Court name
Commercial Court of Uganda
Judgment date
8 November 2013

Shumuk Springs Development Ltd & 3 Ors v Ssempebwa & 2 Ors (Miscellaneous Application-2013/502) [2013] UGCommC 188 (08 November 2013);

Cite this case
[2013] UGCommC 188

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 502 OF 2013

(ARISING FROM H.C.C.S. NO. 375 OF 2009)

  1. SHUMUK SPRINGS DEVELOPMENT LTD}
  2. SPRINGS INTERNATIONAL HOTEL LTD}
  3. SHUMUK FINANCIAL SEERVICES LTD}
  4. MUKESH SHUKLA}..................................................................                                                                                         .APPLICANTS

VERUS

  1. JOSEPH SEMPEBWA}
  2. PETER LULE}
  3. ARVIND PATEL}...................................................................                                                                                               RESPONDENTS

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

This is an application commenced under the provisions of Order 6 rule 29 and 30 of the Civil Procedure Rules and section 98 of the Civil Procedure Act for orders that the court dismisses the counterclaims against the Applicant by the Respondents with costs. In the alternative that the court rejects the Respondents claims. Lastly it is for an order that the costs of the application should be met by the Respondents.

The application is supported by the affidavit of Mr Mukesh Shukla and the grounds set out in the notice of motion are the following. Firstly the first, third and fourth Applicants have no dealings whatsoever in their legal capacities with the Respondents in respect of any matter concerning plot number 2 Colville Street in the city of Kampala. The first Respondent has no interest in any of the units on the property comprised in plot number 2 Colville Street in the city of Kampala on grounds that the lessor Kampala District Land Board has advised that all the sub leases created have all expired. Thirdly the second Applicant has never had any dealings with the Respondents in respect of the sale of the property or any of the units thereof and all its dealings were with Boney Mwebesa Katatumba, the former registered owner of the suit property. Fourthly the second Respondent’s counterclaim is effectively directed at Boney Mwebesa Katatumba with whom they concluded a sale transaction and Applicants were never privy to the same. Lastly the third Respondent has no interest in the suit property in the counterclaim because it sought for its value and obtained judgement and decree for a total sum of US$640,000 and the judgement and decree are still subsisting.

The affidavit in support of Mr Mukesh Shukla deposes that he is the 4th Applicant and Managing Director of the 1st, 2nd and 3rd Applicants. The Respondents each separately filed counterclaims against the Applicant. In the counterclaim the first Respondent claims that he is entitled to possession of 13 condominium units from 26 August 2009 which he purchased then but has never taken possession thereof. This unit number 1, 63, 69, 71, 75, 77, 78, 99, 80, 98, 99, 100 and 101. Consequently the first Respondents claim in the counterclaim is for possession of the said condominium units, payment of US$19,500 per month as mesne profits from 26 September 2000, until vacant possession is handed over. The first, third and fourth Applicants are not in possession of any of the units described in the counterclaim and have never had any dealings on the same with first Respondent.

The second Applicant has never had any binding dealings on the 13 units as described in the counterclaim of the first Respondent and was not privy to any arrangements made between him and one Virani Bahadukali. The first Respondent does not have any interest at all in the units described because whatever interest he may have acquired expired according to the controlling authority’s correspondence attached.

The counterclaim of the second Respondent against the Applicants is to the effect that he purchased condominium units 52 – 62 on the property known as plot number 2 Colville Street Kampala from one Boney Mwebesa Katatumba. The second Respondent subsequently seeks a declaration that he is the owner of the above described property; a declaration that one Boney Mwebesa Katatumba could not validly and competently conclude an agreement to sell and pass title to any other person. Thirdly an order directing one Boney Mwebesa Katatumba to deliver to the second Respondent executed transfer forms for units 52 – 62. Fourthly he seeks an order directing Boney Mwebesa Katatumba to deliver to the second Respondent documents for condominium unit number 61. He furthermore seeks an order against the Applicants to stop interfering with the second Respondent’s quiet and peaceful enjoyment. An order for general damages, costs and any other reliefs that this honourable court may deem fit to grant. Consequently the Respondents counterclaim is ideally directed at one Boney Mwebesa Katatumba who is referred to as the 5th Defendant to the counterclaim and not the Applicants. The Applicants were not privy to any agreements that were made between the second Respondent and one Virani Bahadukali. The counterclaim is misconceived as against the Applicants insofar as it discloses no cause of action against the Applicants.

The counterclaim of the third Respondent is in respect of condominium unit number 76. It is for judgement for a sum of US$1500 per month with effect from 1 October 2008 until payment in full, together with interest thereon at 20% per annum. Secondly it is for an order for vacant possession of condominium unit number 76. The third Respondent obtained value for the unit in the consent judgement executed between him and Boney Mwebesa Katatumba in HCCS number 110 of 2009 under clause 1 (b) thereof. The consent judgement/decree is still effective and unchallenged. Upon obtaining value for unit number 76, the third Respondent ceased to have any interest therein. Consequently he has no cause of action in respect of unit 76 against the Applicants.

The third Respondent Mr Arvind Patel deposes an affidavit in reply in which indicates that he is the proprietor of the condominium unit number 76 and deposes to the affidavit in that capacity. On the Applicant’s application, High Court civil suit number 375 of 2009 was filed by the Applicants against the third Respondent and others seeking an order for a permanent injunction forbidding the sale and transfer or any dealings with the property comprised in plot 2 Colville Street and particularly unit 76. Under paragraph 6 of the plaint the Applicants sought a permanent injunction to forbid the third Respondent from selling, transferring or in any way dealing with the property. In that plaint, particularly paragraph 7 thereof the Applicants give the background which illustrates the dealings of the Applicant in unit number 76. Consequently it cannot be said that the Respondent had no dealings whatsoever with the Applicants in respect of the suit property. Additionally all agreements between Boney Mwebesa Katatumba and Messieurs Shumuk Springs Development Ltd and Messieurs Shumuk Springs International Hotel Ltd clearly acknowledge that the third Respondent has an interest in plot to Colville Street in that he owns unit 76. By an order dated 30th of May 2009 Messieurs Shumuk Spring Development Ltd and Springs International Hotel Ltd were ordered by court to issue an irrevocable bank guarantee of US$1,700,000 for payment to Boney Katatumba's creditors which included the third Respondent.

By letter is dated 15th of August 2008 and 29th of January 2009, Boney Katatumba did instruct Messieurs Shumuk Springs development Ltd and Mukesh Shukla pay the third Respondent sums of money arising out of the transactions involving plot 2 Colville Street. The third Respondent deposes that he has never received any monies arising out of his dealings with the Applicants or Mr Boney Mwebesa Katatumba. That the Kampala district land board in their letter dated second of September 2011 renewed leases for 65 condominium units excluding all properties subject to High Court civil suit number 375 of 2009 which included unit number 76. According to the Applicants plaint in paragraph 7 (v) in High Court civil suit number 375 of 2009, Messieurs Springs International Hotel Ltd and other Applicants are currently stated to be in occupation and deriving income from unit 76 on plot 2 Colville Street which belongs to the third Respondent. The third Respondent deposes that he has never up to date been paid the purchase price for unit 76 by the Applicants and as such the Applicants are occupying his unit illegally. The Applicants are renting the condominium unit for not less than US$1500 per month since 1 October 2008 up to date. The counterclaim seeks recovery of US$1500 from the Applicant per month from 1 October 2008 until payment in full of the purchase price with interest at commercial rates. Consequently the third Respondent or pauses the Applicants application to dismiss his counterclaim in HCCS number 375 of 2009.

