Gonget v Tuhairwe & Another (Miscellaneous Application 2898 of 2023) [2024] UGCommC 160 (27 May 2024)

# 5 **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA COMMERCIAL DIVISION MISCELLANEOUS APPLICATION NO. 2898 OF 2023 (ARISING FROM CIVIL SUIT NO. 0666 OF 2023)**

**BARBARA GONGET ] APPLICANT**

**VERSUS**

# 15 **1. TUHAIRWE MONICA**

# **2. CEDA FINACIAL SERVICES LIMITED ] RESPONDENT**

**Before: Hon. Justice Ocaya Thomas O. R**

# 20 **RULING**

# **Background:**

The Applicant brought this application under the provisions of Order 6 rules 19 and 31 of the Civil Procedure Rules SI 71-1. The application seeks the following orders;

25 a) Leave be granted to the applicant to amend the plaint in Civil Suit No. 0666 2023. b) Costs of the application be provided for.

This application is supported by the affidavit of Barbara Gonget and the grounds upon which it is premised are that some issues were left out by the Applicant's former attorneys. That

30 the amendment is necessary to help the Court properly determine the real issues in controversy and for the court to reopen the same and; further that the amendment will not prejudice the Respondents in any way.

The crux of the Applicant's application lies in paragraphs 2, 3,4, 5, and 6 of her affidavit which 35 I shall labor to reproduce here for ease of reference;


- 5 1. That through the law firm of M/S Nsereko-Mukalazi & Co. Advocates I against the respondents/defendants in High Court Kampala (Land Division) C. S 231 of 2016) now Commercial Court C. S. no. 0666 of 2023. - 2. That the law firm of M/S Nsereko-Mukalazi & Co. Advocates was unable to continue representing me in the suit for reason whereof I instructed the law firm of M/s 10 Wegulo & Wandera Advocates to represent me, who on re-assessing the plaint are of the view that it is necessary to amend the plaint to bring out issues of the illegality of the transaction between me and 2nd Respondent. - 3. That in the absence of a valid money lending license, the loan agreement with interest between the 2nd Respondent and I was illegal, null, and void. - 15 4. That in light of the fact that I received money from the 2nd Defendant which I secured with a pledge of the certificate of title of the suit land, it is important that this honorable court in the exercise of its jurisdiction reopens the transaction and determines how much money I owe the 2nd Defendant if any, which upon payment I should receive back my title in the event of cancellation of the 1st Defendant's name 20 from the same. - 5. That the amendment in the plaint is necessary for the purpose of determining the real questions in controversy between the parties and for the grant of appropriate remedies with finality to the matter. - 25 The Applicant's affidavit in support is opposed by the 1st Respondent's affidavit in reply sworn by herself, Tuhairwe Monica, and the 2nd Respondent's affidavit in reply was sworn by Bwiruka Jane, the director and member of the 2nd Respondent's company. It is deposed that the Applicant's application seeks to introduce a new cause of action which is barred by the law of limitation. - 30

That the averments in the affidavit are self-defeating and clear admissions of indebtedness leading to the disposal of the suit property and that the application will prejudice the 2nd Respondent.

- 5 The brief facts are that the Applicant/Plaintiff brought Civil suit no. 231 of 2016 against the Respondents/Defendants for fraudulently causing a transfer of the suit land into the names of the 1st Defendant, a permanent injunction restraining the Defendants from evicting, transferring, and dealing with the suit land and an order directing the Registrar of Titles to cancel the 1st Respondents name from the certificate of title and restore the Plaintiffs name - 10 on the title.

The Applicant got a loan of UGX 5,000,000 and the 2nd Respondent accepted to avail the plaintiffs the loan on condition that she deposited the suit title as security which the plaintiff did and deposited the duplicate certificate of title.

When the Plaintiff later failed to pay, she communicated to the 2nd Respondent and when she made efforts to pay the 2nd Respondent concealed the outstanding balance and declined to acknowledge the funds paid by the Plaintiff. The Plaintiff later received information that her title had been fraudulently transferred in the names of the 1st Respondent/Defendant. the

20 Applicant/Plaintiff claims that the Respondent/Defendant colluded and fraudulently caused the transfer of the suit title into the 1st Defendants names.

### **Representation and Submissions:**

The Applicant was represented by the law firm of M/S Wegulo & Wandera Advocates 25 whereas the 1st Respondent was represented by the law firm of M/S Mujurizi & Tumwesigye Advocates and the 2nd Respondent was represented by M/S Ochieng Associated Advocates & Solicitors.

The Applicant and the Respondents all made written submissions in support of their 30 respective cases which I have read but I have not seen the need to reiterate the same below but will refer to them where appropriate in the decision.

#### **Evidence:**

The Applicant led evidence by way of an affidavit deponed by Barbara Gonget while the 1st

Page **3** of **9** 35 Respondent led theirs by way of an affidavit in Reply deponed by Tumuhairwe Monica and the 2nd Respondent led evidence by way of an affidavit in reply deponed by Bwiruka Jane.

