THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
MISCELLANEOUS APPLICATION NO. 189 OF 2011
[ARISING FROM CIVIL SUIT NO. 096 OF 2010]
(U) CO. LTD ::::::::::::::::::::::::::::::::::::::::::APPLICANT/2ND DEFENDANT
EVEPEAK CONSULTS & TECHNICAL
BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA
The application which was brought under the provisions of Order 6 rules 19 and 31 of the Civil Procedure Rules (CPR) was supported by an affidavit deposed on 11/04/2011 by Muhammad Luwalira, the Legal Officer of the applicant. The respondent filed an affidavit in reply to oppose the application which was deposed on 10/05/2011 by Edward Magezi, the Managing Director of the respondent. For purposes of making the several references here to the pleadings in the main suit clear, I shall refer to the parties to this application as the plaintiff and the 2nd defendant.
The salient facts averred in the affidavit in support of the application were that while he was preparing for the scheduling conference for this case, Mr. Luwalira realised that the situation on the ground had changed since the filing of the defence. He further averred that the situation necessitated an amendment of the WSD to put the change on the record. The changed situation referred to was that on 10/03/2010 the Chief Magistrates Court at Mengo issued an order in C/S 1913 of 2009 for the attachment of a total of shs. 10,740,974/= and USD 18,391.78 held by the 2nd defendant on account of the 1st defendant, for the benefit of S & J Construction Ltd., the judgment creditor. That subsequently, the 2nd defendant was by a threat to attach its own property forced to pay over the amounts stated above decreed against the 1st defendant together with costs of shs. 3, 420,377/=.
It was further averred that on 4/02/2010, Uganda Revenue Authority (URA) issued an Agency Notice to appoint the 2nd defendant to recover shs. 2,898,935,829/= on account of taxes owed by the 1st defendant. That the 2nd defendant eventually paid shs. 158,572,322/=, which was money she held on account of the 1st defendant, to URA in satisfaction of the Agency Notice.
The salient facts in Mr. Edward Magezi’s affidavit in reply were that since the variations which gave rise to the main suit were issued by the 1st defendant to the plaintiff, the monies arising out of the variations belonged to the plaintiff and not to the 1st defendant. That the facts sought to be included in the WSD were not relevant to the trial of the real issues in controversy between the plaintiff and the 2nd defendant; that the 2nd defendant had admitted the costs of the variations made in the contract between the plaintiff and the 1st defendant and only one issue remained to be decided in the suit, i.e. whether the 2nd defendant was liable to compensate the plaintiff for the her interference in the 1st defendant’s performance of the subcontract between plaintiff and the 1st defendant.
At the hearing of the application, Mr. Fred Kiiza who represented the 2nd defendant argued that the facts raised by the 2nd defendant were new and necessary to iron out all the issues between the parties to the suit. That it was therefore in the interests of justice that the application be allowed. He relied on Eastern Bakery v. Castelino  EA 451 for the submission that amendments requested before the commencement of the hearing should be freely allowed if they are not prejudicial to the other party. He cited the decision in Joseph Nsereko v. Haji Raibu Lubega & Another  HCB 51 for the same proposition and for the further submission that no injustice is caused if the other side can be compensated by costs.
Mr. Dennis Kusaasira for the plaintiff agreed with the legal position presented by Mr. Kiiza about the amendment of pleadings but he opposed the application because in his view the facts that the applicants sought to add to the WSD had no bearing on the issues to be tried in the suit. He stated that the plaintiff’s case against the applicant was for unlawful interference in the performance of the contract between her and the 1st defendant, Venture Communications (U) Ltd. That the plaintiff had a distinct cause of action against the 2nd defendant which did not require the court to find out what happened to the money that the 2nd defendant held on account of the 1st defendant. That as a result, there was no issue at all in the action as it stands about what became of the money that the 2nd defendant held on account of the 1st defendant. That the 2nd defendant’s attempts to amend the WSD to bring in new facts not previously pleaded amounted to substitution of her defence with another and should not be allowed. He relied on the decision in Abdul Karim Khan v. Roshan  EA 289 for the submission that an amendment that creates an inconsistency in a party’s pleadings should be disallowed.
Mr. Kusaasira went on to submit that counsel for the 2nd defendant had not shown how he intends to rely on the new facts because no proposed amended WSD was filed with the application. That the failure to attach the proposed amended WSD to the application was a fatal blow to the application because it denied the court of the opportunity to see what 2nd defendant intended to amend and therefore the application was incompetent. He relied on Meru Farmers v. Abdul Aziz Suleiman (No. 1)  EA 436 for his submission.
