Amayo v Zhang & 2 Others (Civil Suit 12 of 2023) [2024] UGHC 352 (16 May 2024)

Full Case Text

## THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA HOLDEN AT ARUA

## CIVIL SUIT NO. 0012 OF 2023

# 1. AMAYO JINO MOSES...................................

### **VERSUS**

1. QUE ZHANG SHU

2. JINHONGYUN SUPERMARKET

3. XIU FU LAI SUPERMARKET LTD:::::::::::::::::::::::::::::::::::

# BEFORE HON. JUSTICE COLLINS ACELLAM

## **RULING**

## Brief Introduction.

This ruling is in respect of a preliminary objection (PO) raised by the 1ST defendant QUE ZHANG SHU challenging the suit filed against him seeking orders for special damages, general 20 damages, mesne profits, interests on special damages at commercial rates and on general damages at court rate, vacant possession, permanent injunction, and a declaration that the plaintiff is entitled to repudiate the Tenancy Agreement against the defendants.

## Grounds On Which the Preliminary Objection Is Based

Counsel argues that the plaint does not disclose a Cause of Action against the 1st defendant as 25 the very brief facts of the case are that the plaintiff and the 2nd Defendant and 3rd Defendant were engaged in a Tenancy Agreement and the addendums that followed, the 1st defendant signed only as a witness.

That the 2nd and 3rd Defendant were companies registered in accordance with the Laws of

Uganda and only that the 2nd Defendant was amalgamated to form the 3rd Defendant and It is 30 on that basis that counsel raised a Preliminary Objection that there is no Cause of Action disclosed by the plaint against the 1st defendant.

Counsel adds that there are several Annextures, Paragraph 4(b) of the plaint which will take court to Annexture " $B$ " which is the 1st Tenancy Agreement between the Plaintiff and the 2nd

Defendant dated 20th December 2014 and in that Tenancy Agreement the 1st Defendant signed $\mathsf{S}$ for the Second Defendant which was a company then.

Counsel also invited court to examine Paragraph 4 (e) of the Plaint which introduces Annexture (f) which is also another Tenancy Agreement between the Plaintiff and the 2nd Defendant. It is dated 18th May 2015. The 1st Defendant signed for the 2nd Defendant on that tenancy agreement.

Counsel adds that Annexture (f) to the plaint is an Addendum to the tenancy agreement dated 10 21st /5/2019 between the Plaintiff and the 2nd Defendant and the 1st Defendant also signed for the Second Defendant which was a company then.

Counsel contends that Annexture G to the Plaint is another Addendum dated 16/6/2020 between the Plaintiff and the 2nd Defendant and in that Addendum the 1st Defendant signed for the 2nd Defendant.

That in their Joint WSD, the Defendant averred in Paragraph 4 that indeed the 1st Defendant was a Director of the 2nd Defendant but the 2nd Defendant was amalgamated with the 3rd Defendant. Counsel submits that the Certificate of Amalgamation is Annexture 'A' to the Defence.

- Counsel argues that the 2nd and 3rd Defendant are companies or were companies which have 20 legal existence with capacity to sue and be sued in their own names and in any event all the tenancy agreements that were executed between the plaintiff and the 2nd defendant has no legal liability on the $1^{\text{st}}$ defendant who was a director in the second defendant that was amalgamated and transformed into the 3rd defendant. - Counsel concludes that the suit does not disclose a Cause of Action against the 1st Defendant 25 and prayed that court examines the pleadings and strike out the 1st defendant with costs to the 1st Defendant.

## Grounds in Opposition

In response to the Preliminary Objection raised, Counsel submits that from the pleadings, Annexture B and D to the plaint, the agreement that forms the basis of this claim was between the 2nd Defendant and the Plaintiff and the 1st Defendant signed on behalf of the 2nd Defendant on the agreement.

Counsel adds that on search of the Company Registry, the 2nd company for which the 1st $\mathsf{S}$ defendant entered for does not exist. Counsel probs court on what happens where a party enters into a contract on behalf of a Non-existent Entity. Counsel submits that such a party becomes liable personally on such contracts that forms the basis of the suit against the 1st defendant. Counsel cites the case of NEC and 2 ors Vs Nile Bank Ltd. SC. CIVIL Appeal 17 of 1994 where court held that if a person contracts on behalf of a non-existing principal, that person will be $10$

found to be personally liable on the contract.

