Sanlam General Insurance Limited v Quality Milk Diaries Limited (Miscellaneous Application 257 of 2022) [2023] UGCommC 256 (14 November 2023)

Full Case Text

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA ICOMMERCIAL DIVISIONI MISCELLANEOUS APPLICATION NO. 0257 OF 2022 IARISING FROM CML SUIT NO. 0849 OF 20201

## SANLAM GENERAL INSURd,NCE LIMITED: : : : : : : : : : : : : : : : : : : : :APPLICANT VERSUS

QUALITY MILK DIARIES LIMITED: : : : : : : : : : : : : : : : : : : : : : : : : : : :RESPONDENT

## BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI

#### RULING

This Application was brought by way of Notice of Motion under section 98 of the Civil Procedure Act (CPA) and Order 52 rules I & 3 of the Civil Procedure Rules (CPR) for orders that the order of the Court dismissing Civil Suit No 0849 be set aside, varied and the main suit reinstated, the Default Judgment and Decree issued therefor be set aside and the matter determined inter parties and heard on its own merits, grant ofany consequential orders and costs of the Application be provided for.

The Application was supported by the Affidavit of Robert Mazima, the Applicant's credit control manager, and opposed by the Affidavit in reply of Busingye Swalleh, the Director of the Respondent.

#### BACKGROUND

The Applicant brought Civil Suit No.0849 of2020 against the Respondent and the suit was dismissed for failure to comply with directives issued by Court. A Default Judgment and Decree were issued in favor of the Respondent arising from their counterclaim. The Applicant filed Misc. Application No. 257 of 2022 in a bid to reinstate the Civil Suit No. 0849 of 2020 and, the same was dismissed for want of prosecution. The Applicant then filed Misc. Application No. 005 I of 2023 for review and this Application was thus reinstated by this Court.

^t CN{V U

#### REPRESENTATION

The Applicant was represented by I\4/s Tumwebaze, Atugonza, Kobusingye Advocates and Legal Consultants whereas the Respondent was represented by M/s Kikabi & Co Advocates.

#### RULING

I have read the pleadings and submissions of both parties in this matter. The Respondent raised preliminary objections on three points of law which will be addressed before delving into the merits of the Application.

## Preliminary Objection I

#### The Applicant's Notice of Motion is defective because it was filed by Counsel without instructions.

Counsel for the Respondent submitted that the Applicant through ll4/s Tumwebaze, Atugonza, Kobusingye Advocates & Legal Consultants brought this Application by way of Notice of Motion yet the Affidavit in support thereof shows that it was swom by Robert Mazima of M/s Aequitas Advocate. Further, that the Advocate who filed the Applicant's Notice of Motion did so without instructions since the Notice of Motion still reads the former Advocates and the Respondent was not served with a notice of change of Advocates.

Counsel for the Applicant submitted that it was a clerical error to capture the previous law firm and the same was rectified in the Affidavit in rejoinder and that it is already an established position of the law that where some parts of the Affidavit offends the law, the same part should be struck out and not the whole document.

In determining the contention above, I will refer to the provision of Regulation 2(1) of the Advocates (Professional Conduct) Regulations which provides that:

"No Adyocate shall act for any person unless he or she has receiyed instructions from that person or his or her duly authorized agent."

On perusal of the Applicant's Affidavit in support, he states underparagraph I that he is the credit control manager of the Applicant and in paragraph 2 states that the Applicant through Aequitas Advocates instituted civil suit No. 350 of 2019, and further in paragraph 5 states that they have since appointed IWs Tumwebaze, Atugonza, Kobusingye Advocates and Legal Consultants as their new lawyers.

s\_v

Though in the opening statement in the Affidavit in support, the deponent indicates c/o Aequitas Advocates, this assertion was rectified in their Affidavit in rejoinder. Paragraph 5 of the Affidavit in support clearly shows that new instructions had been given to lv[/s Tumwebaze, Atugonza, Kobusingye Advocates and Legal Consultants to handle this Application. It is good practice for new Advocates instructed to give notice of instruction to both Court and the opposite party even on new Applications.

