Court name
Commercial Court of Uganda
Judgment date
5 September 2012

Buffalo Tungsten Inc v SGS Uganda Ltd (Miscellaneous Application-2012/6) [2012] UGCommC 117 (05 September 2012);

Cite this case
[2012] UGCommC 117
Coram
Obura, J

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APPLICATION NO. 06 OF 2012

(Arising from Civil Suit No. 230 of 2009)

 

BUFFALO TUNGSTEN INC::::::::::::::::::::::::::::::::::::::::::::::                                                                                                                                        APPLICANT/PLAINTIFF

 

VERSUS

 

SGS UGANDA LIMITED:::::::::::::::::::::::::::::::::::::::::::::                                                                                                                                            RESPONDENT/DEFENDANT

 

 

BEFORE : HON. LADY JUSTICE HELLEN OBURA

 

RULING

 

This application was brought under Order 6 rules 19 and 31 of the Civil Procedure Rules (CPR) and section 98 of the Civil Procedure Act (CPA). It is seeking for orders that the applicant be granted leave to amend its plaint in Civil Suit No. 230 of 2009 and the costs of the application be provided for.

 

The grounds of the application are contained in the affidavit of Mr. Andrew Kamuteera Munanura of M/S Sebalu, Lule and Co. Advocates who are the applicant’s advocates. The first ground is that there has been discovery of new information that was not available at the time of filing the plaint. Secondly, that the amendment is necessary to enable court determine the real issues in controversy between the parties. Lastly, that it is in the interest of justice that the amendment is allowed.

 

The grounds on which the application is opposed are contained in the affidavit in reply which was deposed by Mr. Edwin Karugire, an advocate practicing with M/S Kiwanuka and Karugire Advocates, who are representing the respondents. The first ground is that the applicant seeks to introduce a new cause of action by amendment which is bad in law. Secondly that the plaint does not disclose a cause of action and as such is a nullity which cannot be amended. Thirdly that the amendment is prejudicial to the respondent’s defence since it introduces a cause of action where none was initially disclosed. Lastly, that the application is not properly before court both procedurally and substantially.

 

At the hearing of this application Mr. Echimu Nicholas for the applicant submitted that the applicant instructed M/S Magezi, Ibale & Co. Advocates to institute a suit and the firm did file a suit in this court on 19/06/2009. He explained that the applicant had problems with his lawyers and transferred the case to M/S Sebalu, Lule Advocates who upon perusal of the plaint and discussions with the applicant found that there were many matters that were not included in it. He referred to paragraph 6 of the affidavit in support which states that such information was not available to the applicant at the time the suit was filed. He also referred to paragraph 7 of the affidavit in support which states that the information is necessary for the applicant to set out all factual aspects of its case to enable court fully determine the matters in controversy.

 

Counsel for the applicant referred to paragraphs 8 and 9 of the affidavit in support of the application and submitted that the matters were brought to the attention of counsel for the respondent formally vide annextures “B”, “C” and “D”. He also submitted that the draft plaint was forwarded to the respondent’s counsel for purposes of consenting to it.

 

As regards the established principles that govern amendments, he referred to the case of Gaso Transport Services (Bus) Ltd vs. Obene [1990-1994] EA 88 where Tsekooko, JSC stated the principles that appear to be recognized as governing the exercise of discretion in allowing amendments.

 

Counsel for the applicant noted that the case has not yet come up for hearing and the amendment is being sought at an early stage. He submitted that the application was not brought in bad faith and that the opposite counsel has had opportunity to look at the proposed amended plaint. He also submitted that if the application is allowed it will avoid multiplicity of suits because the amendment seeks to expound on the applicant’s cause of action in the head suit. It also gives a description of the role of the agent of the applicant who was working between the applicant and the respondent and so was a known agent.

 

In reply, Mr. Kauma Peter opposed the application basing on the grounds that were stated in the affidavit in reply. He referred to paragraph 5 of that affidavit and submitted that the plaint discloses no cause of action, was a nullity and could not be amended. He further submitted that the original plaint states that the claim arises from breach of a contract which was not attached or shown. He referred to paragraph 4 of the written statement of defence and submitted that there is no contract whether written or oral as the plaintiff is not known to the defendant.

