THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCEALLANEOUS APPLICATION NO. 244 OF 2014

ARISING FROM CIVIL SUIT NO 204 OF 2014

CORONET GROUP LIMITED :::::::::::::::::::::::::::::::::::::APPLICANT

VERSUS

JUMA KITAAKA AND ANOTHER:::::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENTS

BEFORE THE HON. JUSTICE HENRY PETER ADONYO

This is an exparte application brought under Order 1 Rule 14 (1),(2) and (5) of the Civil Procedure Rules (CPR), Article 126 of the Constitution of the Republic of Uganda, 1995 and Section 98 of the Civil Procedure Act for orders  that a third party notice doth issue to the Respondent as a necessary party to the suit for the purposes of indemnifying or otherwise contributing to liability that may be imposed on the applicant in a claim by Stanbic Bank (U) Ltd against the Applicant arising from Civil Suit No. 204 of 2014.

The application is supported by an affidavit sworn by Mr. Chris Baine, the Applicant’s Executive Director. The gist of the grounds stated in that affidavit are that the 2^nd Respondent, Stanbic Bank and the Applicant entered into a Tripartite Agreement being a Collateral Management Agreement (herein after referred to as “CMA”) in which the Applicant was to hold finished processed coffee for and on behalf of the Bank as collateral/security for the Bank to finance the 2^nd Respondent to purchase unprocessed coffee which would later be processed and pledged to the Bank.

That with the knowledge of the Bank, the 2^nd Respondent would occasionally take some of the unprocessed coffee from the Applicant for processing and return it to the stores of the Applicant. However the Respondents on various occasions took coffee and neglected to return the processed coffee to the Applicant’s stores, which dilatory conduct contrary to the CMA resulted in the Bank incurring a loss of US$ 418,135 worth of coffee which it is claiming from the Applicant.

 Ms Sarah Kitaka, the director of the 2^nd Respondent and wife of the 1^st Respondent deponed an affidavit in reply which is on record and had been duly considered denying any liability.

Counsel for the Applicant filed written submissions which I have considered together with the relevant law and the authorities cited and relied upon.

Order 1 Rule 14 (1) of the Civil procedure Rules empowers this court to grant leave to a defendant, who claims to be entitled to contribution or indemnity against any person not a party to a suit, to seek orders to issue a third party notice to that person. The position of the law relating to third party notice was explained in the case of M/s Panyahululu Co. Ltd versus M/s New Ocean Transporters Co. Ltd & Others HCCS No. 523 of 2006 by Bamwine, J. (as he then was) who referred to an earlier exposition of that law in D.S.S. Motors Ltd v Afri Tours and Travel Ltd HCCS No. 12 of 2003 where he stated that:  “….I understand the law to be that in order that a third party be lawfully joined, the subject matter between the third party and the defendant must be the same as the subject matter between the plaintiff and the defendant and the original cause of action must be same. In other words the defendant should have a direct right to indemnity as such, which right should have, generally, if not always, arisen from contract express or implied”.

 I find no better position at the moment than concur with that restatement of the law. And thus relating it to the instant case, it is contended by the Applicant that it was the dilatory conduct of the Respondents, who were parties to the CMA from which the Bank’s claim stems, that led to the loss complained of.

Looking at the documents attached to the affidavit in support particularly Annexture “A”, I find that it confirms that the Applicant, the Bank and the Respondents were parties to the CMA with various obligations. Also Annexture “C5” shows that the Respondents would take coffee out of the Applicant’s warehouse and this position is further confirmed by subsequent correspondences  between the instant parties and are attached to this Application and marked Annextures “D” and ”E”.

On the basis of the Annextures to the Application and taking into account the law as stated above, I would find that the subject matter between the Applicant and the third party and that between the Plaintiff and the Applicant/defendant arise from the CMA of which the Respondents were parties and without the respondents being made parties to this suit, this court would not arrive to a just and proper decision.

For that reason, I am convinced that this is a proper case where a third party notice should issue.

Orders

In the circumstances, I am inclined to grant leave to the Applicant for the issuance of a third party notice to the Respondent and it is accordingly granted. I also order that the notice be filed within ten days from the date of this ruling.

This Order is issued at the High Court of Uganda, Commercial Division at Kampala, this 29^th day of May 2014.

HENRY PETER ADONYO

JUDGE