Core Minerals Geologists Limited & 3 Others v Zhou (Miscellaneous Application 1164 of 2024) [2024] UGCommC 340 (22 November 2024)

Full Case Text

### THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION)

## **MISCELLANEOUS APPLICATION NO. 1164 OF 2024** ARISING FROM CIVIL SUIT NO. 0915 OF 2018

1. CORE MINERALS GEOLOGISTS LTD

2. RUHAKANA EMMANUEL

3. KAFUREKA ALEX

4. KADUGALA WILLIAM :::::::::::::::::::::::::::::::::::: **APPLICANTS**

#### **VERSUS**

ZHOU QUINGYOU :::::::::::::::::::::::::::::::::::: **RESPONDENT**

(Before: Hon. Justice Patricia Mutesi)

#### **RULING**

#### **Background**

The Applicant brought this application by notice of motion under Section 9 of the Arbitration and Conciliation Act, Section 98 of the Civil Procedure Act and Order 52 Rules 1 and 2 of the Civil Procedure Rules seeking orders that:

- 1. Civil Suit No. 0915 of 2018 be dismissed. - 2. Costs of this application be provided for.

Briefly, the grounds of this application are that:

- 1. Civil Suit No. 0915 of 2018 ("the main suit") is premature, incompetent, frivolous, vexatious and misconceived, and it does not disclose a cause of action against the Applicants. - 2. The Respondent is a party the agreement that forms a basis of the dispute in the main suit following his appointment as the $1^{\ensuremath{\text{st}}}$

Applicant's Agent and Representative, and he cannot be seen to sue himself.

- 3. The agreement that forms the basis of the dispute in the main suit has a mandatory arbitration and conciliation clause. - 4. This Court does not have jurisdiction over the dispute in the main suit. - 5. The main suit is an abuse of the court process. - 6. It is fair, just and equitable for this application to be allowed.

The application is supported by the affidavit of the 2nd Applicant who stated that he had been authorised by the other Applicants to swear the affidavit on behalf of all the Applicants. He told the Court that the $\mathbf{1}^{\text{st}}$ Respondent was appointed by the Applicant to be its agent/representative in procuring a potential buyer for the 1st Applicant's gold. On 28th February 2017, the Respondent signed a sale and purchase agreement for the gold with Ben Gang (Yantai) Financial Leasing Co. Limited (hereinafter "the Agreement") on the 1st Applicant's behalf.

The 2nd Applicant further told the Court that, in Clause 25.6 of the Agreement, the parties agreed that, in case of any disagreement arising therefrom, the same would be settled through arbitration and conciliation under the auspices of the International Chamber of Commerce ("ICC"). The decision of the ICC would be final and the place of conciliation and arbitration would be in "location state" which, in this case, is Paris, France. He concluded that, since the Respondent is a party to the Agreement, he is bound by the provisions thereof and this Court is not empowered to deal with the dispute in the main suit.

The Respondent swore an affidavit in reply opposing the application. Therein, he stated that his case in the main suit is for money had and received by the Applicants from him for no consideration. He said he advanced to the Applicants a total sum of USD 245,000 which the $2^{\rm nd}-4^{\rm th}$ Applicants claimed their company (the 1st Applicant) needed to meet the logistical cost for the shipment of the first tranche of 100 kilograms of gold that they had contracted to supply to Ben Gang (Yantai) Financial Leasing Co. Ltd. Suing the $2^{nd} - 4^{th}$ Applicants was the only way in which this Court would lift the corporate veil of the $1^{\rm st}$ Applicant which the $2^{\rm nd}$ – $4^{\rm th}$ Applicants are using to evade responsibility for their fraud.

The Respondent denied the existence of any arbitration agreement or clause between him and the Applicants in respect of the claimed USD 245,000. He clarified that he has never been a director or a shareholder of the 1st Applicant and that he only participated in the Agreement as a representative of the 1st Applicant when he introduced the Applicants to a potential buyer of their gold. Finally, he said that the Agreement is not binding on him and does not confer any rights and liabilities to him.

The Applicants filed an affidavit in rejoinder to the affidavit in reply which was also sworn by the 2nd Applicant. He contested the competence of the affidavit in reply on grounds that it is said to have been sworn at Nairobi, Kenya before a notary public but the seal and stamp of the said notary public does not indicate that he is actually a notary public. He reiterated that the Respondent's claim in the main suit is based on the Agreement which has a binding arbitration clause.

