THE REPUBLIC OF UGANDA,
IN THE HIGH COURT OF UGANDA AT KAMPALA
MISCELLANEOUS APPLICATION NO 374 OF 2012
(ARISING FROM CIVIL SUIT NO 115 OF 2011)
GREAT LAKES PORTS LIMITED} ......................................................APPLICANT
TOM MUGENGA} ........................................................................RESPONDENT
BEFORE HONOURABLE JUSTICE CHRISTOPHER MADRAMA
The Applicant seeks leave to amend the plaint in civil suit number 115 of 2011 and for costs of the application. The grounds of the application are that on the 4th day of May 2012 the court ordered Crane Bank Ltd to furnish the applicant with transaction details of the applicant’s account which was controlled and managed by the respondent for the period July 2006 to 2009. Crane Bank Ltd provided the applicant with the details indicating the recipients of monies on the applicants account number 0245030915700. The account indicates that Holbut Limited, Maina Speedy, Speke Resort and Conference Centre, Tom Mugenga, Prime Finance Company Limited, Speke Hotel (19960 Ltd, Safari Frank, Barclays Bank and a number of other companies and individuals received monies from the applicants account when they had no business dealings whatsoever with the applicant. The transaction details are relevant to the applicant’s case but were not available to it at the time of filing Civil Suit No. 115 of 2011. The amendment is necessary for determination of the real controversy in CS No. 115 of 2011 and that it is just and equitable that the application is granted. The affidavit in support sworn by Capt P.N. Wamala Musoke, a director of the applicant, repeats the grounds in the chamber summons. He avers that the moneys remitted from the applicants account were intended for the purchase of 342.5 acres of land at Malaba. Between July 2006 and 28th of February 2007 the respondent disbursed US$505,000 from the applicants account to unknown beneficiaries without the knowledge or approval of the applicant's board of directors. The applicant filed civil suit number 115 of 2011 against the respondents to recover the sum of US$505,000 disbursed by him from the applicants account number 0245030915700 at Crane Bank (U) Ltd in breach of his fiduciary duties. Prior to the filing of the action the applicant tried to obtain transaction details of the recipients of monies from the said account from Crane Bank Ltd but was not successful. Subsequently, the applicant filed an application against Crane Bank Ltd for disclosure of transaction details of the recipients of monies from its account and on the 4th of May 2012 the court ordered Crane Bank Ltd to furnish the applicant with the transaction details of the applicants account. On the 9th and 25th of May 2012 Crane Bank Ltd provided the applicant with the transaction details indicating the recipients of monies from the applicants account. The financial transactions revealed were not sanctioned by the applicant's board of directors. The applicant seeks amendment of the plaint to include recipients of monies from its account as disclosed from the details provided by Crane Bank Ltd.
The respondent in his affidavit in reply avers that the original plaint against the respondent is for a refund of US$505,000. The respondent filed a written statement of defence explaining the circumstances under which those monies were disbursed. Consequently he contends that the amendments sought by the applicant would be prejudicial to him as he had already filed a defence explaining the circumstances under which the monies were disbursed. The application seeks to introduce matters relating to documentation no longer in the respondents possession. Granting the application will be greatly prejudicial to the respondent’s defence on account of already handing over the documents. The affidavit in reply was filed on court record on 8 October 2012 and was sworn on the same day.
The applicants written submissions in support of the application were filed on 28 September 2012. The respondent’s affidavit in reply was filed on 8 October 2012. The affidavit of service of the application is sworn by one Naika Edward Gabula a process server of the High Court employed by Muwema and Mugerwa advocates and was filed on the court record on 24 August 2012. It shows that on 21 August 2012 he received chamber summons in the application for service on the respondent’s advocates. He proceeded to the Chambers of the advocates of the respondent’s one plot 5 Acacia Avenue to serve the chamber summons. He served the chamber summons on Counsel Peter Kawuma on the same day.
In his written submissions counsel for the applicant submits that the applicant’s applicant is unchallenged. Consequently he submitted that the facts contained in the affidavit of Capt Wamala Musoke be admitted as unchallenged. He prayed that the order sought in the application is granted.
Without prejudice counsel submitted that order 6 rule 19 of the Civil Procedure Rules was interpreted in the case of Mbayo Jacob Robert versus Electoral Commission and another election petition appeal number 7 of 2006. The Court of Appeal held that a party would be allowed to make such amendments of pleadings as are necessary for determining the real issue in controversy or avoiding a multiplicity of suits provided that (a) there was no undue delay in bringing the application; (b) no new or inconsistent cause of action is introduced; (c) not vested interest or accrued right is affected and (d) the amendment could be allowed without any injustice to the other side. Amendments should be freely allowed at any stage of the proceedings provided it would not result in prejudice or injustice to the other side that cannot be properly compensated for in costs. That neither the length of any proposed amendment nor mere delays are sufficient grounds to decline leave to amend. The overriding consideration is whether the amendments are necessary for determination of the suit and whether the delay was likely to prejudice the opposite party beyond compensation in costs.
Counsel summarised the facts contained in the affidavit in support concerning the furnishing of new details from the applicant’s account indicating disbursements which were relevant to the applicant's suit. The transaction details indicated in the names of the recipients of the applicant’s money and also the specific amount of money received by each recipient and those facts are irrelevant in determining the real issue in controversy which revolves around the respondent’s breach of his fiduciary duties. Finally that the amendments are necessary for the determination of the real matters in controversy in Civil Suit No. 115 of 2011. The application was filed promptly after the court ordered Crane Bank Ltd to furnish the transaction details on its account and after they were furnished.
