BENEDETTA GROUP LTD v RAB

BENEDETTA GROUP LTD v RAB

- Source: Amategeko - Section: Decisions (Judgements) - Date: 2025-02-12 - Case/document no.: RCOMAA 00015/2022/CA - Collection: Court of Appeal

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BENEDETTA GROUP LTD v RAB [Rwanda COURT OF APPEAL-RCOMAA 00015/2022/CA (Munyangeli, P.J) 20 January 2023] Commercial Procedure – Standing to sue – Joint venture – Standing (locus standi) – A company under a joint venture scheme has the right to sue in its own name when it is only claiming for its share – No company has standing to sue for the full due on the behalf of a joint venture, especially when the claiming company is not suing for the interests of the joint venture. Facts: Rwanda Agriculture Board (RAB) entered into an agreement with Benedetta Group & A.I Engineering Joint Venture, the agreement was about conducting some feasibility study on 16,000 hectares of land, and the agreement was termed as “feasibility study and detailed design of a proposed ha 16,000 gross area hillside and marshland and irrigation lots 2: Gashora area”. Those hectares were split into 4 lots whereby Benedetta Group & A.I Engineering Ltd Joint Venture was assigned to work in Rweru area with 4, 797 hectares for 887,908,560 Frw. Both parties agreed on the contract execution and the payment modalities in instalments. Benedetta Group Ltd sued Rwanda Agriculture Board (RAB) before the Commercial Court and stated that RAB refused to pay to it the last instalment of the payment, which is 40% of the whole tender, equivalent to 335, 163, 425 Frw, and it prayed the Court to order to RAB to pay the

claimed sum together with damages computed at 8% of the tender value, amounting to 15,640,959 Frw, for the unlawful breach of the contract. For the above case, Rwanda Agriculture Board (RAB) submitted that it never had any agreement with Benedetta Group Ltd, rather it concluded the contract with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture. For the raised objection, the Commercial Court found that, though the contract was concluded with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture, Benedetta Group Ltd was assigned with the follow-up of the contract execution and the Court held that the objection raised by RAB has no justification. The Commercial Court decided on the merits of the case and moved that the claim filed by Benedetta Group Ltd is founded, and it ordered to Rwanda Agriculture Board to pay 335,163,425 Frw for the remained instalment together with 12,065,883 Frw for late payment interests with 500,000 Frw for counsel fee and 40,000 Frw for the procedural fee and 20, 000 Frw for the deposited court fee. RAB was not satisfied with the Court’s decision and it appealed against the ruling before the Commercial High Court, and prayed the appellate Court to determine whether the claim filed by Benedetta Group Ltd should be admitted and whether, by ordering to it to pay, the Commercial Court took into consideration the agreement and whether the judge

should try the case while he had taken a related decision and examine whether the services delivered to RAB are proportionate to the surface on which the detailed study was conducted. The Commercial High Court held that the appeal filed by Rwanda Agriculture Board has merit, and it moved that the claim lodged by Benedetta Group Ltd should not be admitted, and it held that the Commercial Court’s decision for case RCOM 01604/2018/TC should be set aside.

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Benedetta Group Ltd appealed against the above ruling before the Court of Appeal, and challenged the fact that the Commercial High Court held that its claim should not be admitted so that it did not take into consideration the debt for which it filed a claim and the interests. It bases its appeal on the fact that by the contract it concluded with RAB, they agreed that it should deposit the payment on Benedetta Group Ltd Bank account in Access Bank Ltd and it deposited on such account the first instalments; it states that such was done in the context of the contract execution and that fact entitles it to claim its rights on basis of the contract, especially that it is Benedetta Group Ltd that signed the agreement that RAB concluded with Benedetta Group Ltd & I.A Engineering Ltd Joint Venture. On the other hand, the respondent submits that it concluded the agreement with Joint Venture, and the latter had no legal personality, it avers that such fact entitles a company under the joint venture to file its own claim, and representing a company does not deprive it of its rights. Held: A company under a joint venture scheme has standing to sue that is limited only to its own name and its sole part when it claims for it, but it does not have standing to sue for the full debt of Joint Venture in its name, especially when the claiming company is not suing for the interests of the joint