It was the responsibility of the Applicant in this Preliminary Objection to prove to court that the 2nd Defendant is a duly registered company. The question is that Preliminary Objection must be purely on points of law but not mixed law and facts that requires proof by evidence or should not be based on facts which are controversial.

Counsel quotes the case of Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd (1969) 1 EA 696 where it was held that a Preliminary Objection in its nature is of what used to be demurrer. It raises a pure point of law which is agreed on assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact must be ascertained or if what is sought is in the exercise of judicial discretion.

The Assumption in this Preliminary Objection is that the 1st Defendant is a Director of the 2nd Defendant but they have not sued the 1st Defendant in his capacity as director of the 2nd Defendant but in his individual Capacity having occupied the plaintiff's premises and failed to pay the outstanding rent arrears. The Applicant has a burden to prove to court that the 1st Applicant is a director and this purely makes the matter not of a preliminary objection based purely on law but on mixed law and fact and the facts which can be raised as an issue for determination by this court upon hearing of the matter.

Counsel prayed that the Objection be dismissed with costs.

### **Rejoinder**

30 In rejoinder, Counsel Abiyo reiterates that the objection before this court is based only on law as the Plaintiff could not have had three tenants at the same time and in the same premises. All the Annextures to the Plaint demonstrates a tenancy relationship between the plaintiff and the 2nd Defendant. It is not possible that the plaintiff filed this suit against the 1st Defendant in his individual Capacity just because he saw the 1st Defendant occupying the premises.

- $\mathsf{S}$ Counsel adds that if it were to be so then the cause of action against the 1st Defendant would be possibly Trespass but not a claim for rent from an individual with whom he did not have any Tenancy Agreement. In a preliminary objection of this nature, court refers only to the pleadings and Annextures thereto attached. The Plaintiff's counsel submitted that a search was conducted, and it was revealed that the 2nd Defendant does not exist, however, they have not seen the same. - Counsel further submit that save for paragraph of the plaint where the plaintiff has averred that 10 the 1st Defendant is a male Adult Chinese presumed of sound mind and the 2nd and 3rd Defendant are to be registered companies under the companies Act. With this, there is no controversy that the 2nd and 3rd defendant are companies under the Laws of Uganda. Counsel concludes that the 1st Defendant as an individual cannot be held liable because the 2nd Defendant 15 defaulted if any.

## Representation

On the 22nd / 4/ 2024 when the matter came up for mention, Learned Counsel Hadat Salim held brief for Buga & Co. Advocates for the plaintiff whereas Abiyo Ivan appeared for the defendants.

Counsel Abiyo Ivan appearing for the defendant sought guidance from court orally on a matter 20 of law. Counsel raised a preliminary Objection on the basis that the preliminary objection will dispose of the claim against the first defendant. Submissions of both parties was done Orally and the same has been considered while coming up with this Ruling.

#### 25 Issue.

# Whether the plaint discloses a cause of action against the 1st defendant.

## Determination of Court.

Before arguing his grounds, Counsel for the Plaintiff reiterated the position as to what constitutes Preliminary Objection. Counsel, rightly quoted the case of Mukisa Biscuits Manufacturing Co. Ltd. versus West End Distributors Ltd (1969) EA 696 to the effect that; -

"A preliminary objection consists of an error on the face of the pleadings which rise by clear implication out of the pleadings and which, if argued as a preliminary objection may dispose of the suit".

This means that the objection raised by 1st Defendants must amount to points of law which, if successfully established, will dispose of the Plaintiffs' suit.

10 I have had the benefit to listen to both counsel to wit I shall respond / resolve as follows. **Consideration of Court**

#### Position of the law

## Cause of Action.

A cause of action can be defined as the fact or combination of facts which gives rise to a right of 15 action. There are three essentials to support or sustain a Cause of Action;

- $i.$ The plaintiff enjoyed a right - ii. The right has been violated - iii. The defendant is liable.

If any of these essentials is missing, the plaint is a nullity and ought to be struck off. See *Priamit* 20 Enterprises Limited Vs Attorney General SCCA NO. 1 of 2001 and Auto Garage vs Motokov (supra) and Attorney General David Tinyefuza SCCA NO. 1/1997.

