THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

COMMERCIAL COURT DIVISION

HCT-00-CC-CS-0426-2004

HERMEZDAS MULINDWA
MARION BABIRYE MATOVU ……………………..….. PLAINTIFFS

VERSUS

STANBIC BANK UGANDA LTD ………………….… DEFENDANT

BEFORE HON. MR. JUSTICE LAMECK N. MUKASA

RULING:

The plaintiffs, Hermezdas Mulindwa and Marion Babirye Matovu first

brought this suit by a plaint filed on 12 th January 2004 against the Attorney
General and John Kiruthu, Simon Karenzi and Sheik Zahir (liquidators of
Uganda Commercial Bank Ltd.). An Amended Plaint was filed on 14 th
October 2004 wherein the defendants were named as Stanbic Bank (U)
Ltd and John Kiruthu (for Uganda Commercial Bank Ltd in liquidation). A
further Amended Plaint was filed on 28 th September 2007 wherein Stanbic
Bank (U) Ltd was retained as the only defendant.

Paragraph 3 of that amended plaint states:-

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 “3. The plaintiffs are suing the defendant in a representative
capacity on their behalf and on behalf of 162 other former
employees of Uganda Commercial Bank who were
retired/retrenched/terminated in 1994 and who are claiming their
unpaid long service awards.”
At the scheduling Conference the following issues were agreed upon for
courts determination.

1. Whether the plaintiffs’ suit is time barred

2. Whether the plaintiffs have a cause of action.
3. If so, whether the plaintiff have a valid claim against the defendant.
4. Whether the plaintiffs or any of them are/is entitled to the long service
award as claimed in the plaint.
5. Whether there exists a valid representative order in this suit in
relation to the claim against the Defendant.
6. Remedies.

Representation was Mr. Augustine Semakula co-appearing with Mr. David

Matovu for the Plaintiffs. The defendant was represented by Mr. Masembe-
Kanyerezi. By consent of counsel for both parties it was agreed to resolve
the following issues first:

Issue No 1. Whether the plaintiffs’ suit was time barred.

Issue No 2. Whether there exists a valid representative order in this
suit against the Defendant

Issue No. 1 Whether the plaintiffs’ suit was time barred.

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The defendant Stanbic Bank (U) Ltd was first introduced as a party to the
suit by the first amended plaint filed on 14 th October 2004. That was the
date when this suit was filed against Stanbic Bank (U) Ltd, the only now
remaining defendant as per the second amended plaint filed on 28 th
September 2007.

Mr. Masembe-Kanyerezi argued that the plaintiffs’ suit was time barred.
That the plaintiffs’ cause of action occurred on 13 th June 1994 and the suit
filed on 28th September 2007 long after the expiry of the six years statutory
limitation period. In their Amended Plaint the plaintiff plead as follows:-

“5. The Plaintiffs and all the numerous individuals who were
retrenched/retired/terminated in 1994 were not paid their long
service awards in 1994 at the time of paying their terminal
benefits through a mistake by the management of UCB when it
omitted to include long service awards in the circular detailing
their terminal benefits which circular is attached and marked
annexture “B” and which long service awards had been
sanctioned by the UCB Board of Directors and had been paid to
employees who were retired/retrenched/ terminated in 1993 (A
photocopy of the minutes of the Board authorising payment of
long service awards is hereto attached and marked a annexture
“C” and the circular spelling out the benefits of the employees
retrenched in 1993 is hereto attached and marked “D”)

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6. It shall be contended for the plaintiffs that they and all the
individuals retired/retrenched/terminated in 1994 by Uganda
Commercial Bank Ltd are exempted from the period of limitation
on grounds that they were only able to discover the mistake on or
about the 26th day of May 2003 when they got hold of the minute
by the Board and after learning of H.C.C.S. No. 0366 of 2001
Nyanzi and Anor Vs Uganda Commercial Bank Ltd which
judgement is hereto attached and marked “E”.

7. The plaintiffs shall further contend that the period of limitations

began to run on 26th day of May 2003 when they discovered the
mistake.

8. Alternatively the plaintiffs shall aver that UCB Board of Directors

meeting was concealed from the plaintiffs and the numerous
individuals whose service were terminated/retired/ retrenched in
1994 by fraud until they discovered it on 26 th May 2003.
Particulars of Fraud
---
---

10. In 1994 UCB issued a circular concerning voluntary

retrenchment which is annexed hereto as “B” and the plaintiffs
and all the individuals whose service were retired/terminated/
retrenched in 1994 by Uganda Commercial Bank retired under the
voluntary retirement scheme mentioned in the said circular.