venture The appeal is unfounded. The deposited court fee covers the expenses of the proceedings. Statutes referred to: Law no 22/2018 of 29/04/2018 relating to the civil, commercial, labour and administrative procedure, articles 3 and 33; Law no 62/2018 of 25/08/2018 governing Public Procurement, article 84. No cases were referred to. Doctrines Anthony BEM, “Le droit, l’intérêt et la qualité à agir comme conditions de recevabilité des demandes en justice”, Article published on 22/04/2015. Judgment I. BACKGROUND OF THE CASE

On 08/08/2016, Rwanda Agriculture Board (RAB) concluded the contract referred to as “contract 1. 11/1242/016/BL/H. Q” with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture. The contract was about conducting a feasibility study on 16,000 hectares of land covering a hillside and a marshland located in Gashora area of Bugesera District; and the contract was termed as “ FEASIBILITY STUDY AND DETAILED DESIGN OF A PROPOSED HA 16,000 GROSS AREA HILLSIDE AND MARSHLAND AND IRRIGATION ( lots 2: GASHORA AREA )” the 16,000 ha were split into 4 sections, and Benedetta Group & A.I Engineering Joint Venture was assigned work at Rweru area on 4,797 hectares for 887,908,560 Frw. Both parties agreed on the contract execution and the payment modalities in instalments.

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Benedetta Group Ltd argues that RAB declined to pay for the last instalment of the due, and that is 40% of the whole tender value, equivalent to 335,163, 425 Frw, and that is why it seized the Commercial Court and prayed the Court to order to RAB to pay the remaining debt of 335,163, 425 Frw originating from the unlawful breach of the contract together with interests computed at 8% of the tender value, equivalent to 15, 640, 959 Frw.

Rwanda Agriculture Board (RAB) states that the claim lodged by Benedetta Group Ltd should not be admitted because it has never concluded an agreement with it, rather it signed a contract with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture. It submits that the assigned work surface area got reduced, as it came from the initial 4,797 hectares down to 3,525 hectares; RAB argues that when it invited Benedetta Group Ltd & A.I Engineering Ltd for renegotiating the salary for the remained assignment, the invitation was not honored; adding that the plaintiff’s mere allegation of the works completion is untrue, more so that it has no evidence that proves that it completed the work assigned and it was satisfied, Benedetta Group Ltd did not submit the bidding document; therefore it should not be granted the interests for which it claims because Rwanda Agriculture Board is not a profit-making institution.

On 24/12/2018, the Commercial Court decided on the RAB’s objection over the plaintiff lack of standing to sue for the case RCOM 01604/2018/TC, whereby Rwanda Agriculture Board argued that it had no contract with Benedetta Group Ltd, it states that it only concluded the contract with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture. While examining the litigants’ submissions together with related evidence, the Commercial Court found that though Rwanda Agriculture Board concluded the concerned contract with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture, the analysis proved that Benedetta Group Ltd was mandated for the follow-up of the concluded contract and the Court therefore held that RAB’s objection has no justification.

On 28/01/2019, the Commercial Court heard the case on the merits and held that the claim by Benedetta Group Ltd is founded, and ordered to Rwanda Agriculture Board to pay a debt of 335,163,425 Frw, together with 12, 065,883 Frw for late payment interests, and 500,000 Frw for counsel fee, 40,000 Frw for the procedural fee, and 20, 000 Frw for the deposited court fee.

Rwanda Agriculture Board (RAB) appealed against the ruling before the Commercial High Court, and prayed the appellate Court to determine whether the claim filed by Benedetta Group Ltd should be admitted and whether, by ordering to it to pay, the Commercial Court took into consideration the agreement and whether the judge should try the case while he had taken a related decision and examine whether the services delivered to RAB are proportionate to the surface on which the detailed study was conducted.