 

He argued that the plaint as it is does not show any element of plaintiffs enjoying a right in a claim for breach of contract and that where there is no contract there is no right. His view was that in the absence of this essential element no cause of action is disclosed. He relied on the case of Auto Garage vs Motokov No. 3 [1971] EA 514 at 519 to support hissubmissionthat in the absence of disclosure of a cause of action, the plaint is a nullity which cannot be amended.

 

The second ground on which the application is opposed is that the amendment sought seeks to introduce a new cause of action which is different in quality from that originally pleaded and cannot be allowed. Counsel for the respondent submitted that the original plaint seeks special damages of US $ 990,706.51, and general damages for breach of contract while the proposed amendment is seeking special damages of US $ 1,400,000. He also pointed out that the cause of action as stated in paragraph 5 of the proposed amended plaint is in fraud, negligence, misrepresentation  and breach of contract and submitted that the quality of the new cause of action is distinct from what was claimed earlier.  

 

Counsel for the respondent submitted further that the amendment seeks to introduce a new person to the suit as co-plaintiff and that if the proposed amendment is allowed it would change the claim into one of a substantially different character. He relied on the case of Lubowa Gyaviira & Others v Makerere University MA 471 of 2009 for the principle that a court will not exercise its discretion to allow an amendment which substitutes a distinctive cause of action for another or to change by means of amendment the subject matter of the suit.

 

Mr. Kauma referred to paragraph 13 of the affidavit in reply and submitted that the amendment would cause prejudice to the respondent since the respondent in its WSD stated that it would raise a preliminary objection on lack of cause of action. He cited the case of Lubowa Gyaviira & Others vs Makerere University (supra)for the position that no amendment would be allowed which prejudices the rights of the opposite party existing at the date of the proposed amendment. On this point he concluded that the respondent would be prejudiced by the proposed amendment as it is an indirect way of trying to fill the gap in the original plaint after having addressed their minds to the preliminary objection that the respondent intends to raise.

 

Finally counsel for the respondent submitted that the application is not properly before court both procedurally and substantially because it was brought under Order 6 rule 19 of the Civil Procedure Rules yet the application seeks to introduce a new co-plaintiff. He argued that it was not proper for the plaintiff to bring another party.

 

Mr. Echimu in rejoinder submitted that the original plaint should be read together with the annextures, to find that it discloses a cause of action. He referred to paragraph 4 (a) of the plaint where it is stated that the plaintiff was acting through its broker/agent.

On the second ground he submitted that the claim relates to breach of contract and the proposed amendment seeks to expound the same by giving particulars. He argued that the case of Lubowa Gyaviira & Others v Makerere University (supra)did not follow the principles laid by the Supreme Court in the case of Gaso Transport Services (Bus) Ltd v Obene (supra).

 

In further response counsel for the applicant submitted that a preliminary objection can still be raised even after the amendment since it is the respondent’s case that there is no contract.

 

Finally counsel submitted that the application was properly before court. His view was that the co-plaintiff is a necessary party as it is interwoven in the case. He cited Order 1 rule 10 (2) of the CPR to support his argument that court may at any stage of the proceedings add the name of a party who ought to have been joined and noted that addition of the co-plaintiff would not be out of the ordinary.

 

I have carefully considered the application and the supporting affidavit plus the affidavit in reply. I have also listened to the submissions of both counsels. The issue for determination by this court is whether the amendment sought should be granted.

 

Order 6 rule 19 of the CPR gives this court discretion to allow alterations or amendment of pleadings in such manner and on such terms as maybe just and as may be necessary for the purpose of determining the real questions in controversy between the parties.

 

Mulla , The Code of Civil Procedure, 17th Edition Volume 2, at pages 333, 334 and 335; states that, as a general rule, leave to amend will be granted so as to enable the real question in issue between the parties to be raised on the pleadings, where the amendment will occasion no injury to the opposite party, except such as can be sufficiently compensated for by costs or other terms to be imposed by the order. Leave to amend must always be granted unless the party applying was acting mala fide and where it is not necessary for determining the real question in controversy between the parties. The application to amend must be made bona fide and made in good faith.