Mr. Kusaasira went on to submit that the new facts which the 2nd defendant intended to plead in the amended WSD occurred before the suit was filed; that the 2nd defendant filed the WSD herself without instructing counsel and thus had knowledge of all the facts but did not include them in her defence. He then concluded that the application was an afterthought and brought in bad faith. He relied on Gaso Transport Services (Bus) Ltd. v. Adala Obene [1990-94] 1 EA 88 for the submission that an amendment that is requested for in bad faith ought not to be allowed.
In rejoinder Mr. Kiiza argued that Order 6 rue 9 CPR does not require an applicant for leave to amend to file the proposed amended pleading with the application. Further that the case before court was an exceptional one in respect of which there was no need to attach the proposed amendment to the application. He went on to submit that the applicant ought to be granted leave to amend because she filed the WSD herself without consulting an advocate. That the proposed amendment would not substitute the original defence with another one because the latter contained only general denials and no facts were stated that the 2nd defendant is alleged to be trying to substitute. That the new facts that the 2nd defendant intends to plead were only discovered by the advocates when they received instructions to defend the suit and after the 2nd defendant had filed its WSD, and therefore there were no mala fides on the part of the 2nd defendant in bringing this application. That the application had been brought expeditiously on receipt of the 2nd defendant’s instructions and thus ought to be allowed.
Following Mr. Kiiza rejoinder, Mr. Kusaasira made an informal application under the provisions of Order 13 rule 6 CPR for judgment on admissions because, in his opinion, determining that application would narrow down the issues in the dispute. He submitted that in paragraph 5 (h) of the affidavit in support the 2nd defendant admitted the value of the variations that were executed by the plaintiffs by agreement with the 1st defendant. He added that the 1st defendant had already admitted the plaintiff’s claim and a judgment in default was entered against her when she failed to file a WSD; that the only issue now pending determination in the dispute was whether the 2nd defendant unlawfully interfered with the 1st defendant’s performance of the contract between her (the 1st defendant) and the plaintiff. He went on to state that his application was without prejudice to whether the application for leave to amend would be allowed or not. He finally pointed out that the contention that the applicant admitted part of the plaintiff’s claim had been averred in paragraphs 8 and 9 of the affidavit in reply to the application.
Mr. Kiiza opposed the application for judgment on admissions for the reason that it was premature because leave to amend the WSD had not yet been granted and the pleadings were not yet complete. He asserted that the application could only be considered if made formally so that the 2nd defendant could file an affidavit in reply thereto. Mr. Kusaasira then submitted in rejoinder that such an application could be taken at any time and there was no requirement in Order 13 CPR that a formal application had to be made because Order 13 CPR provides for no specific procedure for such applications. He went on to submit that the application was timely and if considered it would spare scarce judicial resources in as far as this dispute is concerned. He thus prayed that the application be granted.
Mr. Kusaasira brought the informal application for judgment on admissions hoping that it would dispose of a substantial part of this dispute. I will therefore first address that application and then go on to consider the 2nd defendant’s application to amend her WSD.
I will begin with the question whether counsel for the plaintiff had first to file a formal application before the alleged admission could be considered by this court. Order 13 CPR provides for different categories of admissions to be requested of any party or applied for to court. Order 13 rule 2 provides for notice to admit documents and the procedure for it is given in rule 3; it is by issuing a notice to the party as is prescribed in Form 9 of Appendix B of the Rules. Notice to admit facts is provided for in Order 13 rule 4 and the procedure is given in rule 5. A notice to admit facts should be in the format prescribed in Form 10 of Appendix B while an admission of facts should be in the format prescribed in Form 11 of Appendix B of the Rules.
In Bawa v. Singh the High Court of Uganda ruled that the purpose of Order 6 rule 30 CPR (now Order 6 rule 31) was not to preclude the court from dealing with an oral application to amend pleadings in the course of a hearing, but to provide that, if an interlocutory application is made under Order 6 rule 18 (now Order 6 rule 19), it should be by summons in chambers and not by notice of motion. The court went on to rule that if that were the case, the words “at any stage of the proceedings” in rule 19 would hardly be consistent with rule 31. Similarly, the words “at any stage of the proceedings” in rule 6 of Order 13 would be rendered redundant if it were to be held that whenever an opportunity arises for a party to make an application for judgment on admissions under that rule then the proceedings would have to stop for him/her to file a formal application. I therefore find that in the circumstance, the informal application was proper.
