A.K.T Project Management Limited & 2 Others v DFCU Bank Limited (Miscellaneous Application 2046 of 2023) [2024] UGCommC 248 (21 June 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 2046 OF 2023 (ARISING OUT OF CIVIL SUIT NO. 397 OF 2020)**

## **1. A. K. T PROJECT MANAGEMENT LTD 2. KHATUNBHAI AMIRAL TAR MOHAMED**

**(Suing through her appointed**

**Attorney Nizarali Sayani)**

15 **3. ZAITOON TAR MOHAMED a.k.a NINA ::::::::::::::::::::::: APPLICANTS**

#### **VERSUS**

**DFCU BANK LIMITED ::::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT**

### 20 **BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA RULING**

#### Introduction

This application was brought by way of Chamber Summons under **Section 33 of the Judicature Act, Cap.13**, **Sections 22 and 98 of the Civil** 25 **Procedure Act, Cap. 71** and **Order 10 rules 12, 14 and 24 of the Civil Procedure Rules SI 71-1**, seeking orders that:

- 1. The Respondent produces the following source documents for inspection/discovery: - (a) 1st Applicant's loan application forms to the Respondent in 30 respect of the following loan facilities: - i. USD 1,400,000 (United States Dollars One Million Four Hundred Thousand Only) allegedly issued on 11th April, 2012.

- ii. UGX 1,400,000,000/= (Uganda Shillings One Billion Four Hundred Million Only) allegedly issued on 11th April, 2012. - iii. USD 2,250,000 (United States Dollars Two Million Two 10 Hundred Fifty Thousand Only) allegedly issued on 27th July, 2013. - (b) Loan offer letters issued by the Respondent to the Applicants in respect of the following loan facilities: - - i. USD 1,400,000 (United States Dollars One Million Four 15 Hundred Thousand Only) allegedly issued on 11th April, 2012. - ii. UGX 1,400,000,000/= (Uganda Shillings One Billion Four Hundred Million Only) allegedly issued on 11th April, 2012. - 20 iii. USD 2,250,000 (United States Dollars Two Million Two Hundred Fifty Thousand Only) allegedly issued on 27th July, 2013. - (c) Loan statements from the Respondent in respect of the following loan facilities: - - 25 i. USD 1,400,000 (United States Dollars One Million Four Hundred Thousand Only) allegedly issued on 11th April, 2012. - ii. UGX 1,400,000,000/= (Uganda Shillings One Billion Four Hundred Million Only), allegedly issued on 11th April, 2012. - iii. USD 2,250,000 (United States Dollars Two Million Two Hundred Fifty Thousand Only) allegedly issued on 27th July, 2013.

- 5 (d) Copies of Key Fact Documents (KFD) relating to all the loans duly signed by the customer, the Applicants in this matter. - (e) All the Applicants' account statements from inception in 2011 in relation to the loans in question. - (f) Deposit slips that were not included on the bank statements of the loans in question. - (g) Copies of the cheques not included on the bank statement of the 15 loans in question. - (h) Copies of evidence of the sale or disposal of the asset from the Respondent. - 20 (i) Copies of the credit card statements from the Respondent. - (j) Copies of amortization statements from the Respondent. - 2. Costs of this application be provided for.

#### Background

- 25 The background of the application is detailed in the affidavit in support deponed by Mr. Nizarali Sayani the 2nd Applicant's appointed Attorney, and is summarized below: - 1. That the 2nd Applicant is the Director of the 1st Applicant Company and an Administratrix of the estate of the late Amiraili Virji Tar 30 Mohamed vide Administration Cause No. HCT-00-FD-AC-146- 2013. - 2. That as an Administratrix of the estate of her late husband, she is the registered proprietor of the land comprised in LRV 4086 Folio 7 35 Okurut Close Plot 1A Kololo, Kampala and was duly entered in the

