Bhatia v Boutique Shazim Ltd (Civil Appeal 16 of 2009) [2010] UGSC 40 (17 August 2010)

# THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA

### AT KAMPALA

(CORAM: ODOKI, CJ, KATUREEBE, KITUMBA, TUMWESIGYE, KISAAKYE, JJ. S. C.)

CIVIL APPEAL NO.16 OF 2009

#### **BETWEEN**

NAROTTAM BHATIA **HEMANTINI BHATIA** **EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMPLE 11: EXAMP**

BOUTIQUE SHAZIM LTD::::::::::::::::::::::::::::::::::::

AND

(Appeal from the decision of the Court of Appeal of Uganda at Kampala [Mukasa Kikonyogo, DCJ, MPagi-Bahigeine and Byamugisah, JJ. A.] dated 8<sup>th</sup> October, 2009 in Civil Appeal No.36 of 2007)

#### JUDGMENT OF KITUMBA JSC

This is a second appeal. The appeal is from the decision of the Court of Appeal that dismissed the appellants' ground for affirming the decision of the High Court. The Court of Appeal held that High Court Civil Suit No 411 of 1998 disclosed a cause of action and ordered that the file be remitted to the High Court for hearing before another judge.

# 5 The facts of this appeal are as follows:

On 1.t July 1995 the appellants, attorney, Mr. Nipun Bhatia executed a written agreement on their behalf to sell the property situated at PIot 12 Buganda Road for USD 117,300\$. The respondent paid 50,000\$ but failed to pay the balance. The l0 appellants gave the respondent notice of the repudiation of the contract on the ground that they had failed to pay the balance within the stipulated time. The respondent filed HCCS No. 910 of 1995 against Nipun Bhatia, the appellants'attorney, seeking for specilic performance of the contract of the sale of the property 15 situated at plot 12 Buganda Road, Kampala.

The appellant later on filed Miscellaneous Application No 4T of <sup>1997</sup>under order I rule 10 (2)and (4) and order 4g Rule 1 of the civil Procedure Rules seeking to substitute Nipun Bhatia with the appellants who are the registered proprietors of the property as the defendants.

The application was heard and dismissed by Mukanza J (RIp) on 14th April 1998. In the same ruling the learned judge struck out the suit for not disclosing a cause of action. The respondent filed another suit No 411 0f lggg against the appellants. In that suit the respondent sought for the same relief of specific performance.

on 29th June 20o4 in Miscenaneous Application No 5o5 of <sup>2004</sup> 30 the appellants filed chamber summons under order 7 of rule 1l seeking the rejection of the plaint for being statute barred on the ground of being res judicata.

5' The application was heard by Aweri-Opio J, on 27th September 2005 who struck it out for being res jr.rdicota in view of the earlier decision by Mukanza J (RIP). The respondent was dissatisfied with the decision and appealed to the Court of Appeal on one ground only; namely whether HCCS No 41 1 of 1998 was res judicata.

IO

The appellants filed a notice of ground affirming the decision of the High Court under Rule 92 of the Judicature (Court of Appeal Rules). Directions- S 1 No, i3-10. The ground filed was that the plaint does not disclose a cause of action.

t5

The Court of Appeal ruled that the suit was not res judicata. The Court dismissed the appellants' ground of affirming the decision of the High Court. The Court of Appeal held that a cause of action was disclosed from the pleadings and ordered that the file be remitted to the High Court and the suit is tried by another Judge. The appeal was allowed with costs to the respondent.

25 The appellants were dissatisfied with the decision of the court of Appeal and filed their appeal to this Court on the following ground:

> uThe learned Justices of Appeal erred in fact and law uhen theg held that the suit fn. EICCS No 411 of l99a disclosed a co:use of action uhen the plaint contained. no allegation oJ ang act or otnission bg the defend.ants or their disclosed attorneg that alleged.lg breached, the contract".

The appellants were represented by learned counsel Mr. Ebert Byenkya of Byenlqra, Kihika and Co. Advocates and learned counsel Mr. Nelson N€rima of Nambale, Nerima and Co. Advocates appeared for the respondent.

,5

Counsel for both parties had already filed written submissions and only made a few clarifications when they appeared in court.

l5 20 Submitting on the sole ground of appeal, learned counsel contended that in order to constitute a cause of action for <sup>a</sup> breach of contract some breach of the terms of the contract must be alleged by the plaintiff in the plaint. He submitted that no breach of the contract had been alleged in the instant appeal. He argued that the court has to look at the plaint and annextures thereto to decide whether a cause of action has been established. Counsel made his submissions on the basis of the plaint and annextures thereto.

