Simbamanyo Estates Limited v Equity Bank Uganda Limited and 2 Others (Miscellaneous Application 660 of 2022) [2022] UGCommC 164 (8 August 2022) | Accounts Of Banking Transactions | Esheria

Simbamanyo Estates Limited v Equity Bank Uganda Limited and 2 Others (Miscellaneous Application 660 of 2022) [2022] UGCommC 164 (8 August 2022)

Full Case Text

# **THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA (COMMERCIAL DIVISION) MISCELLANEOUS APPLICATION No. 0660 OF 2022**

5 **(Arising from Civil Suit No. 0198 of 2020)**

**SIMBAMANYO ESTATES LIMITED …………………………………… APPLICANT**

| 10 | 1.<br>EQUITY BANK<br>UGANDA LIMITED<br>2.<br>EQUITY BANK KENYA LIMITED<br>3.<br>BANK ONE LIMITED | VERSUS<br>}<br>}<br>} | ……………… RESPONDENTS | |----|--------------------------------------------------------------------------------------------------|-----------------------|--------------------| | | Before: Hon Justice Stephen Mubiru. | | |

# **RULING**

#### a. Background.

# 15

The applicant sued the respondents jointly and severally seeking, *inter alia*, a declaration that the 2 nd and 3rd respondents are not licensed to conduct financial institution business in Uganda; that the tripartite agreement executed between the applicant, the 1st and 2nd respondents on 20th August, 2012 is accordingly unenforceable, illegal, null and void; that the mortgage over the applicants

- 20 property comprised in LHR Vol. 2220 Plot 2 Folio 3 Lumumba Avenue too is unenforceable, illegal, null and void; a declaration that the appointment by the 2nd respondent of the 1st respondent as an agent bank is illegal, null and void, and so on. These reliefs are premised on averments that the 2nd and 3rd respondents are financial institutions incorporated and carrying on banking business in Kenya and Mauritius respectively. Through the 1st respondent, the two respondents illegally 25 engaged in financial institutions business in Uganda when they extended credit facilities to the - applicant. The subsequent refinancing arrangement between the applicant and the respondents was executed under undue influence and fraudulent misrepresentation on the part of the respondents. - b. The application;

This application by Chamber Summons is made under the provisions of Order 10 rules 1, 2 and 3 of *The Civil Procedure Rules* seeking orders that proper accounts be taken in respect of the following loan accounts held with the 1st respondent; i. 1036500751700; ii. 1036500668729; iii. 0180561375847; and iv. 0180599753314. The applicant further seeks orders that proper accounts be taken in respect of loan processing fees charged upfront on the refinancing facility by the 3rd respondent, and that the court appoints an independent auditor for the purpose of taking the account and furnishing a report to court.

It is contended by the applicant's Managing Director that upon examining the said accounts, he established that the 1st respondent debited the applicants account in the sum of US \$ 8,106,353 instead of US \$ 7,195,877 which was due at the time of settlement. This was a difference of US \$ 910,476. He realised further that the 1st respondent deducted US \$ 800,000 (being 8%) as 10 brokerage fees instead of US \$ 500 000 (5%) as provided under the agreement. This is a difference of US\$ 300,000. He discovered further that the 3rd Respondent disbursed US \$ 9,797,761.30 instead of US \$ 10,000,000. The facility agreement provided for loan processing fees of 0.5% of the facility which would amount to US \$ 50,000. This resulted in a shortfall of US \$ 202,239 (2.03%). Therefore the amount of money that is not properly accounted for is; a) US \$ 910,476; b)

15 US \$ 300,000; and c) US \$ 202,239, hence a total of US \$ 1,412,715. The courts intervention is therefore necessary, on grounds of expedience, justice and equity, to compel the respondents to render proper accounts.

# c. Affidavits in reply;

In their joint affidavit in reply sworn by the 1st respondent's Head of Credit, the 1st and 2nd respondents contend that the applicant has no basis for demanding accounts when he already had attached to the plaint the bank statements in respect of the specified bank accounts. The order for an account can only be made after the court has appraised the documentary evidence giving rise to the applicant's claim. There is already on court record an audit report dated 10th 25 August, 2017 by a reputable firm of auditors whose content explains all transactions undertaken on the specified bank accounts. The application is made in bad faith with the intention of diverting the court from consideration of the actual matters in controversy between the parties, by delaying the trial.

