THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
COMMERCIAL COURT DIVISION
(ARISING FROM HCT-00-CC-CS-040–2008)
BETUCO (U) LTD AND ANOTHER.……….… ………………….….. APPLICANTS
BARCLAYS BANK OF UGANDA LTD & 3 OTHERS…………..RESPONDENTS
BEFORE: HON MR. JUSTICE LAMECK N. MUKASA
This is an application brought by Notice of Motion under section 98 of the Civil Procedure Act and Order 52 Rules 1 and 3 of the Civil Procedure Rules seeking orders:
2. Provide for costs of the application.
The grounds for the application are briefly that:-
2. In signing the Consent Judgment the parties were not ad idem
3. The mediation proceedings were so fundamentally defective that they did not bind the Applicants.
4. It is fair and just that this application be allowed in favour of the Applicants.
Representation was Mr. James Muhumuza for the Applicants and M/s Kanyerezi-Masembe and Ernest Sembatya for the Respondents.
In Peter Muliira Vs Mitchell Cotts Ltd CACA No. 15 of 2007 Hon Justice Kitumba, JA stated:-
“The law regarding consent judgment is that parties to a Civil Suit are free to consent to a judgment. They may do so orally before a judge who then records the consent or they may do so in writing and affix their signatures on the consent. In that case still the Court has to sign that judgment. A consent judgment may not be set aside except for fraud, collusion or for ignorance of material facts.”
The Consent Judgment in issue was reached through mediation proceedings. Mediation is governed by the Judicature (Commercial Court Division) (Mediation) Rules, 2007 (herein referred to as Mediation Rules). Rule 20 (I) provides:-
The principles upon which a consent judgment can be set aside have been settled and followed in a long line of cases. The leading East African case being Broker Bond Liebig Vs Mallya (1975) EA 267. In that case Law Ag P (as he was then) stated:-
“Prima facie, any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and on those claiming under them --- and cannot be varied or discharged unless obtained by fraud or collusion or by an agreement contrary to the policy of the Court --- or if consent was given without sufficient material facts or in misapprehension or in ignorance of material facts or in general for a reason which would enable the Court to set aside an agreement.”
“--- It is a well settled principle therefore that consent decree has to be upheld unless it is violated by reason that would enable a Court to set aside an agreement such as fraud, mistake, misapprehension or contravermention of court policy. This principle is on the premise that a consent decree is passed on terms of a new contract between the parties to the consent judgment ----.”
See also Mohamed Allibhai Vs W.E Bukenya Mukasa & Another SCCA No. 56 of 1995, Tropical Commodity Supplies Ltd & Others Vs International Credit Bank (in liquidation) HCT-00-CC-MA647-2002
As regards Alternative Dispute Resolution mechanism Justice Kiryabwire in Buildtrust Construction (U) Ltd Vs Martha Rugasira HCT-00-CC-CS-288-2005 stated:-
I hold a similar view.
In his submission Mr. Muhumuza appeared, in alternative to setting aside the Consent Judgment, to pray for review or variation of the judgment. Order 46 rule 1 of the Civil Procedure Rules provides:-
“Any person considering himself or herself aggrieved –
(b) by a decree or order from which no appeal is hereby allowed,
In Attorney General & Another Vs Kamoga (Supra) Hon Justice Mulenga held that the provisions of order 46 rule 1 are so broad that they are applicable to all decrees including Consent decrees. However, for the provisions to apply there must be sufficient reason for review as set out in the rule. That is discovery of new and important matter or mistake or error apparent on the face of the record or any other sufficient reason.
I now proceed to apply the above principles to the merits of this application. The avenues for mediation are provided for by Rule 13 of the Mediation Rules, which states:-
“(I) Mediation under these Rules shall be conducted by ---
Order 12 rule 1 CPR provides that Court shall hold a scheduling Conference to sort out points of agreement and disagreements, the possibilityof mediation, arbitration and any other form of settlement. Where the parties reach an agreement, orders shall immediately be made in accordance with rules 6 and 7 of Order 15 of the Rules. Rule 2 (I) of the same order states:-
The consent judgment in issue is the result of the mediation proceedings conducted by Hon Justice Kiryabwire on 25th March 2009. In his submission Mr. Muhumuza argued that it is fair and just that the Consent Judgment is set aside first because the directors of the Applicants had signed the judgment under a mistake or misrepresentation as to the contents thereof. Secondly, that the directors had not been properly advised. Thirdly that the mediation proceedings were fundamentally defective and did not bind the Applicants. Fourthly that the consent judgment was sealed and issued without payment of the requisite court fees.