He argued that paragraph 3(d) of the amended plaint reads:

25 uOn 7't Julg 7999, a sale agreement wqs entered. into between the plaintifJ compang and the deJendant through their attorneg Nipun Bhatia and the a.greetnent wos drawn bg M/S Bgenkga, Kihikrr and Co Ad.aocates and executed, in their presence".

Counsel submitted that according to the above quoted paragraph the appellants were the principal party to the agreement as

.l

<sup>5</sup> vendors, Mr. Nipun Bhatia was their attorney and the firm of Byenkya, Kihika and Co. Advocates acted as solicitor in the transaction by drafting the sale agreement and attesting to it. He argued that, therefore, M/S Byenkya Kihika and Co. Advocates were not agents of the appellants in the performance of the contract. The firm of advocates did not have either express or general authority to act for the appellants. In support of his submission on the point of agency counsel relied on Halsbury's Lauts oJ England, 3.a Edition Vol 7 page 2O8. l0

15 Counsel argued that in its paragraph 3(e) of the plaint the respondent averred.

"The ftrst pagment uros made on Vh and TOth &rlU respectiuelg leaving a bq.lance pagable to the deJendants bg the plaintiff o/ US \$ 67,300 sixtg seven thousqnd three 20 hundred united stcrtes d.ollars to be paid. on or before the 74th dag of September 7995,,.

Counsel submitted that the respondent,s averments that the deadline for payment of the balance is not borne out by the 25 contract Annexture D to the plaint which reads:

"The balance of 67,30O (United Stafes dollars sixtg seuen thousand three hundred) to be pagable within ZS dags of the date of execution PROVIDED that the said pagment shall carry an 30 interest of one and a half per cent on reducin.g balance per month uthich shall be paid along uith the pincipal on the date of effecting payment. For the AVOIDANCE Op DOUBT if the pagment is not

)

<sup>5</sup> effected uithin 75 dags of the date oJ execution, thts SaIe Agreetnent shall be deemed to haue lapsed, and. the property shall reuert to the vendor uho shalt be under no obligation saue for effecting a full reJund of ang pagments made at the time under the agreement".

l0

l5

Counsel submitted that as the agreement was executed on l"t July 1995 and stipulated time for payment of the balance was within 75 days, the final date for effecting pa).ment was 12th September 1995. In case payment was not effected the agreement would automatically lapse and the vendor's only obligation would be to refund the money deposited under the agreement.

In paragraph 3 (g) the plaintiff averred:

" On the 13n September 1995, Mr. Azim Kassam who was at the time in Canada called on phone Ebert Bgenkga in Kampala to ascertain Jor him the Bank Account Number of the defendants in order to remit moneA to the same as the plaintiff did not haue the details. He was not giuen details as Mr. Ebert Bgenkga did not hque the details himse|f, and" asked Mr. Azim Kassam to call back the nert dag. When Mr. Azim Kassam called Mr. Ebert Bgenkga the next d.ag; 14/ 9/ 1995, Mr. Bgenkya refused to giue him the details..."

counsel submitted that the respondent did not contact either the appellants who were principals to the contract or Mr. Nipun Bhatia who was their attorney. It contacted. Mr. Byenkya who was a stranger to the contract. counsel argued that there is no reason 30

()

s.' pleaded in the plaint why they had done so. Besides, there was no covenant in the contract specifying that the appellants were obliged to receive late payment or that they needed the advocate's assistance to effect payment. However, on 7th and 10th July 1995 they had paid a sum of US \$ 5O,O00 without any assistance from l0 the advocate.

In paragraph 3(h) of the plaint the respondent allege.

## "The next dag 75th September 7995, M/S Bgenkga, Kihika and Co. Adaocates acting on behaf of the deJendants notified. the plaintiff oJ the lapse of the sale",

Counsel argued that no breach of the terms of the contract is indicated in that paragraph because what the appellants instructed counsel to do is what is provided in the agreement.

l5

In paragraph 3(i) U) of the plaint it also avers

- (i) The plaintiff was willing ond readg to pag and ofJered the ,noneg directlg to Bgenkga, Kihika and Co. Aduocates to pass on the Nipun Bhatia. - 25 0 The Plaintilf olfered to pag the moneg to the defendant in Uganda about the 23.a Septernber 7995 but both Nipun Batia and. M/S Bgenkga Kihtka and Co. Advocates refased to accept pqgment. - 30 Counsel contended that by the time the respondents attempted to pay in Uganda, due time to pay even by their alleged time of payment, i.e. 14th September 1995, had already elapsed. The

respondent had by then received the notice that the contract had elapsed.

