[2003] UGCommC 132

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT)

### MISC. APPLICATION NO. 647 OF 2002

### (Arising out of Civil Suit No. 132 of 1998)

1. TROPICAL COMMODITY SUPPLIERS LIMITED

2. COUNTRY AGENCIES LIMITED

APPLICANTS 3. ATEKER EJALU

## VERSUS

#### RESPONDENT INTERNATIONAL CREDIT BANK (IN LIQUIDATION)

## BEFORE: THE HONOURABLE MR, JUSTICE JAMES OGOOLA

### **RULING**

The application now before Court sought two orders, as follows: (i) to review or set aside the Court's Consent Judgment of 07/09/01; and (ii) to order Respondent Bank to furnish detailed statements concerning the accounts of the three Applicants in that Bank.

b

The three Applicants' major grounds for their two prayers were stated as follows: **First,** that the Applicants' counsel (Mr. Katuntu) signed the Consent Decree without the authority of one of the three Applicants (specifically, Mr. Ateker Ejalu - who is the Third Applicant in this matter). Second, that ^a new and important matter of evidence has been discovered which, in the interests of justice, ought to be presented to discharge the Applicants from liability.

WORLEY, V. P established the applicable principles as follows: ^I will state right from the outset that a Consent Judgment is truly a contract between the parties. It can only be set aside for a reason which would enable the Court to set aside or rescind an agreement - see the celebrated case of **Hirani v Kassam (1952) .19 EACA 131.** In that case SIR NEWHAM

*"Prima facie, any order made in the presence and with the consent of counsel is binding on all parties to the proceedings or action, and on those claiming under them ... and cannot be varied or discharged unless obtained by fraud, or collusion, or by an agreement contrary to the policy of the Court...; orifthe consent was given without sufficient material facts, or misapprehension orin ignorance ofmaterial facts."*

It is not disputed that learned counsel Katuntu consented to the Decree now challenged in his capacity as counsel for the three Defendants (now Applicants). Therefore, according to the first **Hirani** principle above, all three Applicants who were parties to the action (and all persons claiming under them) are bound by that counsel's Consent Decree. Mr. Ejalu and any of the other two Applicants may be discharged from their liability only upon proof that he or they fall within the exceptions specified in the second **Hirani** principle namely, that the consent is somehow tainted with fraud or collusion, or that the agreement arising from that consent is otherwise contrary to the policy of this Court. Clearly no such proof was adduced in the instant application - and for good reason, because no grounds of fraud, collusion or public policy were pleaded or canvassed by the Applicants in any form, shape or manner. Accordingly, those particular exceptions are wholly inapplicable in the circumstances of this application.

The only exceptions among the second **Hirani** principle that could be remotely relevant to this application, are the ones concerning giving consent without "sufficient facts or in misapprehension or ignorance of material facts". But even here, it is quite evident that Mr. Katuntu's consent was not given on insufficient facts or, indeed in misapprehension or ignorance of the facts. He was the counsel in-charge. He drew up the pleadings. He was afforded all the documents and information that the Applicants tendered in this case. Indeed, the present application does not in any way whatsoever even as much as allude to any ignorance or misapprehension of any facts by Mr. Katuntu. The Applicant's complaint (and that is the complaint of only one Applicant out of the three Applicants) is that Kantutu's consent was not

authorised by Ateker Ejalu; and that Katuntu's professional work in the former proceedings amounted to less than ideal representation of his clients.

If that is true, then Mr. Ejalu is free to have recourse against Mr. Katuntu in a different setting (disciplinary proceedings) and a different forum (the Law Council of Uganda). For the present setting and forum, suffice to say that all three Applicants in the present application are bound by the consent of their counsel in accordance with the above **Hirani** principles of our law. Those principles have been followed and elaborated upon ever since in a long line of cases - most recently in **Brooke Bond Liebig ^v ^Mallya [1975] EA 267.**

In the instant application, Mr. Ejalu's conduct subsequent to the Consent Judgment is extremely instructive. He visited and in many other ways contacted the counsel for the opposite side, negotiated settlement terms with them, proposed a repayment schedule of the amount decreed in the Consent Judgment, and wrote various letters acknowledging the decretal amount and his liability to repay it. Indeed, he proceeded to make various payments amounting in total to some Shs.72 million/-. In this Court's considered view this conduct is fully compatible with and corroborative of the fact that Ejalu and his two Co-Applicants did indeed agree to the Consent Judgment which was entered into on their behalf by their counsel, Katuntu. At this late stage, it is simply implausible for Mr. Ejalu to now claim that he did all the above under pressure and fear of being thrown into civil prison. This talk of pressure is a mere afterthought. Indeed Mr. Nambale, learned counsel for Mr. Ejalu and the other two Applicants, acknowledged as much in his submission before this Court. He said:

*"Secondly, Ejalu is not a lawyer. He saw the Consent Decree as ^a good deal- until he came to us recently. "* [emphasis added]

The letter of 27/02/02 by Mr. P. E. AREU, the Managing Director of the second Defendant: TROPICAL COMMODITIES SUPPLIERS LTD, is critical to an assessment and understanding of the Applicants' conduct in the period following the Consent Decree. That letter was addressed to Mr. Masembe

Kanyerezi of Mugerwa & Masembe, Advocates - counsel for the opposite party: the Plaintiffs in the original suit (now Respondents in this instant application). In that letter, TROPICAL COMMODITIES made the following clear and categorical points:

- (1) that some of that Company's Directors, including its Chairman Mr. **Ateker Ejalu,** held a meeting with counsel Kanyerezi in his offices; - (2) that the said Directors made a settlement proposal to resolve this matter amicably; - (3) that the Directors had put their property on the market for sale and that when that asset is sold "we will apply the proceeds immediately to pay off the entire balance of the loan"; - (4) that in the meantime, "beginning immediately we receive confirmation to these arrangements, we will make monthly remittances of Shs.5 million/- for 6 months, and on the 7th month the entire balance of the loan will be paid off as a lump sum"; - (5) that we request your client [i.e. ICB] to give us a good discount"; - (6) that "we reiterate the following: - (>) The responsibility for this loan is fully accepted by us as a corporate entity. We have not in any way derogated from this responsibility."

All these happened around end-February ²⁰⁰² - almost ⁷ months after the Consent Decree; and long before he Respondents ever took any steps to execute the Decree.

Learned Counsel for Mr. Ejalu cited the two cases of **Kawoya v Uganda, Supreme Court, Criminal Appeal No. 50/99;** and **Lobo v Salim [19611 EA. 223.** The law expounded in those two cases is to the effect that counsel has a duty to conduct his client's case to the best of his ability and in the best interests of his client. **In** the **Kawoya** case, the Supreme Court was satisfied that the defence counsel was casual during the tendering in evidence of the charge and caution confession statement; and did not seem to have cared about the identification and admission of certain items of property in evidence

as exhibits. In the instant application, Ejalu merely alleged that his counsel consented to the judgment without Ejalu's authority or instruction. There was no proof whatsoever of that allegation. Court was not told and does not know what instructions, if any, Ejalu gave to his counsel on this matter. It is thus a matter purely between Ejalu and his lawyer. Suffice to say that Ejalu's lawyer, Mr. Katuntu (who is an officer of this Court), affirmed before this Court on two separate occasions: 9/07/01 and 24/07/01, that his client was willing and ready to explore possible settlement of this matter. Subsequently, on 31/07/01 Ejalu's lawyer and the lawyer for the International Credit Bank negotiated in Court and agreed the terms of the consent, whereupon the Court duly entered a Consent Judgment. Soon after the Consent Judgment, Ejalu's whole conduct in the matter corroborated and endorsed his lawyer's earlier consent. Far from lodging a complaint or in any other way protesting the Consent Judgment, Ejalu proceeded to negotiate with the lawyers of his adversary (International Credit Bank) payment terms of the decretal amount; and, indeed, effected payment of some Shs.70m/- towards that decretal amount. Indeed, Ejalu is stated by his present new lawyer (Mr. Nambale) to have all along considered the Consent Judgment to be "a good deal" until he came to see those new lawyers.

Additionally, Ejalu and his present lawyer accused the former lawyer of not having been diligent. An example of the former lawyer's non-diligence or incompetence was stated to be the very short, four paragraph Written Statement of Defence that he filed "stating nothing but generalised allegations and denials". However, even if this accusation were true, it would not, in the particular circumstances of this case, yield much. The case was not contested. The merits of the defence (and indeed of the Plaintiff) were not heard. There was thus no empirical yardstick by which to gauge Mr. Katuntu's professional competence in his conduct of this case. The parties mutually and amicably decided to negotiate their way out of their dispute without litigation or contest. Accordingly, this case is vastly different from either **Kawoya's** or **Lobo's** cases, which were contested cases. Therefore, the instant case is clearly distinguishable from the other two.