For the case RCOMA 00188/2019/HCC rendered on 12/11/2021, the Commercial High Court held that the appeal lodged by Rwanda Agriculture Board is founded, and held that the claim by Benedetta Group Ltd is inadmissible and the Commercial Court’s decision on the case RCOM 01604/2018/TC is set aside.

On 11/12/2021, Benedetta Group Ltd appealed against such decision before the Court of Appeal, the appeal was docketed as RCOMAA 00015/2022/CA, and it challenges the fact that the Commercial High Court declared its appeal inadmissible so that it did not take into consideration the debt and accrued interests for which it filed a claim.

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The case was heard in public on 04/01/2023, Benedetta Group Ltd was represented by Counsel Uwizeyimana Jean Baptiste, while Rwanda Agriculture Board was represented by Counsel Kabibi Spéciose together with Counsel Ntarugera Nicholas, the case pronouncement was fixed on 13/01/2023, but by this date, the judgement was not pronounced because its drafting was still ongoing and the pronouncement was adjourned to 20/01/2023. II. ANALYSIS OF LEGAL ISSUES OF THE CASE 1. Whether Benedetta Group Ltd had the standing to sue

Counsel Mutabazi Célestin who represented Benedetta Group Ltd for the pre-trial conference of 06/10/2022, argues that on 06/09/2015, A.I Engineering Ltd Company mandated Benedetta Group Ltd for making a follow-up of the public tender concerning the work on the 4, 797 hectares of land. He submits that Benedetta Group Ltd was awarded the tender and on 8/08/2016, it concluded a related contract with RAB, it executed such contract as per agreement of both parties.

He further submits that the statement of Rwanda Agriculture Board that Benedetta Group Ltd had no standing to file a claim against the contract signed between it and Benedetta Group Ltd & A.I Engineering Ltd Joint Venture, and the Commercial High Court so upheld, is not true, because the article 1(8) of the concerned contract stipulates that it is Benedetta Group Ltd with TIN 103336551, which should be paid, the payment should be deposited on its account n0 1002100103539001 in Access Bank Rwanda PLC and this is the very Bank Account that Rwanda Agriculture Board had been using for the payment of the previous instalments, the fact that it is Benedetta Group Ltd that had right to payments, insinuates that it should have accomplished some works in accordance with the contract, it entitles it to exercise its rights arising from the contract signed between it and Rwanda Agriculture Board.

He adds that a letter of 29/06/2018 that Rwanda Agriculture Board wrote in reply to the lawyer of Benedetta Group Ltd, proves that Benedetta Group Ltd had done the assigned work “feasibility study”; and it states that it needs amicable settlement rather than referring the matter to courts. He argues that during the hearing of 05/11/2018, Rwanda Agriculture Board stated that there was a committee that was handling the issue for amicable settlement of the dispute, it never submitted that Benedetta Group Ltd has no standing to sue; therefore, all these elements prove that the Commercial High Court disregarded the evidence together with the agreement of 08/08/2016 which Benedetta Group Ltd concluded with RAB, which entitle to it the standing and interest to file a claim against it.

He concludes by emphasizing the fact that Benedetta Group Ltd was mandated by Benedetta Group & A.I Engineering Joint Venture, the fact that it is Benedetta Group Ltd which signed the agreement of 08/08/2016, the fact that it was paid, are enough for holding that Benedetta Group Ltd had standing and capacity to sue for any interest arising from that contract.

Counsel Uwizeyimana Jean Baptiste who represented Benedetta Group Ltd in the hearing of 04/01/2023 does not concur with the Commercial High Court’s stance on this issue, he argues that due to the fact that the agreement concluded by Rwanda Agriculture Board and Benedetta Group & A.I Engineering Joint Venture includes the account of Benedetta Group Ltd on which

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the payments should be deposited, it is entitled to sue for the remaining part, given that other payments were deposited on its account.