 

Odgers on Pleadings and Practice 20th Edition at page 170 also states that where the amendment is necessary to enable justice to be done between the parties, it will be allowed on terms even at a late stage. However, if the application be made mala fide, or if the proposed amendment will cause undue delay, or will in any way unfairly prejudice the other party, or is irrelevant or useless, or would raise merely a technical point, leave to amend will be refused.

 

In our jurisdiction, the above principles have been followed in a number of cases. In Gaso Transport Services (Bus) Ltd vs Obene [1990-1994] EA 88 Tsekooko, JSC stated that the four principles that appear to be recognized as governing the exercise of discretion in allowing amendments are:-

 

  1. The amendment should not work injustice to the other side. An injury which can be compensated by an award of costs is not treated as an injustice.
  2. Multiplicity of proceedings should be avoided as far as possible and all amendments which avoid such multiplicity should be allowed.
  3. An application which is made mala fide should not be granted.
  4. No amendment should be allowed where it is expressly or impliedly prohibited by any law (for example limitation actions)”.

 

Sir Kenneth O’Connor in the case of Eastern Bakery v Castelino [1958] EA 462 held that an amendment that substitutes one distinct cause of action for another or change the subject matter of the suit or that which would change the action into one of a substantially different character should not be allowed.

 

This position of the law was emphasized by Tumwesigye, JSC in Mulowooza & Brothers vs N. Shah Ltd SCCA No. 26 of 2010 where he stated that the test is whether the proposed amendment introduces a distinct new cause of action instead of the original or whether and in what way it would prejudice the rights of the respondent if it was allowed.

 

In the instant case, counsel for the respondent strongly opposed the application arguing that the current plaint discloses no cause of action and as such is a nullity that cannot be amended. Furthermore, that the proposed amendment seeks to introduce a new cause of action which is different in quality from that originally pleaded and cannot be allowed.

 

On the contention that no cause of action is disclosed in the original plaint, I feel it is necessary to first of all appreciate the meaning of the term cause of action and the essential elements required to prove its existence. In Narotham Bhatia & Hematini Bhatia v Boutique Shazin Ltd CACA No. 16 of 2009 the Court of Appeal quoted with approval a passage in Mulla’s Code of Civil Procedure that;

 

A cause of action means every fact which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words it is a bundle of facts which, taken with the law applicable to them give the plaintiff a right to claim a relief against the defendants. It must include some act done by the defendant since (in) the absence of such an act, no cause of action can possibly accrue…….the cause of action must be antecedent to the institution of the suit”.

 

The three essential requirements to show existence of a cause of action was stated by Spry, V.-P in Auto Garage & Another v Motokov (No.3) [1971] E.A.514 at page 519. He stated thus:

 

“I would summarize the position as I see it by saying that if a plaint shows that the plaintiff enjoyed a right, that the right has been violated and that the defendant is liable, then in my opinion, a cause of action has been disclosed and any omission or defect may be put right by amendment.”

 

He further stated at page 520 that the matter as to whether a cause of action is disclosed is one to be decided by perusal of the plaint and any annextures to it, not on a basis of evidence.

 

In the instant case, I have carefully perused the plaint and all its annextures and I find that in paragraph 4 (a) it is pleaded that the plaintiff through its broker/agent The Barnes Company contracted to purchase Wolframite Ore from a vendor in Zambia as per the contract that was attached and marked Annexture “A”. The Wolframite was to consist of not less than 50% Tungsten Trioxide (WO3) in quantities of ten metric tones (10mt) (dry). The shipment was to be tested by the defendant pursuant to an agreement with The Barnes Company. A copy of the defendant’s proposal to The Barnes Company was attached as Annexture “B”.

 

It was further alleged that the plaintiff paid the defendant for the services to be rendered whereupon the defendant went ahead and certified the contents of the 286 drums of materials described as Wolframite to contain 59.87% WO3. The product was shipped to the plaintiff’s customer in Russia who rejected the same as non-conforming to specifications ordered for since it contained virtually no Wolframite. The plaintiff alleged in paragraph 4 (e) that it incurred losses for which it claims special and general damages arising from breach of contract.

