THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO 534 OF 2012

MITER INVESTMENTS LIMTED}........................................................ APPLICANT

VERSUS

EAST AFRICAN PORTLAND CEMENT COMPANY LTD}................... RESPONDENT

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicant applied for review of the ruling of this court under section 33 of the Judicature Act, sections 82 and 98 of the Civil Procedure Act and orders 46 rules 1, 2, 3 and 8 of the Civil Procedure Rules. The ruling was made in Miscellaneous Application number 336 of 2012, in the applicant’s application for unconditional leave to appear and defend High Court civil suit number 205 of 2012 being a summary suit which had been brought against the applicant by the respondent.

The grounds for the application are that the conditional grant of leave for the applicant to appear and defend civil suit number 205 of 2012 is onerous and unjust to the applicant. Secondly that it would be in the interest of substantive justice if the honourable court reviewed or varied the ruling. The application is supported by the affidavit of Peter Abaliwano, one of the directors of the applicant. The applicants case is that High Court civil suit number 205 of 2012 was a claim against it for Uganda shillings 327,214,000/= from an alleged credit supply of cement to it. The suit by the respondent was by summary procedure and the applicant applied therein for unconditional leave to appear and defend the suit. On the 24th day of August 2012 the court granted conditional leave for the applicant to appear and defend the suit. The applicant was ordered to deposit Uganda shillings 121,000,000/= within two weeks from the date of the ruling. Secondly the applicant was granted leave on condition to file a defence within 14 days from the date of the order on 24th of August 2012. Thirdly the court ordered that an auditor is appointed by the parties to reconcile the accounts of the parties relating to the claim in the suit. The sum ordered by the court cannot be raised by the applicant within the timeframe set by the court and was onerous. The applicant is willing and ready to abide by any court orders consequent upon unconditionally hearing the suit on the merits. The conditional leave granted constituted sufficient cause to warrant the review or variation of the ruling of the court.

The respondent opposed the application and the affidavit in reply to the application was sworn by Benjamin Mwenda. The gist of the reply is that the honourable court has discretion to set conditions for the grant of leave to appear and defend the suit and such a condition does not constitute part or any determination of the merits of the suit. The exercise of that discretion can be challenged through an application for review. The respondent contended that the application was a delay tactic by the applicant because the time specified in the order within which to deposit the security had long expired. It was apparent that the applicant was unable to raise security. Lastly the application for review had been delayed and the court ought to dismiss the applicant’s application with costs.

The applicant was represented by Counsel Frederick Samuel Ntende while the respondent was represented by Counsel Absalom Mubandizi.

The gist of the submissions in support of the application is that section 33 of the Judicature Act gives this honourable court wide discretion to make such orders as are necessary in the interests of justice and to avoid a multiplicity of proceedings. Furthermore section 82 of the Civil Procedure Act empowers the court to review any decision on the application of a person aggrieved by the order. Counsel referred to Sakar on the Code of Civil Procedure 1908 for a discussion of the three instances where the court may review the judgement. The first ground is for error apparent on the face of the record. The second ground is for any sufficient reason and where no appeal has been preferred. A review does not of necessity reopen questions already decided between the parties. The matter in issue can only be opened after the court accepts the review. As far as appeals are concerned, the matter is reopened as soon as the appeal is admitted. The power of review is therefore restricted. The applicants counsel submitted that the applicant is not seeking to reopen the decision of the court. The only question is whether it is possible to vary the decision? The question is whether time can be enlarged and alternative security given. Counsel further prayed that court finds that on the basis of the evidence there is sufficient reason to reconsider and vary the decision of the court. The sufficient reason is the burden to deposit Uganda shillings 121,000,000/= in court. The effect of the order to deposit a sum of money is that judgement would be entered against the applicant who cannot pay. The effect of the review order would make it possible for the applicant to effectively defend the main suit.