### **Issues arising**

- 1. Whether the Respondent's affidavit in reply is competent. - 2. Whether this Court has jurisdiction to entertain, hear and determine Civil Suit No. 0915 of 2018. - 3. Whether the Respondent's plaint in Civil Suit No. 0915 of 2018 discloses a cause of action against the $2^{nd} - 4^{th}$ Applicants. - 4. What reliefs are available to the parties.

### **Representation and hearing**

At the hearing, the Applicants were represented by Mr. Akakimpa Godfrey of M/S Obed Mwebesa & Associated Advocates. The Respondent was represented by Mr. Mwebesa Raymond and Ms. Barbra Musimenta M/S Kampala Associated Advocates. I have carefully considered the

$\mathbf{3}$

submissions of counsel, the laws and authorities they cited and all the other materials on the record while deciding this application.

#### Determination of the issues

## Issue 1: Whether the Respondent's affidavit in reply is competent.

In their affidavit in rejoinder, the Applicants contended that the Respondent's affidavit in reply is incurably defective since it is not notarized by a notary public. They said that, while the affidavit in reply is said to have been sworn at Nairobi, Kenya, it is signed and stamped by "Joseph N. Mbugua" whose stamp indicates that he is an advocate and a commissioner for oaths, and not a notary public.

As held in J. B. Magara V Katehangwa, HCMA No. 0143 of 2000, an affidavit, like a testamentary disposition, is self-evident. It speaks for itself. There is no room for submissions by counsel to clarify on what the contents of an affidavit are. The propriety and competence of an affidavit ought to be assessed only on the basis of the contents of that affidavit and nothing else.

While courts have always taken a liberal approach towards defects in affidavits, it is also true that some defects are more serious than others. Some defects go to the root of the affidavit while others do not. As such, whether a defect will be cured or not wholly rests on the nature and extent of the defect.

The position of the law on the need to commission/notarise affidavits is well settled. That requirement is not one of mere form but of substance. An affidavit which is not commissioned or notarised is not an affidavit in law. Such a defect is not a mere technicality that can be overlooked in line with Article 126(2)(e) of the Constitution of the Republic of Uganda, 1995. It is a fundamental defect that undermines the reliability of the oath in the affidavit itself and the veracity of the evidence presented therein. See (EAA Company Limited v Uganda National Bureau of Standards, HC Consolidated Miscellaneous Applications No. 965 and 1009 of 2023).

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In the instant facts, the Respondent's affidavit in reply appears to have been sworn at Nairobi, Kenya and it is signed and stamped by "Joseph N. Mbugua". His stamp reads that he is an advocate and a commissioner for oaths. It does not show that he is a notary public.

Taking oaths out of Uganda is governed by Section 12(1) of the Oaths Act which provides that:

### "12. Taking oaths out of Uganda

(1) Any oath of affidavit required for any court or matter in Uganda, or for the purpose of the registration of any instrument in any part of Uganda, may be taken or made in any place out of Uganda before any person having authority to administer an oath in that place." Underlining mine for emphasis.

From the above provision, it is clear that an affidavit may be taken out of Uganda before any person having authority to administer an oath in that other country. A person claiming that an affidavit taken out of Uganda was taken before a duly authorised person must prove to the Court that that person before whom the affidavit was taken was duly authorised by the law of the country/place where the affidavit was taken.

However, Section 12(1) of the Oaths Act ought to be construed together with Section 84(c) of the Evidence Act which specifically governs the taking oaths out of Uganda in any country of the Commonwealth in Africa, like Kenya. The Section provides that:

# "84. Presumption as to private documents executed outside **Uganda**

The court shall presume that private documents purporting to be executed out of Uganda were so executed and were duly authenticated if –

$(a)$ ... $(b)$ ... (c) in the case of such a document executed in any country of the Commonwealth in Africa, it purports to be authenticated by the signature and seal of office of any notary public, resident magistrate, permanent head of government department, or resident commissioner or assistant commissioner in or of any such country; and, in addition, in the case of a document executed in Kenya, it purports to be authenticated under the hand of any magistrate or head of a government department;

$(d)$ ...

(e)..." Underlining mine for emphasis.

