Pinnacle Projects Ltd Vs Business In Motion Consultants Ltd (Misc. Appl. No 362 Of 2010)

Case No: 
(Misc. Appl. No 362 Of 2010)
Media Neutral Citation: 
[2010] UGCommC 40
Judgment Date: 
24 November 2010
AttachmentSize
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THE REPUBLIC OF U GANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISCELLANEOUS APPLICATION NO. 362 OF 2010

PINNACLE PROJECTS LTD:::::::::::::::::: APPLICANT/DEFENDANT

VERSUS

BUSINESS IN MOTION
CONSULTANTS LTD:::::::::::::::::::::: RESPONDENT/PLAINTIFF

BEFORE: LADY JUSTICE HELLEN OBURA.
RULING
This is an application brought by Notice of Motion under Order 36 rule 11 of the Civil Procedure Rules (CPR) seeking for orders that:
a)      
the decree passed in HCCS. No 182 of 2010 be set aside
b)       cost of the application be provided for.

The grounds relied upon in bringing this application are that:
a)      
The decree was passed when there was a pending application for leave to appear and defend the suit.
b)      
There was therefore an apparent error on the face of the record.
c)       It is just that the said decree be set aside.

The application is supported by an affidavit of Mr. Peter Mugimba, an advocate in the law firm of M/S Mugimba & Tibesigwa Advocates, who are counsel for the applicant.
A brief background of this application is that on the 19th May 2010 M/s Business in Motions Ltd filed a summary suit against Pinnacle Projects Ltd under O.36 rr 1&2 of the CPR for recovery of a sum of US$200,000 arising out of breach of contract and costs of the suit.

The basis of the claim is that the respondent provided consultancy services to the applicant related to project solicitation to strengthen its bid for the development, on a turnkey basis, of one hundred residential villas for sale. The invitation to tender was by Uganda Broadcasting Corporation (UBC) that wanted the villas constructed on its land at Bugolobi comprised in FRV 21 Folio 11. The applicant was the successful bidder.

On that basis the applicant and the respondent signed a Memorandum of Understanding (MOU) wherein a contract sum of US$200,000 was to be paid to the respondent within three months from the date of ground breaking. The respondent claims that although the ground breaking took place on 12/11/2009 and work on the site was progressing, the applicant has never paid or made any arrangements for payment of the said sum. The respondent through its lawyers reminded the applicant several times to pay but the latter ignored giving rise to the suit.

After filing the suit, summons in summary suit on plaint was taken out on 20/5/2010 and served on the defendant on the 26th May 2010 (as per the affidavit of service sworn by Mr. Richard Etayu, a process server working in the law firm of M/S. Kyazze and Company Advocates, Legal Consultants). Affidavit of the process server is on the record.
Upon realizing that no application for unconditional leave was filed by 8th June 2010, counsel for the respondent wrote to the Registrar, High Court, Commercial Division praying that a default judgment be entered against the applicant under O. 36 r.3(2) of the CPR for payment of US$200,000 and costs of the suit . The Registrar duly entered default judgment as requested on the 8th June, 2010.

On 23rd June 2010, counsel for the respondent forwarded to the Registrar a bill of costs to be taxed ex parte but no action has been taken since then.

Prior to that date, on the 16th of June 2010 the applicant filed this application seeking for orders earlier stated in this ruling. On the same day, counsel for the applicant wrote to the Registrar, High Court, Civil Division informing him that Miscellaneous Application No. 231 of 2010 Pinnacle Projects Ltd vs. Business in Motion Consultants Ltd was by mistake filed in the Civil Registry instead of the Commercial Registry where the main suit (HCCS No. 182 of 2010) was filed. He requested the Registrar to transfer the said application that was filed on 7/6/2010 to the Commercial Registry.

The file was subsequently transferred and received at the High Court Commercial Division Registry on the 23/6/2010. It was allocated a new number as Misc. Application No. 387 of 2010.

When this application came before me for disposal, Mr. Bernard Tibesigwa for the applicant and Mr. Joseph Kyazze for the respondent made lengthy submissions. From the background of this application and the arguments of both counsels, it is not in dispute that the applicant filed application No. 231 of 2010 for leave to appear and defend Civil Suit No. 182 of 2010 at the High Court Civil Registry. The issues to be determined by this court therefore are:
1)      
Whether Miscellaneous Application No. 231 was properly filed at the High Court Civil Registry, and;
2)       Whether the said application was filed in time.

Before I consider these issues, I would like to first deal with the submission made by counsel for the respondent on the validity of the affidavit in support of this application which in effect challenges its competence. Counsel attacked paragraph three of the affidavit of Mr. Peter Mugimba which he contended contains falsehood in so far as the deponent states that Misc. Application No. 231 of 2010 was filed in this court on 7/6/2010 thus contradicting the content of a letter that was written by counsel for the applicant to the Registrar Civil Division dated 16/6/2010 already referred to in this ruling.

He submitted that the applicant was not coming with clean hands to seek justice from this court by lying and hiding under the guise of confusion by the Court Registry. He prayed that court to strikes out the affidavit because it is tainted with falsehood. He relied on the case of Bigways Construction (U) Ltd HCT-00-CC MA 0832-2005 [2007] UG Commercial Court 83 to buttress his prayer.

Paragraph three of that affidavit states as follows:
“That the firm accordingly filed application No. 231 of 2010. Copies of the application and revenue receipts are annexed as “A” and “B” respectively”.

I do not find any falsehood in this paragraph as alleged by counsel for the respondent. The deponent stated the fact that the firm filed application No. 231 of 2010 without specifying the division or court where it was filed. I therefore do not agree with counsel that it contains falsehood and should be struck out.
I now turn to consider the merit of this application.

O.36 r.11 under which this application is brought provides that:
“After the decree the court may, if satisfied that the service of the summons was not effective, or for any other good cause, which shall be recorded, set aside the decree, and if necessary stay or set aside the execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the court so to do, and on such terms as the court thinks fit”.

In the instant case, effective service of sermons is not being contested. The applicant is relying on “good cause” to have the decree set aside as stated in paragraph five of the affidavit in support of this application. It thus states;
“That I verily believe that the said decree was passed irregularly and this amounts to good cause for setting aside the said decree”.

The phrase “good cause” is not defined under the Rules but it is defined in Black’s Law Dictionary, Seventh Edition, as; “a legally sufficient reason”.
However, the phrase “sufficient cause” that is normally used interchangeable with the phrase “good cause” has been explained in a number of authorities.
In the cases of: Mugo v Wanjiri [1970] EA 481 at page 483. Njagi v Munyiri [1975]EA 179 at page 180 and Rosette Kizito v Administrator General and Others [Supreme Court Civil Application No. 9/86 reported in Kampala Law Report Volume 5 of 1993 at page 4] it was held that sufficient reason must relate to the inability or failure to take the particular step in time.

In Nicholas Roussos vs Gulamhussein Habib Virani & Another, Civil Appeal No.9 of 1993 (SC) (unreported), the Supreme Court attempted to lay down some of the grounds or circumstances which may amount to sufficient cause. They include mistake by an advocate though negligent, ignorance of procedure by an unrepresented defendant and illness by a party.

The argument of counsel for the applicant in the instant case is that there was already an application for leave to appear and defend when the decree was passed. If indeed there was a competent application for leave to appear and defend at the time the decree was passed, then that would amount to “good cause” that would justify setting aside the decree. This then leads me to consider the first issue as to whether Misc. Application No. 231 was properly filed at the High Court Civil Registry.

Counsel for the applicant submitted very strongly that there was nothing irregular about filing an application for leave to appear and defend a suit that was filed at the Commercial Division, at the Civil Registry. He argued that under the Constitution of the Republic of Uganda and the Judicature Act there is only one High Court of Uganda. He contended that the creation of divisions of the High Court and the decision as to which case should be transferred to which division are administrative. He submitted that the misfiling of documents in different divisions is a mere technicality that should not be used to deny a party justice.