In reply the respondents counsel submitted that under section 82 of the Civil Procedure Act, a review can be entertained on three grounds. The first ground is error apparent on the face of the record. The second ground is the discovery of any new matter of evidence which was not and could not be within the knowledge of the applicant. The third ground is for any sufficient cause. The respondents counsel contended that the applicant's application is on the ground of sufficient cause. The gist of the ground and the supporting evidence is that the order to deposit security is unfair or onerous. This is not a sufficient cause under section 82 of the Civil Procedure Act and order 46 rules 1 and 2 of the Civil Procedure Rules. Counsel submitted that sufficient cause is analogous to the first two grounds under order 46 of the CPR. It must be of the same kind as an error apparent on the face of the record or the discovery of any new matter of evidence. In the applicants case the court exercised discretion under order 36 rules 8 of the Civil Procedure Rules. The condition was imposed on the ground that the applicant had issued post dated cheques. An exercise of discretion cannot be challenged by way of review. Counsel referred to the case of Eastern and Southern African Development Bank versus African Greenfields [2002] EA where it was held that an exercise of discretion cannot be challenged through the review process though it can be appealed. The time for deposit of security expired and the applicant did not seek to extend the time within which to deposit security. Consequently the implication is that the applicant wants the order vacated in which case it ought to have appealed and not applied for review. It is also apparent that the applicant is unable to raise the money and therefore cannot comply as evidenced from paragraph 9 of the affidavit in support of the application. Counsel concluded that the applicant’s application is just a delaying tactic and prayed that it is dismissed with costs.

In rejoinder the applicants counsel submitted that section 82 of the Civil Procedure Act outlines the circumstances a review is to be considered and order 46 rule 1 gives the grounds. The ground of sufficient reason is not found in section 82 of the Civil Procedure Act but is mentioned and order 46 of the Civil Procedure Rules. What amounts to sufficient reason has to be analogous to the two grounds provided for under order 46 rules 1 of the Civil Procedure Rules. The phrase "any other sufficient reason" is any other ground on which independent grounds can be advanced. As far as the failure to apply for extension of time is concerned the notice of motion and affidavit in support shows that there was insufficient time to comply with the order. Paragraph 7 and 9 of the affidavit in support demonstrated this. The applicant is not asking the court to vacate the order. The underlying reason is that the applicant seeks a right to be heard and that is sufficient reason. Without review there is a risk that the applicant will be excluded from the trial. In the event that the court finds that there are no grounds, the court can rely on section 33 of the Judicature Act to make the necessary orders.

In further reply to the additional submission of the applicants counsel contended that section 33 of the Judicature Act is only applicable and can be invoked during proper proceedings. This is an application for review and there are other avenues in the law such as an appeal. The applicant and cannot invoke section 33 of the Judicature Act.

Ruling

I have duly considered the applicants application, and the affidavits in support and opposition to the application and submissions of Counsels for the parties. The only question to be considered as far as grounds for review are concerned is whether the applicant's raises sufficient reason/s for review of the conditional leave to file a defence.

The applicants grievance is with the order of the court for the applicant to deposit a sum of Uganda shillings 121,000,000/= within two weeks from 24 August 2012. Apparently and from the evidence and submissions, it is clear that the applicant is unable to raise the money.

I agree with the respondents submission that when the court made an order for the applicant to deposit of Uganda shillings 121,000,000/= it was exercising its discretionary power vested in it by order 36 rule 8 of the Civil Procedure Rules which provides as follows:

"Leave to appear and defend the suit may be given unconditionally, or subject to such terms as to payment of monies into court, giving security, or time or mode of trial or otherwise, as the court may think fit."