- 5 register of titles on 23rd September, 2013 under instrument No.00002096. - 3. That in or about 2012, the 1st Applicant through its Managing 10 Director, Amiraili Virji Tar Mohamed signed a debenture and a collateral further charge on the suit property in favour of Crane Bank Ltd to secure a loan amount of USD 1,400,000 and UGX 1,400,000,000/=. - 4. That the 1st Applicant serviced the loan and to the best of the Applicants' knowledge, the loan was fully serviced at the time of the then Managing Director Amiraili Virji Tar Mohamed's death. - 5. That sometime in 2013, after the demise of Amiraili Virji Tar Mohamed, the 2nd Applicant as the new Managing Director was coerced and duped by the then Crane Bank now DFCU Bank into 25 acknowledgement of the alleged outstanding sums of USD 2,250,000 from the previous loan of 2012, as a form of another loan facility issued by the Bank. - 30 6. That through their lawyers, the Applicants wrote a letter to the Respondent dated 12th February, 2019 requesting it to provide all source documents pertaining to the said loan of USD 2,250,000 which they refused to provide to date. - 35 7. That the 2nd Applicant believes that the documents sought are fully in the possession of the Respondent and if fully availed, will shed more light and substantiate the claim in the proceedings by the Applicants in **HCCS No.397 of 2020**.

5 8. That the said documents are necessary to answer the question in the main suit and for the Court to fairly dispose of the suit as well as get to the root of the whole inquiry.

In reply, the Respondent through Mr. Muhammad Kiwanuka Ssenoga its Legal Manager Litigation, opposed the application contending that:

- 10 1. The 1st Applicant as a customer of the Respondent is entitled to documentation relating to its loan accounts and the Respondent has no objection to providing the same upon payment of the necessary costs to acquire them as is ordinarily charged. - 2. The current application is unnecessary and is brought in bad faith or is a ploy by the Applicants to not only delay the main suit but also to obtain documentation without payment of the requisite fees to the Respondent. - 3. The 1st Applicant has never provided the Respondent with a notice of the documentation that it required from the Respondent as the 25 same would have been provided because the 1st Applicant is entitled to the same as a customer of the Bank. - 4. The documents sought for discovery in this application have 30 previously been provided to the Applicants and have been submitted to this Court on prior occasions. - 35 5. On 2nd September, 2020, the Respondent filed its amended written statement of defence wherein it attached various transaction documents including the loan offers, the loan agreements and extracts of the 1st Applicant's bank account statements, which are the same documents the Applicants seek in this application.

5 6. The Respondent is willing to avail all account documents that are in its possession to the 1st Applicant at a cost.

#### Representation

The Applicants were represented by Learned Counsel Monica Namuli of M/s Nsubuga & Co. Advocates and Legal Consultants while the 10 Respondent was represented by Learned Counsel Richard Bibangambah of M/s K&K Advocates.

Both parties were directed to file their written submissions which they did and the same have been considered.

#### Issues for Determination

- 15 1. Whether the Court should grant an order for discovery of the documents? - 2. What remedies are available to the parties?

Issue No. 1: Whether the Court should grant an order for discovery of the documents?

20 Applicants' submissions

Counsel for the Applicants first cited **Order 10 rules 12** and **14 of the Civil Procedure Rules** under which this application was brought and then relied on the case of *Simbamanyo Estates Ltd and Peter Kamya Vs Equity Bank Uganda Ltd and 4 others, Misc. Application No. 583 of*

25 *2022*, wherein the term discovery was defined as the process by which a party may obtain facts and information about its case from the adversary in order to assist its preparation in arguing the substance of the claims.

5 Counsel further relied on the case of *Angubua Peter Vs Housing Finance Bank Ltd and 3 Others Misc. Application No.434 of 2022* wherein the trial Judge cited the case of *Oluoch Vs Charagu [2003] 2 E. A 649* that laid down the prerequisites needed for an order of discovery to be made. The prerequisites are that; there is sufficient evidence that the documents 10 exist that the other party has not disclosed, the documents relate to the matter in issue in the action and there is sufficient evidence that the

documents are in the possession, custody or power of the other party.

