THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
(COMMERCIAL DIVISION)
MISCELLANEOUS APPLICATION NO. 189 OF 2011
[ARISING FROM CIVIL SUIT NO. 096 OF 2010]
HUAWEI TECHNOLOGIES
(U) CO. LTD ::::::::::::::::::::::::::::::::::::::::::APPLICANT/2ND DEFENDANT
VERSUS
EVEPEAK CONSULTS & TECHNICAL
SERVICES LTD:::::::::::::::::::::::::::::::::::::::::RESPONDENT/PLAINTIFF
BEFORE: HON. LADY JUSTICE IRENE MULYAGONJA KAKOOZA
RULING
The applicant is the 2nd defendant in HCCS 096 of 2010. She brought this application to amend her written statement of defence (WSD) before the suit came up for hearing. By the time the application was filed, judgment had already been entered against Venture Communications (U) Ltd, the 1st defendant, who did not file a WSD in time and made no application to file one out of time.
The application which was brought under the provisions of Order 6 rules 19 and 31 of the Civil Procedure Rules (CPR) was supported by an affidavit deposed on 11/04/2011 by Muhammad Luwalira, the Legal Officer of the applicant. The respondent filed an affidavit in reply to oppose the application which was deposed on 10/05/2011 by Edward Magezi, the Managing Director of the respondent. For purposes of making the several references here to the pleadings in the main suit clear, I shall refer to the parties to this application as the plaintiff and the 2nd defendant.
The salient facts averred in the affidavit in support of the application were that while he was preparing for the scheduling conference for this case, Mr. Luwalira realised that the situation on the ground had changed since the filing of the defence. He further averred that the situation necessitated an amendment of the WSD to put the change on the record. The changed situation referred to was that on 10/03/2010 the Chief Magistrates Court at Mengo issued an order in C/S 1913 of 2009 for the attachment of a total of shs. 10,740,974/= and USD 18,391.78 held by the 2nd defendant on account of the 1st defendant, for the benefit of S & J Construction Ltd., the judgment creditor. That subsequently, the 2nd defendant was by a threat to attach its own property forced to pay over the amounts stated above decreed against the 1st defendant together with costs of shs. 3, 420,377/=.
It was further averred that on 4/02/2010, Uganda Revenue Authority (URA) issued an Agency Notice to appoint the 2nd defendant to recover shs. 2,898,935,829/= on account of taxes owed by the 1st defendant. That the 2nd defendant eventually paid shs. 158,572,322/=, which was money she held on account of the 1st defendant, to URA in satisfaction of the Agency Notice.
The salient facts in Mr. Edward Magezi’s affidavit in reply were that since the variations which gave rise to the main suit were issued by the 1st defendant to the plaintiff, the monies arising out of the variations belonged to the plaintiff and not to the 1st defendant. That the facts sought to be included in the WSD were not relevant to the trial of the real issues in controversy between the plaintiff and the 2nd defendant; that the 2nd defendant had admitted the costs of the variations made in the contract between the plaintiff and the 1st defendant and only one issue remained to be decided in the suit, i.e. whether the 2nd defendant was liable to compensate the plaintiff for the her interference in the 1st defendant’s performance of the subcontract between plaintiff and the 1st defendant.
At the hearing of the application, Mr. Fred Kiiza who represented the 2nd defendant argued that the facts raised by the 2nd defendant were new and necessary to iron out all the issues between the parties to the suit. That it was therefore in the interests of justice that the application be allowed. He relied on Eastern Bakery v. Castelino [1958] EA 451 for the submission that amendments requested before the commencement of the hearing should be freely allowed if they are not prejudicial to the other party. He cited the decision in Joseph Nsereko v. Haji Raibu Lubega & Another [1982] HCB 51 for the same proposition and for the further submission that no injustice is caused if the other side can be compensated by costs.
Mr. Dennis Kusaasira for the plaintiff agreed with the legal position presented by Mr. Kiiza about the amendment of pleadings but he opposed the application because in his view the facts that the applicants sought to add to the WSD had no bearing on the issues to be tried in the suit. He stated that the plaintiff’s case against the applicant was for unlawful interference in the performance of the contract between her and the 1st defendant, Venture Communications (U) Ltd. That the plaintiff had a distinct cause of action against the 2nd defendant which did not require the court to find out what happened to the money that the 2nd defendant held on account of the 1st defendant. That as a result, there was no issue at all in the action as it stands about what became of the money that the 2nd defendant held on account of the 1st defendant. That the 2nd defendant’s attempts to amend the WSD to bring in new facts not previously pleaded amounted to substitution of her defence with another and should not be allowed. He relied on the decision in Abdul Karim Khan v. Roshan [1965] EA 289 for the submission that an amendment that creates an inconsistency in a party’s pleadings should be disallowed.