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 Photostat copies of the plaintiffs’ termination letters are hereto
attached and marked “F” and “G” respectively.
11. The management of UCB by mistake/fraud omitted the item of
long service award from among the benefits to which the plaintiffs
and all the individuals whose services were
retired/terminated/retrenched in 1994 by Uganda Commercial
Bank were entitled despite the fact that the UCB Board of
Directors had authorised the payment as per annexture “C”.
---
---“

Uganda Commercial Bank in its restructuring programme vide circular No

2/94 (Annexture B) invited staff who may wish to voluntary terminate their
services to the bank or who may wish to opt for Early Retirement to apply.
All applications were to be submitted to the Executive General Manager to
reach him not later than 31 st May 1994. The plaintiffs and the other 162
responded to the invitation. An example of such responses is the letter
annexture F2 dated 13th May 1994 by the 1st plaintiff, Hermezdas
Mulindwa. By its letters dated 6th June 1994 UCB responded to each of the
plaintiffs and the other 162 respectively accepting their applications for
voluntary termination from the services of the bank. Each acceptance
letter stated:-

“I wish to advise you that the Board has accepted your

application. The effective date of your termination is 30 th June
1994.”

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Counsel for the defendant argued that for all the plaintiffs and the other 162
the effective date of termination was 30 th June 1994. His contention is that
the circular Annexture B was an invitation to treat. Each of the plaintiffs
and the other 162 made an offer which was accepted by UCB with an
effective date of termination. He submitted that the relationship was
contractual and with respect to any alleged breach the cause of action
accrued on the 30th June 1994. That was the date on which each of the
concerned employee’s entitlement to payment accrued. That this
entitlement expired six years later on the 29 th June 2000. The suit against
the defendant was filed on 14 th October 2004. Section 3 (I) (a) of the
Limitations Act provides that actions founded on contract shall not be
brought after the expiration of six years from the date on which the cause
of action arose. By the above provisions of the Limitation Act the sixth
anniversary of the accrued cause of action was on 29 th June 2000.

It is trite that parties are bound by their pleadings. By their pleadings the
plaintiffs appear to concede that the period within which to file the suit had
expired. In Uganda Revenue Authority Vs Uganda Consolidated Properties
Ltd (1997 – 2001) UCL 149 Justice Twinomujuni JA stated.:

“Time limits set by statutes are matters of substantive law and not
mere technicalities and must be strictly complied with”

The period of limitation where imposed begins to run from the date on
which the cause of action accrues. See Eridadi Otabong Waimo Vs
Attorney General SCCA No 6 of 1990 (1992) V KALR 1. Order 7 rule 11
(d) of the Civil Procedure Rules provides that a plaint shall be rejected

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where the suit appears from the statement in the plaint to be barred by any
law. The claim in the instant suit appears time barred by section 3 (I) (a) of
the Limitation Act. In Francis Nansio Michael Vs Nuwa Walakira (1993) VI
KALR 14 the Supreme Court held that clearly if the action is time barred
then that was the end of it.

However, section 25 of the Limitation Act provides for postponement of the

limitation period. It states:

“Where in the case of any action for which a period of limitation is

prescribed by this Act, either –---

(a) the action is based upon the fraud of the defendant or his
or her agent or of any person through whom he or she
claims or his or her agent.

(b) the right of action is concealed by the fraud of any such

persons as mentioned in paragraph (a) of this section, or

(c) the action is for relief from the consequences of a mistake;

the period of limitation shall not begin to run until the plaintiff has
discovered the fraud or the mistake or could with reasonable diligence
have discovered it, but nothing. in this section shall enable any action
to be brought to recover or enforce any charge against or set aside
any transaction affecting, any property which –---

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(d) in the case of fraud, has be purchased for valuable
consideration by a person who was not a party to the fraud
and did not at the time of the purchase know or have reason to
believe that any fraud had been committed; or

(e) in the case of a mistake has been purchased for valuable

consideration, subsequently to the transaction in which
the mistake was made, by a person who did not know or
have a reason to believe that the mistake had been made.”