#### 5 **Decision:**

The Applicant prayed for leave to amend her pleadings in Civil Suit No. 231 of 2016.

The Counsel for the Applicant submitted that it is necessary to bring out the issues of the illegality of the transaction between the 2nd Respondent and the applicant because at the time of the transaction, the 2nd Respondent's company was not in possession of a valid

- 10 money lending license. That even if they had a money lending license, the interest rate charged per annum was high and unconscionable. Further, that transaction should be reopened to determine the amount of money which was borrowed, what was paid, and what was payable by the Applicant to the 2nd Respondent since the Applicant can only redeem her title by paying the rightful amount owed. Counsel for the Applicant submitted that this was - 15 not catered for in the initial plaint.

Both the Respondents submitted that the Applicant wants to introduce a different issue which will introduce a new cause of action and that the information she intends to introduce is not new since she was privy to the same before instituting the suit. Further that the

20 application is barred by the law of limitation since it has been filed after 8 years with the intention of filling in gaps.

Order 6 Rule 19 CPR provides thus:

*"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*

25 *made as may be necessary for the purpose of determining the real questions in controversy between the parties."*

Various decisions of the courts have established the principles that guide the grant of leave to amend pleadings and these are:

30 *(a) Amendments are allowed by the courts so that the real question in controversy between the parties is determined and justice is administered without undue regard to technicalities. (b) amendments to pleadings sought before the hearing should be freely allowed, if they can be made without injustice to the other side and there is no injustice if the other side can be compensated by costs;*

5 *(c) the court will not refuse to allow an amendment simply because it introduces a new cause of action provided it would not change the suit into one of a substantially different character (d) The amendment should not occasion injustice to the opposite party incapable of atonement by damages.*

*(e) It should be granted if it is in the interests of justice and to avoid multiplicity of suits*

10 *(f) The application should be made in good faith.*

# See**:** *Molowoza Brothers Ltd v N. Shah & Co. Ltd SCCA No.26 of 2010, Gaso Transport* 15 *Services (Bus) Ltd v Obene (1990-1994) EA 88, Eastern Bakery v Castelinov (1958) E. A 451.*

The above provisions are clear on what needs to be put into consideration before such an application may be granted. Counsel for the Applicant submitted that the initial plaint 20 drafted by the former lawyers of the applicant did not cater for some particulars of fraud, particularly that in the absence of a valid money lending license the loan agreement between the Applicant and the 2nd Respondent was illegal. And that court should reopen that transaction to determine how much money the applicant owes to the 2nd Respondent if any and upon payment the applicant should receive back her title in the event the 1st 25 Respondent's name is cancelled from the Register.

Counsel further submitted that the amendment is necessary for the purpose of determining the real questions in controversy between the parties. Counsel relied on the case of Musoke Mike v Kalumba James Revision cause no. 09 of 2019 where Hon. Mr. Justice Bashaija K

30 observed that it is the established position of law that illegality can be raised at any time before a court of law and it shall be investigated.

Counsel for the 1st Respondent submitted that the Applicant seeks to introduce new claims different from the original plaint which claims introduce a new cause of action. That the

35 amendment proposed by the Applicant is not based on new information that the Applicant

*<sup>(</sup>g) No amendments should be allowed where it is expressly or impliedly prohibited by any law. (h) The court shall not exercise its discretion to allow an amendment which has the effect of substituting one distinctive cause of action for another.*

- 5 did not have at the time of filing the main suit and if the amendment was necessary the Applicant should not have waited for 8 years to amend his pleadings. Further, that the application is filed in bad faith to fill in the gaps that were omitted in the original suit after realizing her plaint has no real cause of action. - 10 Counsel relied on the case of Harrison C. Kariuki v Blue Shield Insurance Co. Ltd (no citation provided) **[2006] eKLR** where the judge held that to allow the plaintiffs amendment would occasion injustice to the defendant who would have to extensively amend his defense and it would meet a much more expanded case than originally pleaded. - 15 Counsel for the 2nd Respondent submitted that the application sought a new cause of action which is barred by the law of limitation and that the averments in the Applicant's submissions are clear admissions of her indebtedness and that the application will greatly prejudice the 2nd Respondent. - 20 *Does the amendment introduce a new cause of action?*

From the reading of the original plaint alongside the proposed amendment, it is clear that the element of fraud was the center of the cause of action in as far as the loan transaction and every subsequent action and transactions thereafter arising from the loan transaction as claimed by the applicant/plaintiff.

The Applicant in paragraph 3 of the filed Written statement of Defense pleaded and particularized fraud against the 1st and the 2nd Defendant. The same was maintained in paragraph 3 of the amended plaint draft and paragraph 5 of the amended plaint draft where the applicant particularized the fraud claims against the 1st and the 2nd Defendant.