On whether there is sufficient evidence that the documents in issue exist and that the other party has not disclosed the same; Counsel for the 15 Applicants submitted that as deponed under paragraph 12 of the affidavit in support, the Applicants believe that the documents being sought to be discovered in respect of the loan facility are supposed to be kept by the Respondent in their ordinary course of business. Further, that as stated under paragraphs 3 to 8 of the affidavit in reply, the Respondent confirms 20 that the documents exist and that they are aware that the Applicants are entitled to the same. On whether the said documents relate to the matter in issue in the action; Counsel for the Applicants relied on the case of *Simbamanyo Estates Ltd and Peter Kamya Vs Equity Bank Ltd and 4 Others (supra)* wherein the Court held that:

25 *"A document is 'material' if it is being offered to prove an element of a claim or defence that needs to be established for one side or the other to prevail."*

7 Counsel submitted that in the case before this Court, the Applicants filed **HCCS No.397 of 2020** and that one of the issues for determination is the 30 legality of the loan transactions allegedly issued to the 1st Applicant by the Respondent as seen under paragraphs 7 (d) and (e) of the plaint and

- 5 paragraph 9 of the affidavit in support of the application wherein the Plaintiffs/Applicants challenge the impugned loan on account of having been coerced and duped by the then Crane Bank now DFCU Bank Ltd, the Respondent. That all the documents sought to be discovered relate to the matter in issue in the action regarding the legality of the claimed loan 10 which will enable the parties and the Court to resolve the issue surrounding the legality of the loans. On whether there is sufficient evidence that the documents in issue are in the possession, custody or power of the Respondent; Counsel for the Applicants submitted that the Respondent confirmed that they have the documents and are willing to - 15 provide them at the Applicants' cost. Counsel further submitted that much as the Respondent asserts that the Applicants have to pay fees first before they are availed with the documents; providing documents in legal proceedings once ordered by the Court does not involve paying a fee. - Lastly, Counsel for the Applicants argued that much as some documents 20 were attached to the Respondent's written statement of defence/counterclaim in the main suit, the said documents are not certified copies and thus cannot be tendered in as per **Section 64 of the Evidence Act, Cap. 6** and **Sections 3 and 4 of the Evidence (Bankers' Books) Act, Cap. 7**.

#### 25 Respondent's submissions

In reply, Counsel for the Respondent submitted that the position of the law is clear that an order for discovery is discretionary and a fundamental consideration for its issuance is that the order must be necessary *ab initio* as was reiterated in the cases of *Dresdner Bank AG Vs Sango Bay* 30 *Estates Ltd (No.3) [1971] EA 326* and *Simbamanyo Estates Limited*

8 *and Peter Kamya Vs Equity Bank Uganda Ltd & 4 Others (supra)*.

5 That the law mandates the Court to issue an order only where it is necessary. Counsel referred to the case of *Simbamanyo Estates Limited & Another Vs Equity Bank Uganda Ltd and 4 Others (supra),* in which **Hon. Justice Stephen Mubiru** examined considerations for a Court to determine the necessity of an order of discovery or inspection when he 10 observed that:

"*In exercising that discretion, the Court will have regard to its proportionality to the needs of the case, considering the importance of the issues at stake in the suit, the amount in controversy, the parties' relative access to relevant information, the parties'* 15 *resources, the importance of discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit*."

