THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
MISCELLANEOUS APPLICATION NO.319 OF 2014
K. K SECURITY (U) LTD::::::::::::::::::::::::::::::::::::::::::::APPLICANT
APA INSURANCE (U) LTD &
SHARDA BEVERAGES (P) LTD:::::::::::::::::::::::::::::RESPONDENTS
BEFORE THE HON. MR. HENRY PETER ADONYO:
This application was brought under Order 9 rule 12 Order 52 Rules 1 and 2 of the Civil Procedure Rules and Section 98 of the Civil Procedure Act, Cap 71. It is for orders that the applicant be granted an order setting aside the default judgment entered against it on the 6th day of March 2014 by this court in addition to any proceedings arising there from and that the applicant be granted an extension of time within which of file it’s Written Statement of Defence in the main suit.
- The Application:
The application is supported by the affidavit of one Patrick Obooli said to be the Applicant’s Investigation Manager. The application is additionally supported by another affidavit of Sam Gimanga stated to be an advocate of this court. The two affidavits briefly outline the facts relating to this application as follows;
- That Patrick Obooli, the applicant’s investigation officer received the plaint and the unstamped summons from the applicant’s receptionist indicating that the plaint was received on the 10th of March 2014.
- That Patrick Obooli forwarded the unacknowledged summons and plaint to the company lawyers M/s Shonubi, Musoke and Co. Advocates who also double as the Company Secretaries of the applicant and the same was received by the law firm’s office attendant called Diana Kahunde.
- That later the summons were picked from the office attendant by Sam Gimanga who indicated that the last day of filing any response on the said summons to be the 25th day of March 2014 based on the receiving stamp on the plaint but did not inquire when the summons were received.
- That a written statement of defence was filed on the 25th March 2014 with the belief that it was filed well within time.
- That the applicant sooner than later discovered when served with a hearing notice that a default judgment against had been entered on the same date of 25th March 2014 when it filed its written statement of defence.
- That the applicant then filed this application seeking to set aside the default judgment and for extension for time to file its written statement of defence.
- That the applicant denies any liability for the alleged theft of the 2nd respondent’s property and raises a clear defence that if there were any liability in respect of the 2nd respondent’s then those were grounded in a contract it had with the 2nd respondents which clearly spells out the same.
- The applicant further stated that in any case it took insurance with Lion Assurance Company Limited to indemnity it in case of any rightful claims brought against the company and as such the insurance company ought to be joined as a third party to the suit.
- That it was in the interest of justice that the application be allowed and the suit be heard on its merits.
- Grounds of the Application:
The Applicant states that the application was grounded on number salient points thus that;
- There was ineffective service of summons as the summons was served on a person without capacity to receive the summons.
- That there was an honest but negligent omission on the part of Sam Gimanga, its advocate who assumed the date of service of summons.
- That the interests of justice require that the applicant be heard in the main suit as this application was brought without delay for consideration by this Honorable Court.
- That the applicant had a plausible defence to the main suit as it had a liability exemption clause in its contract with the 2nd respondent and was also entitled to indemnification from Lion Assurance Company Limited.