The Applicant's amendment also requires the court to open the transaction to determine the actual amount the applicant owes the 2nd Respondent. The purpose of the amendment is to ensure that all claims of the Applicant against the 2nd Respondent are determined in court as long as they arise from the same transaction.

- 5 I have not seen a new cause of action being introduced in the draft amended plaint; in my view the subject matter of the suit has not changed but rather additionally particulars of fraud have been pleaded. These are additional material facts that have been brought to the Court's attention for the purpose of concluding the controversy between the parties herein because at the end of the day, litigation has to come to an end and any opportunity the Court - 10 gets to conclusively resolve a matter must be encouraged as long as any such amendment does not introduce a new cause or as long as it does not change the character of the suit substantially. See **Sibamanyo Estates Limited v Equity Bank Uganda Limited & Ors HCMA 414/2022.**

*Section 100* of the Civil Procedure Act Cap provides that all necessary amendments are made

- 15 for the purpose of determining the real issue raised. To ensure that there is no multiplicity of suits regarding the same transaction it is only prudent that the amendment is granted by court. - In the case of Harrison C. Kariuki v Blue Shield Insurance Co. Ltd (no citation 20 provided) **[2006] eKLR** cited in opposition to this application**,** the facts are distinguishable as the case had proceeded and testimony called by the parties and the matter was pending submissions and a reserved Judgment. In this matter no evidence has been led by either of the parties. Furthermore, the amendments sought were stated to be expensive. That it not the situation in the matter before court. - 25

It is therefore my considered opinion that the applicant's application did not introduce a new cause of action.

# *Is the Amendment Barred by the Law of Limitation?*

30 Both the 1st and 2nd Respondent averred that the amendment is time-barred since it is being made 8 years after the main suit was instituted. In the submissions of the 1st Respondent Counsel contends that the applicant failed to service her loan and sold her security to group combined effort properties and cannot come after almost 10 years to ask how much was outstanding on the loan. Further, that such an amendment would be statute-barred since 5 causes of action from contracts are statute-barred after 6 years as per Section 3(1)(a) of the Limitation Act.

As earlier stated above the amendment does not introduce a new cause of action of breach of contract but rather is an addition to the particulars of fraud. **Order 6 Rule 19** of the Civil

- 10 Procedure Rules does not provide a time limit within which to make an amendment and this position was upheld by Hon. Lady Justice Jeanne Rwakakooko in *Sarah Nyakato v Lin Jeng Liang and 5 others Mis. App No. 316 of 2022* where she allowed an amendment after 14 years after instituting the main suit. - 15 The applicant's claim is based on fraud and it is trite that allegations of fraud cannot be ignored by the court the moment it is brought to the Court's attention without the Court first scrutinizing the claim. In the case of *Makula International V. His Eminence Cardinal Emmanuel Nsubuga (1982) HCB 11,* the Court held that *A court of law cannot sanction what is illegal and an illegality once brought to the attention of court overrides all questions of* 20 *pleadings, including any admission.*

From the foregoing, I find that the claim of fraud withstands the limitation period.

### *Prejudice:*

- 25 The 2nd Respondent contended that the present application is aimed at derailing the determination of the main suit. As noted above, where an amendment of pleadings causes prejudice to the advance party, and such prejudice is curable by an award of costs, the court may allow the amendment. Moreover, where the court allows such an amendment, it may impose short deadlines for effecting the amendment in order to ensure that the trial is not - 30 derailed as much to affect the element of a speedy trial. Lastly and as earlier established the hearing of this suit has not yet commenced.

In the circumstances, I am certain that the award of costs and the imposition of shorter compliance deadlines for the amendment will negate any prejudice likely to be suffered by

35 the Respondent.

### 5 *Costs:*

As a rule of law, costs ordinarily follow the event and a successful litigant receives his or her costs in the absence of special circumstances justifying some other order. Where the successful party has been guilty of some misconduct, an order of costs may not be granted. See **Harry Ssempa v Kambagambire David HCCS 408/2014, Section 27(2) Civil**

## 10 **Procedure Act, Lyamuleme David vs. AG SCCA NO.4 of 2013.**

In the instant case, this matter is not a function of any misconduct, default or action of the Respondents. In the premises, I award the costs of this application to the respondent.

### **In Conclusion:**

- 15 I accordingly make the following orders: - a) The Applicant is granted leave to amend her plaint. - b) The Applicant should file and serve its amended plaint within ten (10) working days from the date of this ruling. - c) The Respondents, if they so wish, should file a reply to the amended plaint and serve - 20 the same within ten (10) days from the date of service of the amended plaint. - d) Once, the directions above are complied with, the parties should observe the necessary pre-trial processes with the view of having the suit heard and determined. - e) The Applicant shall bear the costs of this application. - 25 I so order.

Dated this\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_2024, delivered electronically and uploaded on ECCMIS. 27th May


**27th May 2024**