I will next consider the question whether the application for judgment on admissions now before me ought to be granted and to facilitate an understanding of the arguments presented by counsel and the discussion that follows about rule 6 of Order 13 CPR, I will produce it here.
The Court of Appeal of Uganda had occasion to discuss the provision above in Kibalama v. Alfasan Belgie CVBA  2 EA 146. The Justices of the Court were unanimously of the opinion that under Order 11 rule 6, which is now Order 13 rule 6, judgment can be entered at any stage of the suit where an admission of facts has been made. That such an admission however, must be unequivocal in order to entitle the party to judgment without waiting for the determination of any other question between the parties. I would say that the provision has to be interpreted literally with no interpolations or additions that were not meant to apply to situation were admissions are made. If an admission is made of a fact upon which the dispute turns, then judgment should be entered forthwith, without waiting for the determination of any other issues between the parties.
That being the law on judgments on admission, did the 2nd defendant make any admissions of the plaintiff’s claims in the affidavit in support of this application upon which judgment can be entered in favour of the plaintiff? The relevant parts of the plaintiff’s claims in the suit are in paragraphs 5, 6 and 7 where she pleaded that on the 29th June 2008, she entered into a sub-contract with the 1st defendant to build a telecom tower at Mpara for a client known as MTN. A Photostat copy of the sub-contract No: PAUGA4Y0860501JLC was attached to the plaint as Annexure ‘A’. The contract showed, in clause 1.14 thereof, that the parties thereto where Evepeak Consults & Technical Services Ltd. (the Sub-contractor) and Venture Communications (U) Ltd. (also a Sub-contractor) and that the “Client or Employer” was MTN.
It was therefore the plaintiff’s claim that the 1st defendant’s refusal to pay her was unlawful and amounted to a breach of the sub-contract. Further that the breach was procured by the 2nd defendant who had no right to dispute the additional costs because she was not party to the sub-contract between the plaintiff and the 1st defendant. As a result the plaintiff claimed special damages of USD 41,508.77 and shs 6m being monies incurred in costs in a suit where the plaintiff was sued by its suppliers, as well as general damages for breach of contract and interest on all the claims at commercial rate.
4. The 2nd defendant denies the contents of paragraphs 7, 8, 9 and 10 and shall put the Plaintiff to strict proof thereof. The 2nd Defendant shall aver and contend that there exists a contract between it and the 1st Defendant under which the 2nd defendant questioned the variations made by the 1st defendant in respect of the subcontract works. The 2nd defendant shall thus contend that it is not liable for any breach of contract between the 1st Defendant and the Plaintiff.”
Venture is aware of the court case against Huawei arising from Venture’s failure to pay S & J Construction Ltd (Venture’s subcontractor on the MTN TK Project), requiring Huawei to pay UGX 14,161,351 (Uganda Shillings Fourteen Million One Hundred Sixty One Thousand Three Hundred Fifty One) and USD 18,391.78 (United States Dollar Eighteen Thousand Three Hundred Ninety One and Seventy Eight American Cents), originating from the garnish (sic) order absolute. Venture hereby acknowledges Huawei’s compliance of honouring the court order and the remainder of the monies both under the purchase order value and variation order value to be made to Uganda Revenue Authority (URA).
From the above mentioned, Venture hereby absolves Huawei of any payment liability whatsoever under the sub-contract Agreement No: PAUGA4Y0860501JLC and Venture shall not claim at any time for any monies paid by Huawei to the Uganda Court and the Uganda Revenue Authority.
We once again wish to apologise for any inconvenience caused, and look forward to a continued working relationship with Huawei in the future.”
Moreover, it was never stated in the letter said to contain the admission (Annex “H”) that the sum of USD 59,301.21 was money that was due on account of variations that were done by the plaintiff. I say so because there were other sub-contractors hired by the 1st defendant such as S & J Construction who had sued the 1st defendant. To my mind the import of the admissions in the letter reproduced above was to absolve the 2nd defendant from the liability of accounting for monies that were paid to URA and S & J Construction on account of the 1st defendant, not that USD 59,301.21 was due to the plaintiff on account of the variations to the works. That then begs the question why Venture (SA) absolved the 2nd Defendant from liability? It does not seem to me that it could have been for any reason other than that Venture (SA) was somehow liable to make good those payments. And if Venture (SA) absolved the 2nd defendant from the responsibility of accounting for the monies paid to URA & S & J Construction, who would then be responsible for paying the costs of the variations in the works and the delay in payment? It would then appear to me that the intention of Venture (SA) was to leave Venture (U) its subsidiary out in the cold to meet the obligations but with no recourse to claim from the 2nd defendant.