In this particular case the applicant was ordered to pay monies into court. The discretionary power was exercised after review of the applicant's application for unconditional leave to appear and defend the suit. It transpired that the applicant had issued several cheques to the respondents which had bounced. At page 7 of the ruling the court held that the issue of post dated cheques puts the entire controversy in another perspective. The court relied on the case of Kotecha versus Mohammed [2002] 1 EA 112 where the Court of Appeal of Uganda held that in a summary suit the applicant has to show bona fide triable issues. They further observed that the situation is different if the plaintiff sues upon a bill of exchange. A bill of exchange such as a cheque is to be treated as cash. The holder is entitled in the ordinary way to judgement. It does not matter that the defendant has a cross claim for damages. The buyer must raise those in a separate action. The court further observed in that ruling that the only defence that the applicant had to the cheques was that 8 of the cheques were not presented for payment and could not found a cause of action against the applicant. The face value of the cheques which had not been presented for payment was Uganda shillings 106,704,000/=. The respondents suit by way of summary procedure was for a sum of Uganda shillings 327,249,000/=. It was in those circumstances that conditional leave was granted for the applicant to appear and defend the suit.

I have further considered the submissions that a decision made in the exercise of the discretion of the judge cannot be reviewed. For this submission, learned counsel for the respondent relied on the case of Eastern and Southern African Development Bank v African Green Fields Ltd and others [2002] 2 EA 377 decided by the High Court of Kenya Commercial Division. In an application for review the court noted that the order sought to be reviewed was an improper exercise of a judge's discretion. Ringera J relied on the Kenyan Court of Appeal decision in National Bank of Kenya v Ndungu Njau [1996] LLR 469 (CAK) at page 381 to hold:

“In my discernment, an order cannot be reviewed because it is shown that the Judge decided the matter on a foundation of incorrect procedure and/or that his decision revealed a misapprehension of the law, or that he exercised his discretion wrongly in the case. Much less could it be reviewed on the ground that other Judges of coordinate jurisdiction and even the Judge whose order is sought to be reviewed have subsequently arrived at different decisions on the same issue. In my opinion the proper way to correct a judge’s alleged misapprehension of the procedure or the substantive law or his alleged wrongful exercise of discretion is to appeal the decision unless the error be apparent on the face of the record and therefore requires no elaborate argument to expose.”

I generally agree with the principles enunciated by the High Court of Kenya. However these provisions consider the rules and not the enabling provisions of the Kenyan Civil Procedure Act. Furthermore, in this case the applicant is not challenging the exercise of the discretion of the court. The applicant has simply applied for variation of the terms imposed upon it. The applicant’s problem is that it cannot raise the security ordered by the court to be deposited as a condition for defending the suit on merits.

Secondly the court had given the applicant leave to appear and defend the suit on the basis that part of the controversy disclosed bona fide triable issues (other than the deposit which approximately represents the face value of bounced cheques). The applicant upon failure to pay the requisite deposit ordered by court would be unable to proceed to defend itself. I have tried to consider the various rules dealing with deposit of security. Starting with order 36 of the Civil Procedure Rules, rule 11 envisages a setting aside of a decree issued in the summary suit in case the court is satisfied that service of the summons was not effective or for any other good cause. In such cases, the suit would have proceeded and judgement issued either under order 36 rules 3, 5, 6 or 7 of the Civil Procedure Rules. Order 36 rules 11 only applies after the decree of the court has been issued. I have further considered order 26 of the Civil Procedure Rules. It strictly applies to applications for the plaintiff to furnish security for the payment of all costs incurred by any defendant. It does not apply to a situation where the defendant is required to deposit money. Order 27 on the other hand deals with payment into court by a defendant. It also makes reference to payment under the order of the court pursuant to order 36 of the Civil Procedure Rules before filing a defence. Last but not least order 40 deals with attachment before judgement and is not relevant. Order 40 deals with applications where it is shown that the defendant with intent to delay the plaintiff or to avoid any process of court or to obstruct or delay execution of any decree that may be passed against him or her has absconded or left the local limits of the jurisdiction of the court, was about to abscond or leave the local limits of the jurisdiction of the court, or has disposed of or removed from the local limits of the jurisdiction of the court his or her property or any part of it or is about to leave Uganda under circumstances affording a reasonable probability that the plaintiff may be obstructed or delayed in execution of any decree that may be passed against the defendant.