It should be noted that the civil suit from which this Application arises was dismissed for failure to comply with Court directives, and in paragraph 5 of the Applicant's Affidavit in rejoinder they clearly state that they withdrew instructions from the former lawyers and gave fresh instructions to the new Advocates to handle and prosecute this Application. I therefore find that this Application was filed by an Advocate with instructions.

This preliminary objection is over ruled.

#### Preliminary Objection 2

#### The Applicant's Notice of Motion lacks grounds and the Affidavit in support is defective.

Counsel for the Respondent submitted that from the first to the last paragraphs ofthe Affidavit in support of the Applicant's Notice of Motion, the deponent failed to show a link or connection between him and the Applicant and his address is distinct from that of the Applicant. Counsel cited Order 52 rule 3 of the CPR and the case of Ssenyimba Vincent & 2 others v Birikade Peter & Anor M. A. No.378 of 2018 where it was held that 'a person should not swear an affidavit in representative capacity unless an advocate, holder of a power of attomey or duly authorized. Where an affidavit is sworn on behalf of others, there is need to prove that the others authorized the deponent to swear it on their behalf. Lack ofauthorization renders the affidavit defective and the Application incompetent.'

Counsel for the Applicant submitted that the grounds of the Application are clear and in regard to the issue ofthe deponent's capacity, that amounts to ambush as the deponent has been a representative of the Applicant and his capacity had never been an issue before this stage. Further, that he is the credit control manager in the Applicant's Company and in the dismissed suit he was listed as the main witness and lead negotiator.

Counsel prayed for the objection to be dismissed with costs as it was held in Nelson Sande Ndugo v Electoral Commission HCCS No. 4 of 2006 that a preliminary

N-V

objection ought to be raised at the earliest opportunity as the determination of the same might have the effect of disposing of the suit when brought at a later stage, and the party responsible should be penalized in costs.

## Order 52 rule 3 of the CPR provides that:

" Every Notice of Motion shall state in general terms the grounds of the Application and where any motion is grounded on evidence by Affidavit, a copy of any Affdavit intended to be used shall be served with the Notice of Motion".

On perusal of the Notice of Motion, the Applicant has indicated the grounds of their Application.

Affidavits can be swom by any person to prove a set of facts and an Advocate is not an exception to this on matters that are within their own knowledge. (Mbarara Municipal Council v Jetha Brothers SCMA No. 10/2021).

In paragraph 1 of the Applicant's Affidavit in support, the deponent states that he is acredit control manager for the Applicant and in paragraph I of his Affidavit in rejoinder reiterates the same words and adds that he is well conversant with the facts pertaining to this matter in which capacity he depones the said Affidavit. No evidence was adduced to disprove this fact and therefore, clearly shows that there is a linkage between Robert Mazima and the Applicant as he works as a credit control manager and assets and that he is well conversant with the facts pertaining to this case.

This preliminary objection also fails.

## Preliminary Objection 3

The Applicant's Application offends the mandatory requirement under Order 6 rule 2 of the CPR which provides that every pleading should be accompanied by a brief summary of evidence to be adduced, a list of documents and a list of authorities to be relied on except that an additional list of authorities may be provided later with the leave of Court.

Counsel for the Respondent submitted that the Application is incompetent for contravening the provisions of the CPR and should be struck out with costs for lack of merit and being an abuse of Court process in accordance with Order 6 rule 30 of the CPR.

\$,.\*

The Applicant's counsel in rejoinder submitted that the Application was filed hurriedly thus the summary of evidence was not uploaded on ECCMIS however that is a curable defect since the Respondent has not been exposed to any danger of ambush.