The second respondent through his Attorney John Kiganda deposes that the Applicant’s application against the second Respondent ought to be dismissed with costs because the Respondent has a cause of action in his counterclaim against the Applicant for misrepresentation. He deposes that the Applicants have at all material times referred to the Respondent as a creditor to Mr Boney Mwebesa Katatumba, the first Defendant in the main suit whereas he has never been a creditor. Reference to the second Respondent as a creditor is contained in paragraph 7 (iii) of the plaint, annexure "E" to the plaint. The second Respondent has no cause of action against the Applicants in so far as the purported to purchase units 52 – 62 of plot 2 Colville Street well knowing that the second Respondent had already bought the same and paid the purchase price.

The first Respondent through David Mukiibi, an advocate of the High Court practising with MMAKS advocates, Counsel for the first Respondent deposes an affidavit on behalf of the first Respondent. The plaint and in response to which the counterclaim was framed and specifically paragraph 6 and 7 thereof assert a claim to ownership and possession of 13 condominium units owned by the first Respondent having purchased them from the second Defendant Mr Virani Bahadukali. It was held that the plaint did not disclose a cause of action but this did not do away with the factual assertions made therein. The counterclaim of the first Respondent asserts that the Plaintiffs have denied him his right possession to the 13 condominium units which he was previously managing on behalf of Mr Virani. The question as to whether this is so is one of fact and can only be determined at the trial. The expiry of the leases in respect of all the 92 condominium units did not extinguish the first Respondent's equitable interest and ownership of its 13 condominium units no more than it would have extinguished the Plaintiff’s equitable interest in its 60 condominium units. In any event the leases of the condominium units were renewed in the names of the owners of the condominium plan number 0045 and the first Respondent has duly registered caveats on its 13 condominium units copies of which are attached to the affidavit in reply.

In rejoinder Mr Mukesh Shukla on behalf of the Applicants deposes in reply to the affidavit of Mr Arvind Patel that all the allegations therein are not true and denied. The Applicants are aware that the said Arvind Patel the third Respondent sued Mr Boney Katatumba in the High Court Commercial Division civil suit number 110 of 2009 in respect of condominium unit number 76, and obtained value thereof and ceased to have any interest therein. Any subsequent suit in the commercial division of the High Court in respect thereto is res judicata under section 7 of the Civil Procedure Act.

As far as the averments on behalf of Peter Lule the second Respondent and by Mr John D Kiganda, who is the attorney of the second Respondent, are concerned, the averments are denied. In response to the Applicants averments that Boney Katatumba under whom the second Respondent purports to derive title, compromised both of the second Respondents claims and his claims in respect of units numbers 52 – 62 on plot 2 Colville Street Kampala when he made a consent judgement with the first and second Applicants in the Commercial Division Civil Suit Number 126 of 2009. The consent judgement annexure "M" is a judgement in rem on the status of the units 52 – 62 and a counterclaim by the second Respondent is as a consequence thereof res judicata.

In rejoinder to the averments made on behalf of Joseph Ssempebwa the averments of Mr David Mukiibi the advocate authorised to swear this affidavit is denied. The first Respondent is a stranger/third-party whose interest in unit numbers 1, 63, 69, 71, 75, 77, 78, 79, 80, 81, 82, 83, and 84 were defeated by the consent judgement and is barred by res judicata under section 7 of the Civil Procedure Act. The consent judgement operates as a judgement in rem against the first Respondent.

The Applicants are represented by Kibuka Musoke and Co advocates and Solicitors, the first and 3rd Respondents are represented by Messieurs Masembe, Makubuya, Adriko Karugaba and Sekatawa Advocates while the 2nd Respondent is represented by Messieurs Kalenge, Bwanika, Ssawa and Co Advocates. The Counsels addressed the court through written submissions.

Written Submissions of the Applicants

The Applicants case is that they instituted a suit against the Respondents inter alia for a permanent injunction forbidding the sale and transfer or dealing with property comprised in plot to Colville Street in 2009. The Respondents filed counterclaims as earlier detailed at the beginning of this ruling.

Issues:

  1. Whether the Respondents each have any causes of action against the Applicant or any of them?
  2. Whether court can strike off or dismissed the counterclaims against the Applicants?

The Applicants Counsel’s submission is that Order 6 rule 30 of the Civil Procedure Rules empowers the court upon an application, to strike off any pleadings on the ground that they disclose no cause of action. Similarly Order 6 rule 29 empowers the court to dismiss the suit/counterclaim if it does not disclose a cause of action against the Defendants who in this case are the Applicants. The principles for determining whether a plaint/counterclaim discloses a cause of action can be found in Auto Garage versus Motokov [1971] EA 514 at 517 where three essential ingredients are given. These are that plaint/counterclaim must disclose that the Plaintiff enjoyed a right, that the right was violated and that the Defendant is liable.

Claims against the 1st, 3rd and 4th Applicants by the 1st Respondent

It is the Applicants case that the 1st, 3rd and 4th Applicants are not in possession of any of the units described in the counterclaim and they have never had any dealings on the same with the first Respondent. On all the three tests necessary for an action to disclose a cause of action, the first Respondents counterclaim fails. The second Applicant has never had any binding dealing on the 13 units as described in the counterclaim with the first Respondent and was not privy to any arrangements made between himself and Virani Bahadukali. The first Respondent does not have any interest at all in the units described because whatever interests he may have possessed expired according to the letter of the controlling authority dated 9th of May 2011, 26th of July 2011 and 2nd of September 2011. Therefore the claims of the first Respondent against the Applicants also fail on all the three tests in the case of Auto Garage versus Motokov (supra).

The second Respondent’s claims against the Applicants

The Applicants case is that the second Respondents counterclaim is ideally directed at Boney Mwebesa Katatumba who is referred to as the 5th Defendant to the counterclaim and not the Applicants. The Applicants were not privy to any agreements that were made between the second Respondent and Boney Mwebesa Katatumba. The counterclaim has failed to show that the Applicants were related to any of their rights. Consequently the counterclaim is misconceived against the Applicants and discloses no cause of action against the Applicants. Counsel relied on the law and authorities discussed in HCCS number 375 of 2009 between Shumuk Springs Development Ltd and others versus Boney Mwebesa Katatumba and others between pages 22 and 25 thereof.

3rd Respondents claim against the Applicants

The third Respondent obtained value for the unit in the consent judgement executed between himself and Boney Mwebesa Katatumba in HCCS No 110 of 2009 under clause 1 (b) thereof. The consent judgement/decree mentioned above is still effective and unchallenged. In the case of Shah versus Attorney General (No 2) [1970] EA 523, it was held that a judgement or order is property. That decision was followed in Edward Frederick Ssempebwa versus Attorney General Constitutional Petition Number 1 of 1986. The Constitutional Court held that a judgement debt is property.

On the basis of the consent judgement in which the third Respondent obtained value for unit number 76, he ceased to have any interest in the plot/unit.