- The Law and Submissions in support and against this Application:
The Applicant grounded its application under Order 29 Rule 2 of the Civil Procedure Rules. This order provides that;
“Subject to any statutory provision regulating service of process, where the suit is against a corporation, the summons may be served;-
- Or the secretary or any director or other principal officer of the corporation; or
- By leaving it or sending it by post addressed to the corporation at the registered office or if there is no registered office then at the place where the corporation carried on business;
Sub rule (2) of the said order provides that the officer of the company ought to be a secretary and director or other principal officer of the corporation. The applicant therefore argues that if the said position is related to the instant matter, the court will find that the affidavit of Atubait David especially paragraph 4 and 6 thereto states that service was effected on a receptionist with it only being acknowledged by a stamp with no accompanying signature to confirm who received it. The applicant further argued that the summons when received in that manner was then further transferred to Patrick Obooli who also delivered them to the applicant company secretaries M/s Shonubi Musoke and Co. Advocates at Plot 14 Hannington Road. The law firm offices also doubles as the registered office of the applicant company and so in view of the Applicant the fact that the service was effected on a receptionist rendered it ineffective by virtue of the holding of the court in the case of Crane Bank Limited v Kabuye Victoria MA 719/2007 whose facts were in pari materia with the instant one. That further the case of Crane bank (supra) considered the situation as was in the instant matter which existed in the case of Stewali Bandali Jaffer & Others v Yefusa Weraga Seggane  2 ULR 108 where it was similarly found and thus held that a service on an office attendant was not effective service under Order 29 Rule 2(a) of the Civil Procedure Rules since a receptionist was not a principal officer of the said company. In reinforcing its argument, the applicant further cited Order 29 Rule 2 of the Civil Procedure Rules which provides that alternative service can be effected by delivery of summons at the registered office of a company and where there is no registered office then at the place where the company normally carries out its business with the case of Crane Bank Limited v Kabuye Victoria (Supra) interpreting what is to be considered as the registered office of a company to be that which was envisaged by the Companies Act and with the same decision further noting that where a corporation has a registered office then service elsewhere would not be considered effective unless done to its registered office. The applicant thus then argued that since the service of the court summons was effected on a receptionist whose names were unknown and who after receiving the same delivered them to an unknown person as is seen from affidavit of David Atubait which further show that the summons were later delivered to the company secretaries and thus the registered office of the applicant company on the 13th March 2014 then service was only effected when it was received at the company secretaries offices on the date first mentioned which date would be the date when the days within which to file and serve a written statement of defence would start to run.
In regards to the issue of the inadvertence of counsel, the Applicant submits that Paragraph 3, 4 and 5 of the affidavit of Sam Gimanga, an advocate working with M/s Shonubi, Musoke & Co. Advocates, shows that he assumed the date of service of the court summons without verifying from the applicant company officials or even Patrick Obooli as to when the court summons were received and thus relied on the date of acknowledgment on the plaint which was the 10th day of May 2014 to believe and therefore indicated on the summons that the last day of acknowledgement would be the 25th March 2014 causing the applicant’s statement of defence to be filed on the 25th Mach 2015 yet this was not the proper date for doing so.
In regards to this adverse position, the Applicant asked this court to consider and take it that it is now trite law that the inadvertence or an omission of counsel however negligent cannot not be visited on a litigant with a wealth of court decisions to that effect prominent among which is the one of Godfrey Magezi & Anor v Shudhir Ruparelia SCCA No. 20 of 2002 where the Supreme Court held that where a mistake, error or misunderstanding of the legal advisor however negligent ought to be interpreted as constituting sufficient cause by court for it to consider granting an application for extension of time like the one which is before this instant court with the facts herein this application showing that the omission to endorse the retained copy of the summons with the proper date being the professional duty of counsel who received the documents to inquire from the applicant company when the summons were received but not to simply assume the date on it since as counsel he ought to have known that it is only the date when the summons was received that matter and not the date when the documents that accompanied the summons were received. Therefore evidentially indicating that since this was the omission of counsel which caused the adverse action then it should not be visited on the applicant company who has exhibited real intention to proceed after with the matter after being properly directed.
In regards to whether this application merits being allowed on the basis of it being in the interest of justice to do so as it raises a plausible defence, the applicant cited the holding in the case of Crane Bank v Kabuye Victoria (Supra) which while approving the holding in the case of Jamada Sodha v Gordhandas Hemraj  7 ULR 11 to be good law and practice since it had this to say;
“The nature of the action should be considered, the defense if one has been brought to the notice of the court, however irregularly, should be considered, the question as to whether the plaintiff can reasonably be compensated by costs for any delay occasioned should be considered and finally it should be remembered that to deny the subject a hearing should be the last resort of the court”.
The applicant urged this court to take into account the above holding which is further buttressed by Article 126(2)(e) of the Constitution of the Republic of Uganda which enjoins the courts to administer justice without undue regard to technicalities and also to consider that the applicant had attached a written statement of defence wherein it denies any liability to the plaintiff’s claim as it states that it was never involved in the alleged theft of the 2nd Respondent property and exempted from any claims since it executed a contract with the 2nd respondent and had contracted Lion Assurance Company to indemnify it from any rightful claims of theft of property under the applicant’s care and as such Lion Assurance Company ought to be added to the suit as third party that it can only be done if the applicant is accorded the opportunity to be heard on all those issues.