In paragraph 3(k)

'3Art atternpt bg the detendants to refund part oJ the purchdse price to the plaintiff was rejected bg the plaintilf as it was in the breo.ch oJ contract"

It was counsel's argument that what the appellants did was not in breach of terms of contract because that was stipulated in the agreement.

l5

t0

-5

Mr. Byenlrya contended that the appellants did not breach the terms of the contract. He criticized the learned Justices of the Court of Appeal for overlooking the basic principle endorsed by the Supreme Court in the Attorneg General Vs Major General

20 Dduid Tingefuza, Constitutional Appeal No I of 1997 that in order to constitute a cause of action there must be some act done by the defendant. If there is no such an act the cause of action does not accrue.

25 Counsel for the respondent opposed the appeal. He argued that it is trite law that in deciding whether or not a plaint discloses a cause of action one looks, ordinarily at the plaint and assumes that the facts alleged in it are true. In support of his submission counsel relied on Attorneu General <sup>V</sup> Maior General Dauid

30 Tinge.fazq ra).

Counsel reiterated some of the contents of paragraph 3 of the plaint and stated as follows.

"There was an agreement of sale of land between the parties and a first instalment was paid. The agreement was drawn by Byenkya, Kihika & Co. Advocates and executed in their presence.

Just before the second instalment fell due, the plaintiff's director, who was then in Canada, called the defendants' advocate, Mr. Byenkya, for an account number to which to remit the balance. Mr. Byenkya, counsel for the defendants, asked the plaintiff's director to call the next day.

The plaintiff was ready and willing to pay and offered the money directly to the defendant's attorney Nipun Bhatia and to their advocates but they refused to accept The defendants purported to rescind the payment. agreement through Byenkya, Kihika and Co. Advocates."

Counsel argued that in their plaint paragraph 4 the plaintiff avers that the defendants are in breach of contract for failure to furnish 25 the plaintiff with the details of the mode of payment and refusal to accept payment. Counsel stated that in paragraph 5 the plaintiff pleads estoppel, and in paragraph 6 the plaintiff pleads that it has the option to purchase the property by paying the balance.

$10$

$5'$

<sup>5</sup> He contended that the pleadings in paragraph 3,4,5 and <sup>6</sup> disclose a cause of action based on breach of contract which is the refusal by the seller to receive the balance.

Respondent's counsel argued further that there are triable issues of law and fact raised; for example whether time was of the essence, mode of remitting the balance, whether Ms Byenkya, Kihika and Co. Advocates were agents of the defendants, whether property passed on execution of contract, among others. He submitted that for a contract of sale of immovable propert5r, upon payment of a deposit, property passes to the purchaser who acquires an equitable interest in that property. In support of his submission he relied o[, Sharif Osman V Haii Hantna Mulanqwa Ciuil Appeal No 38 of 7995 (Supreme Court.) l0 l5

He submitted that counsel for the appellants had raised issues which can only be resolved upon hearing evidence. Respondent,s counsel argued further that the cause of action is disclosed. He argued in the alternative that if there is a deficiency in the plaint it can be cured by amendment and the appellant can also seek for further and better particulars. In support of his submission he quoted the Supreme Court decision Tororo Cement Ltd,vs Frokina fnternationql Ltd S. C. C. A No 2 of 7997. 20 25

In reply, Mr. Byen\ra criticized the respondent,s counsel for failing to specifu any act which the appellant had committed in breach of contract. According to counsel this was not in 30 5 agreement with the definition of cause of action as stated in Maior General Tinuefuza Vs Attorneu General (Supra)

Appellant's Counsel contended that the reference by the respondents' counsel to triable issues is misconceived and meant to mislead the court. According to counsel triable issues are determined by looking at the pleadings of both parties and not just the plaint. To decide whether the plaint discloses a cause of action one looks only at the plaint. Appellant's counsel submitted that there was no issue whether time was of the essence of contract because the time within which to pay the balance was clearly stated in the contract. The authority Sharif Osman Vs Haii Haruna Mulanqua lsupra) stated that time is of the essence of the contract if the contract states that it is so. He agreed. with the submission by the respondent's counsel that striking out <sup>a</sup> plaint for failure to disclose a cause of action should be done in very obvious cases these obviorls ones. In his view, the instant appeal was one of 10 l5 20