Mr. Kusaasira went on to submit that counsel for the 2nd defendant had not shown how he intends to rely on the new facts because no proposed amended WSD was filed with the application. That the failure to attach the proposed amended WSD to the application was a fatal blow to the application because it denied the court of the opportunity to see what 2nd defendant intended to amend and therefore the application was incompetent. He relied on Meru Farmers v. Abdul Aziz Suleiman (No. 1) [1966] EA 436 for his submission.
Mr. Kusaasira went on to submit that the new facts which the 2nd defendant intended to plead in the amended WSD occurred before the suit was filed; that the 2nd defendant filed the WSD herself without instructing counsel and thus had knowledge of all the facts but did not include them in her defence. He then concluded that the application was an afterthought and brought in bad faith. He relied on Gaso Transport Services (Bus) Ltd. v. Adala Obene [1990-94] 1 EA 88 for the submission that an amendment that is requested for in bad faith ought not to be allowed.
In rejoinder Mr. Kiiza argued that Order 6 rue 9 CPR does not require an applicant for leave to amend to file the proposed amended pleading with the application. Further that the case before court was an exceptional one in respect of which there was no need to attach the proposed amendment to the application. He went on to submit that the applicant ought to be granted leave to amend because she filed the WSD herself without consulting an advocate. That the proposed amendment would not substitute the original defence with another one because the latter contained only general denials and no facts were stated that the 2nd defendant is alleged to be trying to substitute. That the new facts that the 2nd defendant intends to plead were only discovered by the advocates when they received instructions to defend the suit and after the 2nd defendant had filed its WSD, and therefore there were no mala fides on the part of the 2nd defendant in bringing this application. That the application had been brought expeditiously on receipt of the 2nd defendant’s instructions and thus ought to be allowed.
Following Mr. Kiiza rejoinder, Mr. Kusaasira made an informal application under the provisions of Order 13 rule 6 CPR for judgment on admissions because, in his opinion, determining that application would narrow down the issues in the dispute. He submitted that in paragraph 5 (h) of the affidavit in support the 2nd defendant admitted the value of the variations that were executed by the plaintiffs by agreement with the 1st defendant. He added that the 1st defendant had already admitted the plaintiff’s claim and a judgment in default was entered against her when she failed to file a WSD; that the only issue now pending determination in the dispute was whether the 2nd defendant unlawfully interfered with the 1st defendant’s performance of the contract between her (the 1st defendant) and the plaintiff. He went on to state that his application was without prejudice to whether the application for leave to amend would be allowed or not. He finally pointed out that the contention that the applicant admitted part of the plaintiff’s claim had been averred in paragraphs 8 and 9 of the affidavit in reply to the application.
Mr. Kiiza opposed the application for judgment on admissions for the reason that it was premature because leave to amend the WSD had not yet been granted and the pleadings were not yet complete. He asserted that the application could only be considered if made formally so that the 2nd defendant could file an affidavit in reply thereto. Mr. Kusaasira then submitted in rejoinder that such an application could be taken at any time and there was no requirement in Order 13 CPR that a formal application had to be made because Order 13 CPR provides for no specific procedure for such applications. He went on to submit that the application was timely and if considered it would spare scarce judicial resources in as far as this dispute is concerned. He thus prayed that the application be granted.
Mr. Kusaasira brought the informal application for judgment on admissions hoping that it would dispose of a substantial part of this dispute. I will therefore first address that application and then go on to consider the 2nd defendant’s application to amend her WSD.
I will begin with the question whether counsel for the plaintiff had first to file a formal application before the alleged admission could be considered by this court. Order 13 CPR provides for different categories of admissions to be requested of any party or applied for to court. Order 13 rule 2 provides for notice to admit documents and the procedure for it is given in rule 3; it is by issuing a notice to the party as is prescribed in Form 9 of Appendix B of the Rules. Notice to admit facts is provided for in Order 13 rule 4 and the procedure is given in rule 5. A notice to admit facts should be in the format prescribed in Form 10 of Appendix B while an admission of facts should be in the format prescribed in Form 11 of Appendix B of the Rules.
Turning to the Order 13 rule 6 CPR, it simply states that an application for judgment on admissions may be made at any stage of the suit. There is no provision for the form that the application should take for it seems it may be sparked off by any statement, whether it be in writing or by word of mouth. While Order 52 CPR provides that all applications to court shall be by notice of motion, it is not unusual for oral applications to be made in the course of proceedings, including applications for amendment of pleadings (D. D. Bawa Limited v. G. S. Didar Singh [1961] 1 EA 282).