**5**

Paragraph 5 of Ejalu's affidavit of 4/12/2002 claims that Ejalu repaid the two Bank facilities in full. If this is true, then there is no plausible reason at all why he should have been constrained to pay the Shs.70 million/- which is mentioned in paragraph 20 of that same affidavit (and elsewhere in the Applicants' pleadings). If, on the other hand, this claim is not true, then of course the affidavit would contain a serious falsehood and render it to be incompetent. No amount of pressure - certainly not the kind the Applicant alluded to - would have forced him to pay Shs.70m/- over and beyond his self acknowledged liability, without any protest or complaint, as is all too evident in this present case. In this regard, Court notes that the settlement proposals and repayment schedules referred to in the Mr. AREU's letter of 27/02/02 (discussed in the above paragraph of this Ruling) were entered into freely and amicably by the Applicants 7 months after the Consent Decree and long before the Respondents commenced any execution measures that Ejalu is now complaining of. At that time, he was under no pressure or threats or coercion of any kind.

Paragraph 3(ii) of the Notice of Motion of 18/10/02 (i.e. the instant application) claims discovery of ^a new and important matter - namely the alleged deposit of US\$13000, which in the interests of justice "ought to be presented to discharge the Applicants from liability". Yet paragraph 4 of Ejalu's affidavit of 17/10/02 - which is stated to be the supporting affidavit of that same Notice of Motion - affirms that the \$13000 was deposited as security for the loan facility of August 1993. Now, if this loan/security affirmation is true, then clearly the matter of that deposit was known way back in 1993, at the inception of the loan (long before the filing of this suit). It is a matter that existed and was well known by all the parties throughout the pendency and hearing of the suit. It cannot, therefore, be claimed to be a new matter that has been discovered only recently. If, on the other hand, the assertion that this deposit was to serve as security for the loan is untrue, then Mr. Ejalu's supporting affidavit would contain yet another grave falsehood - which would render the affidavit to be incompetent, and the Notice of Motion to be unsupported by the requisite affidavit.

Paragraph 15 of Ejalu's supporting affidavit (as well as paragraphs 13-16 of his affidavit of 4/12/02), aver that the First Applicant: TROPICAL COMMODITY SUPPLIERS LTD was wrongly sued as **Tropical Commodities Ltd** (i.e. without the word SUPPLIERS in that Company's name). This is a ground without any merit whatsoever. ^I am satisfied that the omission was an evident slip of the pen. To dwell on that point, is to stand on a mere technicality - ^a stance that is positively discouraged by the provisions of our Constitution. In this connection, in the recent case of **Kassam v Habre International Ltd [2000] ¹ EA 98** ( a tax reference which was otherwise on all fours with the instant application), a company by the name of HABRE INTERNATIONAL LTD. was wrongly sued as HABRE INTERNATIONAL **COMPANY** LTD. Her Lordship, MUKASA-KIKONYOGO, JSC (as the Deputy Chief Justice then was) held that:

*"Courts oflaw are enjoined by the Constitution to administer substantive justice without undue regard to technicalities. The slight difference in the names of the Respondents in the record was not fatal to the award as there was no mistake as to the identity of the parties. "* [emphasis added]

In the instant matter, it is equally self evident that the First Applicant was the subject of the suit. Everything in the pleadings points to the identity of no other company but the First Applicant. ^I am prepared to disregard the all too obvious slip of the pen in this matter; and particularly so as that slip has caused no discernible injustice or prejudice to any of the Applicants or, indeed, to anybody else for that matter. The slip was neither fundamental, nor fatal.

In the result, the application to review or to set aside this Court's Consent Judgment of 07/09/01 is hereby denied. That being the case, the Applicants' prayer to order Respondents to produce banking statements concerning the Applicants' accounts abates - as such production would no longer serve any useful purpose at all.

The costs of this application are awarded to the Respondents against the three Applicants jointly and severally.

# Ordered accordingly.

## James Ogoola JUDGE 21/05/03

DELIVERED IN OPEN COURT, BEFORE: David Nambale, Esq - Counsel for the Applicants Mathias Ssekatawa, Esq - Counsel for the Respondents Ms Rose Emeru - Court Clerk

> James Ogoola JUDGE 21/05/03