To further reinforce its case for it to be heard and for the whole dispute resolved on merit, the Applicant pointed out that the plaintiff/respondent was claiming a sum of over Uganda Shillings One Hundred and Thirty Million (Ug. Shs. 130,000,000) for the loss of its property which was stolen while in the care of the applicant company yet under clause 5 of the Guard Contract it executed with the plaintiff its liability was restricted to Uganda Shillings Twenty Million Only (Ug. Shs 20,000,000) and that such exclusion clause on liability having been found to be binding and enforceable by the courts of law as against parties to such contract and given the fact that colossal sums of money was since then involved it was in the interests of justice that the applicant be accorded an opportunity to be heard in the main suit and so that it is able to give it side of the story. In any case, the Applicant added that could be no injustices occasioned onto the 2nd defendant as it had already been compensated by the 1st respondent with any grant to the applicant enter appearance in the main suit would as a whole set the ground the opportunity by the parties to resolve any dispute between themselves without further expensive litigation costs.
In response to the assertions above, the Respondents stated that as to the issue of extension of time to file a written statement of defence, the court should find that it had been overtaken by events since a judgment to determine the applicant’s liability was entered on the 25th March 2014 after it had defaulted in filing a written statement of defence which by itself left nothing for the applicant to defend with the instant application only being tenable had said default judgment not yet been entered making the instant matter distinguishable from the authority of Godfrey Magezi & Another v Shudhir Ruparelia on the ground that the appeal in that matter had not yet been determined by the Supreme Court and so the respondent asked court to ignore this aspect of the application.
On the issue of whether effective service of court summons was made, the respondent referred this curt to holding by the Supreme Court of Uganda in the case of Geoffrey Gatete & Another v William Kyobe SCCA No. 07 of 2005, in which Mulenga JSC (as he then was) held at Page 8 that;
“The Oxford Advanced Learners’ Dictionary defines the word ‘effective’ to mean ‘having the desired effect; producing the intended result”.
In that context then effective service of summons would mean service of summons that produces the desired or intended result and conversely a non-effective service of summons would mean that service that does not produce such result and that there can be no doubt that the desired and intended result of serving summons on a defendant in a civil suit is to make the defendant aware of the suit brought against him/her so that he/she has the opportunity to respond to it by either defending the suit or admitting liability and submitting to a judgment which results from it and thus if the facts of this matter is put in context with the above decision it would be found out that the applicant did file a “written statement of defence” on the 25th day of March 2014 showing that the applicant was aware of the suit against it and any holding to the contrary would mean that the applicant filed a defence to a suit it was never aware of which in itself would make it an illogical and absurd situation as it was clear that the Applicant was aware of the suit since it responded to the suit by filing a defence after it had been effectively served with service of court summons making according to the holding in Geoffrey Gatete & Another ( supra) to be correct as it were also binding onto this court.
The respondent further asked court to consider the facts at hand and pose the relevant question or issue for its consideration which it believed would be in regards as to when service of court summons was effected to the applicant which it believed was on the 6th day of March 2014 not on the 13th day of March 2014 as was being alleged by the applicant as this position was not supported by any fact since according to Paragraph 2 of the applicant’s additional affidavit in support it is contended by Sam Gimanga that he received the plaint and the photocopy of the unstamped summons from the firm’s office attendant Ms. Diana Kahunde on the 13th day of March 2014 after they had been dropped there by an official of the applicant’s company without disclosing the date when the summons and the plaint were dropped by the applicant’s official at the firm’s offices. The respondent therefore opined that what was to be emphasized here was the date the office attendant handed over the summons to Sam Gimanga yet Patrick Obooli’s affidavit does not to state anywhere that he forwarded the court summons to the applicant’s lawyers on the 13th day March 2014 making counsel’s submission in this regards to be more of evidence from the Bar than what indeed happened and hence ought to not be relied on by court since even the content of. Sam Gimanga’s averment as contained in paragraph 2 is not based on information of the Diana Kahunde who received the court papers neither does that affidavit disclose the source of knowledge when the court summons was dropped thus making the said allegation to be contrary to O. XIX Rule 3 Civil Procedure Rules and hence inadmissible in evidence. In this regards , the respondent concludes that if the court believes this position then it would find that there is absolutely no evidence to confirm that the applicant lawyers received the court summons on 13th March 2014 as alleged in their written submissions yet there was evidence to prove that service was effected on the applicant on the 6th day of March 2014 as shown by the affidavit in reply of David Atubait which was not responded to by the applicant leaving the only possible response to the same being that of Patrick Obooli in his paragraph 3 of his affidavit in support to this application which states that service was effected on 10th March 2014 but that this ought to be considered as hearsay evidence which contravenes the provisions of Order XIX rule 3 of the Civil Procedure Rules and was inadmissible.
