THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL COURT DIVISION)

MISC. APPLICATION NO. 116 OF 2013

(Arising from Civil Suit No. 57 of 2013)

1. STERLING TRAVEL & TOUR SERVICES LTD}
2. MARINO P. OLAMA}.......................................................APPLICANTS

VERSUS

MILLENIUM TRAVEL & TOUR SERVICES LTD}………RESPONDENT

BEFORE HON. LADY JUSTICE HELLEN OBURA

RULING

The applicants brought this application under the provisions of Order 36 rules 2(1) and 4, Order 52 rules 1 and 3 of the Civil Procedure Rules (CPR) as well as section 98 of the Civil Procedure Act (CPA) seeking for orders that they be granted unconditional leave to appear and defend the suit and that costs of the application be provided for.

The grounds of the application as stated in the notice of motion are firstly, that the applicants are not aware of the tickets they are being asked to pay for. Secondly, that for a long time the applicants have argued with the respondent that it is not true that they owe them the alleged sum but the respondent forced the applicants to issue cheques so as to secure the release of tickets for the first applicant’s passengers who were due to travel at or around the date of issuing the cheques. The third ground is that the sum claimed is not a liquidated sum capable of being recovered under summary procedure. Lastly, that it is just, fair and equitable that the applicants are granted unconditional leave to appear and defend the suit.

In support of the application is an affidavit deposed by Mr. Marino P. Olama, the second applicant. In answer to the application, the respondent filed an affidavit in reply deposed by Mr. Tugumisirize Jotham, the respondent’s managing director. The applicants filed a further affidavit in reply deposed by the second applicant.

The applicants are represented by Mr. Richard Adubango of M/S Lwere. Lwanyaga & Co. Advocates and the respondent by M/S Tareemwa & Co. Advocates. Counsel for both parties filed written submissions which are considered in this ruling.

Counsel for the applicants referred to the case of Kasule vs Muhwezi [1992-1993] HCB 212 which states the law governing applications for leave to appear and defend a summary suit to the effect that the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. The applicant is not bound to show a good defence on the merits of the case but should satisfy court that there is an issue or question in dispute which the Court ought to determine between the parties.

The applicant’s counsel also cited the case of Simon Yiga vs Fina Bank (U) Ltd HCMA 58 of 2012 where this court relying on Order 36 rule 7 of the CPR held that in essence where the applicant raises a good defence, the plaintiff is barred from obtaining summary judgment.

He submitted that the managing director of the respondent averred in paragraph 5(a) of his plaint that between 2009 and 2013 the plaintiff (respondent) issued air tickers to various people at the instance and request of the applicants on the promise that the applicants were to pay for the same. Counsel for the applicants argued that the respondent did not attach the requests allegedly made by the applicants for the period in issue yet the affidavit in support of the plaint is devoid of details of the claim.

He highlighted paragraph 5 of the affidavit in support of the application in which the second applicant mentioned the procedure for acquiring tickets as well as paragraph 10 where the second applicant claims that he was never issued with the invoices that are listed in annexture “A” to the respondent’s plaint. He argued that even in the affidavit in reply the respondent did not produce the first applicant’s orders issued to it for the tickets nor invoices of how the claim arose and yet the applicants deny annexture “B” to the affidavit in reply. It was argued furthermore that the case is about tickets issued to third parties and therefore it is necessary for the respondent to show with certainty the tickets that were ordered for by the applicants before a conclusion can be made that they were procured by them and they are liable to pay for the same.

On another note, counsel for the applicants contended that the respondent is not entitled to a summary judgment because the applicants aver that they issued the cheques under duress. He submitted that the two cheques should not be used as the basis for the claim because the other annextures to the plaint indicated that by 31^st May 2012 there was only a balance of US$ 1,320 at the time the applicant placed the order for tickets worth US$ 4,320 and paid US$ 3000. It was argued that if at all the sum represented on the cheques of 2010 were still unpaid it would have been indicated as outstanding in 2012.

While relying on the case of Twentsche Overseas Trading Co. Ltd vs Bombay Garage [1958] EA 741 and Black’s Law Dictionary 8^th Edition, counsel for the applicants submitted that the alleged sum is not a debt or liquidated demand to be brought under summary procedure.