I therefore found it difficult to understand how an admission by Venture Communications (Pty) of South Africa to 2nd defendant that variation orders issued were confirmed to be of the value of USD 59,310.21 could be to the benefit of the plaintiff. In fact what seems to have happened here was to the prejudice of the plaintiff as will become more apparent later on in this ruling. If Venture Communications (SA) would not claim for any of the money paid by the 2nd Defendant to URA, then by implication, Venture (U) the subsidiary company could not go against an estoppel affirmed by its parent company. The taxes were due and they were paid; and for Venture (SA) that put an end to the matter. Business with the 2nd defendant could now go on as usual as was indicated in the last paragraph of Annexure “H.”
But there is no doubt according to the sub-contract (Annexure “A” to the plaint) that the 1st defendant entered into the sub-contract with the plaintiff as an independent sub-contractor and she undertook that she did so as an independent sub-contractor. To that end clause 2.11 provided that the plaintiff would provide all the tools necessary to perform the sub-contracted works at its own cost. That if the plaintiff found it necessary to use tools or other items provided by the 1st defendant then the plaintiff would bear all the risk of loss or damage to the tools till they are returned to 1st defendant. In addition, any cost arising out of the use of such tools had to be paid by the plaintiff unless it was specifically agreed that the responsibility would fall on 1st defendant. And for the avoidance of doubt, clause 2.14 of the agreement specifically provided as follows:-
That being the case, paragraph 4 of the WSD becomes an admission by the 2nd defendant of the facts pleaded by the plaintiff in paragraphs 7 and 8 of the plaint; that the 2nd defendant had no right to interfere in the performance of the contract between the plaintiff and the 1st defendant and therefore she was an accessory to the 1st defendant’s breach of the contract. This is especially so, because, excluding the fact that she denied that the plaintiff had a cause of action against her, the 2nd defendant did plead in paragraph 3 of the WSD that she was not a party to the contract between the plaintiff and the 1st defendant. If she was not a party thereto, then what right did 2nd defendant have to question payments due to the 1st defendant’s sub-contractor?
Moreover, the 1st defendant admitted liability for the breach as pleaded by the plaintiff by not filing a WSD. The 2nd defendant’s intimation in paragraph 5 (h) of the affidavit in support of this application that it was agreed between her and Venture Communications (SA) that there was an amount due on account of variation costs, though not specifically in favour of the plaintiff, seems to point to the same conclusion. I am therefore of the opinion that the said admission is “plain and obvious, as plain as a pikestaff and clearly readable;” it must therefore result in an order in favour of the plaintiff., not for the sum of USD 59,301.21 stated in paragraph 5(h) of the affidavit in support, but for a declaration that the 2nd defendant unlawfully interfered in the 1st defendant’s performance of the sub-contract.
The first question that needs to be determined about the application now before court is whether the failure to file the proposed amended WSD with it makes the whole application incompetent. Mr. Kusaasira referred me to the decision in Meru Farmers Co-operative Union v. Abdul Aziz Suleman to support the submission that the instant application was incompetent. However the decision was not helpful to his argument because it was there held that when an application is made for leave to amend, the particular amendment in respect of which leave is sought should be before the court; only in exceptional circumstances should a court give leave to amend without knowing the particular amendment for which leave was asked. That does not mean that the whole of the proposed amended pleading must before the court before an application to amend is considered.
For the 2nd defendant, Mr. Kiiza referred me to the decision in Uganda Cooperative Credit Savings Bank v. Muzei Kirya & Others  EA 660 for the proposition that although the practice of showing proposed amendments to a pleading in red ink is desirable, failure to do so is not fatal to an application for amendment. It was also held in the same case that since the particulars of the proposed amendment were shown in the affidavit supporting the application, the application would be granted. But in the Gaso case, Tsekoko, JSC was of the view that the trial judge was justified when he criticised the omission to attach the proposed amendment to the application.