The situation of the applicant is quite different from any of the above scenarios. The order for deposit does not decide the liability of the applicant and the suit was for trial. So would it be a denial of justice if the applicant is not heard in defence of the suit? Generally speaking section 82 of the Civil Procedure Act has been held by the Supreme Court to be of wider import than order 46 rules 1 and 2 of the Civil Procedure Rules and restrictions or limitations imposed by order 46 rules 1 and 2 of the rules do not apply to section 82 of the Act (See UCB vs. Mukoome Agencies [1982] HCB 22). A similar decision can be found in the Kenyan case of Sadar Mohamed vs Charan Singh [1959] 1 EA 793 where Farrell J held that section 80 of the Civil procedure Ordinance which is in pari materia with the Uganda section 82 of the Civil Procedure Act gave the court unfettered discretion and  the applicant unfettered right to apply for review. He said:

“In terms this section confers an unfettered right to apply for review in the circumstances specified and an unfettered discretion in the court to make such order as it thinks fit. The omission of any qualifying words at the beginning of the section appears to have been deliberate”

Section 82 of the Ugandan Civil Procedure Act provides as follows:

            "Any person considering himself or herself agreement –

(a) by a decree or order from which an appeal is allowed by this Act, but from which no appeal has been preferred; or

(b) by a decree or order from which no appeal is allowed by this Act, may apply for a review of the judgement to the court which passed the decree or made the order, and the court may make such order on the decree or order as it thinks fit."

In this case, there was an order and the question is whether an appeal is allowed from that order as far as subsection (a) is concerned. Section 76 (1) (h) of the Civil Procedure Act and paragraphs (a), (b), (c), (d), (e), (f) and (g) set out the orders of court from which an appeal is allowed by the Act. Furthermore paragraph (h) includes any order made under the Civil Procedure Rules from which an appeal is expressly allowed by the rules. Order 44 rule 1 (1) sets out the orders from which an appeal shall lie as of right under section 76 of the Civil Procedure Act. It does not include any orders under order 36 of the Civil Procedure Rules under which the order sought to be reviewed was made. In other words section 82 (a) is inapplicable as no appeal is allowed by the Act. Secondly under section 82 (b) any person considering himself or herself aggrieved by an order from which no appeal is allowed by the Act is permitted to apply for review of the judgement to the court which passed the order. The intention of section 82 of the Civil Procedure Act seems to be to provide for an avenue for any person considering himself or herself aggrieved by an order or decree from which that person has not preferred an appeal where an appeal has is allowed by the Civil Procedure Act or where an appeal is not allowed by the Civil Procedure Act to apply to the court to review the order or decree. Failure to appeal a decision will not shut somebody out provided the person considers himself or herself aggrieved by an order or decree. The fact that there could be grounds of appeal from the decision of the court is not a bar to an application for review of the judgement. It cannot therefore be generally said that an appeal should be the proper remedy provided there are grounds for review of the judgement.

The question is whether the section should be strictly construed according to the express limitations provided for under order 46 rules 1 of the Civil Procedure Rules. The limitations are that the application should disclose a discovery of new and import matter or evidence which after the exercise of due diligence was not within the knowledge of the person considering himself or herself aggrieved or could not be produced by him or her at the time when the decree or order was made. Secondly any person who considers himself or herself aggrieved on account of some mistake or error apparent on the face of the record or for any other sufficient reason may apply for review of the judgement. Counsels submitted on whether there was any sufficient reason to bring the application for review. Any sufficient reason has to be a reason analogous to the first two grounds for review.