Conversely, counsel for the respondent referred to paragraphs 4, 5 and 6 of the affidavit in reply and argued that the invoices remained uncontroverted by the applicants, impliedly admitting the contents therein. He contended that the applicants have not disclosed the particular issues in controversy so as to be allowed leave to defend and no evidence of payment has been furnished to Court by the Applicants to show that the said debt has been retired.

He relied on the case of Acaali Manzi vs Nile Bank Ltd [1994] KALR 123 and contended that it is trite law that where a defendant intends to apply for leave to defend, a draft written statement of defence ought to be attached to the application. He then submitted that having not attached a defence to the application, it is obvious that the applicants have no plausible defence whatsoever and the application should be denied since in the case of European Asian Bank AG vs Punjab & Sind Bank [No. 2] [1983] 1 WLR 642, P. 654 Robert Goff LJ it was held that “Court must never forget the policy underlying the summary procedure, namely to prevent delay in cases where there is no defence.”

In his submissions in rejoinder, the applicants’ counsel reiterated all his earlier submissions and added that the fact that the second applicant stated that he was not aware of the invoices listed in annexture “A” to the plaint raises triable issues requiring the grant of leave to appear and defend the suit. It was also argued for the applicants that the amount claimed by the respondents is in contention and therefore there are issues in controversy to warrant granting leave to the applicants to appear and defend the suit. As for the non attachment of the draft written statement of defence to the application, counsel for the applicants pointed out that the respondent’s arguments on the authority of Acaali Manzi vs Nile Bank Ltd (supra) was based on the summary of the holding made by the law reporters and not the wording of Tsekooko J. who actually observed that “…the applicants would do well to attach a written statement of defence showing such defence.”  He argued that this observation does not mean that it is mandatory to attach a written statement of defence.

I have analyzed the pleadings with all their attachments. I have also considered the arguments for and against this application based on the affidavits of both parties. The legal proposition is settled that in an application for leave to appear and defend, the applicant must prove that there is a bona fide triable issue of fact or law that he will advance in defence of the suit. In Churanjilal & Co. v. A. H. Adam (1950) 17 EACA 92, the Court of Appeal for East Africa held that a defendant who has a stateable and arguable defence must be given the opportunity to state and argue it before court. That decision was followed by the High Court of Uganda in the case of Maluku Interglobal Trade Agency v. Bank of Uganda (supra)  where the principle was concisely stated as follows:-

“Before leave to appear and defend is granted the defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law. When there is a reasonable ground of defence to the claim, the defendant is not entitled to summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court should not enter upon the trial of the issues disclosed at this stage.”

In the case of Maria Odido v Barclays Bank of Uganda Ltd HC Misc. Application No. 645 of 2008 Mukasa J. followed the above principle and further observed that at this stage the court is not required to inquire into the merits of the issues raised, however the issue so raised should be real and not a sham. Court must be certain that if the fact alleged by the applicant were established there would be a plausible defence and if the applicant has a plausible defence he should be allowed to defend the suit unconditionally.

Before considering whether this application raise triable issues, I wish to deal with the argument for the applicants that the respondent has not proved a clear basis for its claim as a liquidated claim since the outstanding balance of US$ 37,408 is not ascertainable by merely relying on an unsigned statement of account, annexture “B” to the affidavit in reply. The applicants’ counsel further referred to the case of Simon Yiga vs Fina Bank (U) Ltd (supra) and argued that the ascertainment of the actual outstanding sum requires investigations beyond mere calculations and it shall be necessary for the respondent to adduce evidence to show how he arrived at the outstanding figure. In response, counsel for the respondent argued that the matter is a liquidated claim envisaged by Order 36 rule 1 of the CPR. In his submissions in rejoinder, the applicants contended that the respondents failed to attach annextures to prove how they arrived at the amount claimed as a liquidated demand since the statement of account and the other documents attached do not give with mathematical accuracy proof of the amount claimed on the plaint.

At this juncture it is imperative to determine the question as to whether the suit was properly brought by summary procedure.  The applicants’ counsel relied on the case of Twentsche Overseas Trading co. Ltd v Bombay Garage (supra) where it was held that it is trite law that summary procedure should only be resorted to in clear and straight forward cases where the demand is liquidated and where there are no points for the courts to try. The same position is reflected under Order 36 rule 2 (a) of the CPR.