Res judicata

In the alternative the Applicants Counsel submits that the Applicants rely on the doctrine of res judicata provided for under section 7 of the Civil Procedure Act. The judgement of the court by consent in HCCS number 126 of 2009 dated 5th September 2013 was a judgement in rem determining the status of the 27 units on plot 2 Colville Street. Counsel further relied on the case of Karia and Another versus Attorney General and Others [2002] 1 EA 83.

In summary the Applicants Counsel contends that the consent judgement was made between Boney Katatumba on behalf of himself as owner of plot 2 Colville Street Kampala and all the persons who derived title under him on the one hand and Messieurs Shumuk Springs Development Ltd, Messieurs Springs International Ltd in HCCS number 126 of 2009. Secondly the parties in this suit were later expanded to include Boney Katatumba; Hotel Diplomate Ltd; Shumuk Springs Development Ltd; Springs International Hotel Ltd; Shumuk Financial Services Ltd and Mukesh Shukla. Thirdly the parties described in HCCS number 126 of 29 were litigating under the same title as HCCS number 375 of 2009 counterclaim in the sense that Boney Katatumba, Hotel Diplomate Ltd; Katatumba Properties Ltd Mrs Gertrude Namutebi as Plaintiff in HCCS number 126 of 29 were litigating as owners of the units described in the consent judgement and the Defendants namely Shumuk Springs Development Ltd, Springs International Hotel Ltd, Shumuk Financial Services Ltd and Mr Mukesh Shukla were litigating bona fide in respect of a private right over the property in HCCS number 126 of 2009.

The subject matter in issue was the condominium units described in the consent judgement and whether these had been sold by the Plaintiffs in HCCS number 126 of 2009 to the Defendant. The consent judgment witnessed that the condominium units in issue were actually sold by the Plaintiffs to the Defendants at a specific amount of US$1,700,000 and the sale was closed, what remained was the mode of payment.

In the counterclaims of the Respondents in HCCS number 375 of 2009, it is the same units which by consent had been sold to the Applicants which are in issue. Yet this sale and purchase thereof was previously determined by consent in HCCS number 126 of 2009. The court which presided over the consent judgment is a court of competent jurisdiction. The Respondents in HCCS number 375 of 2009 by were the counterclaim as such entitled to the condominium units by consent and ownership ruled in favour of the Applicants in HCCS number 126 of 2009. Finally because each of the Respondents lay a claim of ownership of the condominium units claimant from Boney Katatumba, on the authority of Lotta Tanaki and others [2003] 2 EA 556, they are estopped from suing by the privy.

In conclusion the Applicant contends that the first, second and third Respondents counterclaim does not disclose a cause of action. Alternatively the claims are res judicata. Lastly the Applicant’s application satisfies all the grounds set out in Order 6 rule 29 and 30 of the Civil Procedure Rules and the counterclaim ought to be struck out or dismissed.

Written Submissions in reply by the Respondents

The first Respondent relies on the case of Auto Garage versus Motokov [1971] EA at page 523 for the three essential elements to support a cause of action and also the case of Jeraj Shariff versus Fancy Stores [1960] EA 374 for the holding that the question whether a plaint discloses a cause of action must be determined upon a perusal of the plaint alone together with anything attached to it so as to form part of it and upon the assumption that any express or implied allegation of fact in it is true.

The first Respondents Counsel relies on the depositions of David Mukiibi to the effect that the Applicants in paragraph 6 and 7 of the plaint asserted a claim of ownership and possession of the 13 condominium units owned by the first Respondent having purchased them from the second Defendant Mr Virani Bahadukali and the plaint was dismissed for failure to disclose a cause of action but this did not do away with the factual assertions made therein. In the counterclaim the first Respondent asserted that the Plaintiffs denied him his right of possession of the 13 condominium units which were previously managed by them on behalf of Mr Virani Bahadukali an assertion which can only be determined at the trial. Thirdly in paragraph 4 of the affidavit in reply, the expiry of the leases in respect of all the 92 condominium units did not extinguish the first Respondent's equitable interest and ownership of the 13 condominium units any more than it extinguished the Plaintiff’s equitable interest in its 60 condominium units. The leases of the condominium units were renewed in the names of the owners of the condominium plan. Consequently from the affidavit of David Mukiibi, the written statement of defence and counterclaim there under it is clear that Joseph Ssempebwa purchased the relevant 13 units from Virani Bahadukali and accordingly is entitled to possession of the units or to payment of rent from the persons in the possession. The units are however occupied by the Applicant’s illegality and the Applicants were also collecting rent from the same. The Applicants in fact applied for an injunction restraining the third Respondent from interfering in any way with the 13 condominium units. Therefore the three essential elements for a claim to disclose a cause of action have been proved by the first Respondent.

As far as the third Respondent is concerned, it is submitted on behalf of the third Respondent that the third Respondent owns condominium unit number 76 presently occupied by the Applicants illegally and collecting rent from the same yet he has never paid the purchase monies for his property.

On the question of renewal of the lease, the third Respondent has an equitable interest in the property which the Applicants are aware of and that interest cannot be effected by the Applicants obtaining a renewed title in their names. In paragraph 12 of the affidavit in reply of Arvind Patel, it is disclosed therein that the Secretary to the Kampala District Land Board communicated that any renewal in respect of the condominium units was to exclude all properties the subject matter of HCCS number 375 of 2009. The titles subsequently issued were made in the names of the condominium owners of plan number 0045 who include the third Respondent. The third Respondent has proved the conditions set out in the case of Auto Garage versus Motokov (supra) and the application as against the third Respondent ought to be dismissed with costs.

On behalf of the second Respondent, Counsels for the second Respondent agree with the necessary ingredients for a plaint to disclose a cause of action as submitted above. It is asserted that the second Respondent enjoys propriety rights in condominium units 52 – 62 having purchased it from one Boney Mwebesa Katatumba and was substantially issued with a certificate of registration under the Registration of Titles Act and the Condominium Property Act 2001.

On the first question, the second Respondent opposes the application based in paragraph 4 of the second Respondents written statement of defence which states that the Applicants together with one Boney Katatumba have all along referred to the second Respondent as a creditor whereas in actual fact he is the purchaser of the units. Reference to the second Respondent as a creditor is a misrepresentation. Paragraph 2 (iv) of the second Respondents counterclaim states that apart from referring to the second Respondent as a creditor, the Applicants have all along disturbed the second Respondents quiet enjoyment of the property by demanding for rent for unit 61 which belongs to him. The 4th Applicant stated in paragraph 2 (vii) of the counterclaim that he has made unwelcome visits to the second Respondents in Washington DC where he resides and works in an attempt to persuade him to sell his property to the 4th Applicant Mr Mukesh Shukla. The unwelcome visits caused inconveniences and irritation to the second Respondent coupled with unwelcome telephone calls amounting to an invasion of his privacy for which the Applicants are jointly and severally liable. Paragraph 3 of the counterclaim avers that the Applicants executed an agreement of sale of the units well knowing that the second Respondent had already bought the units and paid valuable consideration for them. The said acts are deception amount to false misrepresentation which is actionable. The sum total is that the second Respondent has a cause of action against the Applicants.