I have carefully perused the record of appeal and the written submissions of counsel. counsel for the appellant has relied on the statements of the Justices of the Supreme Court in Attorneu General Vs Mator General Dauid Tinuefuza (Supra). Wako Wambuzi CJ as he then was cited with approval the following statement from Mulla,s Cod.e of Civil procedure: 25

"A crtll-se oJ action melzns euery fact uhich iJ traaersed, it would be necessq.ry fior the plaintiff to proue in ord.er to support his right to a judgment of the Court. In other

words it is cr bund.le of facts which, taken ulith the laut applicable to them giaes the plalntiff a right to clqim relieJ against the detend.ants. It tnust include some qct done bg the deJendant since the absence of such an act, no cattse of action ccn possiblg accnte.... Euerything which if not proued., would. giue the deJendant a right to an immediate judgment must be part oJ the cause o;f action... the cause of action rnust be antecedent to the instittttion oJ the stit.,,

I respectively agree with that statement that such facts must be alleged in the plaint to decide that the cause of action has been disclosed. one must also look at the plaint and annextures thereto. one must also assume that the facts as alleged are true. l5

In paragraph 3 of the plaint it is pleaded that on l3th September 1995 Mr. Azim Kassam called from Canada Mr. Byenkya to ascertain the appellant's bank account. Mr, Byenkya told him to call the next day. when Mr. zim Kassam called he failed to give him the details. Instead on 15th September Mr. Byenkya wrote <sup>a</sup> letter to the respondent on the appellants' behalf repudiating the contract 20 25

The respondent pleaded its readiness and willingness to pay. The respondent averred that the appellants were in breach of the contract because they failed to furnish it with the details of mode 30 of payment.

l0

,-5 Counsel for the appellants has raised argumcnts that there was no agency relationship between the hrm of the advocates and the appellants. He has also made submissions about the date of payment that it was 12th September and not l4ti september as is pleaded by the respondent. He has argued that the respondent had previously paid twicc without his assistance. l0

I am of the considered view that alt these submissions are matters of evidence which counsel was going into. Additionally, the contract does not specify how payment had to be effected. It is, therefore, impossible to determine at this stage whether the respondent needed the lawyer's assistance to pay or not.

I appreciate the argument by the respondent's counsel that if there is any deficiency in the plaint it could be cured by the 20 amendment. This was the holding of this court in Tororo cement Co. Ltd Vs Frokinq Intemstional Ltd. (Supra).

In that case the appellant was the defendant in the High court and the respondent was the plaintiff. The plaintiff averred in its plaint that the defendant's truck and its trailer had rammed into the plaintiffs premises and extensively destroyed its doors and walls.

l5

In another paragraph the plaintiff pleaded that the accident was caused by the negligence of the driver. However, no particulars of the negligence were pleaded in the ptaint.

When the case came up in the High Court counsel for the defendant raised a preliminary objection on the ground that the plaint was defective and did not disclose a cause of action and should be rejected under order 7 Rule 11(a) of the civil procedure Rules. The High Court overruled the objection and on appeal to the Court of Appeal by the defendant the appellate court upheld the decision of the High Court. l0

On a second appeal the Supreme Court unanimously upheld the lower courts' decision. Tsekooko JSC, who wrote the lead judgment quoted with approval the following statement by Spry V. P. in Auto Garage & q.nother Vs Motokou (No.3) (lg7l) 84.574 at page 519

" I utould sr.tmmarise the position as I see it bg saging that if a plaint shours that the ptaintiff enjoged. a right, that the right has been uiolated. and. that the d.efendant is liable, then, in mg opinion, a. cettse of action has been disclosed and. ang omission or deJect tnag be put right bg anttendrnent".

l-s

In the appeal before this court, the issues of estoppel, passing of title in the property and calculation of the 75 days can only be determined at the trial. I am unable to fault the first appellate 30 court on its finding that a cause of action is disclosed.

5 I would confirm the order of the Court of Appeal that this file be remitted to the High Court and be placed before another judge for hearing. I would dismiss the appeal with costs to the respondent in this court and courts below.

$10$

$15$

Dated at Kampala this....................................