On the other issue which was prayed for by the applicant that it be granted an order which allowed extension of time to file a written statement of defence yet it became aware of the suit on 13th March 2014 then the question to be asked would be as to why the applicant would seek for extension of time to file the same yet by 25th March 2014 it was still within time to do so clearly indicating that if this position was to be believed then it would mean that by seeking for extension of time to file a written statement defence after the 25th day of March 2014 the applicant was actually confirming that service was effected onto it by the 6th March 2014 and thus could not cannot be seen to raise the issue that it had not been served in time making the case of Crane Bank Limited v Kabuye Victoria to be distinguishable from the present case as in that case the applicant was not seeking for the extension of time to file a written statement of defence.
In reply to the issue of inadvertence of counsel the respondent urged this Honourable court to consider the definition made by Andrew K Bashaija , J in the case of Byansi Elias & Another v Kiryomunju Tofasi HCCA No 029 of 2010 where the learned judge held, inter alia, that;
“A mistake of counsel, in my view, would rise where due to some inadvertent act or omission, the advocate duly instructed by a litigant does or omits to do something that prejudices the litigant’s interest who must not have been party or known of the fact or omission. The act or omission must solely be attributable to the professional negligence and or conduct of the advocate.”
But that when the facts of the instant application is tested as against the decision above, it would appear that upon receipt of summons to file a defence from its client the obligation of the counsel in the instant matter was to file a written statement of defence accordingly after being forwarded the papers by its client but that given the facts surrounding this mater it should be seen that there could have not been any mistake, negligence or lapse on the part of the counsel as even counsel did not verify the date of receipt of summons from the applicant’s official as the date of the 10th day of March 2014 on the plaint is re-affirmed in paragraph 3 of Obooli’s affidavit in support of the application showing that it was entirely the actions of the applicant’s agents which resulted into the said default and not of counsel with the conclusion to be had from this scenario to be that in the absence of a received stamp of the 6th day of March 2014 it could not have been of any practical use for the applicant’s agent to have missed stamping on the summons which was the first page and instead stamped on the plaint instead which was the second page. Meaning that the failure by the applicant to communicate to its counsel the true date of 6th day of March 2014 which was the date of receipt of the summons cannot be attributed to negligence of counsel but to the applicant’s own default making the situation falling within observation made by Mulenga JSC in the case of Capt. Philip Ongom v Catherine Nyero Awota SCCA No. 14 of 2001 when he stated at page 9 that;
“…………in my view, a litigant ought not to bear the consequences of the advocate's default, unless the litigant is privy to the default, or the default results from failure, on the part of the litigant, to give to the advocate due instructions.”
Thus if this was the position then the authority of Godfrey Magezi & Another v Sudhir Ruparelia ought to be distinguishable since in that case the applicant was not involved in the mix-up with the issue of the receipt of summons which were not in his custody and had duly instructed his counsel to handle his appeal compared with the instant case where the applicant handled the receipt and the stamping on the court summons before forwarding it to its lawyers making the applicant’s failure to default in filling its defence to be as a result of its own failure to communicate the true date of service to its counsel.
In regards to whether the applicant has a plausible defence, the respondent counsel argues that the applicant does not have any since its counsel admits under paragraph 9 of the additional affidavit that;
“The applicant contracted Lion Assurance Company Limited to indemnify if rightful claims like the one in the main suit are brought against the company”.
