Umeme Limited v Kefa & Another (Miscellaneous Application 130 of 2023) [2023] UGHC 472 (18 December 2023)

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT MUKONO MISC, APPLICATION NO 130 OF 2023 (ARISING FROM CIVIL SUIT NO. 047 OF 2020)

UMEME LIMITED ::::::::::::::::::::::::::::::::::::

#### **VERSUS**

**REV. KEFA SEMPANGI** OLIVER SEMPANGI :::::::::::::::::::::::::::::::::::: AND

**SANLAM GENERAL** INSURANCE (U) LTD :::::::::::::::::::::::::::::::::::

### BEFORE LADY JUSTICE CHRISTINE KAAHWA

### **RULING**

### **Introduction:**

This is an ex-parte Application brought under Order 1 Rule 14 of the Civil Procedure Rules seeking Orders that;

- 1. Leave be granted to the Applicant to issue a third-party notice to Sanlam General Insurance. - 2. The costs of the Application to abide the result in the main suit.

### **Background:**

The Applicant is a Defendant in Civil Suit No. 47 of 2020 being instituted by the Respondents (Rev. Kefa Sempangi and Oliver

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Sempangi) in which they sought special damages of UGX. 223,125,000/=, loss of profit amounting to UGX.12,020,000/= and costs of the suit. The third party is Sanlam General Insurance (U) Limited that undertook to indemnify the Applicant in the event that it becomes legally liable to pay damages in respect of property damage and also pay all legal costs and expenses.

The Applicant seeks to add the third party to the suit for the purposes of indemnifying or otherwise contributing to liability that may be imposed on the Applicant arising from Civil Suit No.47 of 2020.

The grounds of this Application are in the supporting affidavit sworn by Mr. Rogers Mugisha the legal manager of the Applicant company but briefly are;

- 1. The Respondents filed High Court Civil Suit No. 047 of 2020 seeking declarations that the Applicant was negligent when its employees cut the wires of the Respondents' generator well knowing it was supplying power to the incubator and hatchery - 2. The Respondents seek an order for special damages to a tune of UGX. 223,125,000/= arising from the loss of 80,000 chicks on 7th August, 2020. - 3. The Respondents seek an Order for the payment of lost profits to a tune of UGX. 12,020,000/ $=$ , general damages


and interest thereon at a rate of 20% from the date of filing the suit and costs of the suit.

- 4. The Applicant in paragraph 4 contends that he entered into a general liability insurance policy dated 1<sup>st</sup> January 2020. - 5. The Applicant contends under paragraph 6 of the policy the third party is the policy insurer trading as Sanlam General Insurance (U) limited. - 6. The Applicant avers in *paragraph 5* of the Affidavit that the Insurance Policy indemnified the Applicants against all losses, liabilities, damages, demands, suits, causes of action, Judgments, awards, costs, or expenses (including Court costs and Attorney fees) resulting from, or directly or indirectly arising out of this suit. - 7. The Applicant concludes that in the circumstances she is entitled to indemnity from the third party.

#### **Representation:**

The Applicant was represented by M/s Shonubi, Musoke & Co Advocates.

#### **Analysis and determination:**

Third party proceedings are provided for under **Order 1 rule** 14(1) and (2) of the Civil Procedure Rules enabling the Defendant to obtain leave of the Court to enable them to issue a third-party notice for purposes of claiming contribution or indemnity against any person not a party to the suit.

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In Sango Bay Estates Dresdner Bank (1971) E. A 307 it was held that the general scope of a third party procedure is to deal with cases in which all disputes arising out of the transaction as between the Plaintiff and the Defendant and the Defendant and the third party can be tried and settled in the same action.

The Court can only exercise its discretion to issue a third-party notice upon evaluation of the allegations of the Plaintiff in terms of his or her claim and the orders sought from court, it is also imperative that Court evaluates the Defendant allegations against the third party. (Sango Bay Estates Dresdner Bank supra)

The grounds upon which evaluation of the allegations before a third-party notice could issue were stated in **Semanda Isima** Moses Vs. Airtel Uganda Ltd & Anor. Misc. Application No. 996 of 2020 cited in approval in ATC (U) Limited v Bitama and others Misc. Application No. 111 of 2022 as:

- The Applicant has sufficient grounds to join the $i_{-}$ Respondent as a third party. - The subject matter between the Applicant and ii. Respondent is the same as the subject matter between the Plaintiff and the Defendant and the original cause of action. - The Applicant claims indemnity or contribution iii. from the Respondent. - The Plaintiff will not suffer any prejudice if the $i$ *V*. Application is granted.

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#### it is in the interest of justice that the suit be heard $V_{\bullet}$ on its merits.

## **Issue 1: Whether the Applicant has sufficient grounds to** join the Respondent as a third party?

The Applicant contends that there is a subsisting General Liability Insurance Policy executed on 1<sup>st</sup> January 2020, between the third party and them. (paragraph 4 of the Affidavit in Support of the Application).

Under the Insurance Policy, the third party covenanted to indemnify the Applicant against all losses, liabilities, damages, demands, suits, causes of action, judgments, awards, costs, or expenses (including Court costs and Attorney fees) resulting from, or directly or indirectly arising out this suit.

The Respondent seeks to obtain Orders for the payment of special damages to a tune of UGX.223, $125,000/$ = arising from the loss of 80,000 chicks, an order for the payment of lost profits to a tune of UGX. 12,020,000/ $=$ , general damages and interest thereon at a rate of 20% from the date of filing the suit and costs of the suit.