In its affidavit in reply sworn by the Head Legal, the 3 rd 30 respondent contends that the sums disbursed were properly accounted for and all the contested deductions were made in accordance

with facility agreement between the parties. The applicant had deliberately left out loan account No. 2220555115821 which accounts for the alleged discrepancy in the figures the Applicant is alleging. Furthermore the applicant had not computed the interest right up till December 2017 when the loan was repaid. With this additional loan account taken into account the total outstanding

5 loan as at December 2017 was US \$ 8,106,353 and there is no discrepancy. The facts in respect of which the applicant seeks the appointment of an independent auditor are already in the applicant's knowledge and possession.

### d. Affidavit in rejoinder;

The applicant contends that the 1 st and 2nd respondents affidavit in reply is prolix an argumentative, and contains misrepresentations of fact relating to some of the transactions and a specified loan account No. 2220555115821 that was never managed by the applicant nor is the applicant privy to the alleged borrowing of US \$ 8,106,353 via the said account. None of the respondents has by 15 affidavit raised any preliminary question that has to be tried.

#### e. Submissions of counsel for the applicant.

M/s Byenkya, Kihika and Co. Advocates on behalf of the applicant submitted that one of the orders 20 sought in the main suit is for the respondents to render an account. Such an order will be denied only where the respondent satisfies court that there is a preliminary question to be tried. In *Thomas A. K. Makumbi v. Josephine Katumba, H. C. Misc. Application No. 316 of 2014* it was held that a preliminary question for purposes of Order 20 rule 1 of *The Civil Procedure Rules* would be any question of law that has been pleaded by the defence or raised by way of affidavit that begs 25 resolution before the relief sought by the plaintiff, of provision of an account, may be granted. If the defence has not raised such a question, the court is mandated to immediately grant the prayer for an account without recourse to the merits of the substantive suit. However, if a preliminary question has been raised such order would await the determination of the questions of law, as well as the merits of the substantive at trial. None of the respondents has by affidavit raised any 30 preliminary question that has to be tried. Whereas the applicant has attached copies of the

acknowledged loan accounts, the respondents have not attached that relating to the claimed additional borrowing denied by the applicant. The order therefore ought to be made.

# f. Submissions of counsel for the 1st and 2nd respondents.

M/s Katende, Ssempebwa and Co. Advocates together with AF Mpanga Advocates on behalf of the 1st and 2 nd respondents submitted according to the decisions in *Katarikawe Manuel and others v. Turyamureeba, H. C. Misc. Application No. 0169 of 2013* and *National Bank of Kenva Ltd. v Pipeplatic Samkolit and another [2002] 2 EA 495* an application to account presupposes there is a

- 10 plaint in which the plaintiff is praying for on account. In the instant case, the amended plaint (even the original plaint did not) does not have a prayer or relief for an account against the 1st respondent, yet the applicant has purported to seek orders for an account in respect of 1st respondent. In the prayers contained in the mended plaint, the applicant expressly seeks an order "to take an audit and account of all the interest and other income earned by the 2nd and 3rd defendants under the - 15 impugned Kenyan loan and Mauritian loan and a further order against the said defendants to refund to the plaintiff any monies found to be due on the taking of an audit and accounts. It was pleaded that the Kenyan loon and Mauritian loan were issued not by the 1st respondent, but by 2nd and 3rd respondents. According to the decisions in M*/s Fang Min v. Belex Tours and Travel Ltd, S. C. Civil Appeal No. 06 of 2013* consolidated with *Crane Bank Ltd. v. Belex Tours and Travel Ltd. S.* - 20 *C. Civil Appeal No. 0l of 2074*, a party cannot be granted relief which it has not pleaded or claimed in the plaint.

Furthermore, that the application is misconceived to the extent that it seeks the taking of accounts for loan amounts and/or transactions and/or accounts which were long fully settled and are no 25 longer in dispute and/or issue in this suit. Despite recognition that the first loan was settled and there is no controversy, the applicant is now seeking orders to take accounts for matters relating to the first loan. The loan accounts for the first loan are not relevant since the first loan is not a live controversy and/or is not in issue in this suit. It will be a moot exercise if this Court grants orders for an account for the first loan which is not in issue. This Court should not enBa8e in such a moot 30 exercise. There is no issue requiring accountability when the record of the Court is clear as admitted by the applicant that the first loan is not in issue.

