Fine Spinners Uganda Limited v A to Z Textile Mills Limited (Misc. Application No. 152 of 2025) [2025] UGCommC 87 (14 March 2025)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL DIVISION) MISC. APPLICATION NO. 152 OF 2025 (ARISING FROM CIVIL SUIT NO. 1023 OF 2023)** 10 **FINE SPINNERS UGANDA LIMITED :::::::::::::::::::::::::::::::::: APPLICANT VERSUS A TO Z TEXTILE MILLS LIMITED ::::::::::::::::::::::::::::::::: RESPONDENT BEFORE: HON. LADY JUSTICE PATIENCE T. E. RUBAGUMYA**

### **RULING**

#### 15 Introduction

This application was brought by way of Chamber Summons under **Sections 98 and 100 of the Civil Procedure Act, Cap. 71 (now Cap. 282), Section 33 of the Judicature Act, Cap. 13 (now Section 37 of Cap. 16)** and **Order 6 rules 19 and 31 of the Civil Procedure Rules SI** 20 **71-1**, seeking:

- - 1. Leave to be granted to the Applicant to amend its written statement of defence and counterclaim. - 2. Costs of this application be in the cause.

#### Background

25 The background of this application is contained in the affidavit in support of the application, deponed by **Mr. Musau Peter Muindi**, the Applicant's Chief Financial Officer, and is summarized below:

- 5 1. That on 5th September, 2023, the Respondent filed *Civil Suit No. 1023 of 2023* against the Applicant which is pending hearing before this Court. - 2. That in its defence and counterclaim, the Applicant denied the Respondent's claim and counterclaimed inter alia for the payment of - 10 USD 826,583 (United States Dollars Eight Hundred Twenty-Six Thousand Five Hundred Eighty-Three Only) being the quantum of the losses suffered by the Applicant due to the supply of poor quality fabric by the Respondent. - 3. That to prove its case, the Applicant relied on a productivity loss 15 statement highlighting the extent of loss suffered on the Applicant's part occasioned by supply of poor quality fabric. - 4. That it was upon the basis of the said productivity loss statement that the Applicant sought USD 826,583, which was the quantum of losses due to the Respondent's supply of poor quality fabric. - 20 5. That recently, the Applicant carried out a comprehensive audit and reconciled its accounting books thereby discovering that its original productivity loss statement as attached to its counterclaim had grave errors as it did not reflect the accurate affairs of the Applicant wherefore, affecting the accuracy of its claim. - 25 6. That in light of the corrected productivity loss statement, there is a need to amend the reliefs sought from the Court and some paragraphs of the defence and counterclaim to bring the same in tandem with the corrected statement. - 7. The Respondent will not be prejudiced by the amendment since the 30 hearing of the suit has not yet commenced. The amendment is necessary for the proper determination of the real questions in controversy between the parties.

- 5 In reply, the Respondent through its Managing Director **Mr. Kalpesh Shah**, opposed the application contending that: - 1. The Applicant did not suffer the alleged loss of USD 826,583 and the Respondent did not supply poor quality fabric as alleged. - 2. The application is made in bad faith intended to change the 10 character of the Applicant's counterclaim, and is a total departure from the original pleadings.

3. The amendment introduces a new cause of action and refers to a document that was not in existence at the time the above suit was filed and the Applicant has not justified why it was not in existence 15 then.

- 4. The issues in controversy can still be resolved without the proposed amendment. - 5. The amendment is an afterthought choreographed in bad faith to bolster the Applicant's weak case and the Respondent will be 20 prejudiced if the application is granted.

In its affidavit in rejoinder deponed by **Mr. Musau Peter Muindi**, the Applicant reiterated its averments and added that:

- 1. The exercise, the result of which this application arises, is an acceptable normal accounting process that made findings 25 pertinent to the proper determination of justice of this case. - 2. The amendment does not change the character of the case as it only clarifies the contents of the Applicant's written statement of defence and counterclaim thereof.

3. The hearing of the dispute is still at a preliminary stage and the 30 proposed amendment shall not prejudice the Respondent but

5 rather aid in the conclusive determination of the issues pertinent to the case.

#### Representation

The Applicant was represented by **M/s Ssemambo & Ssemambo Advocates,** while **M/s Mugisha & Co. Advocates** and **M/s Bitangaro &** 10 **Co. Advocates** represented the Respondent.

Both parties were directed to file their written submissions but only the Applicant did, and this Court has considered the same.

Issues for Determination

- 1. Whether the Applicant should be granted leave to amend its 15 pleadings in *Civil Suit No. 1023 of* **2023**? - 2. What remedies are available to the parties?

# Issue No. 1: Whether the Applicant should be granted leave to amend its pleadings in *Civil Suit No. 1023 of 2023*?

#### Applicant's submissions

- 20 In his submissions, Counsel for the Applicant first relied on **Section 100 of the Civil Procedure Act**, **Order 6 rule 19 of the Civil Procedure Rules** and the case of *Gaso Transport Services (Bus) Ltd Vs Martin Adala Obene SCCA No. 4 of 1994*, for principles that govern the exercise of Court's discretion in applications for amendments. - 25 Counsel then submitted that in *Civil Suit No. 1023 of 2023*, the Plaintiff alleges that the Defendant is indebted to it for monies due from the supply of fabric to it while the Defendant's case is that, whereas, the Plaintiff