The High Court has powers under section 82 (b) of the Civil Procedure Act to review any order made under order 36 rules 8 of the Civil Procedure Rules in an application filed by an aggrieved person or to use the phrase in the section by any person considering himself or herself aggrieved by the order. Secondly the phrase “any person considering himself or herself aggrieved” has been judicially interpreted and the interpretation can guide this court in arriving at a decision. The phrase appears under section 82 of the Civil Procedure Act as well as order 46 rule 1 (1) of the Civil Procedure Rules. In Mohammad Alibhai versus W.E. Bukenya Mukasa & Others S.C.C.A. No. 56 of 1996 and Hussein v Kakiiza and another [1995–1998] 2 EA 135the Supreme Court held that a person considering himself or herself aggrieved includes a third party who was not a party to the proceeding where the order or decree was issued.  In Mohammed Allibhai v W.E Bukenya, Departed Asian property Custodian Board (Civil Appeal No.56 Of 1996) Odoki JSC as he then was held that:

“It is I think well established that while a third party may applyfor review under the above provisions, the party must establish that he is an aggrieved person. A person considers himself aggrieved if he has suffered a legal grievance.”

In Re: Nakibubo Chemists [1979] HCB 12 the term “any person considering himself aggrieved” was held to mean a person who has suffered a “legal grievance”. “Legal grievance” was defined in the case of Ex parte side Botham in re Side Botham (1880) 14 Ch. D 458 at 465 per James L.J as follows:

“But the words “person aggrieved” do not really mean a man who is disappointed by a benefit which he must have received if no other order had been made: A person aggrieved must be a man who has suffered a Legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully affected his title. 

The phrase “person aggrieved” has been held to be of wide import by Lord Denning in Attorney General of Gambia vs. N’jie [1961] AC p 617 at page 634:

“the definition of James L.J. is not to be regarded as exhaustive. Lord Esher M. R. pointed out in ex parte. Official Receiver in re Reed, Bowen & Company that the words “person aggrieved” are of wide import and not subject to a restrictive interpretation. They do not include of course a mere busy body who is interfering in things, which do not concern him, but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests.

The words "person aggrieved" if he had by the Administrative Law decision is in considering the question of locus standi. I do not think that the definition under Administrative Law is different from that under section 82 of the Civil Procedure Act. Order 46 rule 1 of the Civil Procedure Rules puts a restrictive interpretation to section 82 of the Civil Procedure Act. Judicial authorities have held that a party applying for review need not be a party to the proceedings in order to be a person aggrieved by the order. In other words the order or decree may have been made against some other person but affect the interest of the party applying for review of the decree or order.

In the affidavit in support of the applicant’s application paragraph 4 thereof the deponent avers that the applicant does not owe any money to the respondent. In view of the cheques which had been issued to the respondent and which advanced, the court cannot reconsider its order granting conditional leave because it reflects the state of the law as decided by the Court of Appeal that a cheque should be treated as cash.

In paragraph 7 the applicant avers that it cannot raise the money within the time set by the court for it to be able to present its defence. In as much as the court set a time limit for the applicant to file its defence and deposit security on the basis of cheques it issued and which bounced and in line with the decision of Ugandan Court of Appeal case of Kotecha vs. Mohammad [2002] 1 EA 112, that the respondent is entitled to money on the face of the bounced cheques, the applicant is not challenging the decision of the court per se. I have considered other factors as relevant. Furthermore I am mindful of the fact that it is an offence under the laws of Uganda to issue a cheque without the corresponding amount stated on the face of the cheque in the account of the drawer. The court has a very narrow scope or avenue to review the order. This narrow scope can only deal with the terms of deposit of security. The respondent would not be prejudiced because the money was going to be deposited in court and there is nothing to stop the respondent from seeking an appropriate remedy in the High Court on the basis of the cheques which bounced. In other words deposit of the security court would not immediately put the money in the pocket of the respondent.

