THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

[COMMERCIAL COURT]

MISC. APPLICATION NO. 175 OF 2011

(ARISING OUT OF CIVIL SUIT NO. 186 OF 2010)

JOHN KATO:::::::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS

MUHLBAUER AG & ANOTHER::::::::::::::::::::::::::::::RESPONDENT

BEFORE: THE HON. LADY JUSTICE HELLEN OBURA

RULING

This application was brought under S.33 of the Judicature Act, S.98 of the Civil Procedure Act (CPA) and O10 rr12 and 24 of the Civil Procedure Rules (CPR). The applicant is seeking for an order for discovery on oath of the contract for the provision of the National Security Information System (NSIS) awarded to the 1^st respondent by the Government of Uganda (GOU). The applicant also sought costs of the application. 

The application is supported by an affidavit sworn by the applicant wherein he stated that he was engaged by the 1^st respondent to provide services inclusive of procurement, presentations, and negotiations leading to the award of that contract.   He further stated that it was agreed that he would be paid 10% of the contract value. Further that he performed his obligation and the contract was awarded to the 1^st respondent.

He also deposed that while the respondents did not deny the existence of the contract, the same was in their exclusive possession.  Copies of the Plaint in HCCS 186 of 2010 and the Written Statement of Defence were annexed to the affidavit as annextures “A” &”B”.

An affidavit in reply and in opposition to the application was sworn by Mr. Herbert Kiggundu- Mugerwa counsel for the respondent on 26^th April 2011. He deposed that the application was bad in law, devoid of any merit, frivolous and vexatious because it was premised on the National Security Information System (NSIS) contract which was denied by the respondent and therefore had to be proved before it could be liable for disclosure.

At the hearing of the application, the applicant was represented by Mr. Alfred Okello-Oryem as lead counsel assisted by Mr. Geoffrey Kavuma and the respondent was represented by Prof. Frederick Ssempebwa as lead counsel assisted by Mr. Arthur Kunsa Ssempebwa.

Mr. Okello-Oryemsubmitted that discovery of the contract was relevant and necessary because if the court decided to award the plaintiff some money it would be relevant for assessment of his claim of 10% of the contract sum. He submitted that Order10 rule 12 of the Civil Procedure Rules and S.22 of the CPA provides that what is paramount in an application of this nature is to demonstrate that the document is relevant and necessary for determination of the applicants claim.  He relied on two authorities to buttress his submission, namely; Uganda Posts and Telecommunications Corporation v International Television Network& Others HCCS No. 93/97 and Dresdner Bank Aktiengesellschaft v Sango Bay Estates and Others C.S No 322 of 1968.  He submitted that the two authorities were on the same point that the document need not be necessary to prove the claim but needed to be relevant to assist the court to determine the claim.

He argued that discovery was relevant at this stage and not after liability of the respondents had been proved firstly, because it would save a multiplicity of suits and secondly, the principles that govern discovery are that if the document is relevant discovery would issue. He further argued that there was no justification for trying the plaintiff’s claim in pieces as that would be a mockery of the system. He submitted that this would mean first trying the issue of commission on the contract then after delivery of judgment, the issue of assessment of damages.  He contended that the court would be functus officio after delivering judgment on the first issue.  He submitted that on the contrary there was every justification as demonstrated by the principles for discovery that it was necessary at this stage because it was the issue arising from the pleadings and the respondents would not suffer any injustice at all if the contract was produced in court.

He further submitted that the applicant does not need the contract to prove his case against the respondent in the main suit but for assessment of his claim. He contended that the applicant is not on a fishing expedition because the records of the scheduling notes showed that the applicant had assembled ample evidence to prove his case on commission which is the main issue for trial in the main suit.

He concluded that he had demonstrated the need and relevance of the document and prayed that court be pleased to grant an order that the contract be produced in court on oath and be supplied to counsel for the applicants. He prayed that the order be granted against both respondents because they have possession of the documents since the two companies are intertwined. He also prayed for costs for reason that the law does not require a formal application for discovery except where the party in possession simply refuses to release it upon request like in this case.

Professor Ssempebwaopposed the application. He pointed out that an order for discovery is discretionary and the discretion is exercised upon well established principles which he stated as follows:-

(1)    There must be evidence that the documents is in possession or custody of the respondent.

(2)   The document must be relevant to the issue to be tried.

(3)   Discovery should not be used as a fishing expedition by the applicant to try and build up a case which he is not sure of.