In Bawa v. Singh the High Court of Uganda ruled that the purpose of Order 6 rule 30 CPR (now Order 6 rule 31) was not to preclude the court from dealing with an oral application to amend pleadings in the course of a hearing, but to provide that, if an interlocutory application is made under Order 6 rule 18 (now Order 6 rule 19), it should be by summons in chambers and not by notice of motion. The court went on to rule that if that were the case, the words “at any stage of the proceedings” in rule 19 would hardly be consistent with rule 31. Similarly, the words “at any stage of the proceedings” in rule 6 of Order 13 would be rendered redundant if it were to be held that whenever an opportunity arises for a party to make an application for judgment on admissions under that rule then the proceedings would have to stop for him/her to file a formal application. I therefore find that in the circumstance, the informal application was proper.
I will next consider the question whether the application for judgment on admissions now before me ought to be granted and to facilitate an understanding of the arguments presented by counsel and the discussion that follows about rule 6 of Order 13 CPR, I will produce it here.
“Any party may at any stage of a suit, where an admission of facts has been made, either on the pleadings or otherwise, apply to the court for such judgment or order as upon the admission he or she may be entitled to, without waiting for the determination of any other question between the parties; and the court may upon the application make such order, or give such judgment, as the court may think just.”
{My emphasis}
The Court of Appeal of Uganda had occasion to discuss the provision above in Kibalama v. Alfasan Belgie CVBA [2004] 2 EA 146. The Justices of the Court were unanimously of the opinion that under Order 11 rule 6, which is now Order 13 rule 6, judgment can be entered at any stage of the suit where an admission of facts has been made. That such an admission however, must be unequivocal in order to entitle the party to judgment without waiting for the determination of any other question between the parties. I would say that the provision has to be interpreted literally with no interpolations or additions that were not meant to apply to situation were admissions are made. If an admission is made of a fact upon which the dispute turns, then judgment should be entered forthwith, without waiting for the determination of any other issues between the parties.
That being the law on judgments on admission, did the 2nd defendant make any admissions of the plaintiff’s claims in the affidavit in support of this application upon which judgment can be entered in favour of the plaintiff? The relevant parts of the plaintiff’s claims in the suit are in paragraphs 5, 6 and 7 where she pleaded that on the 29th June 2008, she entered into a sub-contract with the 1st defendant to build a telecom tower at Mpara for a client known as MTN. A Photostat copy of the sub-contract No: PAUGA4Y0860501JLC was attached to the plaint as Annexure ‘A’. The contract showed, in clause 1.14 thereof, that the parties thereto where Evepeak Consults & Technical Services Ltd. (the Sub-contractor) and Venture Communications (U) Ltd. (also a Sub-contractor) and that the “Client or Employer” was MTN.
The plaintiff further pleaded that it was agreed that in executing the works the plaintiff was required to follow the drawings provided by the 1st defendant. That the scope of works was to be limited to the items and material or inputs listed in a Purchase Order drawn by the 1st Defendant, and whose total value was USD 30,442,82) only. But as soon as the plaintiff began to execute the works under the sub-contract, the 1st defendant supplied other drawings and issued a Variation Order which the plaintiff was instead ordered to follow. And that in the processes of executing the works the parties discovered that the ground on which the works were to be executed contained a rock which needed to be excavated; yet such excavation had not been included in the Purchase Order prepared by the 1st defendant. The 1st defendant then issued to the plaintiff a Variation Order according to Article 4.1 of the sub-contract requiring her to go ahead and burn and excavate the rock.
The plaintiff went on to plead that these variations in the works caused the time spent on and cost of the sub-contract to go up. That the plaintiff submitted a proposal to the 1st defendant for an adjustment to the agreed value of the Purchase Order and/or the amount payable under the Variation Orders. The 1st defendant then advised plaintiff to go on and execute the works per contract and the plaintiff went on and executed and completed the works thus incurring additional costs. After that the plaintiff and 1st defendant met and discussed and agreed that the additional works were valued at USD 41,508. But the 2nd defendant disagreed with the additional costs and advised the 1st defendant not to pay the plaintiff.
It was therefore the plaintiff’s claim that the 1st defendant’s refusal to pay her was unlawful and amounted to a breach of the sub-contract. Further that the breach was procured by the 2nd defendant who had no right to dispute the additional costs because she was not party to the sub-contract between the plaintiff and the 1st defendant. As a result the plaintiff claimed special damages of USD 41,508.77 and shs 6m being monies incurred in costs in a suit where the plaintiff was sued by its suppliers, as well as general damages for breach of contract and interest on all the claims at commercial rate.
In her WSD, the 2nd defendant pleaded in relation to the contract in dispute and the demands of the plaintiff as follows:
“3. Save for the fact that the Plaintiff entered into a contract with the 1st defendant, the 2nd defendant denies paragraphs 4 and 5 of the plaint and shall contend that the plaint discloses no cause of action against it since it was not a party to the contract entered into between the plaintiff and the 1st Defendant.