 

I have had the benefit of looking at annexture “A” being an agreement signed on 11th February 2006 which clearly indicated that the buyer was Buffalo Tungsten Inc., the plaintiff, the seller was Andrew Mazimba  and the broker was The Barnes Company. On page 2 of that contract under inspection, the seller was to arrange for SGS to draw samples and submit to a one Alex Stewart, Rotterdam for some tests to be done.

 

Meanwhile according to annexture “B”, the defendant by its letter dated 21st June 2007, thanked The Barnes Company for nominating it for the work of sampling, lab analysis, weighing, and loading supervision of 120 MT of Wolfram and gave quotations for the work. There is no document to show the development that took place subsequent to that, but a copy of a Certificate of Analysis issued by ALEX STEWART [ASSAYERS] LTD on 7th August 2007 was attached as annexture “C”. It was addressed to The Barnes Company and the reference was SGS SEAL NUMBER BB325545 (DHL 4905804584) suggesting that it was sent by SGS under its seal whose number was quoted.

 

By the respondent/defendant thanking The Barnes Company for nominating it, I believe it could have been referring to the main contract which as already alluded to above stated that the seller would arrange for SGS to draw samples and submit for analysis. The applicant/plaintiff having been named in that contract as the buyer was the principal that would be the ultimate beneficiary of the inspection arrangement between The Barnes Company its broker/agent and the respondent/defendant.

 

In my view, by merely looking at the plaint and its annextures as summarized above, the applicant/plaintiff has shown that it enjoyed a right under the main contract which had a provision for inspection by the respondent/defendant and a separate arrangement was made to that effect, that contract has been breached thereby violating the applicant’s/plaintiff’s rights and the applicant/plaintiff alleges that the respondent/defendant is liable. For that reason I find that a cause of action is disclosed. Whether or not the action succeeds upon trial is a matter of evidence but not a question of lack of cause of action.

 

I also wish to observe at this point that the plaintiff also seeks to join the broker through whom it transacted the business as a co-plaintiff. However, counsel for the respondent contended that this application is not properly before court both procedurally and substantially having been brought under Order 6 rule 19 of the CPR yet the applicant also seeks to introduce a new co-plaintiff. He did not elaborate on exactly what he meant. Nevertheless, to determine the matter I will refer to Order 1 rule 10 (2) of the CPR which provides that:

 

“The court may at any stage of the proceedings either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added.” (Emphasis added).

 

The above rule allows striking out or addition of parties by this court with or without application of either party. In the premises, even without the applicant specifically applying for addition of a co-plaintiff there is nothing that prevents this court from doing so if it is found necessary. In other words, there is nothing procedurally wrong with the proposed amendment to add a party since this court is clothed with discretion to do it at any stage of the proceeding even on its own motion.

 

I do not also see any prejudice that would be occasioned to the respondent by addition of the broker as the co-plaintiff. On the contrary it would enable this court effectually and completely to adjudicate upon and settle all questions involved in the suit so as to avoid multiplicity of suits. In the premises, I do not find any merit on this ground of opposing the application.

 

As to whether the amendment seeks to substitute a distinct cause of action for another or change the subject matter of the suit into one of a substantially different character, I wish to observe that breach of contract was pleaded in the original plaint in paragraph 5, although no particulars of were given. The proposed amendment now gives those particulars in paragraph 7.

 

I note however, that the proposed amendment seeks to add in paragraphs 5, 6 and 8 other causes of action not previously pleaded in the original plaint like fraud, negligence, and misrepresentation. Be that as it may, I do not agree with the respondent that these causes of action are distinct and capable of changing the subject matter of the suit or changing the action into one of a substantially different character.

 

Perusal of these additional causes of action shows that they all relate to the particulars of breach of contract as stated in paragraph 7 of the proposed amended plaint. The applicant is simply seeking to single out what it considers elements of fraud, misrepresentation and negligence from the particulars of breach and there is nothing distinct about them that can change the subject matter or character of the suit. This makes the facts of this case distinguishable from that of Lubowa Gyaviira & Others v Makerere University (supra) which counsel for the respondent heavily relied on to support his argument. The new causes of action in that case were distinct and, if allowed, would change the claim into one of a substantially different character as the Learned Judge rightfully found. That is not the case with the instant application which just seeks to join a number of related causes of action.