On the second question of whether the suit is res judicata, the second Respondent's answer is that he is not a party to the consent judgement. The consent judgement is between Mr Boney Katatumba and the Applicants. The second Respondent is not privy to any rights and obligations that the Applicants think accrued from the said consent judgement. Secondly for a consent judgement to act as a bar under the doctrine of res judicata or as estoppels to a litigant, the litigant must be a party to the consent judgement. The second Respondent never consented to the agreement between the Applicants and Mr Boney Mwebesa Katatumba. The Court of Appeal in the case of Peter Mulira versus Mitchell Cots Ltd civil appeal number 15 of 2002 to that consent judgement is only binding inter partes and cannot affect a party who is not privy to it.

In conclusion, the second Respondents counterclaim clearly discloses a cause of action and he is not in anyway estopped by the doctrine of res judicata. Consequently the second Respondents Counsel prays that the application is dismissed.

Applicants Written Submissions in Rejoinder

In rejoinder to the submissions of the first Respondent, the Applicants Counsel submits that the Genesis of the first Respondents claim is that it purchased 13 condominium units from one Virani Bahadukali by an agreement dated 26th of August 2009. However by the time the agreement was executed one Mr Boney Katatumba and Messieurs Hotel Diplomate Ltd had already bound them in a court of competent jurisdiction that all the condominium titleholders including Mr Virani Bahadukali were Mr Boney Katatumba as creditors, to be paid out of the proceeds of sale of the units to the Applicants. The consent order is dated 20th of May 2009.

The principle in the case of Lotta vs. Tanaki and others [2004] 2 EA 556 bars by estoppels Mr Virani Bahadukali from making any representations to any other person, inclusive of the first Respondent that he had purchased the 13 condominium units.

The 13 condominium units have a date of transfer in the name of Mr Bahadukali Virani reflected as 29th of July 2009. This goes on to show that the alleged registration of Bahadukali Virani was not legitimate in light of the consent judgement/order in HCCS number 126 of 2009 which had occurred earlier on the 20th of May 2009. The principle in the authority of Lotta vs. Tanaki (supra) and particularly as reflected under section 7 and explanation number 6 of the Civil Procedure Act, prevented the action of transfer to Mr Bahadukali Virani after the person from whom he derives title namely Mr Boney Katatumba had already declared him in a court of competent jurisdiction to be a creditor and not an owner. Consequently the only irresistible inference to be got from all of these is that Mr Bahadukali Virani committed a fraudulent act in transferring the units in his names when the owner Mr Boney Katatumba considered him a creditor. He could not conclude illegitimate transfer of property to the first Respondent. The first Respondent does not have any interest at all in the said units and the caveats lodged by him on the units as described in the affidavit of David Mukiibi were misconceived and lodged in error or unlawfully. On the question of whether the first Respondents counterclaim discloses a cause of action, the first Respondent ought to fail. Lastly the first Respondent never commented on the issue of res judicata and is deemed to have conceded the point.

In rejoinder to the second Respondents submissions

The Genesis of the second Respondents claim is that he purchased units 52 plots 62 from Boney Katatumba in an agreement dated 1st of November 2006. The second Respondents claim is that he has always been misrepresented as the creditor of Mr Boney Katatumba. He however does not dispute the fact that his interest in the condominium units claimed accrues from Mr Boney Katatumba. In this case his quarrels with Mr Boney Katatumba have nothing to do with the Applicants who are not privy to the agreement of sale between the two.

The Applicants cannot be guilty of misrepresentation along with Mr Boney Katatumba because they were not privy to the matters between them. Indeed if Mr Boney Katatumba breached the agreement executed between the two persons by making the consent judgement dated 20th of may 2009 by referring to him as a creditor, those were issues between him and Mr Boney Katatumba and the second Respondent can commence an action against him for breach. As far as the matters before the court stand, he is estopped under the same principle discussed above (See Lotta vs. Tanaki and others [2002] 2 EA 556). The allegation that the fourth Applicant has made unwelcome visits to the second Respondent is not a contention in the counterclaim and no declarations are sought from court to stop them, besides they do not constitute a cause of action in as far as the second Respondent has not pleaded the particulars of damage occasioned against him.

As far as the third Respondent is concerned

The Applicants Counsel submits that the Genesis of the third Respondents claim is that he is the owner of unit number 76. This statement is factually wrong as demonstrated by the consent judgement obtained in court dated 12th of June 2009 in HCCS number 110 of 2009, Arvind Patel versus Boney Katatumba. In that consent judgement/decree the third Respondent give up his interest in condominium unit number 76 in consideration of receipt of US$140,000. The third Respondent is free to pursue the realisation of the fruits of his consent judgement/decree against Mr Boney Katatumba but has no cause of action against the Applicants.

In conclusion the claims of the Respondents are misconceived and the court should be pleased to reject them or dismiss them under Order 6 rule 29 and 30 of the Civil Procedure Rules.

Ruling

I have duly considered the Applicants application for dismissal or striking out of the counterclaim of the Respondents, the affidavit evidence, the pleadings in the main suit, the written submissions of Counsel and authorities.

The application is brought under the provisions of Order 6 rules 29 and 30 of the Civil Procedure Rules and section 98 of the Civil Procedure Act. The first ground of the Applicants objection to the counterclaim of the Respondents is that the counterclaims by the various Respondents against whom the application has been brought do not variously disclose any cause of action against the Applicants (jointly and severally).

Order 6 rule 29 of the Civil Procedure Rules has a head note which reads as: "dismissal of suit" and rule 29 there under provides as follows:

"If, in the opinion of the court, the decision of the point of law substantially disposes of the whole suit, or of any distinct cause of action, ground of defence, setoff, counterclaim or reply therein, the court may thereupon dismiss the suit or make such other order in the suit as may be just."

Rule 29 quoted above follows on the heels of Order 6 rule 28 which provides that:

"Any party shall be entitled to raise by his or her pleading any point of law, and any point so raised shall be disposed of by the court at or after the hearing; except that by consent of the parties, or by order of the court on the application of either party, a point of law may be set down for hearing and disposed of at any time before the hearing."

In other words, the point of law referred to in Order 6 rule 29 seems to be a point of law raised by the pleadings of the parties or any point of law by consent of parties or order of the court. Rule 29 merely provides that the point of law so raised may, if in the opinion of the court substantially dispose of the whole suit or any distinct cause of action, ground of defence, setoff or counterclaim or reply therein, dismiss the suit or make such other order as may be just. On the other hand rule 28 makes it clear that the point of law so raised may be disposed of at or after the hearing. Except that it may be by consent of the parties or by order of the court on the application of either party set for hearing and disposed off at any time before the hearing. The Applicant’s application is therefore an application under rule 28 for determination of a point of law on application of ‘any of the parties’. Such a point of law ought to have been raised in the pleadings or agreed upon or ordered by the court to be tried first. For emphasis the counterclaims of the Respondents are suits pending after striking out the plaint of the Applicants/Plaintiffs against the Respondents/counterclaimants in this application.

On the other hand rule 30 has a head note which reads: "Striking out pleadings". It deals with the striking out of any pleading on the ground that “it discloses no reasonable cause of action or answer and, in any such case, or in case of the suit or defence being shown by the pleadings to be frivolous or vexatious”, the court “may order that the suit to be stayed or dismissed or judgment be entered accordingly as may be just”.