The applicant has not shown at all that the loan facility of US \$ 10 million was disbursed through the selected/listed loan accounts. The applicant has not shown at all that the selected/listed loan accounts were the loan account(s) for the loan facility of US \$ 10 million. The application, just like all the applications filed arising out of this suit, are meant and indeed serve and have served 5 one purpose, which is to create unnecessary work for the parties and the Court and thereby delay the trial/hearing and determination of the suit by the Court. Hence, the instant application is an abuse of the process of the Court. The applicant has raised similar applications before in other suits over the same subject matter. The application is accordingly subjudice. The institution of a multiplicity of actions on the same subject matter against the same opponent on the same issue

10 constitutes an abuse of process as per the decision in *Gerald Karuhanga and another v. Attorney General and two others H. C. Misc. Application No. 60 of 2015*.

There are several preliminary questions in the suit for the Court to try before any of the two orders for account applied for can be made. Before granting any order for account this court would need 15 to determine as the first preliminary question what was the outstanding loan amount owed by the applicant as at December 2017. The Second preliminary question concerns the interpretation of the Facility Agreements for US \$ 10 million and the Agreement between the Applicant and NISK capital, its financial adviser in order to determine whether or not the deductions of loan processing fees and interest made by the 3rd respondent on the US \$ 10 million were legal and proper. Further, 20 the Court has to first try lhe "preliminary question" of "whether the Mauritian loon is illegal, null, void, and unenforceable" before any orders for accounts are issued. The third preliminary issue concerns the legality or otherwise of the all the facility agreements or the loan facilities the subject of the live controversy or dispute in the suit.

- According to Mulla, *The Code of Civil Procedure*, 16th 25 Edition, Volume 2 at page 2435, "Preliminary question" in Order 20 Rule I can be a question of law or fact or mixed law and fact. The interpretation of "preliminary question" in the case of *Thomas A. K. Makumbi* is thus *per incuriam*. The Court should interpret "preliminary question" liberally to mean a question that has to be tried and it can be a question of law, a question of fact, or a mixed question of law and fact. 30 The Court should not issue an order for accounts unless and until all questions which would need to be answered before an account is taken, (termed "preliminary questions"), are tried and - 5

answered. The order or preliminary decree for accounts should be passed after hearing the merits of the suit and all that remains to be done is to take accounts.

# g. Submissions of counsel for the 3rd respondent;

M/s ENSafrica Advocates did not file any submissions on behalf of the 3 rd respondent.

## h. Submissions in reply of counsel for the applicant.

- It is a subversion of justice for the 1st 10 applicant to seek to exclude itself from the orders sought on grounds that no similar orders are sought against it in the main suit. It is evident from the facts that the 1st respondent was at the centre of the impugned transactions. No proper accounting can be done without the participation of the 1st respondent. The accounts are required to explain the circumstances in which the new loan was acquired to settle the old loan. It is contended by the - 15 applicant that the respondents in disbursing money to settle the old loan, they exceeded the agreed and authorised amount. The application is neither subjudice nor an abuse of court process. The preliminary questions envisage under Order 10 rule 1 of *The Civil Procedure Rules* and one of law not fact. The respondent shave not raised any such questions and their attempt to distinguish the authorities cited is misconceived. - 20

# The decision.

According to Order 20 rule 1 of *The Civil Procedure Rules*, where a plaint prays for an account, or where the relief sought in the plaint involves the taking of an account, then, if the defendant 25 either fails to appear or does not after appearance, by affidavit or otherwise, satisfy the court that there is some preliminary question to be tried, an order for proper accounts, with all necessary inquiries and directions usual in similar cases, shall immediately be made. The court will in those circumstances, before passing its final decree, pass a preliminary decree directing such accounts to be taken as it thinks fit. For the application to be granted; (i) the plaint must contain a prayer for 30 an account; (ii) or the relief sought in the plaint involves the taking of an account; (iii) there is no preliminary question to be tried; and (iv) it is necessary to appoint an independent auditor.