Considering the earlier landmark case of Auto Garage Vs Motokov, this issue brings into the fore a consideration of 'a cause of action'. I can do no more on the meaning of a cause of action' than call to mind the observation made by Court in Bello v Attorney-General of Oyo State

25 [1986] 5 N. W. L. R. (Part 45) 828 at 876 thus:

> "I think a cause of action is constituted by the bundle or aggregate of facts which the law will recognize as giving the plaintiff a substantive right to make the claim for the relief or remedy being sought. Thus, the factual situation on which the plaintiff relies to support his claim must be recognized by the law as giving rise to a substantive right capable of being claimed or enforced against the defendant. In other words, the factual situation relied upon must constitute the essential ingredients of an enforceable right or claim - see Trower & Sons Ltd. v Ripstein [1944] AC 254 at p.263;

Concisely stated, an act on the part of the defendant which gives to the Plaintiff his cause of 5 complaint is a cause of action."

By the two elements in the foregoing definition of 'cause of action', there can be no doubt that as far as the plaintiff was concerned and as indicated in his plaint and witness statements, that the wrongful act of the 1st defendant was that they have not sued the 1st defendant in his capacity as director of the 2nd defendant but in his individual Capacity having occupied the plaintiff's premises and failed to pay the outstanding rent arrears.

It need be said here that the proposition that a plaintiff has no reasonable cause of action against the 1st defendant can only be made upon an examination of the facts pleaded in the statement of claim. It has nothing to do with the nature of the defence which the 1st defendant may have to the plaintiffs claim. All that will be subject to proof and determination.

The court must therefore confine itself only to the averments in the Statement of Claim in the assessment of whether the plaintiff has a reasonable cause of action against the 1st defendant: See Shell B. P. Petroleum Development Co. of Nigeria Ltd. & Ors. v. Onasanya [1976] 6 S. C.89, 94

20 I should now examine the facts pleaded by the plaintiff in his plaint. The relevant facts pleaded by the plaintiff under paragraph 4 (c), (d) of the plaint read:

(c); At the execution of the contract, the first defendant held out as a director of the second defendant which has turned out to be a non-existent company.

(d); Under the contract, the first and second defendant undertook to make initial payment of rent for a term of three years amounting to.................................... $25$

The above averments from the Statement of Claim/ Plaint clearly made the point that the 1st Defendant was the one executing the contracts and living or operating within the premises. An argument also arising in respect to the existence of the 2nd Defendant on the Company Registry. This however can only be determined at the hearing, his liability under the contract warrants

$10$

proof which burden lies on the plaintiff to do so.

I also wish to note that Order 1 rule 3 of the Civil Procedure Rules which provides as follows:

"All persons may be joined as Defendants against whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exists, whether jointly, severally or in the alternative, where, if separate suits were brought against those persons, any common question of law or fact would arise."

In the case of Stanbic bank Uganda Ltd versus Ducat Lubricants (U) Ltd & 3 Others HCMA 845 of 2013 arising from HCCS 438 of 2012 it was held that the rule was a reflection of the 10 general rule that the Plaintiff can sue whomsoever he or she wishes to sue.

In others words, it is the Plaintiffs' liberty to sue whomsoever he chooses at the risk of incurring costs if the suit is frivolous and vexatious or discloses no cause of action.

In the case of Bank of India Ltd v Ambalal L Shah and others [1965] 1 EA 18 Sheridan J held that the issue to be considered under Order 1 rule 3 of the Civil Procedure Rules is whether the 15 alleged cause of action against the 1st Defendant sought to be joined arose out of the same act or transaction or series of acts or transactions. He held at page 20:

> "Although the word "same" must govern the words "series of acts or transactions", as they are the same here, it is not necessary that every Defendant should be interested in all the reliefs claimed in the suit, but it is necessary that there must be a cause of action in which all the Defendants are more or less interested although the relief asked against them may vary."

What needs to be considered is whether there is an alleged cause of action arising out of the same act or transaction and whether if separate suits are brought common questions of law or fact would arise.

Finally, the Plaintiff cannot be barred from suing the 1st defendant. To avoid multiplicity of suits, it is better to try the action once. What the Plaintiff alleges is that the 2nd defendant is a non-existent company and it is he that executed all contracts and lived within the premises. As I said earlier, this is a matter left for determination to ascertain the 1st defendant's liability.

In this premises, the Preliminary Objection is hereby overruled. Costs shall be in the cause. 30 I so Order.

Delivered this ....................................

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**JUDGE**

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