In the case of Samwiri Kibuuka v Eriya Lugeya Lubanga HCMA No. 656 of 2005 where the same objection was raised Court held that-

"Notice of Motion is a pleading and Section 2 of the Civil Procedure Act, and Order 6 rule 1 (b) of the Civil Procedure Rules require every pleading to be accompanied by a brief summary of the evidence to be adduced, and a list of witnesses, documents and authorities to be relied upon. As was observed by Justice Ntabagoba P. J., in Richard Mwirivumbi v Jada Limited HCCS No. 978 of 1996 the above rule was intended to avoid the situation in which parties ambush their opponents with matters not contemplated. However, Order 48 of the Civil Procedure Rules specifically provides for Motions and other applications. Rule 3 of the Order provides: -

"Every Notice of Motion shall state in general terms the grounds of the application and where any motion is grounded on evidence by affidavit a copy of the affidavit intended to be used shall be served with the notice of motion"

This is a specific provision as to what shall accompany this particular type of pleading as opposed to the general provision under Order 6 rule 1 CPR. It is trite law of statutory constitution that where there is a specific legislative provision and a general provision on a particular matter or procedure, the specific provision takes precedence over the general provision. See Sule Pharmacy Ltd v Registered Trustees of Khoja Shia Janati H. C. Misc. Appl. No. 147 of 1999.

Court went on to state that 'the instant application is by Notice of Motion and accompanied by an affidavit, therefore, the evidence is by affidavit. Therefore, the evidence to be relied upon its already availed to the opposite party. Similarly, the witness was the deponent to the affidavit, the documents are normally annexed to the affidavit and in most cases the authority will be the law under which the application is brought. Therefore, an application by Notice of Motion supported by an affidavit is an exception to the general requirements in Order 6 rule 1 (b) CPR and that ground fails".

In light of the above decision, this preliminary objection also fails.

I will now proceed to address the two issues raised by the present Application.

Issue I

Whether civil suit No. 0849 of 2020 should be reinstated

Section 98 of the Civil Procedure Act provides for the inherent power of Court thus:

"Nothing in this Act shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends ofjustice or to prevent abuse of the process of the court.' '

This provision gives Court the powers to exercise its discretion to set aside and reinstate dismissed Applications/suits provided they are aimed at meeting the ends of justice and preventing any abuse of Court process.

In the case of Standard Chartered Bank of Uganda Ltd v Ben Kavuya and Barclays Bank (U) Ltd HCMA No.350/2006 it was held that: -

"... il is now settled that the existence ofa specific procedure, provision or remedy cannot operate to restrict or exclude the Courts inherent jurisdiction under Section 98 of the Civil Procedure Act which gives wide residual powers to the Court to prevent or correct any injustice".

Looking at the decision in Rawal v Mombasa Hardware Ltd U9681 EA 392 which was quoted with approval by the East African Court of Appeal sitting in Kampala in Adonia v Mutekanga U9701 I EA 429 Spry VP held atpage 432:

"There is no rule of law, as Mr. Kazzora implied that inherent powers cannot be invoked where another remedy is available. The position, as I understand it, is that the courts will not normally exercise their inherent powers where a speci/ic remedy is available and will rarely if ever do so where a specific remedy existed but, for some reason, such as limitation, is no longer available. The matter is, however, not one ofjurisdiction. The High Court is a court of unlimited jurisdiction, except so far as it is limited by statute, and the fact that a specific procedure is provided by rule cannot operate to restrict the court's jurisdiction. "

Counsel for the Applicant submitted that they had legal representation that failed them by not complying with Court directives and while citing the Court's decision in the case of Busingye and Another v Gianluigi Grassi and Another [20141 HCB at page l42,he stated that the duty was upon the Applicant's lawyer to file all the

q\$--

necessary Court documents in time. Further, that the Application has been brought without delay and raises serious triable issues with high chances of success and the same should be heard on its merits. The Applicant has sufficient cause for noncompliance with Court directives and requirements of the rules and was not aware that the lawyer did not comply with the directives and the rules. He cited the case of Philip Ongom v Catherine Nyero Owota SCCA No. 14 2001 and stated that a litigant's right to fair hearing in the termination of civil rights and obligations as enshrined in Article 28 of the Constitution of Uganda should not be defeated on the ground of his lawyer's mistakes.