He referred to the case of Olouch v Charagu [2003] EALR 649 which stated the principle on discretion and the first two principles highlighted above. Applying these principles to the facts of this application, counsel for the respondent submitted that as regards possession; it was difficult to see how the 2^nd respondent was joined in this application when on the evidence of the applicant himself as contained in the affidavit in support, it was clear that the 2^nd respondent did not have the document that was sought.  He referred to paragraph 5 of that affidavit where the applicant stated that the contract was in exclusive possession of the 1^st respondent. He submitted that from the pleadings it was clear that the 2^nd respondent is a separate legal entity.

He prayed that on the basis of the evidence adduced by the applicant, court should find that the 2^nd respondent was not in possession of the document and dismiss the application as against the 2^nd respondent on that ground alone.

In specific response to counsel for the applicant’s submission, he contended that the contract for commission that was alleged to have been entered into between the applicant and the respondent was clearly denied in paragraph 4 (i) of the Written Statement of Defence. He further contended that he had perused the joint scheduling notes and the records and found no admission of that contract at any stage.

He submitted that it followed that at the trial of the suit, the applicant would have to adduce evidence to prove existence of the contract by which the respondents agreed to pay him 10% commission on another bid which was denied. He contended that the applicant could not obtain that evidence from the contractual document between the respondents and a 3^rd party (Government of Uganda) in this case.

He contended that the document sought was not relevant to the issues being tried in court and in any case it was premature to bring the application at this stage. He submitted that under Order 10 rule 12(2) court has discretion if it finds that discovery is not necessary at any stage not to order it but can order it at a later stage when it becomes relevant.

He further submitted that there is no entitlement to discovery and referred to the case of Dresdner Bank v Sango Bay Estates and Others (supra) at page 152, the 2^nd paragraph and quoted a passage where the learned judge citing from an English case stated the objective of the rule as follows:-

“What is the object of the rule? The object as it seems to be is perfectly clear, it often happens that one party to an action makes an allegation of some fact such as the existence of a partnership or an agency which is disputed by the other party. If the allegation is true, the right of discovery will follow. If it is not true, there will be no right to discovery. The framers of the rule saw how ridiculous it would be if they did not give a power to the defendant to refuse discovery until the right of the plaintiff to have it had been established. Therefore rule 20 enables the judge to sever the trial on the issue of facts from the trial of the right of discovery”.

He contended that on the basis of this authority, discovery was not necessary at this stage of the proceedings because the applicant must first prove his case and to do so he did not need the document which might be necessary if he proved his case and the issue of quantum arose.

He explained that they were objecting the application now when in fact the document might be relevant later because discovery must not be allowed as a fishing expedition for the applicant to build up unsure case. He relied on the principle stated in the case of Tweed v Parades Commission for Northern Ireland[2006] UKHL 53 at pages 25 and 28to the effect that:-

“Courts will not allow “fishing expeditions” where a claimant seeks disclosure in the hope that something will emerge which may form the basis of a claim”.

He then submitted that the applicant was on a fishing expedition because the amended plaint showed that the applicant/plaintiff was not sure of the relationship between the two defendants and their legal personalities and that is why they were merged in this application.  He observed that this was very strange considering the alleged volume of work that the applicant did which was very carefully listed in the amended plaint particularly paragraph 5.

He prayed that the applicant should not be allowed to indulge in a fishing expedition and submitted that he should first prove that he had a commission contract with the respondent and that the National Security Information System bid was facilitated by him and was awarded to the 1^st respondent then he could seek discovery. Counsel for the respondent undertook not to oppose the application once these allegations are proved.

He concluded by praying for outright dismissal of the application with costs as against the 2^nd respondent and dismissal with cost in the cause in respect of the 1^st respondent. Over all he prayed that court orders that there is no need for discovery at this stage of proceedings.

Grant of an order for discovery of documents is discretionary and the principle that governs it as derived from Order 10 rule 12 (2) is that it must be necessary either for disposing fairly of the suit or for saving of costs. The case of Olouch v Charagu referred to by counsel for the respondent stated three prerequisites that must be met in an application for discovery. In other words, the applicant must prove that:-

(1)   There is sufficient evidence that the document exist which the other party has not disclosed;

(2)   The document relate to the matter in issue in the action;

(3)   There is sufficient evidence that the documents are in possession, custody or power of the other party.

Counsel for the respondent also referred to the principle in the case of Tweed v Parades Commission for Northern Ireland(supra) where it was stated that discovery should not be used as a fishing expedition by the applicant to try and build up a case which he is not sure of. I will deal with this principle first in relation to this application.

The case of Tweed v Parades Commission for Northern Ireland (supra) is to some extent distinguishable from this case in that the principle was stated in respect of applications for discovery in judicial review. In fact counsel for the respondent tactfully left out portions of the principles from his quotation that would have put it in its context. For example, at pages 28 & 29, the full text of what Lord Brown of Eaton-Under-Heywood stated included the portion in bold as indicated below which counsel chose to leave out. He stated thus:-

“This then is the general framework within which applications for disclosure in judicial review should be considered. In my judgment disclosure orders are likely to remain exceptional in judicial review proceedings, even in proportionality cases, andthe courts should continue to guard against what appear to be merely “fishing expeditions” for adventitious further ground of challenge. It is not helpful, and is often both expensive and time-consuming, to flood the court with needless paper”. (Emphasis added).

Notwithstanding the above observation, there are authorities that applied this principle in actions commenced by writs but pleadings had not yet been completed. In the case of Gale v Denman Picture Houses Ltd [1930] 1 K.B. 588, where an application for discovery was made by the plaintiff after issuing a writ against the defendant but before filing his statement of claim, Scrutton L.J had this to say:-

“A plaintiff who issues a writ must be taken to know what his case is. If he merely issues a writ on the chance of making a case he is issuing what is called a “fishing bill” to try to find out whether he has a case or not. That kind of proceeding is not to be encouraged. For a plaintiff after issuing his writ but before delivering his statement of claim to say, “Show me the document which may be relevant, so that I may see whether I have a case or not,” is a most undesirable proceeding”. (Emphasis added).

My understanding of this statement is that the principle that discovery should not be used as a fishing expedition is applicable where pleadings have not yet been completed and the party applying intends to use the document to build up his/her case. It indeed makes sense and to that extent I agree with counsel for the respondent.

In the instant application counsel for the applicant emphasized that the applicant had already gathered enough evidence as indicated in the joint scheduling memorandum to prove his case. He submitted that discovery was being sought purely to enable court determine the issue of remedies in the event that the applicant is the successful party as the claim is based on a percentage of the NSIS contract sum.

Taking into account the stage at which this application was made and upon looking at the pleadings, the joint scheduling memorandum, and the documents filed in support of the applicant’s case in the main suit, I am more inclined to agree with counsel for the applicant that the applicant is not on a fishing expedition as contended by counsel for the respondent. I do not think he requires the NSIS contract to prove the existence of the commission contract which is the basis of his claim. In the circumstances, I find that the applicant is not seeking discovery merely to fish out a case.

I will now turn to the first prerequisite that must be met by the applicant, that is, whether there is sufficient evidence that the document exist which the other party has not disclosed. I will consider it together with the third prerequisite that relates to possession of the document. Counsel for the applicant submitted authoritatively that the NSIS contract was awarded to the 1^st respondent and as a party to that contract, she must be having a copy of the same.  He argued that since the 2^nd respondent is the agent of the 1^st respondent in Uganda through which she trades then they both must be having copies of the NSIS contract.

Counsel for the respondent on the other hand submitted that as per the evidence contained in paragraph 5 of the affidavit in support, it was clear that the 2^nd respondent did not have the document that was sought. He prayed that on the basis of that evidence court should find that the 2^nd respondent was not in possession of the document and dismiss the application as against her on that ground alone. Counsel contended that as against the 1^st respondent, the applicant would first need to prove that the NSIS contracted existed before he could apply for discovery.

I have looked at the issues agreed upon as contained in the joint scheduling memorandum signed by counsels for both parties and filed in court on 15^th February 2011 and I do not see any issue related to the existence of the NSIS Contract which counsel contended must first be proved. There are only three issues namely;

1)      Whether a contract for services existed between the plaintiff and the defendants;

2)      Whether the plaintiff performed services for the defendants;

3)      Whether the plaintiff is entitled to the remedies claimed.

I believe the first issue relate to the commission contract as opposed to the NSIS contract. Much as the existence of the NSIS contract was denied in the written statement of defence, this was in my opinion overtaken by the summary of the defendant’s case as per the joint scheduling memorandum where it was stated that:-

“The defendants accept that the plaintiff performed some work on the provision of the biometric voter registration system bid by the defendants but the same was not successful and there was no contract for terms of payment either for the performance of that work. The defendants deny that the plaintiff performed any work on the NSIS contract. The defendants therefore contend that the plaintiff’s claim for quantum meruit and remuneration at law does not arise”.