Relating the above to the instant case, Counsel submitted that the 1st Applicant has not demonstrated that it lacked relative access to the 20 documents in issue hence the application is unnecessary and an abuse of Court process. Furthermore, Counsel submitted that the Court may order discovery where there is sufficient evidence that a Respondent has documents that have not been disclosed as per the case of *Angubua Peter Vs Housing Finance Bank (U) Ltd and 3 Others (supra).*

25 Counsel contended that in the present case, the Respondent previously disclosed various account documents of the 1st Applicant as part of the record of this suit. That in paragraphs 7 and 8 of the Respondent's affidavit in reply, it was deponed that on 2nd September, 2020, the Respondent filed its amended written statement of defence and attached various transaction 30 documents such as; a copy of the credit facility dated 11th April, 2012, a copy of extracts of the statement of accounts indicating that the loan - 5 amounts of USD 1,400,000 and UGX 1,400,000,000/= had been credited to the 1st Applicant's Dollar and Shilling accounts respectively on 12th April, 2012, a copy of the collateral third further charge agreement dated 17th April, 2012, a copy of an agreement dated 17th June, 2013 for a credit facility of USD 2,250,000, an extract of an account statement indicating - 10 that the loan disbursement was made on 20th June, 2013, a copy of an agreement dated 19th June, 2013 for a further debenture with a fixed charge over company assets including the movable assets and a copy of an agreement dated 27th July, 2013 for collateral further charge by which the suit property was pledged as security. Counsel further submitted that - 15 all the documents being sought have never been requested, as the request referred to by the Applicants was for loans advanced in 2012 and 2013.

In conclusion, Counsel for the Respondent submitted that the present application is unnecessary as all the account documents are available to the 1st Applicant upon payment of the requisite Bank fees.

20 Analysis and Determination

### **Section 22 (a) of the Civil Procedure Act** provides that:

*"Subject to such conditions and limitations as may be prescribed, the Court may, at any time, either of its own motion or on the application of any party-*

25 *(a) make such orders as may be necessary or reasonable in all matters relating to the delivery and answering of interrogatories, the admission of documents and facts and the discovery, inspection, production, impounding and return of documents or other material objects producible as* 30 *evidence."*

### 5 **Order 10 rule 12 (1) of the Civil Procedure Rules** stipulates that:

*"Any party may, without filing any affidavit, apply to the Court for an order directing any other party to the suit to make discovery on oath of the documents, which are or have been in his or her possession or power, relating to any matter in question in the suit."*

# 10 In the case of *Patricia Mutesi Vs Attorney General HCMA No. 912 of 2016*, **Hon. Justice Stephen Musota** (as he then was) defined discovery as:

*"… a category of procedural devices employed by a party to a civil or criminal action, prior to trial, to require the adverse party to* 15 *disclose information that is essential for the preparation of the requesting party's case and which the other party alone knows or possesses. It is a device used to narrow the issues in a law suit or obtain evidence not readily accessible to the Applicant for use at trial and/or ascertain the existence of information that may be* 20 *introduced as evidence at trial provided it is not protected by privilege.*"

It is therefore trite that, discovery must not be allowed to be used as a fishing expedition for the Applicant to build up an unsure case. (See: *John Katto Vs Muhlbauer A. G and Another HCMA No.175 of 2011.*) The 25 prerequisites for grant of an order for discovery were laid down in the case of *Simbamanyo Estates Ltd and Peter Kamya Vs Equity Uganda Ltd and 4 Others* **(supra***)* to include:

- 1) Relevancy and materiality. - 2) Not otherwise privileged or protected by law.

- 5 3) The document is in the Respondent's possession, custody, control or power; and - 4) Attempts to obtain the same voluntarily were futile.

In the matter at hand, the Applicants seek an order for discovery/inspection of the following documents: the 1st Applicant's loan 10 application forms in respect of loan facilities of; USD 1,400,000 allegedly issued on 11th April, 2012, UGX 1,400,000,000/= allegedly issued on 11th April, 2012 and USD 2,250,000 allegedly issued on 27th July, 2013; their respective loan offer letters and loan statements as well as copies of the Key Fact Documents relating to all loans in issue, all the Applicants' 15 account statements from 2011, copies of the cheques and deposit slips that were not included on the bank statement of the loans in issue, copies of evidence of the sale or disposal of the asset, copies of credit card statements and amortization statements from the Respondent. According to paragraphs 3 and 8 of the affidavit in reply, the Respondent does not 20 oppose the application and even acknowledges having the documents sought in this application. However, the Respondent contends that the Applicants never requested for the disclosure of the said documents and that the same were attached to the written statement of defence and can only be availed at a charge as per the normal banking procedures.