CALS Riturn JUSTICE OF THE SUPREME COURT

### THE REPUBLIC OF UGANDA

### IN THE SUPREME COURT OF UGANDA AT KAMPALA

(CORAM: ODOKI, CJ, KATUREEBE, KITUMBA, TUMWESIGYE AND KISAAKYE, JJ. SC)

### CIVIL APPEAL NO 16 OF 2009

#### **BETWEEN**

### NAROTTAM BHATIA }

2. HEMANTINI BHATIA } :::::::::::::::::::::::::::::::::::

#### AND

### BONTIQUE SHAZIM LTD) ::::::::::::::::::::::::::::::::::::

[Appeal from the decision of the Court of Appeal at Kampala (Mukasa-Kikonyogo, DCJ; Mpagi Bahigeine and Byamugisha, JJA) dated 8<sup>th</sup> October 2009. in Civil Appeal No 36 of 2007]

### JUDGMENT OF ODOKI, CJ

I have had the benefit of reading in draft the judgment of my learned sister, Kitumba JSC, and I agree with her that this appeal should be dismissed with costs in this Court and Courts below.

As the other members of the Court also agree there will be judgment and orders in the terms proposed by the learned Justice of the Supreme Court.

$n$ gust 2010

Dated at Kampala this ....................................

earl B J Odoki

**CHIEF JUSTICE**

# THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA

# (CORAM: ODOKI, CJ, KATUREEBE, KITUMBA, TUMWESIGYE AND KISAAKYE, JJ. SC.).

## CIVIL APPEAL NO. 16 OF 2007

### BETWEEN

# NAROTTAM BHATIA } <table> HEMMANTINI BHATIA}. APPELLANTS AND

# BOUTIQUE SHAZIM LTD :::::::::::::::::::::::::::::::::::

[An appeal from the decision of the Court of Appeal of Uganda at Kampala (Mukasa-Kikonyogo, DCJ, Mpagi-Bagugeube and Byamugisha, JJ. A) dated 8<sup>th</sup> October, 2009 in Civil Appeal No. 36 of 2007]

# JUDGMENT OF KATUREEBE, JSC.

I have had the benefit of reading in draft, the judgment of my learned

Sister, Kitumba, JSC and I fully agree that this appeal be dismissed. I

also support the orders as to costs. $\frac{1}{\sqrt{2}}$

Dated at Kampala this....................................

mallerlinde

Bart M. Katureebe Justice of the Supreme Court

# THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA AT KAMPALA

[CORAM: ODOKI, CJ; KATUREEBE; KITUMBA; TUMWESIGYE; KISAAKYE JJ. S.cl

### BETWEEN

# NAROTTAM BHATIA: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : APPELLANT

### AND

# BOUTIQ SHAZIM LTD: : : : : : : : : : : : : : : : : : : : : : : : : : ; : : : : : : : : : : RESPONDENT

(Appeal from the decision of the court of Appeal of uganda at Kampala [Mukasa Kikonyogo, DCJ, Mpagi-bahigeine and Byamugisha, lJ. Al dated 8rh OcroLer, 2009 in Civil Appeal No. 36 of 2002)

### IUD MENT OF SIGYE ISC

<sup>I</sup>have had the opportunity of reading in draft the judgment of my learned sister, Kitumba JSC, and I agree with her judgment and the orders she has proposed.

JOTHAM TUMWESIGYE IUSTICE OF THE SUPREME COURT

### THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA AT KAMPALA

# (CORAM: ODOKI, C. J., KATUREEBE, KITUMBA, TUMWESIGYE, KISAAKYE, $JJ. S. C.)$

### CIVIL APPEAL NO. 16 OF 2009

#### **BETWEEN**

### 1. NAROTTAM BHATIA 2. HEMANTINI BHATIA

$\circ$

**HIRE OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET OF SET**

#### AND

### BOUTIQUE SHAZIMI LTD

**EXAMPLE 2017 INSULATION**

{Appeal from the decision of the Court of Appeal of Uganda at Kampala (Mukasa Kikonyogo, DCJ., Mpagi-Bahigeine and Byamugisha, JJ. A dated 8<sup>th</sup> October, 2009 in Civil Appeal No. 36 of 2007}

# JUDGMENT OF DR. E. M. KISAAKYE, JSC

I have had the privilege to read in draft the judgment of my learned sister, Justice Kitumba, JSC.

I concur with the orders she has proposed and I have nothing useful to add.

$Aubvisi$ Dated at Kampala this. T.... day of July, 2010.

DR. ESTHER M. KISAAKYE JUSTICEOF THE SUPREME COURT