Counsel for the Respondent submitted that Court was within its right to dismiss the Application for failure to comply with Court directives since the Court had given the parties six weeks within which to file their witness statements, trial bundles and joint scheduling memorandum when the main suit came for direction.

Counsel submitted that the Respondent filed their documents while the Applicant waited for over eight months to file their trial bundle and witness statements which were later filed on the 20th of September 2021 and did not file any scheduling memorandum, and when the matter came before the Judge on the 15th day of November 2021 there was no joint scheduling memorandum. Further that a party who does not comply with time limits set by Court must apply for extension of time under Order 51 rule 6 of the CPR which the Applicant did not do. That the delay in this instant case was for over eight months and the Applicant who brought the original proceedings in the main suit did not deem it fit to make an Application for extension of time and thus Court was right in dismissing the suit.

Counsel further submitted that rule 7 of the Constitution (Commercial Court) (Practice) Directions is about discretion of Court and the party that complains about injudicious exercise of discretion can only Appeal. He submitted that to invoke section 98 of the CPA is the same thing as the Applicant saying that the Court exercised its discretion injudiciously and abused the process and it cannot be the same Court to take a second look at its discretion and reverse it. He cited the case of Famous Cycle Agencies Ltd & 4 Ors v Manshukulal Ramji Karia & others SCCA 16/1994 and stated that Court having not found a joint scheduling memorandum nor an Application for extension of time in the Court system for over eight months was within its rights to dismiss the suit for non-compliance with the directives of Court. Counsel for the Respondent further submitted that the Applicant was indolent and inept and thus cannot benefit from the tenet that negligence of Counsel should not be visited on the client as he displayed lack of interest in pursuing his case since he never appeared in person. That since he did not appear in person when the matter came up for directions and failed to keep itself informed about the case from Counsel or Court for over eight months was in total breach of his primary legal duty to bring the suit to early trial. That the Applicant therefore showed a lack of interest in prosecuting his case and the Application for reinstatement should be dismissed.

Counsel for the Respondent went on to submit that the suit that the Applicant seeks to reinstate does not disclose any cause of action against the Respondent on account that the documents forming the basis of the cause of action were not attached to the plaint and thus was contrary to Order 7 rule $14(1)$ of the CPR. That it is a principle of law in insurance actions that the basis of the cause of action is the contract of insurance. Counsel submitted that it is in the interest of justice that the Applicant's suit is not reinstated as it has the effect of this Court allowing the witness statements of the Applicant thus putting the Respondent in a disadvantaged position.

Counsel for the Respondent argued that this Application is overtaken by events when the Court entered a default judgment in the counterclaim for the Respondent in civil suit No. 0847 of 2020 as it has an effect of showing that there subsisted no valid insurance contract between the Applicant and the Respondent since the Applicant's plaint in the main suit was premised on the said insurance contracts.

In rejoinder Counsel for the Applicant submitted that the main test for re-instatement of the suit is whether the Applicant honestly intended to attend the hearing and he did his best to do so and in this case the Applicant diligently attended Court and was represented but he is not knowledgeable in law, procedures and consequences, the very reason Counsel was hired. Mistake of Counsel however reckless or negligent shall not be blamed on the innocent litigant.

In further rejoinder, the Constitution (Commercial Court) (Practice) Directions is a handmaiden of Justice and cannot be used as a weapon against it. If the Court finds sufficient cause why the Applicant did not comply with its directions, then it has the powers to reinstate the same. The Applicant has always been interested in the conduct of this matter. In conclusion he submitted that allowing this reinstatement will not jeopardize the Respondent in any manner as the nature of the case is based on the law and documentary evidence.

In this case, on the I l(h of March 2021 when the matter came up for summons for directions, the Registrar gave the pa(ies 21 days within which to file their joint scheduling memorandum, witness statements and trial bundles before the matter is forwarded for a scheduling conference before the Judge. On perusal of the file, it is evident that the Respondent filed its scheduling memorandum, trial bundle and witness statements by 31't of March of 202,1 however, the Applicant only filed a trial bundle on the 28s of September 2021 andwhen the matter came before the trial Judge on the 8ft of October 2021, it was dismissed under the Constitutional (Commercial Court) (Practice) Directions for non-compliance with directions.