4. The 2nd defendant denies the contents of paragraphs 7, 8, 9 and 10 and shall put the Plaintiff to strict proof thereof. The 2nd Defendant shall aver and contend that there exists a contract between it and the 1st Defendant under which the 2nd defendant questioned the variations made by the 1st defendant in respect of the subcontract works. The 2nd defendant shall thus contend that it is not liable for any breach of contract between the 1st Defendant and the Plaintiff.”
It is therefore clear from the excerpt above that the WSD did not just consist of general denials, as Mr. Kiiza for the applicant would have had this court believe. The 2nd defendant not only unequivocally denied that there was a contract between her and the plaintiff but also tried to assert that she had a right to interfere in the sub-contract between the plaintiff and the 1st defendant, though that was never disclosed to the 1st defendant in the sub-contract (Annexure “A” to the plaint).
It will be recalled that in support of his argument that the 2nd defendant admitted certain facts in the plaintiff’s suit, Mr. Kusaasira referred me to paragraph 5(h) of the affidavit in support which was as follows:
“(h) Venture Communications South Africa did agree with the Applicant/2nd defendant to variations amounting to USD 59,310.21 (US$ Fifty Nine Thousand Three Hundred and Ten and Twenty One Cents) only.”
Attached to the affidavit was Annexure “H,” a letter dated 5/05/2010 in which the Sales and Marketing Director and the Financial Director of Venture Communications (SA) wrote to the Managing Director of the 2nd defendant referring to earlier communication between them and stating as follows:-
“Venture hereby confirms that the balance due by Huawei to Venture in terms of original purchase orders issued (”Purchase order value”) to Venture amounts to USD 51,839.58 and an additional amount relating to the variation orders issued (“Variation order value”) to Venture of USD 59,310.21 thereby totalling USD 111,149.79 (United Stated Dollar One Hundred Eleven Thousand One Hundred Forty Nine and Seventy Nine Cents).
Venture is aware of the court case against Huawei arising from Venture’s failure to pay S & J Construction Ltd (Venture’s subcontractor on the MTN TK Project), requiring Huawei to pay UGX 14,161,351 (Uganda Shillings Fourteen Million One Hundred Sixty One Thousand Three Hundred Fifty One) and USD 18,391.78 (United States Dollar Eighteen Thousand Three Hundred Ninety One and Seventy Eight American Cents), originating from the garnish (sic) order absolute. Venture hereby acknowledges Huawei’s compliance of honouring the court order and the remainder of the monies both under the purchase order value and variation order value to be made to Uganda Revenue Authority (URA).
From the above mentioned, Venture hereby absolves Huawei of any payment liability whatsoever under the sub-contract Agreement No: PAUGA4Y0860501JLC and Venture shall not claim at any time for any monies paid by Huawei to the Uganda Court and the Uganda Revenue Authority.
We once again wish to apologise for any inconvenience caused, and look forward to a continued working relationship with Huawei in the future.”
In the plaintiff’s affidavit in reply to the application, Edward Magezi, deposed in paragraphs 8 as follows:-
“That since the Applicant has in fact admitted the variation costs under 5(h) of the Affidavit in support of this application; the only issue for determination is whether the applicant is liable to pay those costs to the respondent.”
On the other hand, in paragraph 5 (h) of the affidavit in support it was averred that,
“Venture Communications South Africa did agree with the applicant/2nd defendant to the variations amounting to USD 59,310.21 (US$ Fifty Nine Thousand Three Hundred Ten and Twenty One Cents) only.”
Having gone through the relevant parts of the sub-contract (Annexure “A” to the plaint) explaining who the parties thereto were, it was not very clear to me on the pleadings how the 2nd defendant was related to Venture Communications (U) Ltd, the 1st Defendant. This is because in the sub-contract, it was stated that the client for whom the two sub-contractors, 1st and 2nd defendant were working was MTN, not Huawei. If there was a contract between MTN and Huawei, then it was never disclosed in the pleadings and the documents attached thereto what the terms of that contract were.
Moreover, it was never stated in the letter said to contain the admission (Annex “H”) that the sum of USD 59,301.21 was money that was due on account of variations that were done by the plaintiff. I say so because there were other sub-contractors hired by the 1st defendant such as S & J Construction who had sued the 1st defendant. To my mind the import of the admissions in the letter reproduced above was to absolve the 2nd defendant from the liability of accounting for monies that were paid to URA and S & J Construction on account of the 1st defendant, not that USD 59,301.21 was due to the plaintiff on account of the variations to the works. That then begs the question why Venture (SA) absolved the 2nd Defendant from liability? It does not seem to me that it could have been for any reason other than that Venture (SA) was somehow liable to make good those payments. And if Venture (SA) absolved the 2nd defendant from the responsibility of accounting for the monies paid to URA & S & J Construction, who would then be responsible for paying the costs of the variations in the works and the delay in payment? It would then appear to me that the intention of Venture (SA) was to leave Venture (U) its subsidiary out in the cold to meet the obligations but with no recourse to claim from the 2nd defendant.