Counsel for the respondent on the other hand, submitted and rightly so in my view, that O. 36 r 3(1) requires the defendant who is served with summons under O. 36 to apply for leave to appear and defend in the same court where the main suit is pending. He submitted emphatically that the application has to be made within ten days from the date of service since time is of the essence as was held in the case of Republic Motors Ltd-Vs-Atlantic Decorators and General Construction [1982] HCB 104.

He pointed out that the main suit (HCCS No. 182 of 2010) was filed at the Commercial Division as indicated in the title (heading) of the summary plaint and summons in summary suit on plaint which was served on the applicant.
He therefore wondered why counsel for the applicant chose to file the application for leave to appear and defend at the Civil Registry.

He submitted that this court could only be aware of the application if it was filed before it. He further submitted that on the 8/6/2010 when judgment was entered there was no pending application before this Court and so it cannot be faulted for entering judgment accordingly.

I wholly agree with the submission of counsel for the respondent that the heading of the plaint and the summons in summary suit on plaint indicated quite clearly that HCCS No. 182 of 2010 from which Misc. Application. No. 231 of 2010 arises was filed at the Commercial Division. The contention by counsel for the applicant that he was misled by a clerk in the Commercial Registry is not convincing at all given that he is a very senior advocate who knows the procedures and operations of court. Counsel for the applicant owned up to his mistake in his letter to the Registrar Civil Division, where he stated as follows:

“We act for the applicant in the above matter. This application was by mistake filed in the Civil Registry instead of the Commercial Registry where the main suit (HCCS No. 182 of 2010) was filed. We therefore request you to transfer the said application to the Commercial Registry”.

His specific request that the application be transferred to the Commercial Registry defeats his argument that there was nothing irregular with filing the application at the Civil Registry. This mistake which I find so negligent and careless cannot be treated as a mere technicality particularly in view of the fact that this is a summary suit where time is of the essence. Counsel could not afford to carelessly gamble with choice of where to file the application when it was relating to a summary suit that was clearly filed at the Commercial Division. No wonder, this mistake was quite costly for his client because a decree was passed without any knowledge that the application was lying at the Civil Registry.

The transfer was effected on the 23rd June 2010 two weeks after the decree was passed and it was received at the Commercial Registry and registered afresh as Misc. Application. No. 387 of 2010. This in my view strengthens counsel for the respondent’s argument that on the 8th June, 2010 when judgment was entered there was no pending application before this Court and so it cannot be faulted for entering judgment accordingly.

In the circumstances, I find that Misc. Application. No. 231 was not properly filed at the High Court Civil Registry when the main suit under which the application was brought was at the Commercial Division. Issue number one is therefore answered in the negative.

I would have been persuaded by counsel for the applicant’s argument that, there is only one High Court in Uganda and therefore filing in any division is not fatal, if the division where the main suit was filed was not clearly indicated both on the plaint and the summons. In that case I would have perhaps found otherwise. My finding would have also been different if he was just “instituting a suit” and not making an application arising from an existing suit.

However, the above finding notwithstanding, I am aware that the mistake was occasioned by counsel for the applicant and the law has now been settled that mistakes of counsel however negligent cannot be visited on the litigant. There are many authorities to that effect that bind this court.

In Banco Arabe Espanol vs. Bank of Uganda SCCA No. 8/1998 [1997-2001] UCL 1, it was held that, “the present case was one where the error by counsel for the appellant need not be visited on the appellant, and the circumstances amounted to sufficient cause for the purpose of setting aside dismissal of the suit”.

In that case, Oder, JSC (RIP), while giving the background to the development of this principle had this to say;
“The question of whether an “oversight”, ‘mistake”, “negligence”, or “error”, as the case may be, on the part of counsel should be visited on a party the counsel represents and whether it constitutes “sufficient reason” or “sufficient cause” justifying sufficient remedies from courts has been discussed by courts in numerous authorities. Those authorities deal with different circumstances; and may relate to extension of time for doing a particular act, frequently in cases where time has run out; some of them concern setting aside an ex parte judgment or reinstating a dismissed suit such as in the present case. But they have a common feature whether a party shall, or shall not, be permanently deprived of the right of putting forward a bona fide claim or defence by reason of the default of his professional advisor or advisor’s clerk.”