A dismissal for failure to comply with Court directions can be set aside if sufficient cause is shown by the Applicant for failure to comply with the court directions in issue.

In this case, the Applicant submits that the negligence and mistake of his counsel should not be visited on him.

It is true and an established principle of law as stated in the case of Banco Arabe Espanol v Bank of Uganda SCCA NO. 8/1998 that:

"A mistake, negligence, oversight or etror on the part of counsel should not be visited on the litigant. Such mistake or as the case may be constitutes just cause entitling the trial judge to use his discretion so that the matter is considered on its merits. ' '

Further in the case of AG v AKPM Lutaaya SCCA No. 12 of 2007 , Katureebe, JSC, held that the litigant's interests should not be defeated by the mistakes and lapses of his counsel.

The case of Florence Nabatanzi v Naome Binsobodde SCCA No. 6 of 1987 laid down principles that should be followed by Courts in such cases:

a. First and foremost the application must show sufficient reason which relates to the inability orfailure to take some particular step within the prescribed time. The general requirement not withstanding each case must be decided on facts.

b. The administration ofjustice normally requires that substance of all disputes should be investigated and decided on their merits and those errors and lapses should not necessarily debar a litigant from pursuit of his rights.

s-b

c. Whilst mistakes of counsel sometimes may amount to an error ofjudgment but not inordinate delay negligence to obserye or ascertain plain requirements of the law.

d. Ilhere an applicant instructed a lawyer in time, his rights should not be blocked on the grounds of his lawyer's negligence or omission to comply with the requirement of the law.

e. A vigilant applicant should not be penalized for the fault of his couwel on whose actions he has no control. "

The Applicant has through attendance of the hearing on 8'h of October 2021 demonstrated that he is interested in pursuing his case. The Applicant is not knowledgeable in the law and consequences ofnon- compliance and I believe that is why they hired an Advocate. I therefore disagree with the submissions of the Counsel for the Respondent that the Applicant is not interested in pursuing his own case.

The Court's inherent powers given under section 98 of the CPA cannot be taken away by the directions provided they are exercised to meet the ends ofjustice and to prevent an abuse ofcourt process.

On the basis of the authorities above, I consider that the present case is one where the error on the part of the Advocate for failing to file the necessary documents such as the scheduling memorandum within the stipulated time given by the Registrar during summons for directions should not be visited on the Applicant. It is an established principle that where an Applicant instructs their lawyer on time, they should not be penalized for their lawyer's negligence or omission to comply with the requirements of the law. In this case the Applicant had trusted their lawyer, a professional in law, to diligently pursue their case and would send their representatives to attend proceedings and it is there lawyer that failed them.

I therefore allow this Application for reinstatement.

## Issue 3

Whether the Default Judgment and Decree in Civil Suit No.489 of 2020 should be set aside

Order 8 rule 13 of the CPR provides that:

10 0 s't."

" lf, in any case inwhich the defendant sets up a counterclaim, the suit of the plaintiff is stayed, discontinued or dismissed, the counterclaim may nevertheless be proceeded with " .

Therefore, a counterclaim is an independent suit that still stands even when the main suit is dismissed, stayed or discontinued. Once a counterclaim has been served on the Plaintiff, they are required to file a Defence to the counterclaim within 15 days from the date of service. (Order 8 rule 18(3) of the CPR).

In this case, the Applicant was duly served with the counterclaim which was received by Agaba Clinton on behalf of Aequitas Advocates that was representing the Applicant in protest. However, the Applicant failed to file a Defence to the counterclaim within the stipulated time and did not file an Application for extension of time within which to file their Defence.

The Respondent through an ordinary letter dated the 24th ofOctober 2021 prayed for a default Judgment to be entered for the sum of 13,000,000/: and interestof36Yo per month from date of filing till full payment under Order 8 rule l8(3) and Order 9 rule 6 of the CPR and a default Judgment was entered in favor of the Respondent on the 2l't of December 2021.