Both Counsels addressed the court on the ingredients of a cause of action as held by the Court of Appeal in the case of Auto Garage versus Motokov [1971] EA 514. There is agreement on the three ingredients that are necessary for a plaint or counterclaim to disclose a cause of action. These are that the plaint/counterclaim must disclose that the Plaintiff/counterclaimant enjoyed or enjoys a right, secondly that the right was violated and thirdly that the Defendant is liable for the violation. Additionally the Respondents Counsel relied on the case of Jeraj Shariff versus Fancy Stores [1960] EA 374 for the additional principle that for purposes of determination of whether a plaint/counterclaim discloses a cause of action, only the plaint/counterclaim and any attachments thereto are to be perused with the assumption that the averments therein are true.

It follows from the above quoted laws/rules of procedure and judicial precedents that Order 6 rule 28 which is the precursor to Order 6 rule 29 requires a point of law to be pleaded, agreed upon or ordered by court on the basis of its opinion that it would wholly or substantially dispose of the suit. On the other hand the necessary ingredients for the disclosure of a cause of action require the perusal of the plaint/counterclaim to determine whether it discloses a cause of action. Furthermore Order 6 rules 30 deals with striking out on the ground that it is frivolous or vexatious or does not disclose a reasonable cause of action. Specifically the case of Auto Garage versus Motokov (supra) interprets the provisions of Order 7 rule 11 of the Civil Procedure Rules. To determine whether a plaint or counterclaim discloses a cause of action, one does not have to plead it and it may be raised at any time and the court only needs to look at the pleadings to determine whether a cause of action is disclosed. In other words notwithstanding the citation of Order 6 rule 29 and 28 of the CPR, the court can still determine whether the counterclaims, the subject matter of the Applicants application disclose a cause of action. The inquiry does not have to go to the extent of considering whether any point of law has been pleaded. I have further considered that the Applicant raises a second point which is whether the counterclaim is barred by the doctrine of res judicata as well as estoppels. Nonetheless the distinction as to whether an application has been properly brought under the provisions of Order 6 rules 28 and 29 of the Civil Procedure Rules is important in considering whether perusal of the plaint per se is sufficient or whether the point of law has indeed been pleaded for determination. In any case a point of law can be raised at any time even if it is not pleaded for instance where it is shown that a suit is barred by a statute of limitation. On the other hand to determine whether there is a cause of action requires perusal of the pleadings only without considering the defence to the counterclaim or any evidence i.e. by affidavit. This was held by the Supreme Court of Uganda in the case of Ismail Serugo vs. Kampala City Council and the Attorney General Constitutional Appeal No.2 of 1998. W. Wambuzi CJ as he then was held at pages 2 and 3 of his judgment that in determining whether a plaint discloses a cause of action under Order 7 rule 11 or a reasonable cause of action under order 6 rule 29 (now rule 30 under the revised rules) only the plaint can be looked at. He stated:

“ I agree that in either case, that is whether or not there is a cause of action under Order 7 Rule 11 or a reasonable cause of action under Order 6 Rule 29 (revised rule 30) only the plaint can be looked at...”

Secondly the court does not consider the defence to establish whether a plaint/counterclaim discloses a case of action. In the case of Major General David Tinyefunza vs. Attorney General of Uganda Const. Appeal No. 1 of 1997 the Supreme Court agreed with the statement of law by Mulla on the Indian Code of Civil Procedure, Volume 1, and 14th Edition at page 206:

“It is, in other words, a bundle of facts, which it is necessary for the Plaintiff to prove in order to succeed in the suit.  But it has no relation whatever to the defence which may be set up by the Defendant, nor does it depend upon the character of the relief prayed for by the Plaintiff.  It is a media upon which the Plaintiff asks the court to arrive at a conclusion in his favour.  The cause of action must be antecedent to the institution of the suit.”

The Applicants contention first of all is that the first, third and fourth Applicants are not in possession of any of the units described in the counterclaim and that they have never had any dealings with the first Respondent. The second Applicant has never had any binding dealing on the 13 condominium units described in the counterclaim with the first Respondent and was not privy to any arrangement between him and Bahadukali Virani. Thirdly whatever interests the first Respondent had in the suit property the subject matter of the counterclaim, the lease thereon expired according to the letter of the controlling authority dated 9th of May 2011, 26th of July 2011 and 2nd of September 2011. Consequently the Applicant asserts that the first Respondents counterclaim does not satisfy the three ingredients for disclosure of a cause of action against the Defendant to the counterclaim held in the case of Auto Garage versus Motokov (supra).

As far as the second Respondent is concerned, the counterclaim is best directed at Mr Boney Mwebesa Katatumba referred to as the 5th Defendant to the counterclaim and not the Applicants. The Applicants were not privy to any agreements made between the second Respondent and Mr Boney Mwebesa Katatumba. Consequently the counterclaim discloses no cause of action against the Applicants.

As far as the third Respondent is concerned, the Applicants case is that the third Respondent obtained value for unit 76 in a consent judgement executed between himself and Mr Boney Mwebesa Katatumba in HCCS No 110 of 2009 particularly clause 1 (b) thereof. The consent judgement/decree which confers a right is property.

The Respondent’s case is that the Applicants asserted a claim of ownership and possession as far as the first Respondent is concerned to 13 condominium units claimed by the Respondent who purchased the same from Mr Virani Bahadukali. In the counterclaim the first Respondent claims to have been denied possession by the Applicants and it is an assertion that can only be determined at the trial. Expiry of the leases did not extinguish the first Respondent equitable interest and ownership of the 13 condominium units. Furthermore the leases were renewed in the names of the owners of the condominium plan. The units were occupied illegally by the Applicants who were also collecting rent from the same. In those circumstances the three essential elements for disclosure of a cause of action are present. As far as the third Respondent is concerned, he is the owner of condominium unit number 76 presently occupied by the Applicant’s illegality and collecting rent illegality. As far as the expiry of the leases are concerned, the communication of Kampala District Land Board was that the lease renewals in respect of condominium units excluded properties which were the subject matter of HCCS number 375 of 2009.

The judicial precedents quoted above require that the first issue is resolved by perusal of the plaint/counterclaim of the Respondents against the Applicants only without reference to the defence thereto. The main suit is HCCS No 375 of 2009 brought by the Applicants against the Respondents among others. The 1st Respondent is the 3rd Defendant in the main suit. The 2nd Respondent is the 4th Defendant while the 3rd Respondent is the 6th Defendant to the main suit.

The third Defendant's/first Respondents written statement of defence was filed on court record on 16 November 2009. It is a joint defence and counterclaim by the second and third Defendants. The second Defendant is Mr Virani Bahadukali while the third Defendant is Joseph Ssempebwa who is the current first Respondent. In the counterclaim the third Defendant avers that he is entitled to possession of 13 condominium units from 26 August 2009 when he purchased them. However the Plaintiffs have refused to hand over possession of these units to the third Defendant and are liable to make profits thereon from the said date at the rate of US$1500 per unit being a total of US$19,500 per month from 26 August 2009 to the handover of vacant possession. Consequently the first Defendant's action is for vacant possession of 13 condominium units; payment of US$19,500 per month as mesne profits for the 13 condominium units from 26 August 2009 until possession is handed over to the third Defendant/first Respondent to this application.