I therefore found it difficult to understand how an admission by Venture Communications (Pty) of South Africa to 2nd defendant that variation orders issued were confirmed to be of the value of USD 59,310.21 could be to the benefit of the plaintiff. In fact what seems to have happened here was to the prejudice of the plaintiff as will become more apparent later on in this ruling. If Venture Communications (SA) would not claim for any of the money paid by the 2nd Defendant to URA, then by implication, Venture (U) the subsidiary company could not go against an estoppel affirmed by its parent company. The taxes were due and they were paid; and for Venture (SA) that put an end to the matter. Business with the 2nd defendant could now go on as usual as was indicated in the last paragraph of Annexure “H.”
In Momanyi v. Hatimy & Another [2003] 2 EA 600, the Court of Appeal of Kenya discussed the provisions of Order 12 rule 6 of the Kenya CPR which was then equivalent to our Order 11 rule 6. The court reproduced, with approval, an excerpt from Choitram v. Nazari [1984] KLR 327 where it was held:
“Admissions have to be plain and obvious, as plain as a pikestaff and clearly readable because they must result in judgment being entered. They must be obvious on the face of them without requiring a magnifying glass to ascertain their meaning. Much depends on the language used. The admission must have no room for doubt …”
Although the above is a decision of the Court of Appeal of Kenya, its effect is no different from the decision in Kibalama v. Alfasan Belgie CVBA (above). I am therefore unable to grant Mr. Kusaasira’s application for judgment on admissions in the manner that it was brought.
Nonetheless, I did find other facts on the pleadings that led me to believe that the 2nd defendant did admit a substantial part of the plaintiff’s claim. In paragraph 4 of the WSD the 2nd defendant stated that she had a contract with the 1st defendant that entitled 2nd defendant to question payments due from the 2nd to the 1st defendant. That agreement was not annexed to the WSD; neither was it produced as evidence in this application. And the only defence that the 2nd defendant intends to prove, according to the summary of evidence filed with the WSD, is that she was not a party to the contract between the plaintiff and the 1st defendant; therefore the suit does not disclose a cause of action against her.
But there is no doubt according to the sub-contract (Annexure “A” to the plaint) that the 1st defendant entered into the sub-contract with the plaintiff as an independent sub-contractor and she undertook that she did so as an independent sub-contractor. To that end clause 2.11 provided that the plaintiff would provide all the tools necessary to perform the sub-contracted works at its own cost. That if the plaintiff found it necessary to use tools or other items provided by the 1st defendant then the plaintiff would bear all the risk of loss or damage to the tools till they are returned to 1st defendant. In addition, any cost arising out of the use of such tools had to be paid by the plaintiff unless it was specifically agreed that the responsibility would fall on 1st defendant. And for the avoidance of doubt, clause 2.14 of the agreement specifically provided as follows:-
2.14 The Subcontractor and Venture Communications are independent contractors. All personnel furnished hereunder to provide the Subcontracted Works are employees of the Subcontractor, except as otherwise agreed by the parties, and are not Venture Communications employees or agents. Notwithstanding anything to the contrary herein the Subcontractor shall have exclusive control over its personnel, its labour and employee relationships and its policies related to wages, hours, working conditions and other employment conditions. …”
If the 1st defendant was an independent sub-contractor as stated, then the 2nd defendant had no business questioning what 1st defendant paid to its sub-contractors. This is especially so because variations to the works were agreed upon and judging from the fact that 1st defendant was an independent sub-contractor, what she paid to her sub-contractors would affect her profits. If she overpaid them, then her profits would no doubt be reduced.
That being the case, paragraph 4 of the WSD becomes an admission by the 2nd defendant of the facts pleaded by the plaintiff in paragraphs 7 and 8 of the plaint; that the 2nd defendant had no right to interfere in the performance of the contract between the plaintiff and the 1st defendant and therefore she was an accessory to the 1st defendant’s breach of the contract. This is especially so, because, excluding the fact that she denied that the plaintiff had a cause of action against her, the 2nd defendant did plead in paragraph 3 of the WSD that she was not a party to the contract between the plaintiff and the 1st defendant. If she was not a party thereto, then what right did 2nd defendant have to question payments due to the 1st defendant’s sub-contractor?