He further states that each time Benedetta Group Ltd claimed for payment from RAB, while the latter proposed an amicable settlement of the dispute, it is always Benedetta Group Ltd that was invited for negotiations, given the fact that it is its account that has always been used for payments to Benedetta Group Ltd & A.I Engineering Ltd Joint Venture, and he now wonders how Benedetta Group Ltd has no more a representation mandate for Joint Venture it always represented.

He concludes by arguing that he personally notes that by filing a claim, Benedetta Group Ltd did not replace Benedetta Group Ltd &A. I Engineering Ltd Joint Venture, but it represents the interests of Benedetta Group Ltd &A. I Engineering Ltd Joint Venture as it always represented it for all the previous transactions.

Counsel Kabibi Spéciose who represented Rwanda Agriculture Board explained that RAB concluded an agreement with the Joint Venture that comprised Benedetta Group Ltd and A.I Engineering Ltd, and she argues that since the contracting Joint Venture had no legal personality, it is then clear that in case of any disputes, each company sues for itself. She therefore argues that Benedetta Group Ltd has no standing to sue for the full debt on the behalf of the Joint Venture, and she proposed that had the plaintiff observed the terms of the contract, the claim should have been filed in the name of the Joint Venture, represented by Benedetta Group Ltd.

She further submits that the document of 06/09/2015 that Benedetta Group Ltd brought forth as an evidence of the Joint Venture representation mandate is void since the document itself was meant for representation assignment, and representing a company does not mean replacing it; just as it has been explained under paragraph 20 of the appealed judgement, Benedetta Group Ltd had a mandate of representation, as by signing the concerned agreement, it acted on its behalf.

With regard to the statement of Benedetta Group Ltd that the company it represents had the standing to sue for the unpaid due, is based on the fact that the previous payments were all deposited on the plaintiff’s bank account, Counsel Kabibi Spéciose avers that even though the due payments were made through Benedetta Group Ltd bank account, the payment bills were drawn in the names of Benedetta Group Ltd & I.A Engineering Ltd Joint Venture.

With regard to the above issue, Counsel Kabibi concludes by arguing that Benedetta Group Ltd had no standing to initiate a case on basis of the contract with Benedetta Group Ltd & A.I Engineering Ltd Joint Venture; rather, such would be possible in case it claimed for its own interest, in its explanations, it confused the standing and the capacity.

Counsel Ntarugera Nicholas argues that the Commercial High Court found that a mere fact that Benedetta Group Ltd had a representation mandate from Benedetta Group Ltd & A.I Engineering Ltd Joint Venture with the assignments of signing the contract on the behalf of the Joint Venture, and receiving contract-related due payments does not give the current plaintiff the standing to sue for this case alone; just as it is evidenced by the concerned agreement, Benedetta Group Ltd signed the agreement on the behalf of both biding companies, and a fact that all the due payments were deposited on Benedetta Group Ltd bank account came as a common agreement between both companies, and never meant that the payments were unilaterally made to Benedetta

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Group Ltd alone, and concluded that the plaintiff therefore has no right to refer on a contract that is not their own and sue for this case.

With regard to this issue, Counsel Ntarugera referred to article 3 of the Law relating to the civil, commercial, labour and administrative procedure, and concluded that Benedetta Group Ltd had no standing to sue for this particular case.

DETERMINATION OF THE COURT

Article 3 of the Law n0 22/2018 of 29/04/2018 relating to the civil, commercial, labour and administrative procedure provides that unless otherwise provided by law, a claim is admissible in court only if the claimant has standing, interest and capacity to sue. In the case of associations, organizations and institutions without legal personality, their leaders sue and are sued on behalf of their members.

