Royal Transit Limited and Another v Kyamanywa and Others (Miscellaneous Application 1711 of 2024) [2025] UGCommC 66 (17 February 2025)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA [COMMERCIAL DIVISION] **MISCELLANEOUS APPLICATION NO. 1711 OF 2024**

## ARISING FROM CIVIL SUIT NO. 0812 OF 2024

## 1. ROYAL TRANSIT LIMITED

### 2. TADEO MUKONYENZI

# 3. MARUNGA MOLLY MUKONYENZI::::::::::::::::::::::::::::::::::::

#### **VERSUS**

## 1. CHARLES KYAMANYWA

### 2. SARAH KYAMANYWA

# <table> 3. CHARLOTTE KUNIHIRA::::::::::::::::::::::::::::::::::: **BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI**

#### **RULING**

This application was brought by notice of motion under section 6 of the Civil Procedure Act (CPA), section 33 of the Judicature Act (JA), Order 6 Rule 30(1), and Order 52 Rule 1,2, & 3 of the Civil Procedure Rules(CPR) for orders that:

- 1. The Respondent's suit, HCCS No. 0812 of 2024, Charles Kyamanywa & 2 Ors vs Royal Transit Ltd & 3 Ors, and all interlocutory proceedings arising therefrom be dismissed against the Applicants for being barred at law, incurably defective, and a perpetration of multiplicity of suits. - 2. HCCS No.0812 of 2024, Charles Kyamanywa & 2 Ors vs Royal Transit Limited & 3 Ors. against the Applicants be dismissed on account that the plaint does not disclose a reasonable cause of action against the applicants. - 3. Costs be provided for.

This application was supported by the affidavit of Tadeo Mukonyenzi and Molly Mukonyenzi and opposed by the affidavit in reply of Charles Kyamanywa and Sarah Kyamanywa.

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#### **REPRESENTATION**

The applicants were represented by M/s Kimara Advocates & Consultants and M/s Lawgic Advocates whereas the respondents were represented by M/s Aequitas Advocates.

#### **DECISION**

I have read and addressed my mind to the parties' pleadings and listened to counsel's submissions in this matter. The Issues to be determined by this court are:

- 1. Whether HCCS No. 0812 of 2024, Charles Kyamanywa & 2 Ors vs Royal Transit Ltd & 3 Ors offends the section 6 of the CPA (Lis Pendis rule) - 2. Whether HCCS No.0812 of 2024 does not disclose a cause of action against the defendants.

Issue 1

Whether HCCS No. 0812 of 2024, Charles Kyamanywa & 2 Ors vs Royal Transit Ltd & 3 Ors offends the section 6 of the CPA (Lis Pendens rule)

Section 6 of the CPA provides that:

"No court shall proceed with the trial of any suit or proceeding in which the matter in issue is also directly and substantially in issue in a previously instituted suit or proceeding between the same parties, or between parties under whom they or any of them claim, litigating under the same title, where that suit or proceeding is pending in the same or any other court having jurisdiction in Uganda to grant the relief claimed".

Section 6 of the CPA is framed in mandatory terms and it prohibits/bars a court from proceeding with the trial of a suit where the matters in issue is also directly and substantially in issue in a previously instituted suit between the same parties and where the suit is pending in the same or any other court in Uganda.

The test applied when determining whether a suit offends the Lis Pendens rule was well laid out in the case of Springs International Hotel Ltd v Hotel Diplomat Ltd and Another, HCCS No 227 of 2011 thus:

"a) whether the matter(s) in issue in the instant suit are directly and substantially the same as the matters in issue in a previously instituted suit;

b) whether the parties in the previous suit are directly or substantially the same as in the subsequent suit; and

c) whether the suit is proceeding or pending in the same or any other court having jurisdiction to grant the reliefs claimed".

This court will therefore have to determine whether there is a previously instituted suit between the same parties, whether the suit is pending in a competent court and whether the matter in issue is also directly and substantially in issue in the previously instituted suit between the parties.