# i. The plaint must contain a prayer for an account;

Courts confine their decisions to the questions raised in the pleadings of the parties. The Courts cannot grant a relief which is not claimed and which does not flow from the facts and the cause of 5 action alleged in the plaint. A case not specifically pleaded can be considered by the court only where the pleadings in substance, though not in specific terms, contain the necessary averments to make out a particular case and the issues framed also generally cover the question involved and the parties proceed on the basis that such case was at issue and had led evidence thereon. This should be only in exceptional cases where the court is fully satisfied that the pleadings and issues 10 generally cover the case subsequently put forward and that the parties being conscious of the issue had led evidence on such issue.

An application to account therefore presupposes that there is a plaint in which the plaintiff is praying for an account (see *National Bank of Kenya Ltd v. Pipeplastig Samkolit (K) Ltd and* 15 *another [2002] 2 EA 495*, and *Katarikawe Manuel and eight others v. Benon Turyamureeba Ruranga, H. C. Misc. Application No. 169 of 2013*). A suit for an account envisaged by Order 20 rule 1 of *The Civil Procedure Rules* is a special form of suit and would not include every case in which accounts have to be looked into in order to ascertain the correctness or otherwise of the amount claimed by the plaintiff. A suit for an account is one where a preliminary decree in which 20 court first adjudicates on the rights and liabilities of the parties must be passed, whereafter an account will be necessary, and thus necessitates the Court calling upon the defendant to render an account, before the final decree is passed.

These are usually cases where so long as the account is not taken, the court cannot ascertain what 25 amount, if at all, is due to the plaintiff. The right to apply for an account is an unusual form of relief that is to be given in very specific circumstances and is only to be exercised when the relationship between the parties is such that it is the only relief that will allow the applicant to adequately assert his legal rights (see *Rajendra Singh v. State of Rajasthan and others, 1983 WLN 295*). It is a suit which seeks for a decree, not for a definite sum of money, but ordering the 30 defendant to account to the plaintiff for monies received by him or her.

In determining whether a suit is for an account regard must be had not only to the prayers in the plaint but also to the relation between the parties in respect of the claim and the nature of the claim formulated in the plaint. A suit for an account is that suit where the defendant is under an obligation to render an account to the plaintiff. There must be something more than the mere relationship of

5 debtor and creditor and the defendant must stand in some other relation to the plaintiff, such as that of an agent or bailee or receiver or trustee or partner or mortgagee, where a preliminary decree of rendition of account is necessary before the final decree. The provision applies to situations where a suit is filed for money which will be found due on taking an account against a defendant under a legal obligation to render the account which the plaintiff has not been in a position to

10 ascertain.

A suit for an account lies where it is necessary to ascertain the amount of money due from the respondent to the applicant and where even after due diligence it is not possible for the applicant to ascertain the sum of money which is due from the respondent without the assistance of the 15 respondent or without looking into the accounts of the respondent. For example in suits related to accounts between a principal and agent, the Court issues a preliminary decree before issuing its final judgement directing that the accounts it deems appropriate to be taken in any suit for an account of financial transactions between a principal and an agent. A suit by the principal to claim an account from his or her agent is generally found on the fiduciary character of the agency.

A suit for rendition of an account can be maintained only if a person suing has a right to receive an account from the defendant. Such a right can either be (a) created or recognised under a statute; or (b) based on the fiduciary relationship between the parties as in the case of a beneficiary and a trustee, or (c) claimed in equity when the relationship is such that rendition of accounts is the only 25 relief which will enable the person seeking account to satisfactorily assert his legal right. In such suits the applicant should file documents to demonstrate that there was a running account between the parties and on the basis of the said account, he or she is claiming recovery of a deficit amount. Such a right to seek an account cannot be claimed as a matter of convenience or on the ground of hardship or on the ground that the person suing does not know the exact amount due to him or her, 30 as that will open the floodgates for converting several types of money claims into suits for accounts, to avoid payment of court fees at the time of institution. The test to apply in such cases, is of a twofold nature: (1) whether the material allegations in the plaint disclose that the subjectmatter of the claim has reference to a relation between the parties whereby one is accountable to the other; (2) whether at the date of the suit the necessity for rendering an account has for some stated cause ceased.

