, storing
and delivering water. There was, in my opinion, nothing unlawful in the
imposition of such a charge, and with respect I am of opinion that the
learned judge was in error in coming to the conclusion that it was an
unlawful and irrecoverable charge. I would accordingly allow this appeal,
with costs; set aside the judgment and decree appealed from, and substitute
a judgment and decree in favor of the appellant company for Shs. 12,994/-
with interest at 8 per centum per annum from the date of filing suit until
payment, together with the costs of the suit. I would dismiss the
cross-appeal, with costs. As Lutta and Mustafa J.J.A. agree, it is so
ordered.
LUTTA, J.A.
[19] I have had the advantage of reading the judgment prepared by the
learned Acting Vice-President with which I respectfully agree and have
nothing useful to add.
MUSTAFA, J.A.
[20] I have had the opportunity of reading the judgment prepared by the
learned Ag. Vice-President. I agree with his reasoning and conclusions and
have nothing useful to add. |
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