25 Under paragraph 10 of the affidavit in support, the 2nd Applicant states that through their lawyers; vide a letter dated 12th February, 2019, they requested the Respondent for the source documents relating to the loan of USD 2,250,000 but it refused to provide the same till to date.

12 It is now trite that a party seeking production of documents should 30 attempt to first obtain the adversary's voluntary cooperation by serving a notice to produce documents on the other party and then upon failure to

- 5 obtain voluntary cooperation, discovery may then be sought and a copy of the original request should be attached. (See: *Simbamanyo Estates Ltd and Peter Kamya Vs Equity Bank Uganda Limited and 4 Others (supra) at pg. 17 para 15-20)*. In the matter at hand, though the Applicants did not attach to the instant application the letter wherein they 10 sought for the documents, a perusal of the Court record shows that a copy of the "without prejudice" letter dated 12th February, 2019 addressed to the Respondent was attached to the plaint. In the aforementioned letter, the Applicants requested for the source documents of the loans and specific documents were requested for. - 15 The documents which were specifically requested for by the lawyers representing the Applicants vide their letter dated 12th February, 2019 are; the loan agreement, mortgage deed, contract of guarantorship, letter of sanction for the loan advanced in 2012, company resolutions authorizing the 2012 loan, the pre-loan valuation reports for 2012 and 2013 loans, 20 evidence of deposit of the loan amounts for both loans of 2012 and 2013, statement of accounts for the two loan accounts, advertisement of the property for the sale carried out in December, 2018, a notice of default and notices of intended sale served and received by the Applicants for the sale carried out in December, 2018. - 25 As portrayed, the documents sought in this application are not the same as the ones stated in the aforementioned letter. The only documents that were earlier requested for vide the letter dated 12th February, 2019 which are in the instant application are the statements of accounts. Therefore, no evidence shows that the Applicants requested for the documents listed 30 in the instant application and that the Respondent refused or failed to avail the same.

- 5 Besides that, some of the information requested for in this application was attached to the Respondent's amended written statement of defence/counterclaim. The Respondent under paragraph 7 of the affidavit in reply averred that the documents requested for were annexed to the amended written statement of defence as annexures (**A, D3, D4, E, F, G1,** - 10 **G2, H and I**). I have analyzed the said documents. Annexure "**A**" is a sanction letter of the credit facility dated 11th April, 2012 for USD 1,400,000 and UGX 1,400,000,000/=, "**D3** and **D4**" are statements of accounts dated 28th February, 2011 and 19th December, 2011 respectively, "**E**" is a collateral third further charge agreement dated 17th April, 2012 in 15 respect of the above facilities, "**F**", is a third further debenture agreement dated 17th April, 2012 in respect of the above facilities, "**G1**" is a sanction - letter for the credit facility of USD 2,250,000 dated 17th June, 2013, "**G2**" is a statement of account dated 28th February, 2011, "**H**" is a further debenture securing USD 2,250,000 dated 19th June, 2013 and "**I**" is a - 20 collateral further charge dated 27th July, 2013. In their submissions, the Applicants contend that though the above documents were attached to the amended written statement of defence/counterclaim, they are not certified and therefore cannot be tendered in as evidence during the trial. My view is that this cannot be faulted on the Respondent. Further, no evidence was - 25 adduced to show that the Applicants requested the Respondent to certify the documents upon payment of the requisite fees and that the Respondent refused. In addition, some of the requested records like the account statements are already on the Court record in the respective pleadings of the parties. - 30 The above notwithstanding, the Respondent averred that it does not object to the application and that the documents being sought will be availed upon payment of the necessary fees to acquire them as is ordinarily

5 charged. To this, Counsel for the Applicants submitted that the Respondent is only entitled to charge a fee for providing some of these documents like the bank statements in their ordinary course of business once requested for by the customer and before the institution of the suit however, that the Respondent is not entitled to any fee in providing 10 documents in legal proceedings once ordered by the Court.