As the nature of a bank's business is to hold and transmit funds, only in very special circumstances will a fiduciary relationship occur in the banking context. Bankers (i) accept money from, and collect cheques for, their customers and place them to their credit; (ii) honour cheques or orders drawn on them by their customers when presented for payment and debit their customers 10 accordingly, and (ill) keep current accounts in which the credits and debits are entered (see *United Dominions Trust Ltd v. Kirkwood [1966] 1 All ER 968, [1966] 2 QB 431*). A bank-customer relationship is not a trust but a debtor-creditor relationship in which a bank merely owes a debt to the customer and it may use the funds they hold as they see fit (see *Foley v. Hill1 (1848) 2 HLC 28; 9 ER 1002; [1843-60] All ER Rep 16*).

In banking law, the implied terms of a contract of banking are; (i) the bank undertakes to receive money and to collect bills for its customer's account, and it borrows the proceeds and promises to repay them. The bank promises to repay at the branch of the branch where the account is kept and during banking hours; (ii) the bank promises to repay any part of the amount due against the 20 customer's written order at the branch; (iii) the bank promises not to cease to do business with the customer except on reasonable notice; (iv) the customer promises to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery (see *Joachimson v. Swiss Bank Corporation [1921] 3K. B. 110*). Ordinarily no suit for an accounts can be maintained by a customer against his or her banker, for the relations between the two is in no sense fiduciary, 25 and is merely that of a debtor and creditor.

On the face of it the relationship between a bank and its customers is not a fiduciary relationship (see *Governor and Company of the Bank of Scotland v. A lid. [2001] Lloyd's Rep. Bank73*). Fiduciary relationships arise when one person, in a position of vulnerability, justifiably reposes 30 confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. A fiduciary relationship cannot exist if a bank has no reason to believe that the customer is placing trust and confidence in it and relying on it to put the customer's interests above all else (see *National Westminster Bank plc v. Morgan [1985] AC 686; [1985] 1 All ER 821; [1985] 2 WLR 588*). The relationship of borrower and lender, or banker and customer, does not give rise, of itself, to any presumption of special disability on the part of the borrower or of undue

5 influence, but exceptionally it may do.

In the plaint, the applicant did not cite any statutory provision on basis of which it seeks an account and neither are there objective facts pleaded on basis of which a fiduciary relationship between it and the respondents may be inferred. Therefore the applicant's claim for an account is neither 10 based on an obligation created or recognised under a statute or any fiduciary relationship between it and the respondents, but rather is based in equity on account of the fact that the relationship between it and the respondents is such that rendition of accounts is the only relief which will enable the applicant to satisfactorily assert its legal right.

15 The claim appears to be premised on Clause 7 (a) of *The Bank of Uganda Financial Consumer Protection Guidelines, 2011* which requires banks to provide their customers with statements of their bank accounts or loan accounts showing what transpired since the last statement that affected the account of the customer, including balance changes, payments, disbursements and costs. The frequency and the mode of communicating to the consumer his or her bank account statement is 20 subject to the agreement of the consumer and the financial services provider. The applicant needs to disprove some items in the accounts in order to get a decree for the rest of the reliefs sought.

The suit therefore is not for rendition of an account on basis of statutory obligation or fiduciary duty, but rather one where the relief sought in the plaint involves examining available accounts.

25 ii. The relief sought in the plaint involves the taking of an account;

Simply because some accounts are to be examined in a suit does not necessarily render the suit one for an account. This part of the provision applies to situations where the correct amount payable by the respondent to the applicant can be ascertained only when the accounts are taken 30 and it is not possible to give an accurate liquidated sum at the inception of the suit, because no accounts are readily available. Thus apart from the cases where particular kind of relationship

exists between the parties to the suit, such as a partner and partner, a principal and agent, a mortgagor and a mortgagee, a *cestui qui trust* and a trustee, or other fiduciary relationships, a suit for an account would also lie where it would be the only relief which could entitle the applicant to satisfactorily assert his or her legal rights.

The applicant must satisfy the court that because of the peculiar relations between the parties, it is not possible for the applicant to get any relief except by calling upon the respondent to render an account to the applicant. A suit does not become one for an account simply because accounts have to be examined before a balance due from the respondent to the applicant can be established. A 10 suit for an account is one where a preliminary decree for an account will be necessary after which it necessitates the Court to call upon the defendant to render an account. It must appear from the allegations made in the plaint that the defendant is an accounting party and that the plaintiff claims on the footing that an account has to be taken to ascertain the sum due to him or her.

- 15 The test is whether having regard to the nature of the relationship between the parties it is possible for the applicant to bring a suit for a definite amount or for an amount which is ascertainable, or on the other hand, a total sum can only be determined after the accounts in the possession of the respondent have been examined. The mere fact that there are disputed items in a defendant's accounts which have to be evaluated by Court does not render the relief sought in the plaint one - 20 that involves the taking of an account. In a sense, a suit that involves the taking of an account is one which seeks for discovery of accounts that are not readily available to the applicant, in pursuance of a preliminary decree that has declared the rights and liabilities of the parties. Where the suit is for a liquidated sum of money, the calculation of the sum usually in no sense involves the taking of an account, but is rather a matter of simple mathematical application to the facts - 25 within the knowledge of both the parties, who happen to hold divergent positions regarding the accounts. The whole basis for applications of this nature vanishes when the applicant is able from accounts in his or her possession or those availed to him or her by the defendant, to say what is due from the defendant, and sues to recover a definite sum. - 30 A bank customer usually has all the knowledge requisite to support his or her right upon being availed the relevant bank statements. In the instant case, on basis of bank statements availed to it

by the 1st respondent in accordance with Clause 7 (a) of *The Bank of Uganda Financial Consumer Protection Guidelines, 2011*, the applicant was able to ascertain that the amount of money not properly accounted for by the respondents is; a) US \$ 910,476 as wrongful or unauthorised debits; b) US \$ 300,000 as wrongfully deducted brokerage fees; and c) US \$ 202,239 as wrongfully

5 charged loan processing fees, hence a total of US \$ 1,412,715. Therefore the relationship between the parties is not such that the taking of account is the only relief which would enable the applicant to satisfactorily assert its legal right. That the respondents dispute the applicant's interpretation of the bank statements, thus necessitating the Court's examination and evaluation of the evidence contained in these accounts, does not render the relief sought in the plaint one that involves the 10 taking of an account. It is one for mathematical application only.

Where the amount due to the applicant is ascertained or could be reasonably ascertained by the applicant exercising due diligence, then the claim is not one for an account and in such circumstances the applicant should be enjoined to file a suit for the recovery of a liquidated 15 amount. Merely because the applicant proclaims not to know the exact amount due to him or her from the respondent does not entitle the applicant to apply for an account and any attempt by the applicant by some ingenious device to convert a suit for a liquidated sum into one for an account must be discouraged.

- 20 The applicant does not seek an account on basis of any statutory obligation or fiduciary duty, but rather for reasons that the relief sought in the plaint involves the taking of an account, where in order to secure a decree for the rest of the reliefs sought, the applicant needs to disprove some of the items in the account. However, a suit like the present, where the plaintiff asks an account to be taken as a consequence of declaring the credit transactions illegal, null and void, and declaration of the appointment by the 2nd respondent of the 1st 25 respondent as an agent bank as illegal, null and void, is a suit for declaratory relief, and the fact that the record of the suit transactions, in the form of bank statements, may have to be examined, does not turn it into a suit involving the taking of an account. On the applicant's objecting to the account, which they have a right to do, the Court would have to settle items of credit and debit in the bank statements in order to ascertain what 30 balance, if any, is due. Such a suit is mot one for account but rather it is rather a matter that requires - 12

simple mathematical application to the facts within the knowledge of both the parties, because of their divergent positions concerning the accounts.

## iii. There is no preliminary question to be tried.

In *Thomas A. K. Makumbi v. Josephine Katumba, H. C. Misc. Application No. 316 of 2014* it was held that a preliminary question for purposes of Order 20 rule 1 of *The Civil Procedure Rules* would be any question of law that has been pleaded by the defence or raised by way of affidavit that begs resolution before the relief sought by the plaintiff, of provision of an account. It is argued 10 by counsel for the respondent that this is too narrow a view of the expression "preliminary question to be tried," and I am in respectful agreement. In my humble view, the proposition should not be so narrowly applied, as to exclude issues of fact and those of mixed law and fact.