According to Section 74 of the Evidence Act, a private document is a document which is not a public document. Section 73 of the Evidence Act defines public documents to mean documents forming the acts or records of the sovereign authority, of official bodies and tribunals or of public officers and public records kept in Uganda of private document. Thus, when an affidavit is sworn in a case, it constitutes a private document but, when it is filed on court record, it becomes a public document.

Section 84(c) of the Evidence Act allows the Court to presume that an affidavit taken in any country of the Commonwealth in Africa was properly executed and duly authenticated if it was taken before a notary public, a resident magistrate, a permanent head of a government department, or resident commissioner or assistant commissioner in or of any such country. Such a person must sign and seal/stamp the affidavit to authenticate it. The seal/stamp of the person before whom the affidavit is taken must expressly indicate the capacity of that person which makes him or her suitable to perform that role.

When Sections 12 of the Oaths Act and Section 84(c) of the Evidence Act are read together in relation to the instant facts, the result is that an affidavit taken in any other Commonwealth country in Africa, like Kenya, is not to be presumed to have been properly executed and duly authenticated unless it was taken before any of the persons/officials expressly mentioned in Section 84(c) of the Evidence Act. Without that

$6$ presumption, evidence must be laid before the Court in accordance with Section 12(1) of the Oaths Act proving that the person before whom that affidavit was taken is duly authorised to perform that role by the law of the country where the affidavit was taken.

In the instant case, the stamp of the person before whom the impugned affidavit in reply was taken shows that he is an advocate and a commissioner for oaths in Kenya. Advocates and commissioners for oaths are not mentioned expressly in Section 84(c) of the Evidence Act. The presumption of authenticity and proper execution of the impugned affidavit in reply, therefore, cannot apply and the Respondent was dutybound to adduce specific evidence before this Court to prove that the person before whom that affidavit was taken in Kenya was duly authorised to perform that role under the law of that country. Since no such evidence has been adduced, there is no proof that the affidavit was duly taken before a notary public. Without a notarization that complies with the law, the impugned affidavit in reply is incurably defective and must, at once, be struck off the Court record.

### Issue 2: Whether this Court has jurisdiction to entertain, hear and determine Civil Suit No. 0915 of 2018.

Jurisdiction is the power of court to entertain, hear and determine an action or proceedings. Jurisdiction is a matter of law and the power of a court to entertain, hear and determine an action must be expressly prescribed by law before that court can proceed with that action. Proceedings of a court without jurisdiction are a nullity since lack of jurisdiction goes to the root of the legality of the court's decision. (See Desai v Warsama (1967) EA 351).

The jurisdiction of the High Court is set out in Article 139(1) of the Constitution of the Republic of Uganda, 1995 (as amended) which provides that:

"The High Court shall, subject to the provisions of this Constitution, have unlimited original jurisdiction in all matters and such

## appellate and other jurisdiction as may be conferred on it by this **Constitution or other law.**" Emphasis mine.

From that provision, it is clear that this Court has unlimited original jurisdiction in all matters subject to the Constitution and other laws. The Court's unlimited original jurisdiction is tempered by, and must be understood in accordance with, the Constitution and other laws which affect/relate it.

One such other law which affects the jurisdiction of this Court is the Arbitration and Conciliation Act. Most notably, Section 9 of that Act ringfences all matters governed by the Act and locks the Court out of their resolution. The legal effect of Section 9 of the Arbitration and Conciliation Act is that, except as expressly provided in that Act, no court (including this Court) shall intervene in matters governed by the Act. The provision, therefore, affects this Court's jurisdiction by taking away its mandate to entertain and determine disputes that are subject to arbitration and, or, conciliation.

Briefly, the dispute in the main suit, as can be gathered from the materials on the record, is that, on 15th February 2016, the Respondent was appointed by the 1st Applicant as its agent for the purpose of securing potential buyers for its gold dore bars and other forms of gold concentrates. They signed a formal contract in which the Respondent agreed to find buyers for the 1st Applicant's gold in exchange for a commission. At the Respondent's expense, he and the 2nd Applicant later travelled to China and met a buyer (Ben Gang Financial Leasing Co. Ltd) who purchased the gold. The Respondent claims that he extended a sum of USD 245,000 to the Applicants to enable them transport the first tranche of the gold (100 kilograms) from Uganda to China but that the Applicants did not transport and deliver the gold to China as agreed. It is this USD 245,000 that the Respondent seeks to recover in the main suit.