The sentence in bold implies that what was denied is the plaintiff’s work and not the existence of the contract which in my opinion was confirmed as existing by referring to it as the NSIS contract. This probably explains why the existence of that contract was not included as one of the issues for determination at the trial despite it being denied in the defence. In fact counsel for the respondent’s main reason for opposing the application was that the applicant was using it as a fishing expedition and that it was not necessary at this stage. The argument that the contract did not exist was just a by the way. He even made an undertaking that once the applicant proved the existence of the commission contract he would concede to the informal application for discovery at that stage. To me this undertaking defeats his argument that the contract does not exist. Otherwise, what would be the logic of conceding to the application at a later stage if his clients do not have the NSIS contract now?

In the circumstances, I do not agree with counsel for the respondent’s submission that the existence of the NSIS contract would have to first be determined before application for discovery could be made. There is sufficient evidence including the submission of counsel for the respondent himself as indicated above, to prove that the contract exists.  I am also inclined to agree with the submission of counsel for the applicant that since the 1^st respondent is doing business in Uganda through the 2^nd respondent, both of them are properly joined in this application. If there was indeed evidence to the contrary it should have been stated in the affidavit in reply. Short of that, counsel for the respondent cannot adduce evidence from the bar as it lacks any basis. Consequently, I reject counsel’s submission from the bar and find that there is sufficient evidence to prove that both respondents are in possession of the NSIS contract.

Finally, I now turn to consider whether the NSIS contract relate to the matter in issue in the action and relevant at this stage. Counsel for the applicant submitted that the document was directly related to the third issue in the main suit and was necessary at this stage to enable court determine all the three issues concurrently. Counsel for the respondent on the other hand contended that the document was not relevant at this stage and would only be relevant after the applicant had proved its case on the main issue as to whether there was a commission contract between him and the respondents. He suggested that court should first determine that issue then if it finds for the plaintiff/applicant, he would have to apply for discovery of the contract to enable court determine the remedies available. I find the procedure suggested by counsel quite cumbersome, time wasting, costly and completely uncalled for particularly in view of the fact that courts are inundated with backlog of cases.  

Gone are the days of trial by ambush where parties would hold documents close to their chest and wait to surprise the opposite party at the trial. The reforms in our civil procedure that introduced scheduling conference brought a more liberal approach to sharing of documents between parties so that those that are agreed upon could be admitted on record at the scheduling conference. Even those not agreed upon are made available to the other party and the court. I believe the rationale for this was to sort out all preliminary matters including those relating to documents in advance and shorten the trial time. It is indeed one of the strategies intended to reduce case backlog.  The provisions of Order 12 rule 1 (a) which compels court to hold scheduling conference within seven days after the order on delivery of interrogatories and discoveries has been made is in that same spirit.

The proposal that trial of the main suit from which this application arises be heard in two parts is completely contrary to the letter and spirit of Order 12 rule 1 (a). I do not think that this particular scenario was envisaged by Order 10 rule 12 (2) of the CPR or even the case of Dresdner Bank v Sango Bay Estates and Others (supra) as contended by counsel for the respondent.

I take it that the phrase, “not necessary at that stage of the suit” used in that rule means the stage before pleadings are completed as was stated in the case of Gale v Denman Picture Houses Ltd (supra) or at most before some of the substantial issues are tried.

My understanding of the passage at page 152 of the case of Dresdner Bank v Sango Bay Estates and Others (supra) is that the allegation that the document sought exists is one of the prerequisites to be met by the applicant first before the right of discovery accrues. It did not in my opinion suggest that any substantive issue in the main suit would first be heard and determined before the right to discovery accrues.

In the instant application, I have already made a finding that the NSIS contract exists and it is in possession of both respondents. I am also of the view that it is not necessary to sever trial of the applicant’s case in the main suit in two parts for the reasons I have given above. I agree with counsel for the applicant that the NSIS contract is directly related to the third issue in the main suit. I am therefore convinced that discovery of the NSIS contract is necessary and relevant at this stage of the suit to enable this court dispose all the issues in the main suit fairly and in a timely, less cumbersome and cost effective manner.

In the result, I am satisfied that the applicant has met all the prerequisites for grant of an order of discovery and I accordingly order the respondents to make a discovery on oath of the NSIS contract executed between the 1^st respondent and the Government of Uganda. Since counsel for the applicant did not specify the period within which the discovery should be made, in exercise of the discretion given to this court by section 98 of the CPA and section 33 of the Judicature Act, I order that discovery be made within fifteen days from the date of this ruling.

Costs of this application shall be in the cause.

I so order

Dated this 19^th day of October 2011.

………………………………………….

Hellen Obura

Ruling delivered in chambers at 2.30 pm in the presence of Mr. Alfred Okello-Oryem for the applicant, Mr. Arthur Kunsa Ssempebwa for the respondents and Mr. John Kato the plaintiff.

Hellen Obura

19/10/2011