A careful consideration of the Applicant’s assertions in support of the contention that the first Respondent's counterclaim does not disclose a cause of action is that the 1st, 3rd and 4th Applicants are not in possession of any of the units described in the counterclaim as they never had any dealings on the same with the first Respondent. The first Respondents counterclaim lists all of the four Applicants as Defendants in the counterclaim. From the submission, it may be assumed that the second Applicant namely Springs International Hotel Ltd is there one in possession. However, this does not appear from the counterclaim itself and has to be established from elsewhere. The East African Court of Appeal sitting at Kampala in the case of Jeraj Shariff & Co v Chotai Fancy Stores [1960] 1 EA 374 held per Windham JA as follows:

“The question whether a plaint disclose a cause of action must be determined upon a perusal of the plaint alone, together with anything attached so as to form part of it, and upon the assumption that any express or implied allegations of fact in it are true.”

In the previous objection to the plaint in the same suit I had occasion to consider the principles at page 23 of my ruling which I shall repeat here by way of quotation as follows:

“The principles for determining whether a plaint discloses a cause of action are not in controversy.  The question of whether the plaint discloses a cause of action is determined upon perusal of the plaint only and attachments thereto. In the case of Ismail Serugo vs. Kampala City Council and the Attorney General Constitutional Appeal No.2 of 1998 Wambuzi CJ as he then was held that in determining whether a plaint discloses a cause of action under Order 7 rule 11 or a reasonable cause of action under order 6 rule 30 only the plaint can be considered. In the case of Attorney General vs. Oluoch (1972) EA page 392 it was held that the question of whether a plaint discloses a cause of action is determined upon perusal of the plaint and attachments thereto with an assumption that the facts pleaded or implied therein are true.  The plaint that discloses no cause of action is rejected under order 7 rule 11 of the Civil Procedure Rules.  Similarly, apart from an assertion that there is an abuse of the process of court, an objection that no reasonable cause of action is disclosed is made under order 6 rule 30 of the Civil Procedure Rules.  A point of law on the other hand may be determined upon agreed or uncontested facts. The relevant rules for arguing a point of law are order 6 rules 28 of the Civil Procedure Rules which allows a point of law raised by the pleadings or agreed upon to be set down for hearing. A point of law so set down for hearing which wholly or substantially disposes of the suit or any distinct cause of action, may lead to the dismissal of the action under order 6 rule 29 of the CPR. Arguments on a point of law need not depend upon perusal of the Plaintiff’s plaint only but may incorporate agreed facts or facts not in dispute.”

Similarly a plaint may be struck out under order 6 rule 30 upon perusal of the plaint/counterclaim only. In the above ruling I held at page 24 as follows:

“I had occasion to review judicial precedents on order 6 rule 30 of the Civil Procedure Rules. In Odgers’ 'Principles of Pleading and Practice in Civil Actions of the High Court of Justice 22nd edition at page 148, the learned authors note that in an objection on the ground that the action discloses no reasonable cause of action or that the action is frivolous and vexatious, the court only looks at the pleadings, particulars, and not any affidavit evidence.  Where there is an objection to the effect that there is an abuse of the process of court, evidence may be admitted.

The term "reasonable cause of action" was defined in Drummond Jackson versus British Medical Association [1970] 1 ALL ER 1094 per Lord Pearson at page 1101

“... No exact paraphrase can be given, but I think ‘reasonable cause of action’ means a cause of action with some chance of success, when (as required by r 19(2)) only the allegations in the pleading are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck out.”

In this case, arguments were not confined to the plaint only.  Both parties referred to the pleadings in HCCS 126 of 2009.  The existence of the previous suit and the pleadings are not facts in dispute.  Points of law may be argued from these pleadings some of which are not part of the plaint.  Order six rules 30 strictly construed provides for the determination of the question of whether there is a reasonable cause of action through examination of the pleadings. It is the pleading which discloses no reasonable cause of action or answer.”

The issue as framed in this application is whether the Respondents each have any cause of action against the Applicant or any of them. The issue presupposes that only the counterclaim shall be examined to resolve the question. If it is to be determined as a point of law, then other materials have to be examined before the point of law can be determined. In my opinion, it would be a point on the merits of the action and not whether the counterclaim discloses a cause of action. That point could be stayed until after witnesses have testified and have been cross examined unless facts are admitted.  The expiry of the lease for instance is a matter that requires leading evidence. It is not apparent on the face of the pleadings and it is not based on the agreed facts.

Secondly the submission that the second Applicant has never had any dealings on the 13 units as described in the counterclaim with the first Respondent and was not privy to any arrangements made between himself and Mr Virani Bahadukali needs to be addressed from the pleadings. However there was a previous objection that the plaint disclosed no cause of action against the Respondents and the court made a ruling and made findings of fact therein which can be applied to this case. The question of the cause of action is considered on the basis of the claim/counterclaim/plaint only. It may however be useful to examine the entirety of the pleadings in light of the previous ruling of the court which is binding between the parties. The reply to the second and third Defendant’s written statement of defence and counterclaim was filed on 5 December 2009 by the Applicants. In the reply paragraph 8 thereof the Applicants aver that paragraph 6 and 7 of the counterclaim are denied. Paragraph 6 and 7 are the only paragraphs in the counterclaim of the first Respondent. In paragraph 8 assertions are made against the second Defendant/Mr Virani that he was always represented to the Applicants as a creditor of Mr Boney Mwebesa Katatumba and was never registered as proprietor and only became registered proprietor of the property in June 2009 when the property was already under dispute resulting in the Defendant's lodging caveats thereon. Furthermore in paragraph 9 the defence to the counterclaim is that the second Defendant Mr Virani handed over possession and management of the said units to the Defendants under the understanding that his debt to Mr Boney Mwebesa Katatumba would be paid and all that was delaying it was the court’s decision under HCCS number 126 of 2009. In paragraph 10 of the reply, the reply that the counterclaimant ought to have exercised due diligence to ascertain the interest of the parties in possession of the units before he purported to purchase them from Mr Virani as there was also a caveat lodged on the same units the subject of the Defendant's interests.

It is clear from the averments that the issue as to whether the property was lawfully purchased is revealed by the pleadings of both parties. It is also clear that the Applicants assert that they have possession of the suit property. There is no distinction in the reply between the 1st, 2nd, 3rd, and 4th Defendants. The first Respondent’s action is for possession of the 13 condominium units. Consequently a triable issue is disclosed. Moreover Mr Bahadukali Virani is not a party to this application as a Respondent. The defence in the action is directed against the manner in which he was represented as a creditor of Mr Boney Katatumba and secondly his action of allegedly selling the property to Mr Joseph Ssempebwa the first Respondent. In those circumstances the necessary ingredients of a cause of action based on the assumption that the pleadings in the counterclaim are true are present. The first Respondent asserts that he is entitled to possession having bought the suit property. Secondly, that the Applicants are in possession of the suit property. The question of who in particular among the Applicants is in possession is not apparent on the face of the pleadings. The action is against all of them jointly.  However in the previous ruling I considered the case of misjoinder of some of the Plaintiffs who are now the Defendants. Counsel for the first Defendant in the previous ruling had submitted that there is no connection between the 3rd and 4th Plaintiffs which are limited liability companies.  The fourth Plaintiff is a director of the first three Plaintiffs.  The suit is between the first Plaintiff and the 1st Defendant (Mr. Boney Katatumba). The question is why the third and fourth Plaintiffs were joined (the 2nd and 4th Plaintiffs are the 2nd and 4th Applicants to this application). He submitted that the plaint does not disclose any claim from them. The fourth Plaintiff, the company is a separate legal entity. So the fourth Plaintiff would have no interest in the suit. Finally Counsel contended that the second third and fourth Plaintiffs are redundant in this suit. This cannot be cured by dropping them off and the remedy would be a withdrawal under order 25 of the Civil Procedure Rules. Counsel Masembe who represented the 2nd, 3rd, 5th and 6th Defendants associated himself with the submissions of learned Counsel for the first Defendant. He submitted that the basis of the suit is between the first Plaintiff and the first Defendant in the main suit. That an agreement 10th of November 2008 between the second Plaintiff and the first Defendant governed but neither the agreement the basis of the suit or the subsequent one relates to parties other than the first Defendant. There is no agreement between the first, second Plaintiff and the 2nd to the 6th Defendants (which includes the three Respondents). The suit seeks to enforce actual rights under a sale agreement but under the doctrine of privy of parties to contract shows no relationship with the parties who are not privy to the agreement.