Moreover, the 1st defendant admitted liability for the breach as pleaded by the plaintiff by not filing a WSD. The 2nd defendant’s intimation in paragraph 5 (h) of the affidavit in support of this application that it was agreed between her and Venture Communications (SA) that there was an amount due on account of variation costs, though not specifically in favour of the plaintiff, seems to point to the same conclusion. I am therefore of the opinion that the said admission is “plain and obvious, as plain as a pikestaff and clearly readable;” it must therefore result in an order in favour of the plaintiff., not for the sum of USD 59,301.21 stated in paragraph 5(h) of the affidavit in support, but for a declaration that the 2nd defendant unlawfully interfered in the 1st defendant’s performance of the sub-contract.
Going back to the application to amend the WSD, the law relating to the amendment of pleadings is fairly settled though not without trouble. Order 6 rule 19 CPR provides that
“The court may, at any stage of the proceedings, allow either party to alter or amend his or her pleadings 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 questions in controversy between the parties.”
It is clear from the rule itself that the cardinal principles are two: the terms on which the amendment is allowed must be just, and all just amendments ought to be allowed to enable the court to determine the real questions in controversy in the dispute, not just any question that may arise in the suit. The courts have given various interpretations to the rule, the most comprehensive of which, and one that has been cited here, is the decision in Eastern Bakery v. Castelino where the Court of Appeal for East Africa ruled that the principles that apply to the amendment of plaints are similar to those that apply to amendments of statements of defence. The court summarised the principles thus:-
“… amendments to pleadings sought before the hearing should be freely allowed, if they can be made without injustice to the other side, and that there is no injustice if the other side can be compensated by costs: Tildesley v. Harper (1) (1878), 10 Ch. D. 393; Clarapede v. Commercial Union Association (2) (1883), 32 W.R. 262. The court will not refuse to allow an amendment simply because it introduces a new case: Budding v. Murdoch (3) (1875), 1 Ch. D. 42. But there is no power to enable one distinct cause of action to be substituted for another, nor to change, by means of amendment, the subject matter of the suit: Ma Shwe Mya v. Maung Po Hnaung (4) (1921), 48 I.A. 214; 48 Cal. 832. The court will refuse leave to amend where the amendment would change the action into one of a substantially different character: Raleigh v. Goschen (5), [1898] 1 Ch. 73, 81; or where the amendment would prejudice the rights of the opposite party existing at the date of the proposed amendment, e.g. by depriving him of a defence of limitation accrued since the issue of the writ: Weldon v. Neal (6) (1887), 19 Q.B.D. 394; Hilton v. Sutton Steam Laundry (7), [1946] K.B. 65. The main principle is that an amendment should not be allowed if it causes injustice to the other side. Chitaley p. 1313.”
The principle in Raleigh v. Goschen cited by the court in the excerpt above which was commended to me by counsel for the plaintiff in opposition of the defendant’s application is one that was discussed and relied on in Abdul Karim Khan v. Mohamed Roshan (above); that the court will hesitate to allow an amendment which introduces fresh matters into the pleadings or an amendment that creates an inconsistency on the pleadings.
The Supreme Court of Uganda did not depart from all the principles above when Tsekoko, JSC, summarised them in the Gaso case. Odoki JSC (as he then was) and Manyindo, DCJ (as he then was) concurred Tsekoko, JSC ruled that the basic principles that courts are enjoined to consider in applications of this nature are 4 as follows:
“1. The amendment should not work injustice to the other side. An injury which can be compensated by the award of costs is not treated as an injustice.
2. Multiplicity of proceedings should be avoided as far as possible and all amendments which avoid such multiplicity should be allowed.
3. An application which is made mala fide should not be granted.
4. No amendment should be allowed where it is expressly or impliedly prohibited by any law” (for example limitation of actions).”
The courts have in numerous instances explained the time-honoured principles above and in Jashbhai C. Patel v. B. D. Joshi (1952) 22 EACA 41, an authority that was cited by Mr. Kiiza for the 2nd defendant, the Court of Appeal for Eastern Africa (Sir Barclay Nihill, P.) ruled that
“… for instance, where the plaintiff has made a mistake an amendment, subject to an appropriate order as to costs, is normally allowed so that the real issues between the parties can be determined, unless some injury has been done to the defendant which could not be compensated for by costs. But the mistake must be capable of bona fide, honest explanation and in particular there must be no intention to mislead the Court.”