Where a plaintiff wishes to rely on any exemption to the periods of limitation

it must be specifically stated in the pleadings. If it is not the plaint should
be rejected. See Iga Vs Makerere University (1972) EA 65. In the instant
case the plaintiffs, in paragraph 6 of the plaint, plead an exemption by
mistake which they content were able to discover on or about the 26 th day
of May 2003. Alternatively, in paragraph 8 they plead concealment by fraud
until their discovery of the UCB Board of Directors Resolution on 26 th May
2003. They therefore content that the date of accrual of the cause of
action was by the provisions of sections 25 of the Limitation Act postponed
to the date of discovery of the mistake or the fraudulent concealment on
26the May 2003.

Mr. Matovu, counsel for the plaintiff, argued that by a Board Resolution
passed under Minute 1874 on 26 th April 1993, Annexture “C” the bank
decided to pay a long service award. The minute stated-

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 “That staff with over 15 years service would be paid a portion of
their long service award on a prorata basis. --.”

Counsel submitted that this applied to all members of staff who opted to
retire under the Restructuring Programme. That either by mistake or
fraudulent design of the management the long service award was omitted
from the compensation package communicated to the plaintiffs in circular
“B”

The circular was the invitation to staff who may wish to voluntarily
terminate their services to the bank to apply. Counsel submitted that the
plaintiffs were not aware of their entitlement to the “long service award”
until 26th March 2003 the date of judgment in Eng Silver Lwanga Nyanzi &
Anor Vs Uganda Commercial Bank Ltd. H.C.C.S No. 366 of 2001.

The plaintiffs’ in that suit were claiming payment of long service awards due
to them upon termination of their employment. The plaintiffs, just as in the
instant, had based their claim on Minute 1874 in Annexture “C”. One of the
issues determined in that case was whether Resolution No. 1874 applied
only to employees who were retrenched in 1993 but not the plaintiffs who
were retrenched in 1996. By concession of the defence Court found that:

“1. Resolution 1984 did not apply only to staff who were
retrenched or retired in 1993.
2. The plaintiffs were entitled to the said award at the time
they were retrenched in 1996.”

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In the case before me I am yet to decide on the applicability of the
Resolution to the plaintiffs.

Mr. Masembe-Kanyerezi for the defendant, submitted that to benefit from

the provisions of section 25 of the Limitations Act on the basis of a mistake,
the relief sought must be a consequence of the mistake.
He argued that the plaintiffs’ claim was not a relief from the consequences
of mistake. Section 25 (c) states:-

“the action is for relief from the consequences of a mistake.”

The above provision extends the limitation period where the plaintiffs action
is for relief from the consequences of a mistake.

Time begins to run from the time when the plaintiff discovered the mistake
or could with reasonable diligence have discovered the mistake. The issue
is whether the plaintiffs’ action in the instant case was the consequence of
the alleged mistake of omitting the long service award from the
compensation package communicated to the Bank staff in the circular of
invitation to apply for early termination of service –Annexture “B”

The “long service award” is a consequence of Minute No. 1974 of 26 th April

1993 which would accrue at retirement under the programme. The
plaintiffs’ cause of action arose from the mistake of omitting to include it in
the circular. A similar provision was considered in the English Case of
Philips Highs Vs Harper (1954) QB 411 where Pearson J. held that the

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section does not apply to the case of a right of action which is concealed
from the plaintiff by mistake. Her Lordship stated at page 119:-

“What is the meaning of provision (c)? The right of action is for

relief from the consequences of a mistake. It seems to me that
this wording is carefully chosen to indicate a class of action where
a mistake has been made and has had certain consequences and
the plaintiff is seeking to be released from those consequences ---

--- probably provision (c ) applies only where the mistake is an

essential ingredient of the cause of action, where the statement of
claim sets out the mistake and its consequences and prays for
relief from the consequences---“

See also Andrew McGee’s Limitation Periods 2 nd Ed pages 337 – 338

where a number of cases in which mistakes were considered are
considered. The plaintiff in the instat case are not seeking to be relieved
from the consequences of the mistake but are seeking to recover monies
they claim to be entitled to which they could not seek within the limitation
period because by the mistakes of the management they were not made
aware of the entitlement. The entitlement was not a consequence of the
mistake. It does not arise from the mistake.

I therefore agree with counsel for the defendant that the plaintiffs’ claim
based on mistake is outside the scope of the exemption in section 25 (c) of
the Limitation Act.