# Whether there is a previously instituted suit between the same parties.

In the instant application, the previously instituted suit referred to is HCCS No. 0783 of 2024. There is no dispute that HCCS No. 0783 of 2024 was filed prior to HCCS No. 0812 of 2024.

The parties in HCCS No. 0783 of 2024 include; Charles Kyamanywa and Sarah Kyamanywa as plaintiffs and Royal Transit Limited, Drake Luutu, Tadeo Mukonyezi and Marunga Molly Mukonyezi as defendants.

The parties in HCCS No 0812 of 2024 include; Charles Kyamanywa, Sarah Kyamanywa and Charlotte Kunihira as plaintiffs and Royal Transit Limited, Tadeo Mukonyezi, Marunga Molly Mukonyezi and Equity Bank as defendants.

As far as parties are concerned the applicants in this case were all defendants in both HCCS No. 0783 of 2024 and HCCS No. 0812 of 2024. The only difference in the current suit is that Equity Bank has been added as a defendant and Drake Luutu has been removed as a defendant. On the side of the plaintiffs in the current suit, Charlotte Kunihira has been added as a plaintiff.

The application in this case has been brought by parties who are defendants in both HCCS No. 0812 of 2024 and HCCS No. 0783 of 2024.

I, therefore. find that there is a previously instituted suit between the same parties.

# Whether the suit is pending before a competent court

Both HCCS No. 0783 of 2024 and HCCS No. 0812 of 2024 are filed at the commercial division of the High Court. Though the cases are pending in the docket of different judges, it is without doubt that the cases are pending before a competent court in Uganda with jurisdiction to handle the disputes.

## Whether the matters in issue are directly and substantially in issue in the previously instituted suit.

To resolve this issue, it is pertinent that the claims in both HCCS No. 0783 of 2024 and HCCS No. 0812 of 2024 are laid out and analyzed accordingly.

In the previous suit vide HCCS No. 0783 of 2024, the plaintiff's claim against the defendants is for the recovery of Ugx 229,000,000/=, general damages, interest and costs for breach of contract.

In the current suit vide HCCS No. 812 of 2024, the plaintiff's claim is for damages for breach of contract, breach of trust, deceit, negligence and fraudulent misrepresentation. They also seek for a declaration of mandatory injunction compelling the 1<sup>st</sup>, 2<sup>nd</sup> and 3<sup>rd</sup> defendants to offset the sum of Ugx 247,000,000/= (Two hundred and forty-seven million) from the money due from the Ministry of Local Government, LEGS Project payment.

From the above, the monies sought to be recovered differ in amount but both arise out of the alleged breach of the bridge loan agreement and are to recover the purported balance of the loans advanced. The reliefs sought are primarily similar save for breach of trust, deceit, negligence, mandatory injunction and fraudulent misrepresentation

When you read the facts giving rise to the claim in HCCS No. 0812 of 2024, they have more or less originated from the same unresolved claims in HCCS No. 0783 of 2024 which is the breach of the bridge loan agreement. The crux of the suit in both is to recover the alleged outstanding loan balance from the defendants. In both suits, the plaintiffs have the same facts to wit they contend that they disbursed a loan to the defendants pursuant to the bridge loan agreement and loan agreement, that the defendants later registered a company resolution where Charlotte Kunihira was appointed as a principal signatory to their account with Equity Bank and that the defendants have failed to pay their loan obligations with interests till to date. The plaintiffs claim that the defendants withdrew monies from the account without the signatory Charlotte Kunihira's authorization. It is therefore no doubt that the facts giving rise to the cause of action in both suits are the same.

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On perusal of both plaints, this court has also noted that the complaint against the applicants arise from the same subject matter which is the outstanding loan balance stemming from the alleged breach of the bridge loan agreement. The documents relied on to prove the plaintiff's case are majorly the same in all the suits which is the bridge loan agreement, the ordinary resolution appointing Charlotte Kunihira as the principal signatory and the loan agreement dated 23<sup>rd</sup> February 2024.