Nihill, P., referred to the decision in Steward v. The Northern Metropolitan Tramways Co., 54 L.T.R 35, where Pollock, B. explained, and I think it is useful to reproduce the relevant part of the decision here for strength of effect, that:
“The rule is examined and explained in Claparede v. The Commercial Union Association (32 W.R. 262). I said there, ‘The rule of conduct of the Court in such a case as this is that, however negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs: but if the amendment will put them into such a position that they must be injured, it ought not to be made.” That does not depart from the rule laid down by Bramwell, L.J. but it shows how far the court will go, as appears from the use of the expression ‘however negligent’ and ‘however late’. The rule is more closely stated by Bowen, L.J in the same case as follows: “The question is whether, if the slip is set right, so as to enable the right question to go to trial, the parties will be put in the same position they were in before the slip was made: for if so, that should be done. In most cases it is a question of costs.’ ”
Nihill, P. went on to observe that in “The Alert”, 72 LTR 124, the court identified two propositions that had to be considered. The first was that although it may be that the plaintiff was lax or forgetful in not putting his pleading in the form in which it should have been originally, if any harm arising from that can be compensated by costs, there is no reason for not allowing him to repair the error. The second proposition was that if the judge finds that owing to the mistake, or whatever it may have been, of the plaintiff, in not having put his pleadings right originally, there has been such an injury to the defendant (in this case the plaintiff) or such a change in the position of the defendant (plaintiff here) that he cannot get justice done then, of course, it is equally clear that such an amendment ought not to be allowed.
The other consideration that the court ought to have in mind is one that was sated in Cropper v. Smith, 26 Ch.D 700, where Bowen L.J said that the court also ought to consider whether there has been an attempt by the party applying to mislead the court. And finally, the circumstances in which amendments may be sought are various; a decision against an amendment in the particular circumstances of one case may be no ground for refusing leave in another.
The first question that needs to be determined about the application now before court is whether the failure to file the proposed amended WSD with it makes the whole application incompetent. Mr. Kusaasira referred me to the decision in Meru Farmers Co-operative Union v. Abdul Aziz Suleman to support the submission that the instant application was incompetent. However the decision was not helpful to his argument because it was there held that when an application is made for leave to amend, the particular amendment in respect of which leave is sought should be before the court; only in exceptional circumstances should a court give leave to amend without knowing the particular amendment for which leave was asked. That does not mean that the whole of the proposed amended pleading must before the court before an application to amend is considered.
For the 2nd defendant, Mr. Kiiza referred me to the decision in Uganda Cooperative Credit Savings Bank v. Muzei Kirya & Others [1960] EA 660 for the proposition that although the practice of showing proposed amendments to a pleading in red ink is desirable, failure to do so is not fatal to an application for amendment. It was also held in the same case that since the particulars of the proposed amendment were shown in the affidavit supporting the application, the application would be granted. But in the Gaso case, Tsekoko, JSC was of the view that the trial judge was justified when he criticised the omission to attach the proposed amendment to the application.
It is therefore my view that it is not only desirable but also prudent to attach the proposed amended pleading to the application for leave to amend. Submitting the pleading as it will appear when amended goes a long way in helping the other party, as well as the court, to see the effect of it compared to the original pleading instead of struggling to glean the effect by comparing the contents of the affidavit to the original pleading. It is also easier to determine whether the proposed amendment presents a contradiction or inconsistency in the party’s original pleading as a whole.
And though the CPR do not require that the proposed amendment be filed, and the failure to attach it to the application does not make an application incompetent, it has been the practice in the courts for more than a century, and a good one at that, which counsel in present times desire to relegate to inconsequence, as they would other good practices such as courtesy to counsel for the opposite party and the court. In the instant application, though the proposed amended WSD was not attached to the application, there was ample information to enable the court establish what was meant to be added to the pleading. The application was therefore far from incompetent and I will consider it in substance.
Going on then to the question whether the proposed amendment is necessary to dispose of the issues between the plaintiff and the 2nd defendant, I am in great doubt that it is. The plaintiff’s claim against the 2nd defendants is very specific and contained in paragraphs 7 and 8 of the plaint. While the 1st defendant had agreed to pay USD 41,508.77 to the plaintiff for justified variations to the works, the 2nd defendant who was a stranger to the contract between plaintiff and 1st defendant stopped the payment. This was not because it did not hold any monies due to the 1st defendant but because 2nd defendant alleges she had a right to question the payment.
Now, what the 2nd defendant wants to add to the WSD is that though she had the 1st plaintiff’s money on account of the contract at the time that the 1st defendant proposed to pay the plaintiff, she no longer has it because she paid it to URA. That she did so in response to an agency notice that was served on her and which she had a legal obligation to honour. It is my view that in order to ascertain whether the proposed amendments are necessary in this case, the time at which the 1st defendant proposed to pay the plaintiff and that at which URA demanded for the taxes due to her from the 1st defendant, vis--vis the filing of the suit in court are very important.