The respondent strongly opposed the application for amendment. Firstly the respondent contends that the amendments sought are prejudicial, irrelevant and an abuse of the court process. The respondent had already filed his written statement of defence explaining the circumstances under which the monies were disbursed. The application to amend the plaint seeks to introduce matters that the applicant already pleaded in its plaint. It is pled that the respondent/defendant disbursed US$505,000 from the applicants account without authority. The amendment does not introduce any new information relevant or necessary to adjudicate on the real questions in controversy between the parties. Thirdly counsel contends that the amendment will cause injustice to the respondent as he has already indicated in his written statement of defence an explanation of how the monies claimed in the plaint were disbursed and used. The money was used to acquire land in Malaba, Tororo. The written statement of defence fully accounts for the money in terms of ground rent, premium, and payment of commission agents, legal fees and compensation of the former lessee. Leave to amend the plaint would therefore not be in accordance with the law and would be an abuse of the court process.
In rejoinder the applicant submits that the application was served upon the respondent on 21 August 2012. Under order 12 rule 3 (2) of the Civil Procedure Rules, the respondent was required to file a reply to the application within 15 days from the date of service. Counsel submitted that failure to file a reply within the timelines prescribed would lead to the striking out of the affidavit according to the decision in Stop and See versus Tropical Bank (U) Ltd HCMA No. 333 of 2010.
The applicant further submitted that the affidavit of Capt Wamala Musoke shows that the information obtained from Crane Bank Ltd gave the applicant new information showing the manner in which the respondent disbursed the applicants money on account number 0245030915700. The new information reveals the names of the recipients and the quantum of money disbursed by the respondent for improper purposes. The names of the recipients would show that the disbursements were not for a proper purpose and were done in breach of the fiduciary duty of the respondent to the applicant. As far as injustice in the proposed amendment is concerned, learned counsel submitted that under order 6 rule 24 of the Civil Procedure Rules, the respondent is entitled to reply to the amended plaint within 15 days of service or delivery of the amendment. Consequently the respondent would not suffer any prejudice as a result of the amendment.
I have carefully considered the respondents opposition to the proposed amendment. Firstly the affidavit in reply to the application was filed on 8 October 2012 while the submissions of the applicant in support of the application were filed on 28 September 2012. The applicant could not have taken into account the affidavit in reply or opposition to the application. Consequently, it is contrary to the principles of fundamental justice to admit an affidavit after written submissions in support of the application have been filed. Secondly the affidavit of reply was filed out of time under order 12 rule 3 (2) of the Civil Procedure Rules. The rule provides that the reply to the application by the opposite party shall be filed within 15 days from the date of service of the application and be served on the applicant within 15 days from that date of filing of the reply. The respondent was served with the application on 21 August 2012. The respondent never sought leave to enlarge time within which to file the reply. Consequently, the affidavit in reply shall not be taken into account and is hereby struck out.
I have carefully considered the objections to the amendment. The main ground of objection is that the amendment would cause prejudice to the respondent because he has already given an explanation of how the monies were disbursed. I understand the word 'prejudice' when used in the context of the respondent’s case to mean prejudice to the defence. This does not mean that the applicant or plaintiff cannot introduce prejudicial material upon which the defendant would be called to answer. The issue of prejudice is whether the defendant is able to defend himself or herself against the new amendments. It would be prejudicial for instance if an amendment is introduced at a stage after the defendant has called its witnesses. So long as the defendant can respond to the allegations in the amendments sought, he or she can also file an amended written statement of defence in respond thereto.
I am agreement with the principles to be followed by the court in considering applications for amendment as set out in the Court of Appeal case of Mbayo Jacob Robert versus Electoral Commission and another election petition appeal number 7 of 2006. Amendments can be allowed whenever it would not cause any injustice to the other side at any stage of the proceedings. In any case the respondent can be compensated in costs for any inconveniences to amend its defence. It is always assumed that what is pleaded in pleadings is the truth from the point of view of the party pleading.
The amendments sought annexure "E" to the affidavit in support of the application, amplify the facts in support of the plaintiff’s case and do not plead a new cause of action. It further gives details of specific payments and the beneficiary of the disbursements. The respondent is able to defend himself against questions of fact introduced by documents supplied by the bank. The fact that the documents are no longer in possession of the respondent is irrelevant as it is clearly pleaded that the documents were in possession of the bank from which the applicant accessed them. In any case, the documents are from a particular account belonging to the applicant allegedly managed by the respondent. The truth of such particulars can be prejudicial if they disclose the true nature of the transaction. The respondent can always give the necessary explanations about those disbursements. Consequently there would be no prejudice to the respondent if the amendment is allowed. In the circumstances, the plaintiff/applicant will be allowed to amend the plaint with costs awarded to the respondent.
The applicant shall file the amended plaint within seven days from the date of the ruling and serve the respondent/defendant. The defendant may file its defence within 14 days from the date of service of the amended plaint.
Ruling delivered on 16 November 2012.
Hon. Mr. Justice Christopher Madrama
Ruling delivered in the presence of:
Peter Kawuma for the respondent
Terrence Kavuma for the Applicant
Charles Okuni Court Clerk.
Hon. Mr. Justice Christopher Madrama
16th of November 2012