I have perused the specially endorsed plaint with all its annextures. The plaintiff/respondent’s claim of US$ 37,408 is alleged to have arisen between 22/09/2009 and 10/01/2013 and the basis for the claim is a statement of account together with request chits that are attached to the plaint and marked annexture “A”. The plaintiff/respondent claims that the applicants/defendants made some partial payments leaving an outstanding balance of US$ 37,408. The above allegations were also stated by the managing director of the plaintiff/respondent in his affidavit that accompanied the plaint.

 Black’s Law Dictionary 8^thEdition defines liquidated amount as “a figure readily computed, based on an agreement’s term”. It is stated in “The Annual Practice” 1966, Sweet & Maxwell, London that a liquidated demand is in the nature of a debt, a specific sum of money due and payable under or by virtue of a contract which is either already ascertained or capable of being ascertained as a mere matter of arithmetic.  It is also stated in “The Supreme Court Practice” 1966, Sweet & Maxwell, London that; 

“…if ascertainment of a sum of money even though it be specified or named as a definite figure, requires investigation beyond mere calculations, then the sum is not a debt or liquidated demand but constitutes damages”.

This Court while considering a similar question applied the above principles in the case of Simon Yiga vs Fina Bank (U) Ltd (supra).

In the instant case, the statement of account which was attached to the plaint shows how that outstanding amount was accumulated over a period of time between 22/09/2009 and 12/01/2013.  The statement of account shows names of different persons who are referred to as clients, the Invoice Numbers, Receipt Numbers and the Cash Received. In my view that would be a liquidated demand if there is proof that the applicants requested for the issuance of all those tickets. However, that is not the case. Although the account runs from 22/09/2009 to 12/01/2013with over 290 transactions merely counting from the invoice numbers without including the repeated ones, there are only 15 request chits attached to prove requests by the 2^nd applicant. Those request chits bear dates for May, June, July and August 2012. There are none for 22^nd Sept 2009-April and part of May 2012 as well as from Sept. 2012-January 2013 as claimed in the statement of account.

Even then, some of the request chits show the amount for the ticket, the payment forwarded and the balance including the old ones which in some cases the amount are even indicated. Some of the outstanding balances acknowledged in the request chits do not correspond to what is indicated in the statement of account. Besides, two of the cheques that form the basis of the respondent’s claim were issued in March 2010 and dishonoured in May 2010. One wonders why more tickets were issued to the applicants allegedly on credit before those amounts were cleared. There is even no formal demand for the same attached to the plaint. It is also noteworthy that only the invoice numbers were quoted in the statement of account but the actual invoices were not attached.

To my mind all the above gaps/questions require investigation by this court beyond mere calculations which removes this case from the ambit of liquidated demand as defined above. I therefore find that the respondent/plaintiff’s claim is not properly brought by summary plaint because it requires proof by adducing more evidence. This finding alone entitles the applicants to leave to appear and defend the suit because they raise triable issue as to whether or not the applicants owe the respondent that amount or at all. In the circumstances, I would be inclined to grant the applicants leave to appear and defend the suit and I so order.

Before I take leave of this matter, I wish to address the respondent’s contention that since no defence has been attached to the application, it is obvious that the applicants do not have any defence. The respondent contended that it is trite law that where applicants intend to apply for leave to defend, a draft written statement of defence ought to be attached to the application as observed in the case of Acaali Manzi vs Nile Bank Ltd (supra).

I agree with the respondent’s submission that it is not mandatory to attach a written statement of defence to the application. At least Order 36 rule 4 of the CPR under which this application was brought, does not require an applicant for leave to appear and defend a summary suit to attach a written statement of defence to the application. However, Court has held that it is a good practice to do so. This is the context in which Tsekooko J. (as he then was) observed in the case of Acaali Manzi vs Nile Bank Ltd(supra) that when applicants apply for leave to defend the applicant would do well to attach a draft written statement of defence showing such a defence. In the premises, I find that failure to attach the draft defence to the summary plaint does not mean that the applicants have no defence.

On the whole, this application is allowed. The applicants are granted unconditional leave to defend the suit and they are hereby ordered to file their written statement of defence within 10 days from the date of this order. Costs of this application shall be in the main cause.   

I so order.

Dated this 26^th day of June 2014.

Hellen Obura

JUDGE

Ruling delivered in chambers at 3.00 pm in the presence of:

1.  Adubango Richard for the applicants.
2.  Mr. Ronald Baluku who was holding brief for Innocent Tareemwa for the respondent.
3. Mr. Chris odaga , the accountant of 1^st applicant.

JUDGE

26^th June 2014