Justice Paul Gadenya of the Commercial Court, has dismissed city law firm, Sebalu & Lule Advocates from representing dfcu bank in a case in which billionaire businessman Dr.Sudhir Ruparelia is suing the bank over breach of contract.
The commercial court judge found that the law firm broke several rules in the Advocates (Professional Conduct) Regulations and therefore found them in conflict.
In miscellaneous application No.1047 of 2018 (Crane Management Services vs. Sebalu & Lule Advocates and Dfcu Bank Limited), the businessman, accused the law firm of conflict of interest and breach of the Advocates (Professional Conduct) Regulations, since the law firm that was previously CMS’ lawyers and as such in possession of confidential information would use this privileged information against CMS.
In an affidavit sworn by Rajiv Ruparelia, one the directors of CMS, the real estate firm contended that Sebalu & Lule Advocates had overtime received instructions from CMS “including instructions to cause a thorough review of the applicants then existing tenancies which form the foundation” of the main suit.
In the main suit (HCCS No.109 of 2018), CMS sued dfcu for severally breaching various tenancy agreements in respect to 13 properties in Kampala and Mbale. CMS is demanding for USD385,728 and UGX2,998,558,624 as rental arrears. This is before interest, general damages, interest on general damages and costs of the suit.
“In view of the advocate-client relationship between the applicant (Crane Management Services Ltd) and the 1st respondent (Sebalu & Lule advocates), the latter’s continued participation as defence counsel for the 2nd respondent (Dfcu bank) herein, which is the defendant in High Court Civil Suit (HCCS) No. 109/2018 against the applicant/plaintiff, is prejudicial to the applicant’s head suit,” CMS’s petition reads in part.
CMS prayed that court issues a permanent injunction restraining the law firm from “appearing in and or acting as counsel for dfcu Limited in HCCS No 109 and all applications arising therefrom.”
Unprofessional and conflicted
Delivering his ruling, Justice Paul Gadenya said that Crane Management Services (CMS) had successfully proved that the law firm are “in possession of confidential information which is relevant, current and related to the head suit in HCCS No 109 of 2018 what would make them conflicted to act as counsel for the 2nd respondent against the applicant.”
“For the record, the engagement of the 1st respondent (Sebalu & Lule) as counsel for the 2nd respondent (dfcu) violated Regulation 4, 9 and 10 of the Advocates (Professional Conduct) Regulations,” he further ruled, in a ruling read for him by the Commercial Court registrar Festo Nsenga.
“The application is allowed with the following orders: an injunction shall issue against the 1st respondent from representing the 2nd respondent in all matters in HCCS 109 of 2018. The respondents will pay the costs of this application,” he ordered.
Rule No.4 of the Advocates (Professional Conduct) Regulations stipulates that advocates shouldn’t prejudice former clients.
Rule 9 forbids an advocate from “appearing before any court or tribunal in any matter in which he or she has reason to believe that he or she will be required as a witness to give evidence, whether verbally or by affidavit; and if, while appearing in any matter, it becomes apparent that he or she will be required as a witness to give evidence whether verbally or by affidavit, he or she shall not continue to appear.”
Rule 10 stops advocates from using their privileged relationship with their clients to their own personal advantage. It requires advocates to disclose to their clients any personal interest that they may have in transactions being conducted on behalf of those clients.
In yet another big blow to Sebalu Lule & Advocates, the judge also agreed with CMS’s lawyers that the law firm can also not represent Bank of Uganda and or Crane Bank in Civil Suit No. HCCS 493 of 2017 (Sudhir Ruparelia vs. MMAKS Advocates, AF Mpanga Advocates (Bowmans Uganda), Crane Bank Limited (In Receivership) and Bank Of Uganda) since CMS, the Ruparelia Group and Crane Bank are “one and the same.”
Sebalu & Lule were hired by Bank of Uganda to replace MMAKS Advocates, AF Mpanga Advocates (Bowmans Uganda), who were kicked off the case by Commercial Court Justice Hon Justice David K Wangutusi in December 2017, also over conflict of interest and breach of the Advocates (Professional Conduct) Regulations.
In yet another big blow to Sebalu Lule & Advocates, the judge also agreed with CMS’s lawyers that the law firm can also not represent Bank of Uganda and or Crane Bank in Civil Suit No. HCCS 493 of 2017 (Sudhir Ruparelia vs. MMAKS Advocates, AF Mpanga Advocates (Bowmans Uganda), Crane Bank Limited (In Receivership) and Bank Of Uganda) since CMS, the Ruparelia Group and Crane Bank are “one and the same.”
Sebalu & Lule were hired by Bank of Uganda to replace MMAKS Advocates, AF Mpanga Advocates (Bowmans Uganda), who were kicked off the case by Commercial Court Justice Hon Justice David K Wangutusi in December 2017, also over conflict of interest and breach of the Advocates (Professional Conduct) Regulations.
The dismissal of the three top law firms which are expected to be personifications of professionalism, is not only a commercial loss as the cases are believed to be worth several billions in professional fees, but is also a major reputational blow to the two law firms, each of which is affiliated to international law firms.
MMAKS Advocates is a member of Africa Legal Networks (ALN), an independent alliance of leading law firms in Africa while Bowmans Uganda is part of Bowmans Law one of Africa’s biggest law firms.
Sebalu & Lule is part of DLA Piper Africa Group.