Paragraph one of article 33 of the above mentioned law provides that “[…] However, persons with shared interests in a case file their claims in one motion instituting proceedings and pay only one filing fee

Article 84, 40 of the Law n0 62/2018 of 25/08/2018 governing Public Procurement provides that “in case of joint venture, companies participating in the joint venture must enter into a written agreement signed before the notary, indicating the leading company that represent other companies throughout the procurement process and the scope of its power. This agreement must be part of the document submitted in the bid of the joint venture”

When the Commercial High Court held that the Commercial Court should not have admitted the claim from Benedetta Group Ltd, it considered the fact that Benedetta Group Ltd sued for the case as if it sued for its own sole interests; and as though it had concluded the contract alone yet it was acting under a representation mandate; and the contract which it put forth for evidence was not its own since the contract belonged to the Joint Venture, and the plaintiff did not specify whether it sued for its own part of the due, and it had no standing to sue on the behalf of Benedetta Group Ltd & I.A Engineering Ltd Joint Venture, since the tender was won by the companies under the Joint Venture, and the plaintiff’s right was only limited to Joint Venture’s representation mandate.

The case file contains a certain agreement of 06/09/2015, whereby A.I engineering Ltd represented by Paola Sorba and Benedetta Group Ltd represented by Dr. Edward Kamugisha agreed for the formation of a temporary Joint Venture, and by which Benedetta Group Ltd was mandated to make a follow-up of the concluded contract.

The case also contains another type of agreement concluded between Rwanda Agriculture Board and Benedetta Group Ltd & A.I Engineering Joint Venture, whereby Dr. Kamugisha Edward signed the contract on the behalf of the Joint Venture, and Benedetta Group Ltd bank account within Access Bank was submitted for use in case of contract-related payments deposits.

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The Court of Appeal finds that Benedetta Group Ltd was mandated for representing Benedetta Group Ltd & A.I Engineering Ltd Joint Venture for following-up the execution of contractual obligations between the Joint Venture and Rwanda Agriculture Board.

The Court of Appeal finds that Benedetta Group Ltd was mandated for representing the companies under the Joint Venture as per the existing legal provisions, but the Court finds that the power of representation for the execution of contractual obligations is deferent from the standing to sue in courts since such standing comes in when contract-related disputes arise; it is therefore clear that seeking justice is far different from executing parties’ contractual obligations.

The Court also finds that, just as law scholars explained, anyone intending to seize the court must have a claim1.

By the claim of Benedetta Group Ltd, this claiming company has half right on the full debt that Rwanda Agriculture Board owes to the companies under the Joint Venture, and the other half belongs to A.I Engineering Ltd and the latter did not appear in this case, and yet Benedetta Group Ltd argues that it sued for the Joint Venture’s full due; the Court finds that Benedetta Group Ltd has no standing to sue for this case, as above explained. Even in case Benedetta Group Ltd secures the standing to sue for this case, it cannot approach the case as if it replaced the mandator, it can exercise the representation assignment, but the mandator must always appear for the case as the principal litigant.

The Court finds that, as the Commercial High Court found it, Benedetta Group Ltd had the standing to sue for its own part of the due and in its own name, but it had no standing to sue for the full debt and on the behalf of the Joint Venture, especially when the time for enforcing the court’s decision comes, the execution engages the parties that appear in the copies of the judgement, since the execution of a judicial decision never concerns the Joint Ventures’ agreements. Furthermore, the fact that the plaintiff filed a claim in its own name and moreover for the Joint Venture full due brings about doubts of whether the remaining company is as well a litigant along a case that has been unilaterally initiated by Benedetta Group Ltd.

The Court finds that the representation mandate for overseeing the execution of some contractual obligations, signing a contract on the behalf of one of the companies under Benedetta Group Ltd & A.I Engineering Ltd Joint Venture, or submitting Benedetta Group Ltd bank account for payments deposit, none of the above gives the plaintiff a right to sue for this case in its own name and for the full due on the behalf of the Joint venture. It is therefore clear that the appeal filed by Benedetta Group Ltd on this issue is unfounded.

2. Whether the Commercial High Court should grant to Rwanda Agriculture Board the procedural fee and the lawyer’s fee for which it claimed (cross appeal filed by RAB) [35] Counsel Kabibi Spéciose requests the Court of Appeal to grant to Rwanda Agriculture Board a sum of 5,000,000 Frw for damages, the very amount she had requested in the case RCOMA 00188/2019/HCC but which was not awarded, the Court never considered the principle of costs follow by event.