Thus proving the applicant had no a prima facie defence to the respondent’s claims in the main suit since under Clause 1 of the Guard Contract the primarily obligation of the applicant was to provide security services at the 2nd respondent’s premises protecting it from burglary or trespass and this has been held to constitute a fundamental term of the contract whose breach goes to the root of the contract as was the view held by Helen Abulu Obura, J in Gentex Enterprises Ltd v Security Group (U) Ltd HCCS No. 45 of 2007 whose facts are similar to this case wherein she stated at page 5 thereof that;
“It follows that protecting the plaintiff’s premises from burglary or trespass by an unauthorized person was a fundamental term of the contract whose breach goes to the root of the contract. By the defendant’s servants failing to guard and protect the premises as agreed, the defendant as the contractor and employer would be guilty of fundamentally breaching the terms of the service order contract for the provision of security service and I so find. For that reason, the defendant cannot rely on the exemption clause whose terms are so unreasonable. In the premises the defendant’s plea on exemption clause is rejected”
Thus since that it is true that the applicant does not dispute that the 2nd respondent’s stock of 53 drums of alcohol spirit was stolen from premises under its guard according to the Guard Contract and applying the principle held in the above case, it would be clear that the applicant in this matter fundamentally breached the Guard Contract rendering the alleged exclusion clause to be of no consequences thus annulling any claim of a plausible defence.
The respondent also pointed to the fact of the applicant contending that it was not involved in the theft of the 2nd respondent’s property and therefore was not liable were contradictory of Clause 3 of the Standard Conditions of Contract at page 2 of the Guard Contract which provides the circumstances under which the applicant would not be liable for losses including acts which are beyond its control like strikes, labour action among other and since theft is not stated the same the applicant’s claim then would be rendered inadmissible under Section 91 of the Evidence Act Cap 6 as this would now amount to parole evidence whose rule was explained by Byamugisha JA (as she then was) in Muwonge v Musah  2 EA 187 (CAU) when she stated at page 195 that;
“There is a presumption that when parties put what they have agreed upon in writing they are bound or intended to be bound by it. Therefore the terms agreed upon should be protected from unwarranted disputes and alteration.”
Ruling out the applicant’s allegation that contracted Lion Assurance Company to indemnify it from rightful claims not constitute a defence since there is no law which bars the applicant from filing a suit against the said Lion Assurance Company if it believes that it has a cause of action against it rather than frustrating the respondents’ recovery process.
In regards to whether it was in the interest of justice that this application be allowed, the respondent pointed out that this application hinged entirely on major omissions which were geared towards misleading court into believing that service was not effected on the 6th day of March 2014 which the respondent avers was properly done with Article 126 (2) (e) of the Constitution not to have been framed to aid parties who ground their prayers on their own unbelievable actions and conduct and so the respondent urged this court to find that the applicant had failed to prove the grounds of setting aside the default judgment in this matter and as such it should be should be dismissed with costs.
- Resolution of this matter:
I have carefully considered the arguments tendered above by learned counsels for either side in respect of this matter. I have also taken into account the well cited holdings of the courts some of which are binding on this court and some which are not. From the same it thus appears to me that a careful perusal of the pleadings in this matter show that indeed a default judgment was entered on the 25th day of March 2014 and it was followed by formal proof through exparte proceedings with the applicant having excluded itself from these proceedings. However, the arguments raised herein has raised fundamental principles of law which when facts in support are taken into account tend to show that there were indeed circumstances which makes this court to believe that the applicant who had instructed counsel was not prevented or had itself excluded from these proceedings. It is my view that from the evidence which have been adduced in support of this application there was indeed the fact that learned counsels for the applicant did not bother to follow up the proceedings with the professional skills as appropriately required as it appears to me that they never took these proceedings seriously as has been clearly pointed out by the respondent. From the disposition herein it is true that the applicant did receive summons in this matter in time but took its time to inform its counsel who never bothered to provide the legal advice needed in a situation as were required in these matters leading this Honourable Court to order these proceedings to go on exparte. That this was so was even confirmed by the fact of the presumption by the applicant that since it had insured its premises against possible claims it could take things slowly and not really digest the import of responding to court summons unless there was clear legal guidance given which I find was lacking in all its essence as it is clear to me that the fact that the applicant believed that it had taken insurance cover ought to have been unpackaged by its legal counsel to make it be in the know of what its obligation or not were. My reading of the context of the pleadings attached to the main proceedings show that though the applicant was covered by insurance and the instant matter was not included in the insurance contract yet from the reading of the insurance cover and the provisions in its entirety including limitation, it is apparent that the interest of the respondent was at risk given the fact that the limitation was very low compared to what was being insured thus anything could occur at the premises of the respondent and the applicant would bring to its aid the limitation clause in the insurance cover yet the very first and foremost duty it had to the respondent was of providing guard duties and thus my conclusion from this scenario properly brings in the need for the parties to resolve the dispute between themselves leaving out any multiplicity as ignoring this lopsided situation would condemn the parties to several and arguably inconclusive litigations.