A thorough examination of the current suit namely HCCS No. 0812 of 2024 clearly reveals that the matter in issue in the current suit is also directly and substantially in issue in the previously instituted suit namely HCCS No. 0783 of 2024 between the same parties or between parties under whom they or any of them claim. It is no doubt that the matters in controversy are substantially the same.

In summary, this court finds that both suits are founded on the same subject matter, bear the same set of facts and have the same documents that the plaintiffs seek to rely on to prove their case. Both courts will first have to determine the rights of the parties under those agreements mainly the loan bridge agreement, and loan agreement and determine whether there was a breach of those rights before moving to other issues. Both courts will also have to determine whether indeed the defendants are indebted to the plaintiffs.

Allowing HCCS No. 0812 of 2024 which is the later suit to proceed while HCCS No. 0783 is ongoing before a different judge has the likely possibility of exposing the judicial officers to a risk of reaching two conflicting decisions which threatens the spirit of precedence. And even if the two judges reached the same decision, the plaintiffs would stand to benefit twice or lose twice.

This court is cognizant of the fact that a new party that is Equity Bank has been added as a defendant in the current suit and was not part of the previous suit, however, this court has noted that the subject matter of the suit is exactly the same and arises from the course of the same transaction which is the bridge loan agreement. The applicants in this case have been maintained as defendants in both suits.

Counsel for the respondent contends that in the current suit vide HCCS No. 0812 of 2024, the particulars of fraud, collusion and negligence are specifically pleaded which is not the case in Civil Suit No. 0783 of 2024. It should be noted that all these

stem from the loan agreement that is said to have been breached upon default to make payment. Therefore, to establish fraud, collusion and negligence, the court will first have to establish the rights of the parties to the suit.

Similarly, in the current suit, the plaintiffs seek for mandatory injunction which is not in the previous suit. It should be noted that a permanent injunction cannot be granted without establishing the rights of the plaintiffs which can only be determined by trying the suit on matters in controversy which are directly and substantially in issue in HCCS No. 0783 of 2024.

In the circumstances and given the introduction of new parties and prayers in both suits referred to above, among other things, and in the interest of justice, this court will invoke its powers under section 37 of the Judicature Act (Cap 16) and direct that both civil suits 0783 of 2024 and 0812 of 2024 are consolidated and determined by one judicial officer in order to completely and finally determine all matters in controversy between the parties to avoid multiplicity of legal proceedings concerning the said matters.

#### Issue 2

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## Whether HCCS No. 0812 of 2024 does not disclose a cause of action against the defendants.

Counsel for the applicants contends that this prayer is in relation to the third plaintiff in HCCS No. 0812 of 2024 who is Charlotte Kunihira. Counsel contends that her presence in the transaction was that of an agent to the lenders and the transactions did not accrue to her direct benefit as a person. She was not a party to it and she would not derive any direct benefits from the transaction. Her role in the transaction was only to look out to the affairs of respondents 1 and 2 who are already parties in Court.

Counsel for the respondents submitted generally that the entire plaint discloses a cause of action and relied on the case of One Stop Events Center Limited v Uganda Communications Commission and Another Civil Suit No. 61 of 2016 to elaborate on the ingredients to prove while establishing a cause of action and the need for the court to look at only the plaint and its annexures while determining such.

Counsel for the respondents contended that from a careful examination of the annexures to Civil Suit No. 0812 of 2024, it is clear that the plaintiffs enjoyed the

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right whereby money was lent to the defendants on terms that are in the agreements which are annexed to that plaint. That in the same loan agreements, the 3rd plaintiff in that suit was made a principal signatory to an account that is held by Equity Bank Uganda limited; and where the money from the Ministry of Local Government was to be credited. In other words, she was to approve any transactions on that account. However, a resolution was fraudulently executed by the defendants in that case, removing the 3rd plaintiff as principal signatory and money was withdrawn from the account without any knowledge of the plaintiffs which resulted in the ingredient that, that right that was enjoyed by the plaintiffs was violated which also resulted in the third ingredient that the defendants are liable.

