Court name
Commercial Court of Uganda
Judgment date
5 June 2015

ZTE Corporation v Uganda Telecom (Miscellaneous Application-2015/359) [2015] UGCommC 85 (05 June 2015);

Cite this case
[2015] UGCommC 85

THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC APPLICATION NO 359 OF 2015

ARISING FROM HCCS NO 169 OF 2013

ZTE CORPORATION}...........................................................................APPLICANT

VERSUS

UGANDA TELECOM LIMITED}..........................................................RESPONDENT

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicant commenced this application under the provisions of section 100 of the Civil Procedure Act and Order 6 rule 19 of the Civil Procedure Rules for an order to amend the Plaint in HCCS 169 of 2013 to join ZTE (HK) Ltd as a party to this suit and for costs of the application to be provided for.

The grounds of the application are that the Applicant instituted Civil Suit Number 169 of 2013 in the Commercial Court against the Respondent to recover a sum of US$6,108,272 arising out of various contracts. Secondly the Respondent contests liability to the Applicant in respect of the contract dated 29th of October 2007 executed by ZTE (HK) Ltd, a wholly owned subsidiary of the Applicant, for the benefit of the Applicant. Thirdly the presence of ZTE (HK) Ltd as a party is necessary for the effectual determination of the main suit. Fourthly the Respondent would not be prejudiced by the addition of ZTE (HK) Ltd to the main suit. Lastly that it is in the interests of justice that the application is allowed.

The application is supported by the affidavit of Cao Chao, a legal officer with the Applicant Company. The deposition repeats the grounds and adds that the Respondent contested liability of the Applicant in respect of the main contract in a preliminary objection. The contract dated 29th of October 2007 was executed by ZTE (HK) Ltd, a wholly owned subsidiary of the Applicant, for the benefit of the Applicant. The deponent relies on a copy of the Respondent’s submissions contesting liability and annual returns of the company. He asserts that the Respondent made several payments to the Applicant’s account in respect of the above contract and copies of the evidence are attached. Furthermore he deposes that the presence of ZTE (HK) Ltd is necessary for the effectual determination of the main suit. The rest of the deposition repeats the grounds in the chamber summons which need not be repeated.

The application came for hearing on 1 June 2015 at 2:30 PM. At the hearing Counsel Terrence Kavuma appeared but the Respondent did not appear either in person or through Counsel. Counsel Terrence Kavuma relied on the affidavit of Kakaire Frederick filed on court record on the 25th of May 2015 in which he deposes that he received the chamber summons with documents annexed as on the 15th of May 2015 and immediately proceeded to the Respondent's offices located at Telephone House Speke Road Kampala whereupon he tendered the court documents to Counsel Kibuuka Rashid, the Respondent’s advocate in this matter. Counsel Kibuuka Rashid received the court documents on the 15th of May 2015 and acknowledged it went the stamp of Uganda Telecom, chief legal Counsel according to the returns filed by the deponent. At the request of the court Counsel Terrence Kavuma was given in a few minutes to get in touch with Counsel Rashid Kibuka on his mobile phone whereupon he came back and informed the court that the said Counsel was in Mbarara and had informed him that he had forgotten about the application. He prayed for the matter to proceed ex parte on the ground that there was no response to the chamber summons and due to the absence of the Respondent’s Counsel.

The prayer of the Applicants Counsel to proceed ex parte under Order 9 rule 20 (1) (a) of the Civil Procedure Rules was granted. Subsequently a representative of the Respondent appeared and waited patiently in court until after the Applicant’s Counsel completed his submissions and I gave a ruling date for 5th of June 2015 at 9.30 am (today’s date). He then sought to be heard and stated that there was no response to the application because they presumed that because the Respondent had filed a formal application for leave to appeal the ruling of the court on the preliminary objection, they assumed that the Applicant’s application would not be heard.  This was at variance with what the Applicant’s Counsel reported about Counsel Kibuuka Rashid having forgotten. I decided that the application to adjourn was belated and without merit and have proceeded with the ruling as scheduled.

From the submissions of the Applicant’s Counsel the Applicant’s case is as follows. The Respondent by the time of submissions never filed an affidavit in reply opposing the application or rebutting the facts in the affidavit in support. In such cases courts have held that the application stands unchallenged and the facts deposed to in the Applicant’s application are presumed admitted by the Respondent. The Applicants Counsel relied on the cases of Tororo Steel Works vs. Betty Akikoth OS No. 1 of 2008 and a decision of Hon. Justice Lameck Mukasa as well as the case of Erusani Kivumbi and 3 Others vs. Registrar of Titles HCMA No. 102 of 2009 a decision of Hon. Justice Joseph Murangira. The Applicant’s Counsel invited the court to find that the application is admitted and should be allowed as pleaded. 

Notwithstanding the foregoing, Counsel submitted that in ground 3 of the application, it is stated that the presence of ZTE is necessary for effectual determination of the suit. The reason is basically because the present Applicant in the plaint on record seeks to recover monies arising from a contract that was executed by ZTE Hong Kong and the present Respondent which contract is annexed. In that contract the beneficiary of the monies arising is the present Applicant and the implementing party in the contract is ZTE Hong Kong Ltd. ZTE (HK) not a party to HCCS 169 which is the main suit. However for effectual determination of all issues, it is a necessary party (under the contract).  On a question put to Counsel by court as to what capacity of party ZTE (HK) should be, Counsel submitted that it would be co – Plaintiff. This would enable all parties affected by the contract to be properly before the court. The court will be in a position to determine the issues arising under the contract conclusively and avoid multiplicity of proceedings in respect of the particular matter. If the court is disinclined to grant application, he contended that ZTE Hong Kong could file a separate plaint. For the holding that a necessary party may be added Counsel relied on the case of Stanbic Bank vs. Canstar Rags HCMA 349 of 2012 and where the High Court relied on the Supreme Court Decision of DAPCB vs. Jaffer Bros. A further rationale is that addition of parties is made to avoid multiplicity of suits.