In conclusion, I find that the Applicant presented sufficient grounds to add the third party to the suit.

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$\mathsf{S}$

Issue 2: Whether the subject matter between the Applicant and the Respondent is the same as the subject matter between the Plaintiff and the Defendant and the original cause of action.

In M/s Panyahululu Co. Ltd v M/s New Ocean Transporters Co. Ltd & Others HCCS No. 523 of 2006 Bamwine, J. (as he then was) who referred to an earlier exposition of the law in D. S. S. Motors Ltd v Afri Tours and Travel Ltd HCCS No. 12 of **2003**. He stated thus:

".... I understand the law to be that in order that a third party be lawfully joined, the subject matter between the third party and the Defendant must be the same as the subject matter between the Plaintiff and the Defendant and the original cause of action must be same"

In the instant case, the subject matter in Civil Suit No. 47 of 2020 is about loss caused to the Plaintiff due to the Applicants' employees' negligent acts leading to loss of 80,000 chicks on 7<sup>th</sup> August, 2020. The Plaintiff sued the Applicant seeking special damages of Ug. Shs.233,125,000/ $=$ , loss of profits amounting to $Uq. Shs.12,020,000/=$ and legal costs that are yet to be determined.

The Applicant seeks to obtain indemnity from the third party to cover possible outcomes from Civil Suit No. 47 of 2020 basing 15/12/2023

on Section $1(b)$ and $(c)$ of the General Liability Insurance Policy (Annexure A).

"Section 1 (B). Insuring Agreement - Public Liability

The Insurer will indemnify the Insured in respect of an occurrence subject to the Exceptions terms of this Section and the General Terms against all sums that the Insured shall during the Period of insurance and within the policy territory.

become legally liable to pay as damages in $(a)$ *respect of;*

$(i)$ ....................................

(ii) Property Damage

Section 1 (c). Legal Costs - Public Liability

The Insurer will also pay all Legal Costs and expenses incurred by the Insured with the Insurer's prior consent such consent not to be unreasonably withheld or delayed."

In conclusion, I find that the third party undertook to indemnify the Applicant in respect of the damages arising out of property loss and all legal costs arising in such instances as is the case in Civil Suit No. 47 of 2020. This issue is answered in the affirmative.

Issue 3: Whether the Applicant claims indemnity or contribution from the Respondent.

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According to Black's Law Dictionary (4th Edition) at page 910, to indemnify is to save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. **Hasbrouck v. Carr,** 19 N. M. 586, 145 P. 133, 136.

A right to indemnity generally arises from contract. It exists where the relationship between the parties is such that either in law or in equity there is an obligation upon the one party to indemnity against the other (**Easter Shipping Co. Vs. Quah** Beng Kee (1924) AC 177 at 182).

In the instant case, the Applicant in paragraph 4 of her affidavit in support avers that a General Liability Insurance Policy dated 1<sup>st</sup> January 2020 exists between the third party (Sanlam general insurance) and the Applicant Company. A copy of the General Liability Insurance Policy was attached and marked as Annexure A on the Applicants' Affidavit in Support.

In conclusion, I find the provisions of Section 1(b) and (c) of the General Liability Insurance Policy dated 1<sup>st</sup> January 2020 proved and entitles the Applicant to claim indemnity or contribution in the circumstances of this case.

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Issue 4: Whether the Plaintiff shall not suffer any prejudice if the Application is granted.

In **Section 1 (b) and (c)** of the General Liability Insurance Policy (marked as annexure A) indicates that the third party was to indemnify the Applicant, to pay damages and all legal costs and expenses incurred by the Insured with the Insurer's prior Consent such Consent need not to be unreasonably withheld or delayed.

The issuance of a third party notice and addition of Sanlam General Insurance as a party to the suit is intended to enable the Plaintiffs to obtain the fruits of the Judgement if it is in their favour.

In conclusion, the Plaintiffs will not be prejudiced in any way given that the addition of the third party will expedite recovery of the damages sought and any legal costs arising from the suit.

**Issue 5: Whether it is in the interest if justice that the** suit is heard on its merits.

The issuance of a third party notice and addition of Sanlam General Insurance as a party to the suit will enable the plaintiffs establish their claim and realise the same in one suit given that the third party will be party to it.

The object of third party proceedings is to prevent multiplicity of actions and the procedure is limited to a claim of indemnity and

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contribution. (Sango Bay V Dresdenor Bank supra). Failure to add a third party could lead to conclusion of the suit between the Plaintiff and the Applicant then giving rise to a separate suit between the Applicant and the third party claiming indemnity or contribution leading to delay of justice.

In conclusion, it is in the interest of justice that a third party is added to the suit.

The Applicant also prayed for cost of the Application to abide the out come of the main suit. **Section 1 (c)** of the General Liability Insurance Policy, the third party (insurer) undertook to cover all the legal costs and expenses incurred by the Applicant (insured).

Having resolved that all the pertinent issues relating to third party proceedings are affirmatively proved, I make the following Orders:

- 1) That leave is granted to the Applicant to issue a Third Party Notice to the Sanlam General Insurance in Civil Suit No. 47 of 2020. - 2) The costs of this Application be in the cause.

**Dated** at **Mukono** this....................................

Christine Kaahwa **JUDGE**

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