The plaintiff filed this suit on 19/05/2010. The payments that the 2nd defendant says she was ordered to make on account of the suit between the 1st defendant and S & J Construction Ltd. occurred around 10th and 11th March 2010. The Agency Notice that is referred to by the 2nd defendant to collect taxes due from the 1st defendant was issued on 4/02/2010. The 2nd defendant eventually complied with the agency notice and paid the monies held on account of the 1st defendant on 28/05/2010. However, the documents attached to the plaint to prove the quantum of the plaintiff’s claim indicate that the works were completed in 2008, or at the most in 2009 and I believe that is when payment was due. But the 2nd defendant held onto the money till it was claimed and paid to other persons. It is therefore my opinion that the facts relating to the payments to S & J Construction and URA would not be pertinent to determining whether the 2nd defendant’s withholding of the monies due to the plaintiff wronged her or not. That amendment is therefore of no consequence in deciding the question that remains outstanding in the suit.
It was averred in paragraph 4 of the affidavit in support that the agency notice and the court orders attached to the affidavit contained new facts that came to the knowledge of counsel for the 2nd defendant when they received instructions to defend the suit. But as mentioned above, the agency notice was issued to the 2nd defendant on or around the 4/02/2010. On 8/04/2010 2nd defendant wrote to URA in response to the agency notice (Annexure “G” to the affidavit in support). In the said letter, Mr. Muhammad Luwalira the Legal Officer of the 2nd defendant and the deponent of the affidavit in support in this application, stated that the plaintiff had filed a suit against 2nd defendant in this court. Further that the 2nd defendant was embroiled in legal battles with other persons who sought to enforce court orders against the 1st defendant. As to why the 2nd defendant who filed her own WSD on 6/04/2010, which was signed by the same Mr. Luwalira, did not plead those facts in the WSD remains a mystery. I was therefore not persuaded by Mr. Kiiza’s argument that the facts were new and they were not included in the WSD because the 2nd defendant did not then have the benefit of the advice of an advocate.
As to whether the proposed addition to the WSD is inconsistent or contradictory to 2nd defendant’s previous defence, the gist of the 2nd defendant’s WSD as contained in paragraphs 3 and 4 thereof was to the effect that the plaintiff had no cause of action her because she was not party to the contract in issue. But by virtue of a contract between the defendants, 2nd defendant asserted that she had the right to question payments to be made by 1st defendant on account of the contract between 1st defendant and the plaintiff.
If it is the 2nd defendant’s case as pleaded in paragraph 5 (h) of the affidavit in reply that Venture Communications (SA) would have allowed the 2nd defendant to release up to USD 59,310.21 to the 1st defendant on account of the variations claimed to have been made according to their contract, then the 2nd defendant’s amendment would be contrary to what was pleaded in the initial WSD. It would amount to saying, “I have now been allowed to release up to USD 59,310.21 on account of the variations but I no longer have any money on account of the 1st defendant because I paid shs. 158,575,322/= to URA on behalf for taxes due from her. I therefore do not have the money to pay over to the 1st defendant so that she can meet her obligations to you.”
That being the case, the 2nd defendant’s WSD was evasive and she intends to make it more so by the proposed amendment. I am also of the view that allowing the 2nd defendant to plead facts that were within her knowledge when the WSD was first filed now would amount to allowing her to change the gist of her defence. In addition, I was led to believe that by seeking to amend the WSD in the manner that she did, the 2nd defendant hoped to escape liability for any injury that may have been occasioned to the plaintiff by her questioning the payments due from the 1st defendant to the her.
That, no doubt, indicates bad faith on the part of the 2nd defendant, given the fact that Venture (SA) confirmed that she was estopped from making any claims for the refund of the monies paid to URA and S & J Construction. That would then mean that even though judgment has been obtained against the 1st defendant, she can no longer go back to the 2nd defendant to claim any more monies in respect of sub-contract No. PAUGA4Y0860501JLC between the plaintiff and the 1st defendant. The plaintiff would then be left with no person from whom to recover the valid expenses that accrued from the variations that she executed on the instructions of the 1st defendant at her own costs. In effect, the plaintiff would be non-suited in respect of both the 1st and 2nd defendant. And the loss of a claim for USD 41,508.77 cannot be compensated by any amount of costs payable for this application. It is therefore not true, as stated in paragraph 7 of the affidavit in support that the proposed amendment would not be prejudicial to the plaintiff in any way.
In conclusion, the application to amend the WSD is dismissed with costs to the plaintiff. A declaration on admission is entered for the plaintiff that the 2nd defendant unlawfully interfered in the 1st defendant’s performance of the contract between her and the plaintiff. The suit shall therefore be set down for proof of the special damages and interest claimed, as well as for assessment of general damages.
Irene Mulyagonja Kakooza
JUDGE
29/06/2010