This brings into the lime light the issue of issue of effective service as it appears to me that the definition of it as described in Geoffrey Gatete & Another v William Kyobe SCCA No. 7 of 2005 and relied upon by the respondents has to be read in tandem with the provision of the purpose of Order 29 rule 2 of the Civil Procedure Rules as it involves a limited liability company. My considered view is that the interpretation given in regards to effective service in the Gatete case when put in light of the provisions in Order 29 Rule 2 of the Civil Procedure Rules seems to me that for service to be effective onto a company it can only be achieved when it has been received by a secretary or director or any other principal officer of the company who has the authority to make decisions on behalf of the company and or can best understand the nature and effect of the court documents. Thus in my view, the fact of a receptionist receiving court documents and then the company made to suffer the consequence of such persons likely ineptitude like in the present situation would in my considered view not bind the company since such a person is not clothed with either the duty of care or capacity to make the necessary decision in a company to receive and act on serious company documents like court summons unless evidence is shown to the contrary. Thus I am inclined to agre with the applicant that the very fact that a receptionist received court documents and did not give it due weight is a matter which this court takes seriously into account and would not want to penalize the applicant for either the ineptitude or lack of foresight by such a receptionist.
The other matter which I have considered is the affidavit of Sam Gimanga who is said to be an advocate working with the applicant’s company secretaries who are M/s Shonubi, Musoke & Co. Advocates. He states that he got knowledge of summons on the 13th day of March 2014 and that this piece of information was based on his knowledge. He is an employee of M/s Shonubi, Musoke & Co. Advocates and so is Ms. Diana Kahunde. Gimanga Sam states that upon perusal of the summons he himself gave advise that the last day of filing a defence was to be the 25th day of March 2014 which date eventually has been proven as an erroneous assumption the date on the document. From this piece of evidence it is clear to me that it was the faulty assumption of when action was to take place on the part of learned counsel that no proficient decision was made and who ought to have taken all the necessary steps to ensure that the appropriate procedure was followed but alas did not do so thus proving that indeed his omission as counsel caused the applicant not properly make a defence in the instant matter as the onus was on counsel to verify when the summons were received which he did not thus making the decision in the case of Capt. Philip Ongom v Catherine Nyero Awota SCCA No. 14 of 2001 to be applicable basing from its latent facts. Thus I find that there was indeed laxity on the part of counsel in executing his legal duties and the client who gave him instructions through the law firm cannot be held responsible for such inappropriate negligence.
On the issue of whether it was necessary that Lion Assurance Company be brought on board as a third party to this suit in order to bring finality of court proceedings in this matter, it has been argued that this was apparently being brought in as an afterthought. However, Section 33 of the Judicature Act calls upon courts to endeavor under all circumstances to bring to finality disputes between parties by avoiding multiplicity of proceedings in order to ensure that what was which was disturbing parties are completely disposed with finality. From my perusal of this application, I am satisfied that it was though brought to court immediately after the applicant became aware of the default judgment and there appears to have been no inordinate delay on the applicant’s part to come to court for redress thus indicating to me that it was interested in complete resolution of the dispute between it and the other parties involved. The interests of the justice of the matter would this time round be in the favour of ensuring that such active interest is not laid to waste.
From my consideration above, I am inclined to grant this application conditionally.
- This application is allowed conditionally upon the applicant depositing in court the earlier decreed amounts of Ug. Shs. 119,317,000 together with general damages of Ug. Shs. 30,000,000/- and the tax costs of the suit of Shs. 11,341, 500.
- Applicant is allowed 15 days from the date of this ruling to file its written statement of defence which must be served on the respondent accordingly.
- Loin Assurance Company is also directed to be joined in as a party accordingly.
- The costs of this application to be in the cause.
These orders are made at the High Court of Uganda m, Commercial Division this 19th day of February, 2015.
Henry Peter Adonyo