There are many other authorities in Uganda where this principle was stated with approval. They include; Haji Nurdin Matovu vs Ben Kiwanuka SCCA No. 12 of 1991 (Unreported), Alexander Jo Okello vs Kayondo & Co. Advocates SCCA No. 1 of 1997 (Unreported) and Andrew Bamanya Vs Shamsherali Zaye CAC Application No. 70 of 2001, where Hon. Lady Justice Mukasa-Kikonyogo, DCJ, observed that mistakes, faults, lapses or dilatory conduct of Counsel should not be visited on the litigant.

I am of the view that the circumstances of the instant case is one where this principle can be applied and for that reason I would find that the mistake of counsel is “good cause” for setting aside the decree. However, this is on condition that issue number two is answered in the affirmative, that is, if Misc. Application No. 231 of 2010 was filed in time.

On issue number two, counsel for the applicant argued in the alternative as regards the date of filing Misc. Application. No. 231 of 2010. He submitted that court fees in respect of that application was paid on the 4/6/2010 and the receipt was brought to court although the application itself was not filed until 7th June 2010. He contended that the said date when the fees was paid should be taken as the date when the application was filed. He supported his argument with the holding in the case of UNTA EXPORTS LTD-VS- CUSTOMS [1970] EALR 648 to the effect that a document is only filed when court fees is paid.

He faulted the Commercial Registry for not bringing to the attention of the Registrar the receipt, which in his view, would have put the Registrar on notice that there is a pending application for leave to appear and defend.
Counsel for the applicant invited court to take judicial notice of the new system of lodging documents in court which is different and more time consuming than the old system where fees was paid directly to court as opposed to the bank. He pointed out that assessment of the prescribed fees is done by cash office and the Registry only receives the documents after payment of court fees.

I consulted the O/C Registry on the procedure of filing documents and he confirmed that assessment is done by the cashier. He informed me that the documents are lodged at the registry for filing after payment of the fees whereupon the document itself is embossed and the back of the file stamped. That the amount paid, the receipt number, and the date of filing are indicated at the back of the file.

I have looked at the back of the file for Misc. Application No. 231 of 2010 (MA. No. 387/10) and indeed it bears a stamp with Receipt No. 4366561and amount of 1,800=, and the date of filing is indicated as 7/06/10. It also bears the signature of the clerk who received the document.

Counsel for the applicant argued in the alternative that even if court was to hold that the application was not filed when court fees was paid, it was still filed in time on 7/6/2010 because the ten days lapsed on 8/6/2010.

In response to this submission, counsel for the respondent submitted that payment of court fees per se does not constitute filing of court documents. He pointed out that documents are filed when they are received at the Registry and stamped. He contended that the receipt referred to by counsel may not even be relating to Misc. Application No. 231 of 2010 because it just indicates that the payment is in respect of a notice of motion and it could be any, other than the one in the instant case.

With due respect, I disagree with the argument of counsel for the applicant that filing a receipt for fees paid in respect of a document amounts to filing the document itself. The filing procedure as explained above does not support his argument. What in effect would one be filing, the document or the receipt? It is common knowledge that a receipt is just evidence of payment which in the case of documents filed in court, must be attached to prove payment of the prescribed fees and I believe it serves no other purpose other than that. Counsel has not explained why he chose to file the receipt (if at all he filed it) without the documents. I therefore find it very difficult to believe his story.

Counsel has grossly misrepresented the principle in UNTA EXPORTS LTD-VS- CUSTOMS (supra) which he cited to fortify his argument. That case is distinguishable from the instant case and the circumstances in which the principle was stated must be understood in its context. In that case, the plaint was lodged in the registry for filing on the 14th September 1968 and the court fees were paid on the 16th September 1968 which was already out of time.