The question, therefore, is whether the plaint in HCCS No. 0812 of 2024 discloses a cause of action against defendants in relation to the 3<sup>rd</sup> plaintiff.

The law governing the need for a plaint to disclose a cause of action is provided for under **Order 6 Rule 30(1)** of the CPR which states that:

"The court may, upon application, order any pleading to be struck out on the ground that it discloses no reasonable cause of action or answer and, in any such case, or in case of the suit or defense being shown by the pleadings to be frivolous or vexatious, may order the suit to be stayed or dismissed or judgment to be entered accordingly, as may be just."

Under Order 7 rule 11(a) of the CPR, a plaint shall be rejected by the court if it does not disclose a cause of action. Therefore, a plaint that does not disclose a cause of action cannot stand and should be struck out by the court.

The Courts have described what constitutes a cause of action in a plaint or the ingredients of a cause of action in the case of Auto Garage v Motokov [1971] EA 514 where it was held that:

"If a plaint shows that the plaintiff enjoyed a right, that the right has been violated and the defendant is liable then a cause of action has been disclosed and any omission or defect may be put right by amendment if, on the other hand, any of those

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essentials is missing, no cause of action has been shown and no amendment is permissible."

Further in the case of Major General David Tinyefunza v AG Constitutional Appeal No. 1 of 1997 Wambuzi CJ held that:

"The question of whether a plaint discloses a cause of action is considered upon a perusal of the plaint only".

The Court of Appeal in the case of Kapeka Coffee Works Ltd v NPART CACA No. 3 of 2000 held that in determining whether a plaint discloses a cause of action, the court must look only at the plaint and its annexures if any, and nowhere else.

From the plaint in HCCS No. 0812 of 2024, it can be seen that the 3<sup>rd</sup> plaintiff's role in the whole transaction was that she was appointed as a principal signatory in the defendants' bank account in Equity Bank. This is clearly evidenced in the plaintiffs' claim where they stated that pursuant to a company resolution dated the 21<sup>st</sup> February 2024, the 3<sup>rd</sup> plaintiff was appointed as a signatory to the defendants' account. The plaintiffs attached a resolution as an annexure to this effect and a bank form that was filled introducing the 3<sup>rd</sup> plaintiff as a signatory.

I have observed from the pleadings that although there is no direct benefit that the 3<sup>rd</sup> plaintiff was to gain from the whole transaction that has led to the present suit, the 3<sup>rd</sup> plaintiff had a right to being the principal signatory with authority to approve transactions on the defendants' bank account in respect of payments in favor of the 1<sup>st</sup> and 2<sup>nd</sup> plaintiff; and from which account monies were allegedly fraudulently withdrawn by the defendants without her approval; thereby violating her right as principal signatory by the said defendants who are alleged to have forged her signature; and even went further to allegedly execute a resolution removing the 3<sup>rd</sup> plaintiff as signatory to the account.

Although, in the bridge loan agreement which is the document that binds the parties in the suit, the 3<sup>rd</sup> plaintiff signed the said document as a witness, she appears to have been introduced to safeguard the rights of the plaintiffs in the transaction in issue and her claim as particularized in the plaint is in respect of fraud allegedly perpetrated by the defendants in that regard.

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Order 1 rule 1 of the Civil Procedure Rules provides that all persons may be joined in one suit as plaintiffs in 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 exist, whether jointly, severally or in the alternative, where, if those persons brought separate suits, any common question of law or fact would arise. Further, it is trite law that a plaintiff is at liberty to sue anybody that he or she thinks has a claim against and cannot be forced to sue somebody.

From the above and in conclusion, I find that the plaint discloses a cause of action as regards the 3<sup>rd</sup> plaintiff in HCCS No. 0812 of 2024.

In the result, this application is dismissed. Given the outcome of this application, each party will bear their own costs of the same.

My Bitalie

HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................