This application is supported by the affidavits of Mr. Joseph Bahakanira and Mrs, Goodra Tumusiime Bahakanira, directors of the Applicants. The Respondents filed an affidavit in reply deponed to by Angelina Namakula Ofwono, the Head of Legal of M/s Barclays Bank (U) Ltd. Annexture F to Mr. Bahakanira’s affidavit is a set of documents among which is the summary of the plaintiffs case filed pursuant to Rule 16 of the Mediation Rules. Rule 21 provides for confidentiality. It states:
“(I) Every person, including associated persons, shall keep confidential and not use for any other purposes –
(3) Sub-rule (2) does not apply to any information, which would in any case have been admissible or disclosable in proceedings in the main suit or an application arising out of the mediation.
In handling this matter I accordingly caution myself against taking into consideration matters barred by the above provisions. Particularly I will not consider annexture F, save for the documents already on Court record, prior to the mediation proceedings.
In paragraph 5 of his affidavit Mr. Bahakanira states that the mediation proceeded marathonly and the Applicants ended up making mistakes in signing the consent judgment. In paragraph 7 he states that the Applicants committed a mistake to sign a hurriedly concluded consent judgment. He avers in paragraph 13 that the Consent Judgment did not have the basis on how the figures for repayment of the loan were arrived at. He claims that the formula presented by the Applicants for calculation of the outstanding balances was refused or ignored and neglected by the mediation judge. He attached annexture D which is a Statement of Loan Position of Betuco (U) Limited as at 28th February 2008 prepared by Goldgate Certified Public Accountants. The statement shows a total balance of Shs2,246,398,089/= as opposed to the outstanding balance of Shs4,500,000,000/= indicated in the Consent Judgment with respect to the loan to Betuco (U) Limited. In arriving at their figures Goldgate states:
Counsel for the Applicant argued that the agreed outstanding amount of Ugshs4,500,000,000/= reflected on the Betuco (U) Ltd’s loan in the Consent Judgment was arrived at by the mistaken or erroneous use of 20% as the interest rate for the entire loan period. That 20% was only for two months of the loan period and thereafter the rate should have been 10% which would have put the outstanding amount at Ughshs2,246,398,089/=. Counsel relied on the Goldgate’s Statement (Annexture D) and the Facility Letter.
The facility letter dated 21st November 2005 provided:-
time of approval.
Billion will be given
meantime the Apex loan is
processed which shall be
offset from disbursement of
the Apex Funds and may be
allowed at a rate of 2%
above prime (currently at
18%) making a total of 20%.”
31st day of May2009. In his submission Mr. Muhumuza argued that the effective date of the agreed six years should be revisited. Counsel stated that in arriving at the amortization period of six years consideration should have been given to the period when transaction on the loan was stopped. Court is not supposed to inquire into the parameters by which the parties came to an agreement. It is only required to consider whether there was a new or important matter or evidence discovered which was unknown at the time of the consent agreement or whether there was a mistake or error apparent on record. None has been shown and as was stated by Sir Newton Worsley in Hirani Vs Kasam (1952) 19 EACA 131 at page 133 :-
“--- In such a case, the decree is passed upon the new contract between the parties which supersedes the original cause of action.”
neither denied nor rebutted. In fact the consent agreement was signed for the Applicants by all the above named save for Mr. Mwebembezi. An advocate is under a duty to properly advise his/her client and in his or her client’s interest. An advocate is his/her
client’s interpreter on technical legal matters. With three able advisers the Applicants’ directors cannot be believed to say that they lacked proper legal advise. The Applicants have not alleged collusion on the part of their former advocates. As to misadvise, if
the Applicants feel aggrieved they could take upon proceedings against their advocates for professional negligence in tort or disciplinary.
The Applicants complained that the mediation proceedings continued up to 8:30 pm beyond the court hours. Mr. Muhumuza argued that as Mediation is Court annexed it should be conducted within the court hours. The Mediation Rules, Rule 11 provide for time within which the mediation proceedings must be completed. The Rules are silent
as to place where and time of the day when mediation should be conducted. Rule 14 (a) requires the Mediator to organize a suitable venue and date for the mediator session. My considered view is that place, date and time should be at the convenience and by agreement of the mediator and the parties to the proceedings. In paragraph 6 of the Respondents’ affidavit Mrs. Ofwono avers that at the pre-medication meeting the parties agreed on a mediation time table fixing the mediation for 25th March 2009 for a full day and 27th March 2009 in the afternoon. In paragraph 9 she avers that on 25th March 2009 at about 5:30p.m, seeing that a lot had been achieved through the mediation process thus far, the parties and their lawyers agreed to stay on in a bid to have the matter concluded on that day. That the Mediator did not object to that proposition and accordingly the mediation proceeded. These averments on oath were neither denied nor rebutted. The two respectable directors and three distinguished lawyers of the Applicants cannot be believed to have hurriedly signed the consent judgment merely because they were tired and wanted to go home. They had all the right and freedom to demand or seek time to go home with the consent agreement, study the same overnight with a view to sign or not sign the same the following day or some other time agreeable to the parties and the mediator. It was not prudent for Mr. Bahakanira to first sign and then decide to scrutinize the Consent Judgment. Scrutiny should have come first and execution follow.