The Applicants Counsel has now raised the same bar against the counterclaim as against some of the Applicants. Can the court ignore the Respondents own representations to the court and referred to in the ruling dated 20th of April 2012? The submissions give the agreed facts. The counterclaim for the same reasons submitted previously by the Respondent’s Counsels cannot be maintained against some of the Applicants. The previous agreement in HCCS 375 of 2009 is between Boney Katatumba and Messrs Shumuk Springs Development Ltd. Secondly the Court order in MA 193 of 2009 arising from HCCS No. 126 of 2009 is between Boney Katatumba and Hotel Diplomate Ltd as Applicants/Defendants and Messrs Shumuk Springs Development Ltd  and Shumuk Spring Hotel Ltd. The 4th Applicant Mr. Mukesh Shukla is a director of the first three Applicants while Shumuk Financial Services is not shown anywhere to be connected in the matter.  The defence as to who could be a proper party is on the merits in the circumstances of the case. In those circumstances the first Respondent’s action discloses a cause of action against the first and second Applicants only but not against the 3rd and 4th Applicants. The first Respondents counterclaim as against the 3rd and 4th Applicant is dismissed on a point of law for not disclosing a cause of action the said Applicants.

As far as the second Respondent is concerned, the second Respondent is the fourth Defendant in the main suit. The fourth Defendant's counterclaim asserts that he bought the condominium units mentioned in paragraph 3 (i) of the written statement of defence on 1 November 2006 from the first Defendant/Mr Boney Mwebesa Katatumba. He obtained vacant possession of the units with all certificates of title except certificate of title for unit 61 in which the fifth Defendant refused to hand over vacant possession to the Plaintiff. The fifth Defendant is Tecton Group and is not a party to the application. In paragraph 6 of the counterclaim the second Respondent seeks remedies against the Applicants jointly and severally together with the Mr Boney Mwebesa Katatumba. In paragraph 6 (e) he seeks an order for all the Defendants to stop interfering with the Plaintiffs quiet and peaceful enjoyment and possession of condominium units 52 – 62, general damages and costs. In other words his primary complaint is against Mr Boney Mwebesa Katatumba. However he seeks an order to stop all the Defendants/Applicants from interfering with quiet and peaceful enjoyment of the units pleaded.

In the reply thereto the Applicants assert in paragraph 7 that the transactions between Mr Boney Mwebesa Katatumba was not in their knowledge. Secondly that Mr Mwebesa Katatumba was the registered proprietor of the units in question and that the first Respondent had always been represented to them as a creditor and never as the registered proprietor. Finally they aver that the second Respondent ought to have proceeded against Boney Katatumba and not the Defendants to the counterclaim and are strangers to the transaction.

It must be shown on the face of the pleadings that the Applicants are not parties to the transactions. That may well be true and this is revealed by the defence and indeed the submissions of the second Defendant’s Counsel in objection to the Applicants plaint in the previous ruling. Perusal of the counterclaim of the second Respondent shows that he claims for vacant possession against the Defendants jointly and severally. The court cannot on the basis of the pleadings only assess the merits of the counterclaim. For instance the second Respondent pleads false representation by the Applicants namely Shumuk Springs Development Ltd, Springs International Hotel Ltd and Mr Shukla Mukesh. His action is also against Tecton Group which is the fifth Defendant in the main suit. Consequently a point of law arises as to whether the question on the privity of contract between the second Respondent and Mr Boney Mwebesa Katatumba absolves the Applicants. However by claiming a vacant possession against the Applicants, the second Respondent claims that they are in possession of the suit property. This is a matter that requires evidence. On the face of the pleadings, it can be shown that the second Respondent enjoyed a right and that right has been violated. However the interference pleaded is only against three Applicants. There is no averment against Shumuk Financial Services. The question of whether the counterclaim discloses a cause of action is established as against the three Applicants namely the 1st, 2nd and 4th Applicants. On a point of law and based on previous proceedings referred to above, the second Respondents action cannot be maintained against Shumuk Financial Services and the action therefore is dismissed for disclosing not case of action on a point of law.

As far as the third Respondent is concerned, the Applicant’s case is that he obtained value for condominium unit number 76 under a consent judgement executed between the third Respondent and Mr Boney Mwebesa Katatumba in HCCS number 110 of 2009. This 6th Defendant’s written statement of defence and counterclaim is against the Applicants. In paragraph 6 of the counterclaim, the third Respondent avers that the Defendants to the counterclaim/the Applicants to this application, being in possession of the sixth Defendants condominium unit number 76 since 1 October 2008 is a sale agreement between the 1st Defendant and the 1st and 2nd Plaintiff. In paragraph 7 the third Respondent avers that the Defendants have been renting the condominium unit for at least US$1500 per month since 1 October 2008 when the proceeds thereof belong to the counterclaimant in his capacity as the proprietor of the condominium unit. Furthermore the third Respondent/counterclaimant seeks an account of the rental proceeds of his condominium from the Plaintiff which by 1 November 2009 was estimated at US$19,500 excluding VAT. He also seeks the vacant possession of condominium unit number 76 from the Applicants. In their written statement of defence the third Respondent attaches annexure "A" which is a consent judgement/decree in civil suit number 110 of 2009. The consent is endorsed by the court on 12 June 2009 but shows that the matter came up on 8 June 2009 for hearing and disposal before his worship Henry Haduli.

Judgement was entered in favour of the Plaintiff Mr Arvind Patel for a total sum of US$640,000. It is provided inter alia that the US$640,000 represents the Plaintiffs claim in HCCS number 110 of 2009 of US$500,000. Secondly he was awarded the balance of US$140,000 which the value of the condominium unit number 76. It is further indicated that the total sum of US$640,000 would be paid from the proceeds of the bank guarantee opened in favour of the Defendant/Boney Katatumba’s creditors in HCCS number 126 of 2009 between Boney Katatumba and others versus Shumuk Springs Development Ltd and three others. Mr Arvind Patel/third Respondent was to surrender to the Defendant or the Defendant's advocates the title deed in respect of the condominium title unit number 76 with duly executed transfer instruments in favour of Messieurs Springs Development Ltd or the Defendant's nominee. Finally the settlement represented the full and final settlement of all claims outstanding between Mr Arvind Patel and Mr Boney Katatumba.

The first element of a cause of action which is that the Plaintiff/counterclaimant should enjoy a right is not available to the third Respondent. This is because the right to plot 76 were fully settled in favour of Mr Boney Katatumba. The consent judgement is attached to the written statement of defence and counterclaim of the third Respondent as annexure "A" and has been proved in this application. It is only Mr Boney Katatumba who could commence any action in respect of the condominium unit number 76. In those circumstances, the third Respondents counterclaim discloses no cause of action against the Applicants and is accordingly dismissed under the provisions of order 6 rule 29 of the Civil Procedure Rules with costs on a point of law.

Res Judicata

On the question of res judicata the Applicants relied on section 7 of the Civil Procedure Act for the assertion that the judgement of the court by consent of the parties in HCCS number 126 of 2009 and dated 5th of September 2013 was a judgement in rem determining the status of the 27 condominium units. The consent judgement was between Boney Katatumba on behalf himself as the owner of plot 2 Colville Street Kampala on the one hand and Messieurs Shumuk Springs Development Ltd, Messieurs Springs International Ltd. The parties were later expanded to include Hotel Diplomate Ltd, Shumuk Springs Development Ltd, Springs International Hotel Ltd, Shumuk Financial Services Ltd and Mr Mukesh Shukla. The subject matter in issue was the condominium units described in the consent judgement and sold by the Plaintiffs to the Defendant. The properties were sold at US$1,700,000 and what remained was the mode of payment. The court which presided over the consent judgement was a court of competent jurisdiction.

On the question of res judicata, the second Respondent’s case is that it is not a party to the consent judgement which can only be enforced inter partes.

The consent judgement was considered in the previous ruling of this court holding that the Plaintiff’s suit discloses no cause of action against the Defendants/counterclaimants. The consent order is issued by honourable Justice Lameck Mukasa on the 18th of May 2009 in Miscellaneous Application number 193 of 2009 and arising from HCCS 126 of 2009. The order reads as follows:

            “

  1. That the Respondents/Defendants shall issue an irrevocable Bank Guarantee in favour of the Applicants/Plaintiffs in the maximum sum of US$1.7 million, valid for a period of 12 months from the date of issuance of the Bank Guarantee.
  2. That the sum guaranteed (US$1.7 million) shall be payable to the Plaintiffs creditors were shall include, but are not be limited to the remaining condominium title holders on brought to court by Street and in accordance with such schedule as shall be submitted by the first Plaintiff to the Defendants in a period of 30 days. Such schedule shall not exceed the sum of US$1.7 million.
  3. That the Defendant shall cause the irrevocable guarantee in the sum of US$1.7 million to be issued within 15 days from the date of receipt of the creditors schedule from the Plaintiff.
  4. That payments from the bank guarantee shall be made in accordance with the creditors schedule as follows:
    1. In respect of each individual condominium titleholder, upon the delivery to the bank of a condominium title free of any encumbrances.
    2. In respect of each non-condominium creditor, upon the issuance of a letter of instruction/consent issued by the respective parties lawyers.
  5. Costs of this application to be in the main suit.”

The consent is an agreement between Boney Katatumba the first Defendant in the current suit, Hotel Diplomate Ltd as Applicants in MA No. 193 of 2009 and Shumuk Springs Development Ltd and Springs International Hotel Ltd. The court in the previous ruling determined whether the consent judgment was binding on the Respondents and the same ruling applies to the doctrine of res judicata. In the previous plaint the first Respondent is the 3rd Defendant. The second Respondent is the 4th Defendant while the 3rd Respondent is the 6th Defendant. The ruling of the court on the question of parties privy to the consent judgment appears at pages 28 and 29 which I shall quote it full and the ruling is as follows:

“The 2nd, 3rd, 4th, 5th and 6th Defendants are not parties to the suit or to the consent order. Whereas the consent agreement is an agreement of the parties subject to the same principles of the law of contract, the basis of the claim for permanent injunction is the said consent agreement embodied in an order of this court. It is not a controversial point that a contract is only enforceable between the parties to the agreement even if it is made for the benefit of third parties. It has been held to be an elementary principle of law that only parties to an agreement can sue upon it (see Scrutons vs. Midland Silicones Ltd [1962] 1 ALL ER 1). This doctrine was upheld by the Ugandan Supreme Court in the case of Shiv Construction Ltd vs. Endesha Enterprises Ltd [1999] EA page 329 where the Court held that where a contract is executed for the benefit of a third party, it is only the parties to the contract who can enforce it for the benefit of the third-party. The third-party is not allowed to assert rights under the contract in a court of law. Coming to the current suit and by the same token, the contract is not binding or enforceable as between the third-party and any of the party’s privy to the contract. In other words the consent order cannot form the basis of the suit against the 2nd, 3rd, 4th, 5th, and 6th Defendants who are not parties to the same. By the same token a permanent injunction cannot be granted against the said Defendants. The plaint does not aver that the first Defendant is an attorney or representative of the said creditors who are also the second, third, fourth, fifth and sixth Defendants. Furthermore, an examination of paragraph 2 of the consent order shows that the money indicated therein namely the sum of US$1.7 million was payable to the Plaintiffs creditors. It is not sufficient to aver that the Plaintiffs in the current suit are unable or have been unable to fulfil their obligation under the order to pay the Plaintiffs creditors. This cannot give rise to a cause of action against the said creditors who may be paid by the Plaintiffs at will and without compulsion. If they had agreed to be paid under the consent order, why doesn't the Plaintiff just pay them so that they handover the condominium titles held by them?

Secondly, the order was made under HCCS 126 of 2009. Apart from the question of enforceability of contract between the parties who are privy to it, the consent order is still an order of the court and enforceable as an order in a particular suit and against parties who are parties thereto.

In the premises, the plaint discloses no cause of action against the 2nd, 3rd, 4th, 5th and 6th Defendants.”

The court having pronounced itself that the consent judgement can only be enforced against the parties thereto, and the first and second Respondents not been parties thereto, the question of res judicata cannot be raised against them. The ground of res judicata is accordingly dismissed with costs as against the first and second Respondents. In the premises, the Applicant’s application only succeeds in part and the following orders issued above are finally issued as here under.

  1. The first Respondents counterclaim discloses a cause of action against the first and second Applicants only and the Applicant’s application on that ground is dismissed with costs.
  2. The first Respondents counterclaim against the third and fourth Applicants is dismissed on a point of law for not disclosing a cause of action with costs.
  3. The second Respondent’s counterclaim discloses a cause of action against the first, second and third Applicants and the Applicant’s application on the ground that it does not is dismissed with costs.
  4. The second Respondents counterclaim does not disclose a cause of action against the fourth Applicant on a point of law and is dismissed with costs.
  5. The third Respondents counterclaim does not disclose a cause of action against the Applicants and is dismissed under Order 6 rule 29 of the Civil Procedure Rules with costs on a point of law his right to sue for Unit 76 having been settled in favour of Mr. Boney Katatumba by order of court.
  6. The Applicant’s application against the first and second Respondents for dismissal of the counterclaim on the ground that their counterclaims are barred by res judicata is dismissed with costs.

Ruling delivered in open court on 8 November 2013

 

Christopher Madrama Izama

Judge

 

Ruling delivered in the presence of:

Augustine Kibuuka Musoke for the applicants

Patrick Muhweroha for the applicant in attendance

Steven Zimula represents the 1st and 3rd Respondents

Mr. Mubiru Kalenge represents second Respondent but is not in court.

Charles Okuni: Court Clerk

 

Christopher Madrama Izama

Judge

8th November 2013