The crux of the issue is that the applicant cannot be heard without a deposit of the security. It is a principle of procedural justice that all parties should as far as possible be heard according to the principles for fair hearing enshrined in articles 28 (1), 44 (c) and 126 (2) (a) of the Constitution. The filing of a defence by the applicant will not prejudice the right of the respondent to seek other remedies from the court on the merits of the bounced cheques. The applicant will be given an opportunity to present that defence by filing a written statement of defence notwithstanding the earlier order of the court before a hearing of the defence. I have further strictly construed the order of the court for the applicant to deposit some money which I quote for ease of reference:

“However in light of the dishonoured cheques, the court will grant conditional leave to the Defendant.  In the circumstances the following orders shall issue:

1. The Defendant shall deposit in court a sum of Uganda shillings 121,000,000/= which sum shall be deposited within two weeks from the date of this order.

1. The Defendant is granted leave on the above condition to file a defence within 14 days from the date of this order.

1. Order 36 rules 10 of the Civil Procedure Rules permits the court, where leave whether conditional or unconditional is granted, to give all directions and make all orders as to pleadings, issues, and further steps in the suit as may appear reasonable or necessary. Accordingly it is the direction of this court that the parties shall agree on an independent auditor to reconcile the accounts of the parties relating to the claim in the suit within one month from this order failure for which the court shall appoint an auditor after the parties have forwarded three names that they will have agreed upon to the court for that purpose.”

The order to file a defence within 14 days and the order to deposit Uganda shillings 121,000,000/= within two weeks does not ipso facto indicate which one is to come earlier. The applicant was at liberty to file his defence within seven days but did not do so. I have further considered the provisions of order 36 rules 10 of the Civil Procedure Rules which provides as follows:

"Where leave, whether conditional or unconditional, is given to appear and defend, the court shall have power to give all directions and make all orders as to pleadings, issues, and any further steps in the suit as may then appear reasonable or necessary, or may order the suit to be immediately set down for hearing."

Order 36 rule 8 permits the court to give the terms of payment of monies into court. In this case the court ruled that payment was to be made within 14 days. Having considered all the issues surrounding the application for review, the question is whether the court can vary the terms of payment of the security ordered.

The applicant has pleaded that its right to be heard would be violated by the order a fact which was not in issue because the circumstances of the applicant were not taken into account in the submissions of the counsels and ruling of the court at the time the court reached the decision to grant conditional leave on the terms in the order.

In the circumstances, the order for the applicant to furnish a sum of Uganda shillings 121,000,000/= will not be reviewed but the terms of payment may be reviewed and the order will be varied as follows:

1. The Applicant will file its defence within seven days from the date of this order.

1. The order that the parties agree to an independent auditor to reconcile the accounts of the parties relating to the claim will be varied as follows: the registrar shall within seven days of this order in consultation with the parties appoint an auditor to reconcile the accounts of the parties relating to the claim in the suit. The parties shall submit all the relevant documents and make representations to the auditors within two weeks from the date of appointment of an auditor by the registrar. Thirdly the auditors shall submit their report within one month from the date of appointment.

1. The order for deposit of security by the applicant shall be stayed until after the auditors have submitted their report to the court and the parties.

1. The deposit ordered by the court shall abide the outcome of the audit report pursuant to a reconciliation of the accounts of the parties.

1. If the audit report does not resolve the controversy between the parties, then the defence of the applicant shall be subject to the deposit of security. Furthermore in the event that the audit report does not resolve the dispute, the security ordered for deposit of Uganda shillings 121,000,000/= may be offered in an alternative form as may be determined by the registrar of the court i.e. by bank guarantee, deposit of title deeds etc.

1. The costs of this application shall be borne by the Applicant.

Ruling delivered in open court on 3 May 2013

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Barbara Rwobusheru holding brief for Patrick Alunga counsel for respondent,

No body for the applicant

Charles Okuni: Court Clerk

Christopher Madrama Izama

Judge

3^rd May 2013