Goudie, J observed at page 649 that;
“I have no doubt whatsoever that both as a matter of practice and also as a matter of law documents cannot validly be filed in the civil registry unless fees have been paid or provided for by a general deposit from the filing advocate from which authority has been given to deduct court fees”.

He then ruled that the plaint was filed out of time, having not been properly filed until fees paid on 16th September 1968.

I am of the considered opinion that the principle in the UNTA EXPORT case (supra) does not in any way suggest that payment of fees and filing the receipt without the document to be filed is proper filing. I believe even if the Registry staff had brought the receipt in the instant case ( if at all it was filed) to the attention of the Registrar it would have been of no consequence because it is not an application for leave to appear and defend as stipulated under O.36 r.4 of the CPR.

I am persuaded by the decision in the case of Uganda Commercial Bank vs. Abaasi Kibirige & Another, Civil Appeal No. 59 of 1991 (Unreported) where the defendants while seeking leave to appear and defend, filed a notice of motion under O33r11 ( current O.36 r.11) without a supporting affidavit. It was held that there was no application filed which met the requirements and the Registrar was right to ignore it and enter judgment in favour of the plaintiff.

For the reasons stated above, I find no merit in counsel’s argument and I rule that Misc. Application. No. 231 of 2010 was not filed on the 4th June 2010. This then leads me to consider the alternative argument advanced by counsel that, even if court was to hold that the application was not filed when court fees was paid, that is, on 4/6/2010, it was still filed in time on 7/6/2010 because the ten days lapsed on 8/6/2010 and not on 5th June as submitted by counsel for the respondent.

In dealing with this issue, there is need to determine when time starts running.
Counsel for the applicant referred court to O. 51 r.8 as the guide in computing the ten days prescribed in the summons that was served on the applicant. He argued that the day the service was effected and the last day should be excluded.

With respect, I disagree with counsel on this point and I do not find the relevance of O.51r. 8 since the summons in Form 4 of Appendix A of the CPR that was served on the applicant on the 26th May 2010 clearly stated that;
“You are required within ten days from the date of service of this summons to apply for leave from the court to appear and defend this suit”.

The number of days and when it starts running were clearly stated in the summons and therefore there is no need to be guided by O.51 r.8 which clearly states the instances when it is applied.

In the case of Robert Byaruhanga vs. Rukungiri District Administration Mbarara HCCS No. 407 of 1989 (unreported), where the judgment of the taxing officer which was being appealed against was to be made within 30 days in accordance with S. 61 (1) of the Advocates 1970 (Act. 22) 1970 (now Cap 267 of the Laws of Uganda) Mukanza J, held that the thirty days ran from 19th November 1992 (when judgment of the taxing officer was delivered) to 18th December instant.
Basing on what was stated on the summons as quoted above, and the above authority, it follows that, time in the instant case started running on the 26th May, 2010 when the summons in summary suit on plaint was served on the applicant and it lapsed on the 4th of June 2010.

In the circumstances, I find that Misc. Application. No. 231 of 2010 which was filed at the Civil Registry on 7th June 2010 and later transferred to the Commercial Registry and registered as Misc. Application No. 387 of 2010 was filed out of time. The applicant should have first applied for extension of time within which to file the application as it was already out of time. Consequently, I do not find merit in this application because the decree that it seeks to set aside was properly passed since there was no pending competent application for leave to appear and defend the summary suit.

Before I make my final decision in this case, I wish to refer to the condition that I gave in conclusion of my finding on issue number one. I stated that if issue number two was answered in the affirmative, that is, if the application was filed in time, then I would allow this application because the law is now settled that the mistake of counsel however negligent cannot be visited on the litigant. Unfortunately, the applicant cannot take advantage of this settled principle of law because the application was filed out of time for the reasons stated above. In the result, I would dismiss this application with cost to the respondent.

Hellen Obura (Mrs.)
Judge
25/11/2010

Ruling delivered in open court in the presence of
1.      
Mr. Bernard Tibesigwa for the applicant
2.       Mr. Joseph Kyazze for the respondent
3.       Ms. Ruth Naisamula Court Clerk

25/11/2010