I am alive to the fact that if a party is ordered by the Court to produce documents, they must do so without requesting for fees from the Applicant unless the production of such documents, is very costly to the prejudice of the Respondent. However, in the matter at hand, the request to the 15 Respondent was vide a "without prejudice" letter dated 12th February, 2019 and as already stated above, the documents sought in this application were not in the request letter of 12th February, 2019 except for the account statements.

It is a standard bank practice that if a party requests for documents in 20 respect of his or her account, he/she incurs a charge to access the same. Furthermore, no evidence of payment of the charges was adduced. If such evidence had been adduced to show that the Applicants paid the requisite fees and that all the documents listed in this application were requested for earlier, it would have been fair to order the Respondent to avail the 25 same at no cost. Given the fact that the Applicants did not adduce evidence of the earlier requests for the documents listed in this application, and no fees for copies of the same were paid as per the normal banking practices, this Court declines to waive payment of the relevant bank charges/fees. It should also be noted that some of the information requested for discovery 30 is already on the Court record.

- 5 However, since the Applicants are not satisfied with the documents attached to the amended written statement of defence/counterclaim and some of the documents were not previously requested for; in the interest of justice, the Respondent is ordered to provide to the Applicants certified copies of the following documents upon the Applicants paying the requisite - charges/fees as is ordinarily charged for the same by the Bank; the 1st 10 Applicant's loan application forms in respect of loan facilities of; USD 1,400,000 allegedly issued on 11th April, 2012, UGX 1,400,000,000/= allegedly issued on 11th April, 2012 and USD 2,250,000 allegedly issued on 27th July, 2013; their respective loan offer letters and loan statements 15 as well as copies of the Key Fact Documents relating to all the loans in issue, the Applicants' account statements from 2011 in relation to the loans in issue, copies of cheques and deposit slips that were not included on the bank statement of the loans in issue, copies of evidence of the sale or disposal of the asset, copies of credit card statements and amortization - 20 statements.

### Issue No.2: What remedies are available to the parties?

Counsel for the Applicants requested the Court to exercise its discretion under **Section 27 of the Civil Procedure Act** and award costs to the Applicants. On the other hand, Counsel for the Respondent submitted that 25 costs be awarded to the Respondent as this application could have been avoided, had the 1st Applicant applied for the necessary documents relating to the loan accounts as a bank customer.

In the case of *Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35,* **Hon. Justice Manyindo** (as he then was) held 30 that:

- 5 *"A successful party can only be denied costs if it is proved, that but for his or her conduct, the action would not have been brought. The costs will follow the event where the party succeeds in the main purpose of the suit." (*My Emphasis) - I agree with the submissions of Counsel for the Respondent that this 10 application was not necessary and could have been avoided if the Applicants had clearly requested for the certified copies of the documents attached to the amended written statement of defence/counterclaim as well as the other documents being sought. Accordingly, since the Respondent incurred costs in respect of this application, costs are hereby - 15 awarded to the Respondent.

In the premises, the following orders are issued:

- 1. The Respondent shall avail the Applicants with certified copies of the documents as sought in this application, upon payment of the requisite charges/fees as per the Respondent's internal policies and 20 practices. - 2. Costs of this application are awarded to the Respondent.

I so order.

- 25 Dated, signed and delivered electronically this **21st** day of **June**, **2024.** - Patience T. E. Rubagumya

## **JUDGE**

21/06/2024

30 7:40am