Clause 6 of the agency contract between the Respondent and the $1st$ Applicant provided that:

#### "6. ARBITRATION

6.1 It is desired that there be no disputes but in the event of any dispute or difference arising out of the construction and or interpretation of this agreement or affecting any transaction, it shall as far as possible be settled amicably as between both parties failing which the matter may be referred to an arbiter and the arbiter so nominated by the aggrieved party and consented to by the other party shall make a decision on the matter before it and such decision shall be binding and enforceable and have the force of law.

6.2 The arbitration shall take place within Uganda and in accordance with Cap 4." Emphasis mine.

In my considered view, the dispute in the main suit falls squarely in the caliber of disputes anticipated by Clause 6 of the contract. The purpose of the contract between the Respondent and the $1^{st}$ Applicant was to secure buyers for the 1st Applicant's gold. The Respondent's duty was to find buyers to enable the 1st Applicant sell its gold. In exchange, the Respondent was to earn a commission of USD 7/kilogram of gold sold. The Respondent would not earn his commission upon finding a buyer but only upon conclusion of a sale. His job would not be complete until the sale is concluded because it is only then that he would earn his commission.

As such, if the Respondent facilitated the travel of the 1st Applicant's director to China to conclude a transaction, he did so in furtherance of his duties under the contract. If he extended money to the Applicants to help them transport some gold to a buyer in China, he did so in furtherance of his duties under the contract, though that money may be refundable or recoverable. Since the dispute in the main suit concerns the alleged breach of contract and fraud which is said to have occurred when the Applicants took the Respondent's money to transport gold to China but failed to deliver that gold, the dispute clearly constitutes a dispute arising in the course of performance of the said agency contract of 15th February 2016 because it arose from the Respondent's attempts to ensure that the buyer

he had found for the 1st Applicant gets his gold to enable the Respondent earn his commission under the agency contract.

Although the Applicants were right in asserting that the dispute in the main suit is governed by the Arbitration and Conciliation Act, I realised that they were wrong in claiming that the dispute is covered by the 28th February 2017 contract between the 1st Applicant and Ben Gang (Yantai) Financial Leasing Company Ltd and as opposed to the 15th February 2016 contract between the 1st Applicant and the Respondent. Undoubtedly, the Respondent was acting only as an agent of a known principal when he signed the 28th February 2017 contract between the 1st Applicant and Ben Gang (Yantai) Financial Leasing Company Ltd. It is not true, as the Applicants have claimed, that the Respondent was a party to that contract in his own right. In any case, even if, for argument's sake, this Court was to assume that the Respondent was party to the 28th February 2017 contract between the 1st Applicant and Ben Gang (Yantai) Financial Leasing Company Ltd, the current dispute has not arisen between the Respondent and the said Ben Gang (Yantai) Financial Leasing Company Ltd but between the Respondent and the Applicants. It is only logical that the contract between the parties who are in dispute is the one to be considered in resolving that dispute.

For all the above reasons, I find that the dispute in the main suit is a matter that is subject to arbitration and that is governed by the Arbitration and Conciliation Act. This issue is, thus, answered in the negative with the result that this Court does not have the jurisdiction to hear and determine the main suit in accordance with Section 9 of the Arbitration and Conciliation Act.

# Issue 3: Whether the plaint in Civil Suit No. 0915 of 2018 discloses a cause of action against the $2^{nd} - 4^{th}$ Applicants.

Having decided that the dispute in the main suit is subject to arbitration and conciliation, resolving this issue would be redundant. Since the Court does not have jurisdiction to hear and determine the main suit, consideration of whether or not the plaint therein discloses a cause of action against any of the defendants would be inconsequential.

## Issue 4: What reliefs are available to the parties.

In Issue 2, the Court found that it does not have jurisdiction to decide the main suit. Consequently, this application succeeds and I make the following orders:

- The Respondent's affidavit in reply is hereby struck off the record. i. - This application is hereby allowed. ii. - Civil Suit No. 0915 of 2018 is hereby dismissed for want of III. jurisdiction. - Costs of Civil Suit No. 0915 of 2018 and of this application are iv. awarded to the Applicants.

Patrica senter

Patricia Mutesi

JUDGE

$(22/11/2024)$