Application to strike out a plaint for not disclosing a cause of action against the 2^nd defendant

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISCELLANEOUS APPLICATION NO. 825 OF 2013

(ARISING FROM CIVIL SUIT NO. 557 OF 2012)

SOLOMON CHAPLAIN LUI::::::::::::::::::APPLICANT/2^nd DEFENDANT

VERSUS

TEKPLAN LIMITED::::::::::::::::::::::::::::::::RESPONDENT/PLAINTIFF

Brief facts

This application was brought under Order 6 rule 30 and Order 52 rules 1 & 2 of the Civil Procedure Rules (CPR) as well as Section 101 (I supposed counsel meant section 98) of the Civil Procedure Act (CPA). It is seeking for orders that the plaintiff/respondent’s plaint against the 2^nd defendant/applicant be struck off the record, the suit against him be dismissed with costs and the costs of the application be provided for.

The background to this application is that the respondent company entered into building contracts with another company, M/S Rock City Investments Ltd, the 1^st defendant in the main suit. In those transactions the 1^st defendant was represented by the applicant herein who signed on the building contract documents as chairman and managing director of the 1^st defendant. Arising from the alleged breach of contract the respondent sued both the applicant and the 1^st defendant but the applicant contends that he was wrongly joined as party in the main suit as there is no cause of action against him.

Affidavit- false hood- supporting affidavit containing falsehood- whether can lead to dismissal of the application.

Company law-directors- whether director who signed a contract on behalf of the company can be joined as a party to the suit.

Held

1. In determining the alleged defect of the affidavit in reply, I wish to observe that the defect of an affidavit on account of falsehood is treated more seriously than other defects because it affects the credibility of the evidence given by way of that affidavit. It would therefore, in view, have the effect of rendering the affidavit incurably defective. To that end, this court would be inclined to find so in this case if it is proved that the affidavit in support of this application and that in rejoinder contain falsehood.
2. All in all as regards the issue of falsehood, I am unable to agree with the respondent that the applicant is stating obvious falsehood. I therefore decline to strike out the affidavit on that basis. I would instead give the applicant the benefit of the doubt and find that there is no obvious falsehood in the affidavit as alleged. I now proceed to determine the application on the merits.
3. On the basis of the above mentioned annextures, I agree with the applicant’s counsel that the applicant signed the contract documents not as a party to the contracts referred to but in his representative capacity as Chairman/Managing Director for the 1^st defendant, a limited liability company.
4. Following that principle, I find that the 1^st defendant, that was described in the plaint as a company incorporated in South Sudan, is a legal entity and thus distinct from its members such as the applicant. I also find that there is nothing in the plaint to bring this case within the ambit of the exceptions to the Salmon principle since the plaint does not allege nor do the annextures show fraud or improper conduct on the part of the company or its directors in the transaction in question.
5. It is my firm view that the allegation of fraud in this application does not give rise to a cause of action against the applicant/2^nd defendant in the main suit and as such does not justify retaining him as a party to the suit. The issue of fraud, in my view, cannot be raised in this application which is purely dealing with the question of cause of action and distinct corporate entity. However, the respondent is at liberty to bring an application for lifting of the corporate veil at an appropriate time if it can satisfy the conditions for doing so as established by judicial precedents.

The application was allowed with costs to be taxed after the disposal of the main suit.