Order 9 rule 6 of the CPR upon which the default Judgment was issued provides that:

"Were the plaint is drawn claiming a liquidated demand and the defendantfails to file a Defence, the court may, subject to rule 5 of this Order, pass judgment for any sum not exceeding the sum claimed in the plaint together with interest at the rate specified, if any, or if no rate is specified, at the rate of 8 percent per year to the date ofjudgment and costs ".

The Applicant, in paragraph 8 of their Affidavit in support, stated that they were never informed of any other hearing date nor the company served with the counterclaim of which they would very much wish to have an opportunity to reply to. Counsel for the Applicant submitted that the Applicant depended on the lawyer and used to attend Court but never knew about the counterclaim and neither told about filing his written statement of Defence by anyone and that it was the duty of counsel to file the Defence and comply with Court directives. Counsel also submitted that the interest of 36%o per month that was awarded would translate to 432Yo per annum which is extremely harsh, unfair and unconscionable.

The Respondent, in paragraph 9 of their Affidavit in reply, stated that the Court entered default Judgment for the Respondent in the counterclaim because the Applicant did not make an effort to file a reply to the counterclaim as required by law. Further in the Respondents submissions, it was stated that the Applicant has not led grounds in its pleadings amounting to sufficient cause since it was not the duty of the Respondent to remind the Applicant and the Applicants Advocates to file a reply to the counterclaim after service. That the Applicant had a duty to pursue its case and keep itself informed of its matter and thus cannot be permitted to absolve itself of such duties to the disadvantage of the Respondent and the Respondent cannot be blamed for the poor legal representation of the Applicant.

In rejoinder to the issue of interest, the Respondent submitted that fairness is determined from existing circumstances as what is fair to one party may be unfair to another party. That in this case the Applicant kept the Respondent out of his money and had the use of it itself equivalent to the interest rate granted by this Court.

A default Judgment can be set aside as provided for under Order 9 rule 12 of the **CPR** which provides that:

Where judgment has been passed pursuant to any of the preceding rules of this Order, or where judgment has been entered by the registrar in cases under Order L of these Rules, the court may set aside or vary the judgment upon such terms as may be just.

Therefore, the above order permits the setting aside of a default Judgment passed under Order 9 rule 6 if it is just or if just cause is shown.

The Applicant's ground for setting aside the default Judgment is essentially that he failed to file a Defence to the counterclaim due to mistake of Counsel. It is settled that the mistake and negligence of Counsel should not be visited on an innocent litigant and therefore constitutes just cause for setting aside a default Judgment.

However, in the case of Okech Verkam v Centenary Rural Development Bank HCCA No.93/2019 the trial Judge stated that:

'But before the Applicant, can be excused from the mistakes of his counsel, he must show that he was not in any way negligent and that he took proactive steps in correcting the errors of his counsel, when he first became aware of the default. Proactiveness in this matter would include the applicant taking urgent steps to file an application to set aside the default judgment.''

The Applicant in this case was present during the hearing when the civil suit was dismissed. Therefore, this demonstrates his diligence and character of being proactive in pursuing his case. Subsequently when a default Judgment was passed and a decree issued on the 1st of March 2022, the Applicant filed an Application to set aside the Judgment by 11th of March 2022 on the instruction of new Advocates. There was therefore no inordinate delay in filing this Application. This shows the interest of the Applicant in pursuing their case only that they were let down by an Advocate who was negligent and failed to follow the time lines set by Court in filing the Applicant's defence. The Applicant wholly relied on the Advocate's expertise and knowledge in the law to diligently handle their case and in such circumstances, the negligence of the Advocate cannot be visited on the Applicant.

Therefore, the negligence of counsel constitutes just cause for setting aside the Default Judgment in this matter. The Default Judgment is therefore set aside.

Costs shall abide the cause.

Om Bratin

HON. LADY JUSTICE ANNA B. MUGENYI 14 / 11 / 2027 DATED: