Court name
Commercial Court of Uganda
Judgment date
29 May 2014

Coronet Group Ltd v Kisuule Astacio and Sons Ltd (Miscellaneous Application-/) [2014] UGCommC 190 (29 May 2014);

Cite this case
[2014] UGCommC 190

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCEALLANEOUS APPLICATION NO. 243OF 2014

ARISING FROM CIVIL SUIT NO 204 OF 2014

 

CORONET GROUP LIMITED :::::::::::::::::::::::::::::::::::::APPLICANT

VERSUS

KISUULE ASTACIO AND SONS LTD:::::::::::::::::RESPONDENTS

 

 

 

BEFORE THE HON. JUSTICE HENRY PETER ADONYO

 

 

RULING

 

This is an exparte application brought under Order 1 Rule 14 (1),(2) and (5) of the Civil Procedure Rules (CPR), Article 126 of the Constitution of the Republic of Uganda, 1995 and Section 98 of the Civil Procedure Act for orders  that a third party notice doth issue to the Respondents as a necessary party to the suit for the purposes of indemnifying or otherwise contributing to liability that may be imposed on the applicant in a claim by Stanbic Bank (U) Ltd against the Applicant arising from Civil Suit No. 204 of 2014.

The application is supported by an affidavit sworn by Mr. Chris Baine, the Applicant’s Executive Director. The gist of the grounds stated in that affidavit are that the Respondent, Stanbic Bank and the Applicant entered into a Tripartite Agreement being a Collateral Management Agreement (herein after referred to as “CMA”) in which the Applicant was to hold finished processed coffee for and on behalf of the Bank as collateral/security for the Bank to finance the Respondents to purchase unprocessed coffee which would later be processed and pledged to the Bank.

That with the knowledge of the Bank, the Respondents would periodically take some of the unprocessed coffee from the Applicant for processing at Mbale Importers and Exporters Ltd Plot 6A Mapera Road, Nalukolongo Industrial Area and return it. However the Respondents on various occasions took coffee for processing but neglected to return it to the Applicant’s stores, which dilatory conduct contrary to the CMA resulted in the Bank incurring a loss of US$ 828,281 worth of coffee which it is claiming from the Applicant as collateral manager.

The Respondent filed an affidavit in reply deponed by Mr Kisuule Astacio, a Director in the Respondent Company. In it he stated that under Clause 4.3 of the CMA, the Applicant was required to only release the coffee upon prior written instructions of Stanbic Bank and that his Company has never taken coffee from the Applicant.

Counsel for the Applicant filed written submissions which I have considered together with the law and the authorities cited in which he relied upon. Order 1 rule 14 (1) empowers this court to grant leave to a defendant, who claims to be entitled to contribution or indemnity against any person not a party to the suit, to issue a third party notice to that person. The position of the law relating to third party notice was explained in the case of M/s Panyahululu Co. Ltd versus M/s New Ocean Transporters Co. Ltd & Others HCCS No. 523 of 2006 by Bamwine, J. (as he then was) who referred to an earlier exposition of that law in D.S.S. Motors Ltd v Afri Tours and Travel Ltd HCCS No. 12 of 2003 where he stated that“…I understand the law to be that in order that a third party be lawfully joined, the subject matter between the third party and the defendant must be the same as the subject matter between the plaintiff and the defendant and the original cause of action must be same. In other words the defendant should have a direct right to indemnity as such, which right should have, generally, if not always, arisen from contract express or implied”. 

In the instant case, it is contended by the applicant that it was the dilatory conduct of the Respondents, who were parties to the CMA from which the Bank’s claim against them stems, that led to the loss complained of. The respondents denies any dilatory acts.

I have looked at the documents attached to the affidavit in support particularly Annexture “A” which confirmed that the Applicant, the Bank and the Respondents were parties to a CMA with various obligations. I have also looked at Annexture “C5” which shows that the Respondents would take  coffee out of the Applicant’s warehouse and subsequent correspondences marked “D” and ”E”.

On the basis of the annextures to the Application and taking into account the law as stated above, this court finds that the subject matter between the applicant and the third party and that between the plaintiff and the applicant/defendant arise from the CMA of which the Respondents were parties which shows a relationship among the parties. This situation makes me convinced that all the parties involved in the transaction have something to explain to this Honourable Court before it can arrive at a just conclusion to the issues at hand. I would therefore find that this is a proper case where a third party notice should issue.

Orders

In the circumstances, I am inclined to grant leave to the Applicant for the issuance of a third party notice to the Respondent and it is accordingly granted. I also order that the notice be filed within ten days from the date of this ruling.

This Order is issued at the High Court of Uganda, Commercial Division at Kampala, this 29th day of May 2014.

 

HENRY PETER ADONYO

JUDGE