1 Anthony BEM, “Le droit, l’intérêt et la qualité à agir comme conditions de recevabilité des demandes en justice”, Article published on 22/04/2015.

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[36] Counsel Mutabazi Célestin who represented Benedetta Group Ltd during the pre-trial conference argues that the damages that RAB requested before the Commercial High Court have no justification, he states that his client did no wrong, adding that it is Rwanda Agriculture Board that caused the whole trouble when it refused to pay the due debt, so that the disputes arose.

DETERMINATION OF THE COURT

Article 111 of the Law n0 22/2018 of the law relating to the civil, commercial, labour and administrative procedure provides that “the claim for representation fees is an incidental claim to the principal claim aiming to repay expenses incurred during judicial proceedings. The claim for legal costs is adjudicated at the same time with the principal claim. It can also be admitted and adjudicated even if the principal claim has not been admitted”.

Paragraph one of article 75 of the above mentioned law provides that “in general, no documents, submission, brief or pleading notes may be deposited with the court after the pretrial conference”

The case file indicates that during the pretrial conference for the case RCOMA 00188/2019/HCC convened on 29/04/2019, the litigants debated on the following issues: - Whether the Court was supposed to admit and hear a claim that Benedetta Group Ltd has filed in its own name; - Whether the Court first considered the agreement between Rwanda Agriculture Board and Benedetta Group Ltd & A.I Engineering Ltd Joint Venture before it decided about the payment; - Whether the judge who had already declared a stance on the onset of the case was supposed to remain and hear the merit of the RAB case. - whether the services delivered to RAB are proportionate to the surface on which the detailed study was conducted. - -Whether the cross-appeal was founded.

Having examined the first ground of RAB’s appeal which states that the claim filed by Benedetta Group Ltd should not be admitted, the Commercial High Court found that this claim was indeed inadmissible, and it set aside the Commercial Court’s ruling, it decided that it was not necessary to examine other appeal grounds as it was expounded that the claim should not be admitted at the first instance.

The Court of Appeal finds that the Commercial High Court did not err when it declined RAB’s request for damages for the incurred case-related expenses and the representation fee due to the fact that the issue over the incurred case follow-up costs was not raised whether during the pretrial conference neither in the course of the hearing of 14/10/2020 just as indicated in the hearing minutes.

3. Determine the justification of the procedural fee and the representation fee claimed by Benedetta Group Ltd

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Counsel Mutabazi Célestin who represented Benedetta Group Ltd during the pre-trial conference requested to the Court of Appeal to order to Rwanda Agriculture Board to pay to Benedetta Group Ltd a sum of 2,000, 000 Frw for the procedural fee and for the counsel fee as damages for being dragged into unnecessary lawsuits.

Counsel Ntarugera Nicholas avers that the damages claimed by Benedetta Group Ltd has no justification since Rwanda Agriculture Board has never dragged it into lawsuits because it is the plaintiff who initiated the whole trouble when it declined to attend the meeting that was meant for evaluating the performed works, the surface where the works were carried out, and the related appropriate payment.

DETERMINATION OF THE COURT

Article 111 of the Law n0 22/2018 of 29/04/2018 relating to the civil, commercial, labour and administrative procedure provides that “the claim for representation fees is an incidental claim to the principal claim aiming to repay expenses incurred during judicial proceedings. The claim for legal costs is adjudicated at the same time with the principal claim. It can also be admitted and adjudicated even if the principal claim has not been admitted”.

The Court finds that since the appeal filed by Benedetta Group Ltd is unfounded, it shall not be granted the procedural fee and the representation fee. III. DECISION OF THE COURT

Holds that the appeal lodged by Benedetta Group Ltd is ungrounded.

Holds that the case RCOMA 00188/2019/HCC rendered by the Commercial High Court on the 12/11/2020 is not overruled.

Orders that the court fee deposited by Benedetta Group Ltd when it lodged the appeal, covers the expenses of the proceedings.