The Applicant’s Counsel contended that any decision the court makes is likely to affect the rights of ZTE Hong Kong Ltd and as such it would be prudent that the court hears from ZTE (HK) as a party. Civil Suit 169 of 2014 is not premised only on the particular contract but also on purchase orders and repayment agreements. In the circumstances he invited that court to grant the application on the ground that the Applicant has met all the relevant criteria for the grant of applications to add a party.

Ruling

The Applicant’s application is deceptively couched as an application for amendment of pleadings under order 6 rule 19 of the Civil Procedure Rules whereas it is an application for the addition of a party. Order 6 rule 19 of the Civil Procedure Rules provides that:

            “19. Amendment of pleadings

The court may at any stage of the proceedings, allow either party to alter or amend his or her pleading in such manner and on such terms as may be just and all such amendments shall be made as may be necessary for the purpose of determining the real question in controversy between the parties.

Order 6 rule 19 deals with amendment of pleadings and not substitution or addition of parties. Pleadings are made by parties whereas substitution or addition deals with who makes the pleadings and who is seeking what by any pleadings in the plaint or defence. Section 2 (p) of the Civil Procedure Act defines “pleadings” to include:

“... any petition or summons, and also includes the statements in writing of the claim or demand of any Plaintiff, and of the defence of any Defendant to them, and the reply of the Plaintiff to any defence or counterclaim of a Defendant;”

Similarly section 100 of the Civil Procedure Act under which the Applicant purported to move the court also deals with amendment of pleadings. It provides as follows:

            “100. General power to amend

The court may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceeding.”

The substitution or addition of parties on the other hand is made under Order 1 rule 10 of the Civil Procedure Rules which is what the Applicants Counsel seemed to base his submission on. Addition of parties seeks to add a party to the suit.

The authorities the Applicant relies on deal with Order 1 rule 10 (2) which deals with the addition of a party as a necessary party.  Order 1 rule 10 (2) allows the substitution of a Plaintiff or the addition of a necessary party.

Order 1 rule 10 (2) of the Civil Procedure Rules provides that:

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

Notwithstanding the submission that the Respondent filed no defence to this application, the question of parties cannot be resolved by application as this is pre-emptive of the decision of this court. The Applicant’s application was prompted by a ruling on preliminary objection made on the 8th of May 2015 in which the Defendant objected to the Applicant’s application on the ground that the Plaintiff did not have Locus Standi to bring the application.  According to Osborn’s Concise Law Dictionary 11th Edition Sweet and Maxwell locus standi means:

“[A place of standing]. The right to be heard in a court or other proceeding.”

The ruling of the court on the preliminary objection on the ground that the current Applicant has no locus standi in the main suit is at page 11 of the ruling and is as follows:

“In the premises the Defendant’s preliminary objection is stayed. However because it affects the standing of the Plaintiff in the court, it shall be tried as a preliminary issue by calling evidence on the question of identity of the company which executed annexure "A" to the plaint and that in annexure "C" to the plaint. It cannot be resolved on the basis of submissions of the Plaintiff's Counsel.

Before a question of whether a different party which is a beneficiary under section 65 of the Contracts Act 2010 can be resolved, the question of identity as a matter of fact has to be determined before considering other matters.

In the premises the point of law raised by the Defendant remains a point of law to be tried together with the question of authority to execute the relevant agreement by any of the parties as far as annexure "C" to the plaint is concerned.

The point of law is stayed with costs to abide the outcome of the trial after adducing evidence.”

By bringing this application deceptively couched as an application for amendment of pleadings, the Applicant is trying to pre-empt the stay order of the court, staying a decision on the question of locus standi of the Plaintiff. I decided that the question of locus standi would be tried as a preliminary issue. A decision on locus standi would deal with the right of the Plaintiff be heard and is fundamental in nature. The right to be heard is based on the identity of the party before the court in relation to the contract in issue which is pleaded in paragraph 4 (a) to the plaint as annexure “A”. The Plaintiff in effect and by this application admits that ZTE (HK) Ltd is a different party from ZTE Corporation.  In my ruling at page 10 I held that the question of identity cannot be resolved only on the basis of the pleadings alone.  However this application will not resolve the quest for fact to resolve the issue of locus standi of the Plaintiff and the assertion in this application that ZTE (HK) Ltd is a subsidiary needs to be tested and opportunity given to the Defendant to further submit on the basis of facts for which a decision on the preliminary objection was stayed.

The Applicant’s application tries to circumvent the stay order and decision of court to try the issue of locus standi by calling evidence on the identity of the Plaintiff ZTE Corporation and ZTE (HK) Ltd.  The decision of the court was stayed to admit evidence only and for that matter this application is incompetent for being an attempt to circumvent the order of the court. It is struck out. There being no affidavit in opposition, it is struck out with no order as to costs.

Ruling delivered in open court the 5th of June 2015

 

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Terrence Kavuma Counsel for the Applicant

Respondents Counsel not in court

Parties absent

Charles Okuni: Court Clerk

 

Christopher Madrama Izama

Judge

5/June 2015