- 5 supplied fabric to it, the same was of poor quality consequently occasioning loss to the Defendant and for which it seeks recovery of the monies suffered in losses. That paragraphs 8, 9, 10, 11 and 14 of the affidavit in support lay down the rationale for the application which is in line with paragraph 4 of the written statement of defence and paragraph 3 - 10 of the counterclaim. That all the above reveal that the amendment sought only seeks to elaborate and provide clarity on the issues already previously raised in the Applicant's pleadings which rationale is well fortified by the law on amendment as well as in the case *Mulowooza & Brothers Ltd Vs N. Shah & Co. Ltd C. A. C. A No. 26 of 2010*. - 15 Further, Counsel contended that much as the Respondent avers that the intended amendment seeks to introduce a new cause of action and alter the character of the Applicant's counterclaim, that is not true. That the productivity loss statement for which this amendment is sought contains elaborate and unambiguous details of the loss of revenue and business 20 suffered because of the poor quality fabric supplied by the Respondent, arrived at after scrutiny of the records of the Applicant and undertaken per the international standard on related services (ISRS 4400). Also, that the Respondent will not be prejudiced since the hearing of the case has not yet commenced. - 25 Analysis and Determination

## **Order 6 rule 19 of the Civil Procedure Rules** stipulates that:

"*The Court may, at any stage of the proceedings, allow either party to alter or amend his or her pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be*

5 *necessary for the purpose of determining the real questions in controversy between the parties*."

The above provision explicitly vests this Court with discretionary power to allow the amendment of pleadings at any stage of the proceedings to determine the real issues in controversy, between the parties.

- 10 To guide the Court in the exercise of the above discretion, it was held in the case of *Eastern Bakery Vs Castelino [1958] 1 EA 461* that the powers of amendment should not be used to substitute one cause of action for another or change an action into another of a substantially different character. - 15 Furthermore, the principles that govern the amendment of pleadings were laid out in the case of *Gaso Transport Services (Bus) Ltd Vs Martin Adala Obene (supra)* and these include that: - i) The amendment should not work as an injustice on the other side. - ii) Multiplicity of proceedings should be avoided as far as possible 20 and all amendments which avoid such multiplicities should be allowed. - iii) An application which is made malafide should not be granted. - iv) No amendment should be allowed where it is expressly, or impliedly prohibited by any law. - 25 In the instant case, the Respondent filed *Civil Suit No. 1023 of 2023* against the Applicant for recovery of USD 33,123.35, being an outstanding payment due from breach of agreement, interest thereon and costs of the suit. The claim was premised on the facts that, on different occasions, upon purchase, the Applicant was supplied with goods worth USD

5 49,082.35 by the Respondent, but it only paid USD 15,959.00, and has refused to pay the balance of USD 33,123.35.

In its written statement of defence and counterclaim, the Applicant denied the allegations contending that on several occasions, the Respondent withheld the supply of fabric even after payment, resulting in massive 10 losses and the Respondent later supplied fabric that was not of the required standard and not fit for purpose. In its counterclaim, the Applicant sought to recover USD 14,583 for the loss occasioned by the rejection of contaminated, molded fabric and garments and USD 812,000 for the productivity loss. In evidence, the Counterclaimant/Applicant 15 adduced a copy of the debit note and statement confirming productivity losses.

The Applicant now contends that the attached copy of the productivity loss statement contained errors which were clarified and reconciled when it carried out a comprehensive audit. That the same errors are reflected in 20 the reliefs sought as reflected in the written statement of defence and counterclaim.

I have looked at the Applicant's draft amended written statement of Defence and counterclaim together with the proposed amendments therein as portrayed in annexure "**B**" attached to the affidavit in support and 25 observed that; the Applicant is seeking to amend the claimed amount from USD 826,583 to USD 2,697,093.38 as the quantum of losses suffered due to the Respondent's alleged actions. The above amounts are premised on the account audits carried out by the Applicant as reflected in annexure "**A**" attached to the affidavit in support; that is different from the one 30 attached to the written statement of defence and counterclaim. I have also observed that the paragraphs sought to be amended are adding particulars

5 to the Applicant's claim. No new facts or claims are disclosed as alleged by the Respondent.

As was held in the case of *Eastern Bakery Vs Castelino (supra)*, amendments of pleadings sought before the hearing of the case should be freely allowed provided, they do not occasion an injustice to the other 10 party. In the instant application, the Respondent has not demonstrated any injustice that it will suffer if the Court grants this application. Since the sums fall under the same claim, the alteration of the same is not prejudicial as it is subject to proof during the trial.

In the circumstances, I find that the Respondent will not be prejudiced by

15 the amendments and in the interest of justice and pursuant to **Section 37 of the Judicature Act** and **Section 98 of the Civil Procedure Act,** the Applicant is hereby granted leave to amend its written statement of defence and counterclaim, as sought.

Therefore, issue No. 1 is answered in the affirmative.

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

Having resolved issue No.1 in the affirmative, the following orders are issued:

- 1. The Applicant is hereby granted leave to amend its written statement of defence and counterclaim in *High Court Civil Suit No.1023 of* - 25 *2023* by amending the amount claimed and providing better particulars of the same. - 2. The Applicant shall file and serve the amended written statement of defence and counterclaim to the Respondent within fourteen (14) days from the date of this Ruling.

- 5 3. The Respondent shall file and serve its amended reply to the written statement of defence and counterclaim within fourteen (14) days after receipt of the amended written statement of defence and counterclaim. - 4. Costs of this application shall be in the cause. - 10 I so order.

Dated, signed and delivered electronically via ECCMIS this **14th** day of **March, 2025**.

Patience T. E. Rubagumya 15 **JUDGE** 14/03/2025