It is therefore my view that it is not only desirable but also prudent to attach the proposed amended pleading to the application for leave to amend. Submitting the pleading as it will appear when amended goes a long way in helping the other party, as well as the court, to see the effect of it compared to the original pleading instead of struggling to glean the effect by comparing the contents of the affidavit to the original pleading. It is also easier to determine whether the proposed amendment presents a contradiction or inconsistency in the party’s original pleading as a whole.
And though the CPR do not require that the proposed amendment be filed, and the failure to attach it to the application does not make an application incompetent, it has been the practice in the courts for more than a century, and a good one at that, which counsel in present times desire to relegate to inconsequence, as they would other good practices such as courtesy to counsel for the opposite party and the court. In the instant application, though the proposed amended WSD was not attached to the application, there was ample information to enable the court establish what was meant to be added to the pleading. The application was therefore far from incompetent and I will consider it in substance.
Going on then to the question whether the proposed amendment is necessary to dispose of the issues between the plaintiff and the 2nd defendant, I am in great doubt that it is. The plaintiff’s claim against the 2nd defendants is very specific and contained in paragraphs 7 and 8 of the plaint. While the 1st defendant had agreed to pay USD 41,508.77 to the plaintiff for justified variations to the works, the 2nd defendant who was a stranger to the contract between plaintiff and 1st defendant stopped the payment. This was not because it did not hold any monies due to the 1st defendant but because 2nd defendant alleges she had a right to question the payment.
Now, what the 2nd defendant wants to add to the WSD is that though she had the 1st plaintiff’s money on account of the contract at the time that the 1st defendant proposed to pay the plaintiff, she no longer has it because she paid it to URA. That she did so in response to an agency notice that was served on her and which she had a legal obligation to honour. It is my view that in order to ascertain whether the proposed amendments are necessary in this case, the time at which the 1st defendant proposed to pay the plaintiff and that at which URA demanded for the taxes due to her from the 1st defendant, vis-
-vis the filing of the suit in court are very important.
The plaintiff filed this suit on 19/05/2010. The payments that the 2
If it is the 2nd defendant’s case as pleaded in paragraph 5 (h) of the affidavit in reply that Venture Communications (SA) would have allowed the 2nd defendant to release up to USD 59,310.21 to the 1st defendant on account of the variations claimed to have been made according to their contract, then the 2nd defendant’s amendment would be contrary to what was pleaded in the initial WSD. It would amount to saying, “I have now been allowed to release up to USD 59,310.21 on account of the variations but I no longer have any money on account of the 1st defendant because I paid shs. 158,575,322/= to URA on behalf for taxes due from her. I therefore do not have the money to pay over to the 1st defendant so that she can meet her obligations to you.”
That being the case, the 2nd defendant’s WSD was evasive and she intends to make it more so by the proposed amendment. I am also of the view that allowing the 2nd defendant to plead facts that were within her knowledge when the WSD was first filed now would amount to allowing her to change the gist of her defence. In addition, I was led to believe that by seeking to amend the WSD in the manner that she did, the 2nd defendant hoped to escape liability for any injury that may have been occasioned to the plaintiff by her questioning the payments due from the 1st defendant to the her.
That, no doubt, indicates bad faith on the part of the 2nd defendant, given the fact that Venture (SA) confirmed that she was estopped from making any claims for the refund of the monies paid to URA and S & J Construction. That would then mean that even though judgment has been obtained against the 1st defendant, she can no longer go back to the 2nd defendant to claim any more monies in respect of sub-contract No. PAUGA4Y0860501JLC between the plaintiff and the 1st defendant. The plaintiff would then be left with no person from whom to recover the valid expenses that accrued from the variations that she executed on the instructions of the 1st defendant at her own costs. In effect, the plaintiff would be non-suited in respect of both the 1st and 2nd defendant. And the loss of a claim for USD 41,508.77 cannot be compensated by any amount of costs payable for this application. It is therefore not true, as stated in paragraph 7 of the affidavit in support that the proposed amendment would not be prejudicial to the plaintiff in any way.
In conclusion, the application to amend the WSD is dismissed with costs to the plaintiff. A declaration on admission is entered for the plaintiff that the 2nd defendant unlawfully interfered in the 1st defendant’s performance of the contract between her and the plaintiff. The suit shall therefore be set down for proof of the special damages and interest claimed, as well as for assessment of general damages.
Irene Mulyagonja Kakooza