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Alternatively the plaintiffs sought to rely on fraudulent concealment of the
Resolution. In paragraph 8 of the plaint the following particulars of fraud
are indicated:

“(i) Concealing a decision of the Board of the Directors to

pay long Service Awards from the plaintiffs and all the
individuals who left UCB in 1994.
(ii) Omitting the benefits of the Long Service Award from the
circular that showed the plaintiffs and all those persons
retired/terminated/retrenched in 1994 their Terminal
Benefits”

Mr Masembe-Kanyerezi submitted that the particulars of fraud had not

been pleaded. Order 6 rules 3 and 6 of the Civil Procedure Rules require
that where a party relies on fraud it must be specifically pleaded.

Concealment or omission perse is not an element of fraud. There should

be a fraudulent intent to conceal or omit. However the Laws of England 3 rd
Ed Vol. 24 para 631 page 318 on what constitutes fraudulent concealment
states:

“Fraudulent concealment has been defined, in relation to an action

to recover property , as designed fraud by which a person,
knowing to whom the right belongs, conceals the circumstances
giving the right and by means if such concealment enables
himself or some other person to enter and hold property.”

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In B EA Timber Co Vs Inder Sigh Gill (1979) EA 463, Forbes, VP at page
469 stated

“--- it is --- well established that fraud must be specifically pleaded

and that particulars of the fraud alleged must be stated on the
face of the pleading. Fraud, however, is a conclusion of law. If
the facts alleged in the pleading are such as to create a fraud it is
not necessary to allege the fraudulent intent. The acts alleged to
be fraudulent must be set out, and then it should be stated that
these acts were done fraudulently, but from the acts fraudulent
intent may be inferred.”

In Suleman Vs Azzan (1958) EA 553 court held that circumstantial

evidence suffices to prove fraud.

In his submission Mr. Matovu argued that the fraudulent acts in the instant
case regarded the release of information only known to the Board of UCB
which was released to some staff who were retired/ terminated/retrenched
in 1993 and concealed the same from the other members of staff retiring/
terminated/retrenched in 1994. The plaintiffs claim is that the management
knowing that the staff retired/terminated/retrenched were entitled to long
service awards withheld or concealed it from the retrenchment or omitted it
from the retirement package thereby holding on the funds. I agreed and
therefore, find that there was sufficient pleading to infer a fraudulent intent
on the part of UCB Management.

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That being the position Mr. Masembe argued that the exemption was taken
away by the provisions of section 25 (d) of the Limitation Act. In paragraph
13 of their pleading, the plaintiffs state:

“The defendant took over the assets and liabilities of the former
UCBL where upon the former Uganda Commercial Bank Ltd who
had taken over the assets of UCB was deregistered from the
company registry and the defendant is liable to pay the plaintiffs
claim and is sued in that capacity—“

In paragraph 11 of the plaint it is claimed that the management of UCB by

mistake/fraud omitted the item of long service award from among the
benefits to which the UCB staff retired/terminated/retrenched in1994 were
entitled. Mr. Masembe-Kanyerezi argued that the defendant had bought for
value the assets and liabilities of UCBL. He submitted that under Section
25 postponement of limitation cannot apply against a purchaser for value
without notice of the defect in title or without notice of the fraud. Counsel
argued that liability was property for the purposes of section 25 (d). On his
part Mr. Matovu argued that liability is not property since it did not have
value. That the holder of a liability cannot be said to be having property
since liability is negative. Mr. Masembe-Kanyerezi argued that liability is a
chose in action and as such property. Words and Phrases Legally defined
Vol. 3 page 445 states:-

“Property is that which belongs to a person exclusively of others,

and can be the subject of bargain and sale. It includes goodwill,

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 trade marks, licences to use patent, book debts, options to
purchase, life policies and other rights under a contract.”

Blacks Law Dictionary 7th Ed page 234 defines “Chose” as “a thing,

whether tangible or intangible, a personal article; a chattel”. While “chose
in action” is defined as “a proprietory right in personam, such as debt
owed by another person, a share in a joint stock company , or a claim for
damage in tort. The right to bring an action to recover a debt, money, or
thing. Personal property that one person owns but another person
possesses the owner being able to regain possession through a law suit.”