The purpose of this criterion is for the Court to ascertain that there are no preliminary issues which 15 the court must decide in order to determine whether to grant all or part of the relief requested. It creates room for disputed rights, duties and obligations which have to be resolved or finally settled declaring the rights and liabilities of the parties, before issuing a preliminary judgement specifying and directing that the accounts it deems appropriate be taken. Such issues may not necessarily be confined to legal questions. The prime preliminary issue concerns the legality or otherwise of all 20 the facility agreements the subject of the controversy in the suit. Additionally, the court needs to determine first the rights, duties, liabilities and obligations of the parties arising under the Facility Agreements for US \$ 10,000,000 and the agreement between the applicant and its financial adviser, NISK capital, in order to determine whether or not the deductions of loan processing fees and interest made by the 3rd respondent on that loan were legal and proper. The other issue is whether 25 the Mauritian loan is illegal, null, void, and unenforceable as a consequence of which the mortgage over the applicant's property too is unenforceable, illegal, null and void. Furthermore, the applicant questions the 3rd respondent's inclusion in the general accounting, of loan account No. 2220555115821 in relation to the alleged borrowing of US \$ 8,106,353. The determination of these and other preliminary issues has a bearing on the question whether or not an account needs to be 30 taken at all and if so, the scope of that account. The facts giving rise to these questions have been

pleaded in the written statements of defence and also raised by way of affidavits of the respondents.

## iv. It is necessary to appoint an independent auditor.

The applicant seeks an order appointing an independent auditor for the purpose of taking the account and furnishing a report to court. The judicial system in Uganda uses the adversary mode 5 of trial when resolving disputes. It is a system based on the notion of two adversaries battling in an arena before an impartial third party, with the emphasis on winning. Under the guidance of court, which ensures that rules of evidence and procedure are followed, the two adversarial parties have full control over their respective cases. This means that the parties are responsible for pretrial procedures, and preparation and presentation of their respective cases during the trial. It is 10 their duty to gather evidence, to organise and present witnesses. The role of the judicial officer is to decide which evidence is admissible, and what evidence is inadmissible, and therefore to be excluded from the trial.

Under Order 18 rule 13 of *The Civil Procedure Rules*, the court may at any stage of the suit recall 15 any witness who has been examined, and may, subject to the law of evidence for the time being in force, put such questions to him or her as the court thinks fit. Similarly under section 164 of *The Evidence Act*, a judicial officer may, in order to discover or to obtain proper proof of relevant facts, ask any question he or she pleases, in any form, at any time, of any witness, or of the parties about any fact relevant or irrelevant.

The court is given wide discretionary powers under both Order 18 rule 13 of *The Civil Procedure Rules* and section 164 of *The Evidence Act* to recall witnesses. Such powers must be exercised judicially and reasonably and not in a way likely to prejudice either party. Once the court decides that certain evidence is essential for the just determination of the case, then it may "recall" a 25 witness or witnesses to give that evidence whatever its effect is likely to be, provided that the parties are allowed to exercise their right to cross-examine any such person, and the court should adjourn the case for such a time, if any, as it thinks necessary to enable such cross-examination to be adequately prepared if, in its opinion, either party may be prejudiced by the calling of any such person as a witness. This provision is not a license to a court to summon witnesses at its own, 30 motion or on application of either party, who have not been summoned by either party. A judicial officer should not *proprio motu* summon witnesses not called by either party.

Secondly, what is sought by this prayer is technically for the court to obtain an expert opinion. It is trite that before the courts, opinion evidence is generally not permitted. The exception to this rule is opinion evidence from an expert, who must be qualified as such before being permitted to testify. The practice is that parties to a suit each appoint their own experts to tender expert opinion 5 evidence to the court on an issue. It is subject to this practice that the court may, on its own initiative at any stage of the suit, appoint an expert if it considers the expert opinion evidence given by the ones called by the parties deficient, or for some other good reason considers that a third opinion may help the court in resolving an issue in the suit. This is usually done after the evidence on both sides is closed. This power of the court must obviously be dictated by exigency of the 10 situation, while fair play and good sense appear to be the only safeguards. When the court invokes this power, each party on record has the right to cross-examine the expert called by court.

According to section 43 of *The Evidence Act*, when the court has to form an opinion upon a point of foreign law, or of science or art, or as to identity of handwriting or finger impressions, the 15 opinions upon that point of persons specially skilled in that foreign law, science or art, or in questions as to the identity of handwriting or finger impressions, are relevant facts. Such persons are called experts. As a general rule, an expert is characterised as a person possessed of the special skill and knowledge acquired through study or practical observation that entitles him or her to give opinion evidence or speak authoritatively concerning his or her area of expertise. An expert's 20 opinion evidence is intended to provide the court with information which is outside its experience or knowledge. Because of their lack of a direct interest, it is believed they can provide the Court with an informed perspective that is distinct from that of the parties.