 

In any event, Order 2 rule 4 (1) of the CPR provides for joinder of causes of action. In the case of Mohan Musisi Kiwanuka vs Asha Chand SCCA No. 14 of 2004 Mulenga JSC (RIP) observed that it is a cardinal principle in our judicial procedure that courts must, as much as possible avoid multiplicity of suits.  Thus the rules of procedure provide for, and permit where appropriate, joinder of causes of action.

 

It is clear from the leading authorities on amendment of pleadings cited above that addition of new causes of action that are not allowed are those that are distinct and capable of changing the subject matter of the suit or changing the action into one of a substantially different character.

 

However, courts do allow some amendments that introduce new causes of action where appropriate so as to avoid multiplicity of suits. I believe each case is determined on its own facts and circumstances.

 

In Mulowooza and Brothers Ltd v N. Shah & Co. Ltd (supra) Tumwesigye, JSC observed as follows;-

 

“Moreover learned counsel for the respondent is right to state as he does in his submission that the Civil Procedure Rules do not bar introducing a new cause of action through an amendment to the plaint. On the contrary Order 2 rule 4(1) of the Civil Procedure Rules allow uniting in the same suit several causes of action which is intended to promote just disposal of suits and to guard against the multiplicity of suits.”

 

I am fortified by that observation and convinced that the proposed amended plaint in the instant case does not introduce new and distinct causes of action that will substantially change the character of the suit. I find that they are related to the original cause of action and therefore can be safely joined together in this suit to avoid multiplicity of suits.

 

Finally, another ground of objection of this application is that the amendment would prejudice the respondent if it is allowed because the respondent had stated in its WSD that it would raise a preliminary objection relating to the cause of action. Interestingly, counsel for the respondent went ahead and submitted at length on this point of law as his first ground for opposing this application. It was also responded to by counsel for the applicant and left for this court to make a finding on. I have already done so herein above and I do not see any other prejudice that would be occasioned to the respondent.

 

Before I take leave of this ground of objection, I wish to refer to the dictum of Spry, V.-P in Auto Garage & Another v Motokov (No.3) (supra) at page 521 where  he stated as follows:-

 

“…..In this, I am particularly influenced by the fact that, as shown in the passage quoted above, the written statement of defence of Auto Garage Ltd.,which was filed on 5 September 1996, expressly raised the defence that Motokov was not the holder in due course of the bills of exchange, yet it was not until 7 August 1970, nearly four years later that Motokov gave notice of intention to apply for amendment of its plaint. I accept that negotiations for a settlement were in progress but that does not, in my opinion excuse the apparent failure to study the defence and to take promptly such action as might be necessary, by way of amendment or otherwise, to put the suit in order. It has repeatedly been said that applications for amendment should be made without delay.”(Emphasis added).

 

That dictum, in my view, gives a proposition that even where the defendant raises a defence of lack of cause of action, the plaintiff can still amend the plaint to put the suit in order if it is done without delay. I hope this gives insight into the issue in view of the strong argument for the respondent that seems to suggest that once cause of action is raised as a defence the plaintiff is not allowed to amend the plaint to put the suit right.

 

On the whole, I find that the amendment sought by the applicant does not offend any of the principles that govern amendment of pleadings. In the result, the application is allowed and leave is granted to the applicant to amend its plaint in Civil Suit No. 230 of 2009 as proposed in the intended amended plaint. The amended plaint must be filed within seven days from the date of this ruling. The costs of this application are awarded to the respondent.

 

I so order.

 

 

Dated this 5th day of September, 2012.

 

 

Hellen Obura

JUDGE

 

Delivered in chambers at 3.00 pm in the presence of Ms. Alice Nalwoga who was holding brief for Mr. Nicholas Echimu for the applicant and Mr. Peter Kauma for the respondent.

 

 

JUDGE

05/09/2012