The long service award is money which the plaintiff claim they are entitled
to by virtue of the UCB Board of directors Resolution which they now claim
from the defendant. It is thus property. This was a liability which the
defendant had inherited through a purchase for a valuable consideration.
The purchase was sometime in November 2001 long after the alleged
fraudulent concealment or omission in 1996. It is not pleaded that the
defendant was party to the alleged fraudulent concealment or omission.
Further it is not pleaded that at the time of the purchase the defendant
knew or had reason to know of the alleged fraudulent concealment or
omission.

In the premises I find that the plaintiffs have failed by their pleadings to
show that their claim is entitled to postponement of the limitation period by
the provision of section 25 of the Limitation Act. That ground suffices to
strike out the plaintiffs’ suit.

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Issue No. 5 Whether there exits a valid representative order in this suit
in relation to the claim against the defendant.
This suit was first filed on 12th January 2004. An amendment plaint was
field on 14th October 2004 by which the defendant was first introduced as
a party to the suit. A further amended plaint was filed on 28 th September
2007 which retained the defendant as the sole defendant. On 1 st February
2007 the plaintiffs were by order of this court permitted to institute an action
on their behalf and on behalf of 162 others. This was long after the suit
had been filed against the defendant on 14 th October 2004.

Mr. Masembe argued that the permission under Order 1 rule 8 (I) of the
Civil Procedure Rules must be sought and obtained before the filing of the
representative suit. Counsel referred to the Kenyan case of Wariform Vs
Standard Chartered Bank Kenya Ltd Others (2003) 2 EA 701 where
Mwera J. stated:-

“It is this court’s view that a representative action should have

leave of court or direction and the earlier is when it is being filed.”

Chitaley and Rao in A.I R Commentaries, The Code of Civil Procedure 7 th

Ed Vol. II pages 1896 and 1997 states that the obtaining of judicial
permission is an essential condition for binding persons other than those
actually parties to the suit and their privies, if this essential condition is not
fulfilled, the suit is not a representative one. That as a matter of procedure,
the court ought to insist on the permission prescribed by the Rules being
obtained before a matter is allowed to be fought out in a representative

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capacity. That the requirement as to permission under the rule cannot be
waived.

The defendant was introduced as a defendant to the suit by the amended

plaint filed on 14th October 2004. Paragraph 4 of that plaint stated.

“4 The plaintiffs are suing the defendant in a representative

capacity on their behalf and on behalf of the former employees of
Uganda Commercial Bank who were
retired/retrenched/terminated in 1994 and who are claiming their
unpaid long service awards.”

Annexture B to that plaint was the list of the said employees. There was no
Representative Order in place as of that date. The plaint was clearly in
contraversion of Order 1 rule 8 (I) of CPR and liable to be struck out. The
first plaint filed on 12the January 2004 also provided similarly.

However, the second amended plaint attached a Representative Order

made on 1st February 2007 in Miscellaneous Application No. 125 of 2003.
Though the application appears to have been filed in 2003 apparently
there was no Representative Order until 1 st February 2007. That explains
why non was attached to the plaint filed on 12 th January 2004 and the
Amended Plaint filed on 14 October 2004. The amended plaint filed on 28 th
September 2007; and by which this court is now proceeding; had the
Representative Order dated 1st February, 2007 attached. It thereby
conformed with the provisions of Order 1 rule 8 (I) CPR.

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By the date of filing the amended plaint on 28 th September 2007 no
application had been made to strike out the plaintiffs’ suit for contravening
the provisions of Order 1 rule 8 (I) of the Civil Procedure Rules. I have not
been availed the courts ruling in Misc. Application No. 125 of 2003 from
which the Representative Order – Annexture A – was extracted. At this
stage for me to strike out the amend plaint filed on 28 th September 2007 I
will be sitting as an appellate court a jurisdiction I do not have. As was
held by Mead J in Sonko and others Vs Halima and Anor (1971) EA 443
the provisions of Order 1 rule 8 are provisions of convenience to avoid the
necessity for encumbering the plaintiffs or the defendants with names of
many persons and to avoid the necessity for their personal service of
proceedings and their personal appearances.

In the circumstances I am unable at this stage to strike out the plaintiffs suit
on that ground.

However, in view of my findings on the first issue, the suit was time barred
and outside the saving provisions of section 25 of the Limitations Act.
Therefore the plaintiffs’ suit is struck out and dismissed with costs.

Hon Mr. Justice Lameck N. Mukasa

JUDGE
22 August 2008
nd

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