An expert's evidence is not, however, limited to oral testimony. It may also be in the form of a 25 written report. The qualifications of the witness will have bearing on the weight to be given to the evidence. For this reason, it is still important to establish the domain of the asserted expertise, and to compare the qualifications offered with the domain asserted. The quality of decision making in courts hinges in many cases on the willingness of the judicial officers to take seriously their responsibilities as gatekeepers, to ensure that unsound scientific and other expert evidence is not 30 allowed to be presented to the court.

The court is not bound to accept and give full weight to the expert testimony. It may be weighed in the same manner as any other evidence. An expert's opinion can be disregarded after it has been given due consideration. A primary danger of the admission of opinion evidence as binding on the parties is that the court as a result abdicates its role as fact-finder and defers to the opinion of an 5 expert due to his or her impressive credentials and mastery of scientific jargon. The court should screen all expert testimony to ensure that it is reliable before admitting it into evidence. It is the duty of the court before relying an expert opinion, to determine whether or not it based on sufficient facts and that the expert reliably applied conventional principles and methods to the facts of the case. Where the main effect of the opinion evidence is to convey to the court the expert's belief 10 in the truthfulness of one of the parties' case, the trial judge has a residual discretion to exclude the proffered opinion because it may distort the fact-finding process.

It is incumbent upon every trial judge to ensure that any and all expert testimony or evidence admitted is not only relevant, but also reliable. To satisfy this requirement, all expert testimony 15 must meet exacting standards of reliability, including whether the expert's methods have been tested and subjected to peer review and publication, and whether that methodology is generally accepted in the relevant scientific or technical community, whether the expert's opinions resulted from independent research or are a product of litigation; whether the expert has accounted for alternative explanations; and whether the expert was as careful in forming his opinions for 20 litigation as he would be in his non-testifying professional work. It is an elementary principle of proof, that he who alleges must prove the subject matter of his allegation. There is no duty in law or morals for the court to fill a vacuum created by the investigative procedural gaps of the experts called by the parties, or to seek to forestall it before they have called their own.

25 By appointing an expert characterised as neutral before the parties have led their evidence, the Court in a way binds the parties to the litigation to the findings of an expert, yet such an opinion cannot take the court's place in determining issues of fact. Principles of the law of evidence demand that courts reject expert testimony that is not based on sufficient facts or data, or that is not the product of reliable principles and methods, or when the witness has not applied the 30 principles and methods reliably to the facts of the case. When a court looks to the data underlying expert opinion but neglects to evaluate its relation to the expert's conclusion ostensibly legitimate

data may serve as a Trojan horse that facilitates the surreptitious advance of junk science and spurious, unreliable opinions. The Court cannot tell beforehand whether or not the auditor's opinion would be based on sufficient facts, whether the auditor would reliably apply principles and methods to the facts of the case, or whether the auditor would account for alternative 5 explanations in reaching his conclusion.

The power of court to call a witness upon application of a party must be exercised sparingly and only in suitable cases where the just decision of the case demands it. Moreover an expert is not a witness of fact and his or her evidence is only of advisory character. An expert therefore deposes 10 and does not decide. I have not found a justifiable reason in this case at this stage of the proceedings for departing from the practice that parties to a suit should each appoint their own experts to tender expert opinion evidence to the court on the impugned accounts. The court always reserves the right to appoint an expert of its own later in the trial if it considers that the expert opinion evidence given by the ones called by the parties is deficient, or for some other good reason, considers that a third 15 opinion may help the court in resolving an issue in the suit.

Having decided that the suit is neither one for rendition of an account nor one that involves the taking of an account, but is rather a suit that requires simple mathematical application to the facts within the knowledge of both parties, yet there are preliminary questions to be tried, it is obvious

20 that the question of appointing an independent auditor does not arise. For all the foregoing reasons the application lacks merit and it is accordingly dismissed with costs to the respondents.

Delivered electronically this 8

th day of August, 2022 ……Stephen Mubiru………….. Stephen Mubiru 25 Judge, 8 th August, 2022.