Court name
Commercial Court of Uganda
Judgment date
26 February 2014

investment Finance Co. Ltd v Ken Paper (EA) Ltd & Anor (Miscellaneous Application-2013/695) [2014] UGCommC 23 (26 February 2014);

Cite this case
[2014] UGCommC 23

THE REPUBLIC OF UGANDA

 

IN THE HIGH COURT OF UGANDA

AT KAMPALA

(COMMERCIAL DIVISION)

 

MISC. APPLICATION 695/2013

(ARISING FROM CIVIL SUIT 278/2013)

 

INVESTMENT FINANCE CO. LTD ----------------------------- APPLICANT/PLAINTIFF

 

VS

 

KEN PAPER (E.A) LTD ------------------------------------ RESPONDENTS/DEFENDANTS

EDWARD KIGONGO NAKABAALE

 

BEFORE LADY JUSTICE FLAVIA SENOGA ANGLIN

 

RULING

 

This application was made under S. 98 Civil Procedure Act, O. 1 rules 3, 10 (2) and 13 and O. 52 rule 1 of the Civil Procedure Rules; seeking orders of this court to join Cairo Bank International (U) Ltd  as a Defendant to civil suit 278/13; and to be granted leave to amend the pleadings.

 

The grounds of the application are that with the full knowledge of Cairo Bank the Applicant who was trying to redeem a mortgage sold the suit property to the Respondents.

 

The Respondents made part payment in both Uganda shillings and USA dollars and deposited it on the Applicants account with Cairo Bank.

 

The Respondents failed to pay the outstanding balance, whereupon the Applicant instituted the suit seeking among other things, an order of specific performance.

 

After filing the suit, the Applicant learnt that without his knowledge, the 2nd Respondent had instead repurchased the suit property from Cairo Bank and hence this application.

 

The application was supported by the affidavit of Karim Lalani a Director of the Applicant Company that was relied upon at the hearing.

 

Opposing the application, the Respondents contended that the Applicant never disclosed to the 2nd Respondent that the land was mortgaged to the bank and hence the refusal to sign any agreement with the Applicant.

 

Secondly that, the proposed amendment discloses new facts that were within the knowledge of the Applicant at the time the suit was filed but chose not to disclose them. And that the amendment brings a new cause of action amounting to a fresh suit.

 

At the hearing of the application on 12.02.14, Counsel for the Applicant submitted that court has power under S. 33 Judicature Act and the other provisions of the law already referred to herein to grant the application to enable all matters in controversy to be heard and finally determined.

Counsel cited the case of DAPCB Vs Jaffar Brothers Ltd [1999] 1 EA 55 relied upon in the case of Samson Sempasa  Vs B.K. Sengendo Misc. App.557/13 (C.S. 234/13) which sets out what is necessary to be proved before a party can be joined to a suit on those grounds.

 

Reciting the grounds of the application, Counsel stressed that the facts necessitating the joining of Cairo Bank to the suit were obtained after the suit had been filed and that they indicate that the bank has high interest in the suit. He then prayed that the application be allowed.

 

In reply, Counsel for the Respondents adopted the contents of the affidavit in reply, adding that the issues such as were before court were discussed in the case of Central Kenya Ltd Vs Trust Bank Ltd [2000] 2 EA 365

 

The case sets out the aim of amendment of pleadings and joinder of parties and the reasons for which amendments should be allowed. Provided certain conditions are met.

 

He argued that looking at the plaint and the proposed amendments, it is clear that a new cause of action outside the administrative jurisdiction of this court was introduced; as the matter is now land.

Also that the fraud pleaded was not included in the original plaint; adding that the facts have been restated as a result of which the Respondents will suffer if the amendment is allowed.

 

Claiming that the Bank was never party to the commitment of the parties, Counsel prayed for dismissal of the application.

 

In rejoinder, it was maintained that the proposed amendment would not prejudice the Respondents, and that it was necessary as the bank sold the land when it had allowed the Applicant to redeem it. While asserting that this court has jurisdiction to handle the matter, Counsel stated but without prejudice that the suit could be transferred to the Land Division.

The issue for court to determine is whether this is a proper case for allowing addition of a party and amendment of pleadings:

 

Under O.1 rule 3 of the Civil Procedure Rules, all persons may be joined as defendants against whom any right to relief in respect or arising out of the same act or transaction or a series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if separate suits were brought against those persons, any common question of law or fact would arise.

 

In the present case, the relief sought against Cairo Bank arose out of the same transaction the Applicant had with the Respondents. That is, the mortgage which the Bank had allowed the Applicant to redeem by sale. And which later was sold to the Respondents by the Bank.

 

In the circumstances, I find that if separate suits are brought common questions of law and fact would arise.

 

The Applicant also asserts that he got to know of the sale by the Bank after filing the current suit, although this is opposed by the Respondents.

 

There are also serious allegations of fraud made against the bank and the Respondents which the Applicant claims were not known it at the time the suit was filed. The allegations of fraud justify the joining of the bank as a party. I am fortified in my decision by the case of Mulowooza Brothers Ltd Vs N. Shah and Co. Ltd S.C.C.A 26/10 where Tumwesigye JSC held that “the Court of Appeal was justified to rule that because of the serious allegations of fraud against Senior Government Officials, the Attorney General should be joined as a party”.

 

I accordingly hold that this is a proper case for adding the Bank as a party to the suit as its presence is necessary for the effective and complete settlement of all the questions involved in the suit. The orders sought in the suit by the Applicant would legally affect the bank and it is therefore constructive that the Bank be made party to the suit to avoid multiplicity of suits. See the case DAPCB Vs Jaffar Brothers Ltd (Supra)

 

It is also worth noting that the hearing in this case has not taken off and there has been no inordinate delay in making this application. As already pointed out, the proposed suit against the Bank arises out of the same transaction; I find no new or inconsistent cause of action introduced.

And since all the parties will be given opportunity to be heard, including amendment of the written statement of defence, there will be no injustice occasioned to either side. See the case of Central Kenya Ltd Vs Trust Bank Ltd (Supra)

 

There is also no indication that the proposed amendment is expressly or impliedly prohibited by law or that the application is made malafide. See Gaso Transport Service Ltd Vs Martin Adalo Obene [1990-94] EA88 SCCA 04/94 Tsekooko JSC

 

This decision is also based on the provisions of S. 33 of the Judicature Act  that empower the High Court  to grant absolutely or on such terms and conditions as it deems just, all such remedies as any of the parties to a cause or matter is entitled  to in respect of any legal or equitable claim properly brought before it, so that as far as possible all maters in controversy between the parties may be completely ad finally determined and all multiplicities of legal proceedings concerning any of those matters avoided.

 

The application is allowed for all those reasons.

  • The Bank is to be added as a party to the suit

 

  • The proposed amendments are allowed. The amended plaint should be filed and served upon the Defendants.
  • The Respondents to file their  amended defence within 15 days from the date of service of the amended plaint and so should the Bank

 

As to whether the matter should be referred to the to the Land Division, I find that since the transaction complained of arose as a result of the mortgage, the matter can be properly handled by the  Commercial Court. Any High Court has unlimited jurisdiction to handle all matters and causes.

 

  • Costs of the application will abide the outcome of the suit.

 

 

FLAVIA SENOGA ANGLIN

JUDGE

26. 02. 14