Mr. Bahakanira in his affidavit states that he has pressure and
diabetes. He complains that mediation started at 9:00 a.m. and
proceeded non-stop up to 8:30 p.m. That he did not have lunch and
If true that would surely be very harsh and unfair conduct of the
Mediator. But the Mediator’s refusal to adjourn the proceedings is
denied by the Respondents. As already stated proceedings
after 5:30 p.m. were by agreement of the parties, their respective
lawyers and the Mediator. In paragraph 8 Mrs. Ofwono avers:-
“THAT in conducting the mediation, the Mediator held both joint and separate sessions with the parties. The mediation was broken off at 1:30 p.m. for a lunch break until 3:00 p.m. and it then continued for the
rest of the day.”
The above averment on oath was also neither rebutted nor denied on
In his affidavit Mr. Bahekanira claims that the Applicants’ proposals were not included in the Consent Judgment. That the formula he presented on behalf of the Applicants for calculating the outstanding balances was not applied. Rules 14 and 16 require each party to file and exchange a summary of its case and all documents which he may refer to in the mediation. Annexture F to his affidavit is the Applicants’ case summary and documents filed. As already stated such documents are confidential and should not have been filed with this application. So I will keep a blind eye to them. My considered view is that the case summaries and documents so filed only serve as the working papers or documents to be referred to at the mediation proceedings. They do not necessarily become part and partial of the agreement, if any reached.
The Applicants contend that they are not bound by the mediation proceedings. The Applicants are corporate entities and as such they act through their officers like directors. Both Mr. and Mrs. Bahakanira in their respective affidavits, describe themselves as directors of the Applicants. The Applicants were represented by these two directors and the Applicants’ three lawyers at the Mediation proceedings. It is these same officials who signed the Consent Judgment on behalf of the Applicants. Mediation Rule 15 states:-
“(2) The person signing the mediation agreement on behalf of each party shall be deemed to have authority to bind the party represented by him or her.”
As regards execution by Counsel the law is that so long as Counsel is acting for the party in a case and his instructions have not been terminated, he has full control over the conduct of the trial and apparent authority to compromise all matters connected with the action. See BN Technical Services Ltd Vs Francis X Rugunda HCMA 75 of 1998, Buladina Nankya & Anor VS Bulsio Konde (1979) HCB 239
In paragraphs 10 and 11 of the Respondents affidavit Ms Ofwono states that on the Mediation day at about 7:00 p.m. the parties reached an agreement and their respective lawyers in the presence and with the full involvement of both parties’ representatives, jointly prepared the consent agreement. That the Mediator did not participate in the preparation of the Consent Judgment. That after the Consent Judgment had been so drawn the parties respective representatives and their respective lawyers signed the Consent Judgment in the presence of the Mediator Judge who sighed it too. The above averments on oath were neither denied nor rebutted.
When the agreement is so reached and signed the Mediator becomes functus officio and Rule 20 (I) requires the agreement to be filed with the Registrar for endorsement as a Consent Judgment. This is what happened and on 26th March 2009 it was sealed as a judgment of this Court.
Mr. Muhumuza in his conclusion remarks stated:-
The Learned Justice also upheld Justice Engwau’s holding in an earlier appeal before the Court of Appeal wherein he held:-
Justice Tsekoko cited Rule 6 and held:-
I would have so ordered in the instant case but Mediation Rule19 requires the Mediator when mediation is concluded to file a report to the Registrar. Such report will indicate the result of the mediation. It would indicate whether an agreement has been reached on some or all the issues in dispute or whether no agreement has been reached. Under Rule 20, if no agreement is reached the Mediator is required to refer the matter back to Court. When any agreement is reached the rules provide that it shall be signed by the parties and filed with the Registrar for endorsement as a Consent Judgment. My view is that such agreement is filed by the Mediator and as such would not attract filing fees. This is what happened in the instant case.
Considering all the above, I am enable to interfere with the Consent Judgment. The application is dismissed with costs.
Lameck N. Mukasa
21st August 2009